# EDGAR Filing Document

**Accession Number:** 0001089113
**File Stem:** 0001089113-26-000010
**Filing Date:** 2026-2
**Character Count:** 3022378
**Document Hash:** 95c63506b5edd3f76693338dc5610a47
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001089113-26-000010.hdr.sgml**: 20260226

**ACCESSION NUMBER**: 0001089113-26-000010

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 551

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260226

**DATE AS OF CHANGE**: 20260226

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** HSBC HOLDINGS PLC
- **CENTRAL INDEX KEY:** 0001089113
- **STANDARD INDUSTRIAL CLASSIFICATION:** SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 000000000
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14930
- **FILM NUMBER:** 26686032

**BUSINESS ADDRESS:**
- **STREET 1:** 8 CANADA SQUARE
- **CITY:** LONDON
- **STATE:** X0
- **ZIP:** E145HQ
- **BUSINESS PHONE:** 442079913048

**MAIL ADDRESS:**
- **STREET 1:** 8 CANADA SQUARE
- **CITY:** LONDON
- **STATE:** X0
- **ZIP:** E14 5HQ

?xml version='1.0' encoding='ASCII'? hsbc-20251231

**As filed with the Securities and Exchange Commission on February 26, 2026.** 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

**FORM 20-F**

---

| | |
|:---|:---|
| **(Mark one)** | **(Mark one)** |
| ◻ | **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT** <br>**OF 1934**<br>|

---

**OR** 

---

| | |
|:---|:---|
| 🗹 | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |

---

**For the fiscal year ended December 31, 2025** 

**OR** 

---

| | |
|:---|:---|
| ◻ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |

---

**OR** 

---

| | |
|:---|:---|
| ◻ | **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF** <br>**1934** <br>|

---

**Date of event requiring this shell company report ____________**

**For the transition period from N/A to N/A** 

**Commission file number: 001-14930** 

**HSBC Holdings plc** 

**(Exact name of Registrant as specified in its charter)** 

---

| | |
|:---|:---|
| **N/A** | **United Kingdom** |
| (Translation of Registrant's name into English) | (Jurisdiction of incorporation or organization) |

---

8 Canada Square

London E14 5HQ

United Kingdom

(Address of principal executive offices)

Jonathan Bingham

8 Canada Square

London E14 5HQ

United Kingdom

Tel +44 (0) 20 3268 4840

Email jonathan.bingham@hsbc.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading <br>Symbol(s)<br>| Name of each exchange on which registered |
| Ordinary Shares, nominal value US$0.50 each (GB0005405286) | HSBA | London Stock Exchange |
|  | 5 | Hong Kong Stock Exchange |
|  | HSBC.BH | Bermuda Stock Exchange |
|  | HSBC | New York Stock Exchange<br> \* |
| American Depositary Shares, each representing 5 Ordinary <br>Shares of nominal value US$0.50 each (US4042804066)<br>| HSBC | New York Stock Exchange |

---

---

| | | |
|:---|:---|:---|
| 7.625% Subordinated Notes due 2032 (US404280AF65) | HSBC/32A | New York Stock Exchange |
| 7.35% Subordinated Notes due 2032 (US404280AE90) | HSBC/32B | New York Stock Exchange |
| 6.5% Subordinated Notes 2036 (US404280AG49) | HSBC36 | New York Stock Exchange |
| 6.5% Subordinated Notes 2037 (US404280AH22) | HSBC37 | New York Stock Exchange |
| 6.8% Subordinated Notes Due 2038 (US404280AJ87) | HSBC38 | New York Stock Exchange |
| 6.100% Senior Unsecured Notes due 2042 (US404280AM17) | HSBC42 | New York Stock Exchange |
| 5.250% Subordinated Notes due 2044 (US404280AQ21) | HSBC44 | New York Stock Exchange |
| 4.300% Senior Unsecured Notes due 2026 (US404280AW98) | HSBC26 | New York Stock Exchange |
| 3.900% Senior Unsecured Notes due 2026 (US404280BB43) | HSBC26A | New York Stock Exchange |
| 4.375% Subordinated Notes due 2026 (US404280BH13) | HSBC26B | New York Stock Exchange |
| 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028 (US404280BK42)<br>| HSBC28 | New York Stock Exchange |
| 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2029 (US404280BT50)<br>| HSBC29 | New York Stock Exchange |
| 3.000% Resettable Senior Unsecured Notes due 2028 <br>(XS1961843171)<br>| HSBC28A | New York Stock Exchange |
| 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2030 (US404280CC17)<br>| HSBC30 | New York Stock Exchange |
| 3.00% Resettable Senior Unsecured Notes due 2030 <br>(XS2003500142)<br>| HSBC30A | New York Stock Exchange |
| 4.950% Fixed Rate Senior Unsecured Notes due 2030<br>(US404280CF48)<br>| HSBC30B | New York Stock Exchange |
| 2.848% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(US404280CH04)<br>| HSBC31 | New York Stock Exchange |
| 2.357% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(US404280CK33)<br>| HSBC31A | New York Stock Exchange |
| 2.013% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028<br>(US404280CL16)<br>| HSBC28B | New York Stock Exchange |
| 1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2027<br>(US404280CM98)<br>| HSBC27 | New York Stock Exchange |
| 1.750% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2027<br>(XS2322315727)<br>| HSBC27A | New York Stock Exchange |
| 2.804% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2032<br>(US404280CT42)<br>| HSBC32 | New York Stock Exchange |
| 2.206% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2029<br>(US404280CV97)<br>| HSBC29A | New York Stock Exchange |
| 2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2027<br>(US404280CX53)<br>| HSBC27B | New York Stock Exchange |
| 2.871% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2032<br>(US404280CY37)<br>| HSBC32A | New York Stock Exchange |
| 4.762% Fixed Rate/Floating Rate Subordinated Unsecured Notes <br>due 2033 (US404280DC08)<br>| HSBC33 | New York Stock Exchange |
| 4.755% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028 (US404280DF39)<br>| HSBC28C | New York Stock Exchange |

---

---

| | | |
|:---|:---|:---|
| 5.210% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028 (US404280DG12)<br>| HSBC28D | New York Stock Exchange |
| 5.402% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2033 (US404280DH94)<br>| HSBC33A | New York Stock Exchange |
| 7.35% Subordinated Notes due 2032 (US404280DJ50) | HSBC32B | New York Stock Exchange |
| 7.625% Subordinated Notes due 2032 (US404280DK24) | HSBC32C | New York Stock Exchange |
| 6.5% Subordinated Notes Due 2036 (US404280DL07) | HSBC36A | New York Stock Exchange |
| 6.5% Subordinated Notes Due 2037 (US404280DM89) | HSBC37A | New York Stock Exchange |
| 6.8% Subordinated Notes Due 2038 (US404280DN62) | HSBC38A | New York Stock Exchange |
| 7.390% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028 (US404280DR76)<br>| HSBC28E | New York Stock Exchange |
| 8.113% Fixed Rate/Floating Rate Subordinated Unsecured Notes <br>due 2033 (US404280DS59)<br>| HSBC33B | New York Stock Exchange |
| 6.161% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2029<br>(US404280DU06)<br>| HSBC29B | New York Stock Exchange |
| 6.254% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2034<br>(US404280DV88)<br>| HSBC34 | New York Stock Exchange |
| 6.332% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2044<br>(US404280DW61)<br>| HSBC44A | New York Stock Exchange |
| 6.547% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br>due 2034 (US404280DX45)<br>| HSBC34A | New York Stock Exchange |
| 5.887% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2027<br>(US404280DZ92)<br>| HSBC27C | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2027 <br>(US404280DY28)<br>| HSBC27D | New York Stock Exchange |
| 6.800% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(XS2685873908)<br>| HSBC31B | New York Stock Exchange |
| 7.399% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br>due 2034 (US404280EC98)<br>| HSBC34B | New York Stock Exchange |
| 5.546% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2030<br>(US404280ED71)<br>| HSBC30C | New York Stock Exchange |
| 5.719% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2035<br>(US404280EE54)<br>| HSBC35 | New York Stock Exchange |
| 5.597% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028<br>(US404280EF20)<br>| HSBC28F | New York Stock Exchange |
| 5.733% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2032<br>(US404280EG03)<br>| HSBC32D | New York Stock Exchange |
| 5.874% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br>due 2035 (US404280EL97)<br>| HSBC35A | New York Stock Exchange |
| 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2028<br>(US404280EM70)<br>| HSBC28G | New York Stock Exchange |
| 5.286% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2030<br>(US404280EN53)<br>| HSBC30D | New York Stock Exchange |

---

---

| | | |
|:---|:---|:---|
| Floating Rate Senior Unsecured Notes due 2028 <br>(US404280EK15)<br>| HSBC28H | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2030 <br>(US404280EP02)<br>| HSBC30E | New York Stock Exchange |
| 4.899% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2029<br>(US404280EQ84)<br>| HSBC29C | New York Stock Exchange |
| 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(US404280ER67)<br>| HSBC31C | New York Stock Exchange |
| 5.450% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2036<br>(US404280ES41)<br>| HSBC36B | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2029<br>(US404280ET24)<br>| HSBC29D | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2031<br>(US404280EU96)<br>| HSBC31D | New York Stock Exchange |
| 5.240% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(US404280EW52)<br>| HSBC31E | New York Stock Exchange |
| 5.790% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2036<br>(US404280EX36)<br>| HSBC36C | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2031<br>(US404280EZ83)<br>| HSBC31F | New York Stock Exchange |
| 5.741% Fixed Rate/Floating Rate Subordinated Unsecured Notes <br>due 2036<br>(US404280FB07)<br>| HSBC36D | New York Stock Exchange |
| 4.619% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2031<br>(US404280FE46)<br>| HSBC31G | New York Stock Exchange |
| 5.133% Fixed Rate/Floating Rate Senior Unsecured Notes due <br>2036<br>(US404280FG93)<br>| HSBC36E | New York Stock Exchange |
| Floating Rate Senior Unsecured Notes due 2031<br>(US404280FF11)<br>| HSBC31H | New York Stock Exchange |

---

\*Not for trading, but only in connection with the registration of American Depositary Shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act: **None**

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: **None**

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period

covered by the annual report:

Ordinary Shares, nominal value US$0.50 each **17,175,239,862**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 🗹 **Yes** ◻

No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934. ◻ Yes 🗹 **No**

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to

file such reports), and (2) has been subject to such filing requirements for the past 90 days. 🗹 **Yes** ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such

shorter period that the registrant was required to submit such files). 🗹 **Yes** ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an

emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in

Rule 12b-2 of the Exchange Act.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Large accelerated filer | 🗹 | Accelerated filer  | ◻ | Non-accelerated filer  | ◻ | Emerging growth company | ◻ |

---

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if

the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards† provided pursuant to Section 13(a) of the Exchange Act.

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards

Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report. 🗹

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ◻

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive

based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ◻

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this

filing:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| U.S. GAAP  | ◻ | International Financial Reporting Standards | 🗹 | Other  | ◻ |
|  |  | as issued by the International Accounting Standards Board  |  |  |  |

---

If "Other" has been checked in response to the previous question indicate by check mark which financial statement item the

registrant has elected to follow. ◻ Item 17 ◻ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the

Exchange Act). ◻ Yes 🗹 **No**

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or

15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

◻ Yes ◻ No

**HSBC Holdings plc** Annual Report on Form 20-F<br>

Opening up a world of opportunity

HSBC is one of the largest banking and financial

services organisations in the world.

Guided by our purpose of opening up a world of

opportunity, our ambition is to become the world's

most trusted bank globally, putting customers at

the heart of everything we do.

In this year's report

**1**Cautionary statement regarding

forward-looking statements

**2**Additional cautionary statement

regarding ESG data, metrics and

forward-looking statements

**3**Certain defined terms

**Strategic report**

**[5](#i96daf02f42c54c2fa5f3e366af5e1baa_31)**Highlights

**[7](#i96daf02f42c54c2fa5f3e366af5e1baa_61)**Who we are

**[8](#i96daf02f42c54c2fa5f3e366af5e1baa_79)**Group Chairman's shareholder letter

**[10](#i96daf02f42c54c2fa5f3e366af5e1baa_82)** Group CEO's shareholder letter

**[12](#i96daf02f42c54c2fa5f3e366af5e1baa_85)** Our strategy

**[15](#i96daf02f42c54c2fa5f3e366af5e1baa_166)**Financial overview

**[19](#i96daf02f42c54c2fa5f3e366af5e1baa_193)** Business segments

**[28](#i96daf02f42c54c2fa5f3e366af5e1baa_94)** ESG overview

**[30](#i96daf02f42c54c2fa5f3e366af5e1baa_238)** Risk overview

**Environmental, social and**

**governance ('ESG') review**

**33**Environmental

**51**Social

**57**Governance

**Financial review**

**65**Financial summary

**88**Business segments and legal

entities

**106**Alternative

performance measures

**111**Other information

**Risk review**

**119**Our approach to risk

**121**Top and emerging risks

**126**Risk factors

**138**Our material banking risks

**Corporate governance report**

**220**Biographies of Directors and

senior management

**233**Board committees

**249**Directors' remuneration report

**Financial statements**

**286**Report of Independent Registered

Public Accounting Firm to the

Board of Directors and Shareholders

of HSBC Holdings plc (PCAOB ID 876)

**288**Financial statements

**300**Notes on the financial statements

**Additional information**

**382**Shareholder information

**394**Abbreviations

This Strategic Report was approved by the

Board on 25 February 2026.

Brendan Nelson

Group Chairman

**A reminder** 

The currency we report in is US dollars.

**Our approach to ESG reporting**

We embed our ESG reporting and Task Force on

Climate-related Financial Disclosures ('TCFD') within

our Annual Report and Accounts. Our TCFD

disclosures are highlighted with the following

**TCFD**<br>

symbol:

**Use of alternative performance** 

**measures**

We supplement our IFRS Accounting Standards

figures with non-IFRS Accounting Standards

measures used by management internally that

constitute alternative performance measures under

European Securities and Markets Authority guidance

and non-GAAP financial measures defined in and

presented in accordance with US Securities and

Exchange Commission rules and regulations.

These measures are highlighted with the following

symbol: ※

🡠Further explanation may be found on page 65.

**Financial targets**

For our financial targets, medium-term is defined as

between three to five years, and long term as five to

six years, from 1 January 2026.

🡠See page <u>[6](#i96daf02f42c54c2fa5f3e366af5e1baa_40)</u> for details on our forward guidance

and outlook.

None of the websites referred to in this Form 20-F for

the year ended 31 December 2025 (the 'Form 20-F')

(including where a link is provided), and none of the

information contained on such websites, are

incorporated by reference in this report.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **1** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Cautionary statement regarding forward-looking statements

This Form 20-F contains certain forward-looking statements with

respect to HSBC's financial condition; results of operations and

business, including the strategic priorities; financial, investment and

capital targets; and ESG ambitions, targets and commitments

described herein.

Statements that are not historical facts, including statements about

HSBC's beliefs and expectations, are forward-looking statements.

Words such as 'may', 'will', 'should', 'expects', 'targets',

'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates',

'potential' and 'reasonably possible', or the negative thereof, other

variations thereon or similar expressions are intended to identify

forward-looking statements. These statements are based on current

plans, information, data, estimates and projections, and therefore

undue reliance should not be placed on them. Forward-looking

statements speak only as of the date they are made. HSBC makes

no commitment to revise or update any forward-looking statements

to reflect events or circumstances occurring or existing after the

date of any forward-looking statements. Written and/or oral forward-

looking statements may also be made in the periodic reports to the

US Securities and Exchange Commission, summary financial

statements to shareholders, offering circulars and prospectuses,

press releases and other written materials, and in oral statements

made by HSBC's directors, officers or employees to third parties,

including financial analysts. Forward-looking statements involve

inherent risks and uncertainties. Readers are cautioned that a

number of factors could cause actual results to differ, in some

instances materially, from those anticipated or implied in any

forward-looking statement. These include, but are not limited to:

–changes in general economic conditions in the markets in which

we operate, such as new, continuing or deepening recessions,

prolonged inflationary pressures and fluctuations in employment

levels and the creditworthiness of customers beyond those

factored into consensus forecasts; the Russia-Ukraine war, further

conflict or military action in the Middle East or elsewhere and their

impact on global economies and the markets where HSBC

operates, which could have a material adverse effect on (among

other things) our financial condition, results of operations,

prospects, liquidity, capital position and credit ratings; deviations

from the market and economic assumptions that form the basis

for our ECL measurements (including, without limitation, as a

result of the Russia-Ukraine war, further conflict or military action

in the Middle East or elsewhere, inflationary pressures,

commodity price changes, and ongoing developments in the

commercial real estate sector in mainland China and Hong Kong);

potential changes in HSBC's dividend policy; changes and volatility

in foreign exchange rates and interest rates levels, including

fluctuations in HIBOR and the accounting impact resulting from

financial reporting in respect of hyperinflationary economies;

volatility in equity markets and the risk of disruptive correction

stemming from high company valuations; lack of liquidity in

wholesale funding or capital markets, which may affect our ability

to meet our obligations under financing facilities or to fund new

loans, investments and businesses; geopolitical tensions or

diplomatic developments producing social instability or legal

uncertainty, such as the Russia-Ukraine war, conflict in the Middle

East, the US military operation in Venezuela and any potential

military action or conflict elsewhere, and the related imposition of

sanctions, export-control, trade and investment restrictions,

supply chain restrictions and disruptions, sustained increases in

energy prices and key commodity prices, claims of human rights

violations, diplomatic tensions between China and the US, which

may extend to and involve other countries and territories, and

developments in Hong Kong and Taiwan and the surrounding

maritime region, alongside other potential areas of tension, which

may adversely affect HSBC by creating regulatory, reputational

and market risks; the efficacy of government, customer, and

HSBC's actions in managing and mitigating ESG-related risks, in

particular climate risk, nature-related risks and human rights risks,

and in supporting the global transition to net zero carbon

emissions, each of which can impact HSBC both directly and

indirectly through our customers and which may result in potential

financial and non-financial impacts; illiquidity and downward price

pressure in national real estate markets; adverse changes in

central banks' policies with respect to the provision of liquidity

support to financial markets; heightened market concerns over

sovereign creditworthiness in over-indebted countries; adverse

changes in the funding status of public or private defined benefit

pensions; the significant depreciation of the US dollar through

2025, with volatility expected to persist; societal shifts in

customer financing and investment needs, including consumer

perception as to the continuing availability of credit; exposure to

counterparty risk, including third parties using us as a conduit for

illegal activities without our knowledge; and price competition in

the market segments we serve;

–changes in government policy and regulation, as well as monetary,

interest rate and other policies of central banks and other

regulatory authorities in the principal markets in which we operate

and the consequences thereof (including, without limitation,

actions taken as a result of changes in government following

national elections in the markets where the Group operates);

continued volatility in trade and tariff policies, changes in tariff

rates, including sector-specific levies imposed by various nations,

including the US, which could further disrupt supply chains and

reduce global trade growth; initiatives to change the size, scope of

activities and interconnectedness of financial institutions in

connection with the implementation of stricter regulation of

financial institutions in key markets worldwide; revised capital and

liquidity benchmarks, which could serve to deleverage bank

balance sheets and lower returns available from the current

business model and portfolio mix; changes to tax laws and tax

rates applicable to HSBC, including the imposition of levies or

taxes designed to change business mix and risk appetite; the

practices, pricing or responsibilities of financial institutions serving

their consumer markets; expropriation, nationalisation,

confiscation of assets and changes in legislation relating to foreign

ownership; the UK's relationship with the EU, particularly with

respect to the potential divergence of UK and EU law on the

regulation of financial services; changes in government approach

and regulatory treatment in relation to ESG disclosures and

reporting requirements, and the current lack of a single

standardised regulatory approach to ESG across all sectors and

markets; changes in UK macroeconomic and fiscal policy, which

may result in fluctuations in the value of the pound sterling;

general changes in government policy (including, without

limitation, actions taken as a result of changes in government

following national elections in the markets where the Group

operates) that may significantly influence investor decisions; the

costs, effects and outcomes of regulatory reviews, actions or

litigation, including any additional compliance requirements; and

the effects of competition in the markets where we operate

including increased competition from non-bank financial services

companies; and

–factors specific to HSBC, including our success in adequately

identifying the risks we face, such as the incidence of loan losses

or delinquency, and managing those risks (through account

management, hedging and other techniques); our ability to

achieve our financial, investment, capital and ESG ambitions,

targets and commitments (including the positions set forth in our

thermal coal phase-out policy and our energy policy and our

targets to reduce our on-balance sheet financed emissions and,

where applicable, facilitated emissions in our portfolio of selected

high-emitting sectors), which may result in our failure to achieve

any of the expected outcomes of our strategic priorities and may

result in reputational risks; evolving regulatory requirements and

the development of new technologies, including artificial

intelligence, affecting how we manage risk, including model risk;

model limitations or failure, including, without limitation, the

impact that high inflationary pressures and interest rates have had

on the performance and usage of financial models, which may

require us to hold additional capital, incur losses and/or use

compensating controls, such as judgemental post-model

adjustments, to address model limitations; changes to the

judgements, estimates and assumptions we base our financial

statements on; changes in our ability to meet the requirements of

regulatory stress tests; a reduction in the credit ratings assigned

to us or any of our subsidiaries, which could increase the cost or

decrease the availability of our funding and affect our liquidity

---

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **2** |

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position and net interest margin; changes to the reliability and

security of our data management, data privacy, information and

technology infrastructure, including threats from cyber-attacks,

which may impact our ability to service clients and may result in

financial loss, business disruption and/or loss of customer services

and data; the accuracy and effective use of data, including internal

management information that may not have been independently

verified; changes in insurance customer behaviour and insurance

claim rates; our dependence on loan payments and dividends from

subsidiaries to meet our obligations; changes in our reporting

frameworks and accounting standards, which have had and may

continue to have a material impact on the way we prepare our

financial statements; our ability to successfully execute planned

strategic acquisitions and disposals; our success in adequately

integrating acquired businesses into our business; our ability to

successfully execute and implement the announced strategic

reorganisation of the Group; changes in our ability to manage third-

party, fraud, financial crime and reputational risks inherent in our

operations; employee misconduct, which may result in regulatory

sanctions and/or reputational or financial harm; changes in skill

requirements, ways of working and talent shortages, which may

affect our ability to recruit and retain senior management and an

inclusive and skilled workforce; and changes in our ability to

develop sustainable finance and ESG-related products consistent

with the evolving expectations of our regulators, and our capacity

to measure the environmental and social impacts from our

financing activity (including as a result of data limitations and

changes in methodologies), which may affect our ability to achieve

our ESG ambitions, targets and commitments, including our net

zero ambition, our targets to reduce on-balance sheet financed

emissions and, where applicable, facilitated emissions in our

portfolio of selected high-emitting sectors and the positions set

forth in our thermal coal phase-out policy and our energy policy,

and increase the risk of greenwashing. Effective risk management

depends on, among other things, our ability through stress testing

and other techniques to prepare for events that cannot be

captured by the statistical models it uses; our success in

addressing operational, legal and regulatory, and litigation

challenges; and other risks and uncertainties we identify in 'Top

and emerging risks' on pages 121 to 125.

This Annual Report and Accounts 2025 contains a number of

images, graphics, infographics, text boxes and illustrative case

studies and credentials which aim to give a high-level overview of

certain elements of our disclosures and to improve accessibility for

readers. These images, graphics, infographics, text boxes and

illustrative case studies and credentials are designed to be read

within the context of the Form 20-F as a whole.

The information, statements and opinions set out in this Form 20-F

do not constitute a public offer for the purposes of any applicable

law or an offer to sell or solicitation of any offer to purchase any

securities or other financial instruments or any advice or

recommendation in respect of such securities or other financial

instruments.

Additional cautionary statement regarding ESG data, metrics and forward-

looking statements

The Form 20-F contains a number of forward-looking statements (as

defined above) with respect to HSBC's ESG-related ambitions, targets

and commitments, climate-related pathways, processes and plans, and

the methodologies and scenarios we use, or intend to use, to assess

our progress in relation to these ('ESG-related forward-looking

statements').

In preparing the ESG-related information contained in the Form 20-F,

HSBC has made a number of key judgements, estimations and

assumptions, and the processes and issues involved are complex. We

have used ESG (including climate) data, models and methodologies that

we consider, as of the date on which they were used, to be appropriate

and suitable to understand and assess climate change risk and its

impact, to analyse financed emissions and operational and supply chain

emissions, to set ESG-related ambitions, targets and commitments and

to evaluate the classification of sustainable finance and investments.

However, these data, models and methodologies are often new, are

rapidly evolving and are not of the same standard as those available in

the context of other financial information, nor are they subject to the

same or equivalent disclosure standards, historical reference points,

benchmarks or globally accepted accounting principles. In particular, it

is not possible to rely on historical data as a strong indicator of future

trajectories in the case of climate change and its evolution. Outputs of

models, processed data and methodologies are also likely to be

affected by underlying data quality, which can be hard to assess and

we expect industry guidance, market practice, and regulations in this

field to continue to change. We also face challenges in relation to our

ability to access data on a timely basis, lack of consistency and

comparability between data that is available and our ability to collect

and process relevant data. Consequently, the ESG-related forward-

looking statements and ESG metrics disclosed in the Annual Report

and Accounts 2025 carry an additional degree of inherent risk and

uncertainty.

Due to the unpredictable evolution of climate change and its future

impact and the uncertainty of future policy and market response to

ESG-related issues and the effectiveness of any such response, HSBC

may have to re-evaluate its progress towards its ESG-related ambitions,

targets and commitments in the future, update the methodologies it

uses or alter its approach to ESG (including climate) analysis and may

be required to amend, update and recalculate its ESG-related

disclosures and assessments in the future, as market practice and data

quality and availability develop.

No assurance can be given by or on behalf of HSBC as to the likelihood

of the achievement or reasonableness of any projections, estimates,

forecasts, ambitions, targets, commitments, prospects or returns

contained herein. Readers are cautioned that a number of factors, both

external and those specific to HSBC, could cause actual achievements,

results, performance or other future events or conditions to differ, in

some cases materially, from those stated, implied and/or reflected in

any ESG-related forward-looking statement or metric due to a variety of

risks, uncertainties and other factors (including without limitation those

referred to below):

–Climate change projection risk: this includes, for example, the

evolution of climate change and its impacts, changes in the scientific

assessment of climate change impacts, transition pathways and

future risk exposure and limitations of climate scenario forecasts;

–ESG projection risk: ESG-related metrics are complex and are still

subject to development. In addition, the scenarios employed in

relation to them, and the models that analyse them, have limitations

that are sensitive to key assumptions and parameters, which are

themselves subject to some uncertainty, and cannot fully capture all

of the potential effects of climate, policy and technology-driven

outcomes;

–Changes in the ESG regulatory landscape: this involves changes in

government approach and regulatory treatment in relation to ESG

disclosures and reporting requirements, and the current lack of a

single standardised regulatory approach to ESG across all sectors and

markets;

–Variation in reporting standards: ESG reporting standards are still

developing and are not standardised or comparable across all sectors

and markets, and new reporting standards in relation to different ESG

metrics are still emerging;

–Data availability, accuracy, verifiability and data gaps: our disclosures

are limited by the availability of high quality data in some areas and

our own ability to timely collect and process such data as required.

Where data is not available for all sectors or consistently year on year,

there may be an impact to our data quality scores. We may not be

able to fully mitigate financial reporting risks related to our climate

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **3** |

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---

and ESG disclosures due to the limited quantity and consistency of

available data. The accuracy and reliability of data is also impacted by

the diverse range of internal and external data sources and data

structures needed for climate-related reporting. While we expect our

data quality scores to improve over time, as companies continue to

expand their disclosures to meet growing regulatory and stakeholder

expectations, there may be unexpected fluctuations within sectors

year on year, and/or differences between the data quality scores

between sectors. Any such changes in the availability and quality of

data over time, or our ability to collect and process such data, could

result in revisions to reported data going forward, including on

financed emissions, meaning that such data may not be reconcilable

or comparable year-on year;

–Developing methodologies and scenarios: the methodologies and

scenarios HSBC uses to assess financed emissions and set ESG-

related ambitions, targets and commitments may develop over time

in line with market practice, industry standards, regulation and/or

developments in science, where applicable. Such developments

could result in revisions to reported data, including on financed

emissions or the classification of sustainable finance and

investments, meaning that data outputs may not be reconcilable or

comparable year-on year. Consequently, we might need to reassess

our progress towards ESG-related ambitions, targets and

commitments in the future; and

–Risk management capabilities: global actions, including HSBC's own

actions, may not be effective in transitioning to net zero and in

managing relevant ESG risks, including in particular climate, nature-

related and human rights risks, each of which can impact HSBC both

directly and indirectly through our customers, and which may result in

potential financial and non-financial impacts to HSBC. In particular:

–we may not be able to achieve our ESG-related ambitions, targets

and commitments (including with respect to the positions set

forth in our thermal coal phase-out policy and our energy policy,

and our targets to reduce our on-balance sheet financed

emissions and, where applicable, facilitated emissions in our

portfolio of selected high-emitting sectors), which may result in

our failure to achieve some or all of the expected outcomes of our

strategic priorities and raise reputational concerns; and

–we may not be able to develop sustainable finance and ESG-

related products consistent with the evolving expectations of our

regulators, and our capacity to measure the environmental and

social impacts from our financing activity may diminish (including

as a result of data and model limitations and changes in

methodologies), which may affect our ability to achieve our ESG-

related ambitions, targets and commitments, including our net

zero ambition, our targets to reduce our on-balance sheet financed

emissions and, where applicable, facilitated emissions in our

portfolio of selected high-emitting sectors and the positions set

forth in our thermal coal phase-out policy and energy policy, and

increase the risk of greenwashing. We may face additional risks if

we knowingly or unknowingly make inaccurate, unclear,

misleading or unsubstantiated claims regarding sustainability to

our stakeholders.

Any forward-looking statements made by or on behalf of HSBC speak

only as of the date they are made. HSBC expressly disclaims any

obligation to revise or update these ESG forward-looking statements,

other than as expressly required by applicable law.

Written and/or oral ESG-related forward-looking statements may also

be made in our periodic reports to the US Securities and Exchange

Commission, summary financial statements to shareholders, proxy

statements, offering circulars and prospectuses, press releases and

other written materials, and in oral statements made by HSBC's

Directors, officers or employees to third parties, including financial

analysts.

Our data dictionaries and methodologies for preparing the above ESG-

related metrics and third-party limited assurance reports can be found

on: www.hsbc.com/who-we-are/esg-and-responsible-business/esg-

reporting-centre.

Certain defined terms

Unless the context requires otherwise, 'HSBC Holdings' means HSBC

Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC

Holdings together with its subsidiaries. Within this document the Hong

Kong Special Administrative Region of the People's Republic of China is

referred to as 'Hong Kong'.

When used in the terms 'shareholders' equity' and 'total shareholders'

equity', 'shareholders' means holders of HSBC Holdings ordinary

shares and those preference shares and capital securities issued by

HSBC Holdings classified as equity. The abbreviations '$m', '$bn' and

'$tn' represent millions, billions (thousands of millions) and trillions of

US dollars, respectively.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **4** |

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Performance in 2025

Our key performance indicators measure the progress we have

made against our priorities for the benefit of all our stakeholders,

and also inform remuneration outcomes across the Group.

Financial performance

indicators

🡠Read more on our financial performance in 2025

on pages <u>[5](#i80805ccc4ca646738e840a8a78611975_145844)</u> and <u>[17](#i96daf02f42c54c2fa5f3e366af5e1baa_3848290703951)</u>.

🡠For an explanation of performance against our

key Group financial targets, see page <u>[15](#i96daf02f42c54c2fa5f3e366af5e1baa_172)</u>.

🡠To better align with market practice, from our

2025 full-year results we no longer adjust the

'average tangible equity' for the post-tax impact

of notable items in each period. Comparatives

have been re-presented. This revision improved

RoTE excluding notable items by 16 basis points

('bps') in 2025 (**2024: (34)bps).**

🡠For a reconciliation of alternative performance

measures to their reported equivalents, see

---

| | |
|:---|:---|
| **Return on average tangible equity** <br>**('RoTE')** ※ <br>13.3%<br>(2024: 14.6%)<br>| **Profit before tax**<br>$29.9bn<br>(2024: $32.3bn)<br>|
| **RoTE excluding notable items** ※ ![Performace icons-01.jpg](hsbc-20251231_g1.jpg)<br>![Performace icons-02.jpg](hsbc-20251231_g2.jpg)<br>17.2%<br>(2024: 15.6%)<br>| **Constant currency profit before tax** <br>**excluding notable items** ※ ![Performace icons-01.jpg](hsbc-20251231_g1.jpg)<br>$36.6bn <br>(2024: $34.2bn)<br>|
| **Operating expenses**<br>$36.4bn<br>(2024: $33.0bn)<br>| **Common equity tier 1 capital ratio**<br>14.9%<br>(2024: 14.9%)<br>|
| **Target basis operating expenses** ※ ![Performace icons-01.jpg](hsbc-20251231_g1.jpg)<br>$33.5bn<br>(2024: $32.5bn)<br>| **Dividend per share in respect of 2025**<br>$0.75<br>(2024 dividend per share: $0.87, inclusive <br>of a special dividend of $0.21 per share)<br>|

---

Strategic performance

indicators

🡠Read more on our strategy on pages <u>[12](#i96daf02f42c54c2fa5f3e366af5e1baa_85)</u> to <u>[14](#i7cf96fe886304926a690772792b80e5c_17085)</u>.

🡠Read more on our approach to ESG on page 28.

🡠Read more on our definition of sustainable

finance and investment on page 35.

---

| | |
|:---|:---|
| **Organisational simplification** ![Performace icons-01.jpg](hsbc-20251231_g1.jpg)<br>$1.2bn<br>Annualised impact of cost saving actions taken <br>during 2025<br>| **Sustainable finance and investment** ![Performace icons-02.jpg](hsbc-20251231_g2.jpg)<br>$495.6bn<br>Cumulative total provided and facilitated <br>since 1 January 2020.<br>(2024: $393.6bn) |
|  | **Sustainable finance and investment** ![Performace icons-02.jpg](hsbc-20251231_g2.jpg)<br>$495.6bn<br>Cumulative total provided and facilitated <br>since 1 January 2020.<br>(2024: $393.6bn) |
| **Grow our Wealth business**<br>$80bn<br>Net new invested assets generated in 2025, <br>of which $39bn were in Asia.<br>(2024: $64bn generated, of which $47bn <br>were in Asia)<br>|  |

---

**Link to remuneration**

🡠For details of executive Directors' pay and

performance in 2025, see the Directors'

Remuneration Report on page 249.

Our remuneration policy supports the

achievement of our strategic objectives by

aligning reward with our long-term

sustainable performance. This includes

review of our performance against financial

and non-financial metrics to determine overall

variable pay for our colleagues and executive

Directors.

Key financial and strategic performance

indicators included in the 2025 annual

incentive and 2023-2025 long-term incentive

scorecards of our executive Directors are

highlighted by the following symbols:

---

| | | | |
|:---|:---|:---|:---|
| ![Performace icons-01.jpg](hsbc-20251231_g3.jpg) | Annual incentive | ![Performace icons-02.jpg](hsbc-20251231_g4.jpg) | Long-term incentive |

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **5** |

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Highlights

We are becoming a simple, more agile, focused bank, built on our core strengths.

Financial performance (vs 2024)

–**Reported profit before tax decreased by** 

**$2.4bn to $29.9bn,** mainly due to a $4.9bn

year-on-year net adverse impact from

notable items. **Profit after tax decreased** 

**by $1.9bn to $23.1bn.**

–In 2025, notable items included dilution and

impairment losses of $2.1bn related to our

associate Bank of Communications Co.,

Limited ('BoCom'), reserve recycling losses

of $1.5bn following the completion of the

sale of our French retained portfolio of home

and certain other loans, legal provisions of

$1.4bn and restructuring and other related

costs associated with our organisational

simplification of $1.0bn. In 2024, notable

items included net losses relating to our

disposals in Canada and Argentina of $1.4bn.

–**Constant currency profit before tax** 

**excluding notable items increased by** 

**$2.4bn to $36.6bn,** from a strong

performance in Wealth in our International

Wealth and Premier Banking ('IWPB') and

Hong Kong businesses, and from Wholesale

Transaction Banking in our Corporate and

Institutional Banking ('CIB') business. This

was partly offset by a rise in expected credit

losses and other credit impairment charges

('ECL') and an increase in operating

expenses due to planned investment and

inflation.

–**RoTE in 2025 was 13.3%, compared with** 

**14.6% in 2024. Excluding notable items,** 

**RoTE in 2025 was 17.2%,** a rise of 1.6

percentage points compared with 2024.

–**Revenue of $68.3bn increased by $2.4bn** 

**or 4% compared with 2024.** The increase

was primarily due to fee and other income

growth in Wealth from Investment

Distribution and Insurance, and in Wholesale

Transaction Banking, particularly in Foreign

Exchange in CIB. This was partly offset by

the year-on-year impact of notable items,

mainly relating to business disposals and a

dilution loss related to BoCom. **Constant** 

**currency revenue excluding notable items** 

**rose by $3.4bn to $71.0bn.**

–**Net interest income ('NII') of $34.8bn was** 

**$2.1bn higher than 2024** reflecting the

benefit of the reinvestment of our structural

hedge at higher yields, deposit balance

growth and higher NII in Markets Treasury.

In addition, the increase included the non-

recurrence of a $0.2bn loss in 2024 on the

early redemption of legacy securities. This

was partly offset by the adverse year-on-

year impact of $1.6bn from business

disposals in Argentina and Canada, and

margin compression on our deposits. The

growth in NII of $2.1bn also reflected a

benefit from lower funding costs associated

with the trading book of $1.7bn. **Banking** 

**net interest income ('banking NII'), which** 

**excludes these funding costs, increased** 

**by $0.3bn to $44.1bn.**

–**Net interest margin ('NIM') of 1.59% was** 

**3bps higher,** reflecting the reinvestment of

our structural hedge at higher yields.

–**ECL were $3.9bn, an increase of $0.4bn** 

**compared with 2024,** including charges in

both periods related to the commercial real

estate ('CRE') sectors in Hong Kong and

mainland China. In 2025, the charge in this

sector in Hong Kong of $0.7bn (2024:

$0.1bn) reflected higher allowances for new

defaulted exposures, the impact of an over-

supply of non-residential properties that has

put continued downward pressure on rental

and capital values, and updates to our

models used for ECL calculations. The 2025

charge in the mainland China CRE sector

was $0.2bn (2024: $0.4bn). **ECL were 39** 

**bps of average gross loans, including** 

**loans and advances classified as held for** 

**sale.**

–**Operating expenses increased by $3.4bn** 

**or 10% to $36.4bn.** The increase primarily

reflected notable items in 2025 of $3.0bn,

including legal provisions of $1.4bn,

restructuring and other related costs

associated with our organisational

simplification of $1.0bn, and $0.5bn related

to disposals, wind-downs, acquisitions and

related costs.

–Cost growth also reflected planned spend

and investment in technology, higher

performance-related pay and the impacts of

inflation, partly offset by reductions related

to our business disposals and the benefits of

our organisational simplification.

–**Target basis operating expenses rose by** 

**3%,** in line with our cost growth target. This

increase primarily reflected higher planned

spend and investment in technology, higher

performance-related pay and the impact of

inflation, partly offset by the benefits of our

organisational simplification.

–**Customer lending balances rose by** 

**$57.7bn** including favourable foreign

currency translation differences. **On a** 

**constant currency basis, lending balances** 

**rose by $17.6bn,** mainly in our UK business

reflecting growth in mortgage and

commercial customer lending.

–**Customer accounts rose by $131.9bn,** 

including favourable foreign currency

translation differences. **On a constant** 

**currency basis, customer accounts** 

**increased by $67.6bn,** with growth in all our

businesses, particularly our Hong Kong

business segment.

–**Common equity tier 1 ('CET1') capital** 

**ratio remained at 14.9%.** This reflected an

increase in risk-weighted assets ('RWAs'),

which was offset by an increase in CET1

capital through capital generation net of

distributions. The increase in RWAs was

mainly driven by foreign currency translation

differences and asset size movements.

–The Board has approved a **fourth interim** 

**dividend of $0.45 per share, resulting in a** 

**total of $0.75 per share in respect of 2025.**

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **6** |

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Outlook

**Group financial targets**

–We are targeting a **RoTE of 17% or better** 

**for 2026, 2027 and 2028, excluding** 

**notable items.** Our revised target reflects

momentum in our earnings and the positive

progress we are making in our strategic

execution.

–We are targeting **year-on-year growth in** 

**revenue from 2026 to 2028, rising to 5%** 

**growth in 2028 compared with 2027** 

excluding notable items and on a constant

currency basis.

–We maintain our **dividend payout ratio** 

**target basis of 50% in 2026, 2027 and** 

**2028.** Our target basis payout ratio is

calculated as a percentage of earnings per

share ('EPS') excluding material notable

items and related impacts.

**In respect of 2026:**

–We expect **banking NII of at least $45bn,** 

based on our current expectations for policy

rates.

–We expect **ECL charges as a percentage of** 

**average gross loans to be around 40bps** 

**in 2026** (including held for sale loan

balances). Over the medium term, we retain

our planning range of 30-40bps.

–We retain our commitment to Group-wide

cost discipline. We are targeting **growth in** 

**target basis operating expenses of** 

**approximately 1% compared with 2025.**

–Our target basis operating expenses

measure excludes notable items and

includes the impact of simplification-related

saves associated with our announced

reorganisation.

–We intend to continue to **manage the CET1** 

**capital ratio within our medium-term** 

**target range of 14%–14.5%.** Capital may fall

below our target range during January 2026

owing to the privatisation of Hang Seng

Bank, which had a net CET1 capital impact of

110bps in January 2026 (based on our CET1

capital ratio as at 31 December 2025). This

included a day one impact of around 120bps

on CET1, partly offset by a release of around

10bps of incremental hedging-related

structural foreign exchange RWAs.

–We expect to restore our CET1 capital ratio

within our target range through a

combination of organic capital generation and

not initiating any further buy-backs until CET1

capital is back within, or above, this range. A

decision to recommence buy-backs will be

subject to our normal buy-back

considerations and process on a quarterly

basis.

🡠Our targets and expectations reflect our current

outlook for the global macroeconomic

environment and market-dependent factors,

such as market-implied interest rates (as of end

January 2026) and rates of foreign exchange, as

well as customer behaviour and activity levels.

🡠We do not reconcile our forward guidance on

RoTE excluding notable items, constant currency

revenue excluding notable items, target basis

operating expenses, dividend payout ratio target

basis or banking NII to their equivalent reported

measures.

🡠See pages 107 to 108 for a further explanation of

RoTE excluding notable items, constant currency

revenue excluding notable items, banking NII,

target basis operating expenses and dividend

payout ratio target basis. For further information

on our CET1 ratio, see page 191.

Reshaping the Group for growth

**Privatisation of Hang Seng Bank**

–On 26 January 2026, we completed our

privatisation of Hang Seng Bank, following

shareholder and Court approval. **Hang Seng** 

**Bank is now a wholly-owned subsidiary** 

**of the HSBC Group** and Hang Seng Bank

shares have been withdrawn from the Hong

Kong Stock Exchange. This transaction

demonstrates our confidence in the outlook

for Hong Kong and further strengthens our

market-leading position.

–Through the privatisation of Hang Seng

Bank, we expect to realise $0.5bn in pre-tax

revenue and cost synergies across both our

brands in Hong Kong by the end of 2028,

with associated restructuring costs of

$0.6bn. These costs would be reported as a

material notable item. We intend to redeploy

savings we realise from cost synergies into

areas of competitive advantage and

accretive returns.

–We also have an ambition to generate

further revenue and cost opportunities of

around $0.4bn by the end of 2028 across

both our brands in Hong Kong.

**Organisational simplification**

–At our 2024 full-year results we announced

measures to simplify the Group, and we

have committed to **deliver an annualised** 

**reduction of around $1.5bn in our cost** 

**base, expected by the end of 2026** from

our organisational simplification programme.

–We are on track to have taken actions to

deliver our $1.5bn annualised cost

reduction by the end of June 2026, which is

six months earlier than planned. **In 2025,** 

**we identified and actioned annualised** 

**cost savings of approximately $1.2bn,** 

**which resulted in a reduction of around** 

**$0.6bn in operating expenses in the** 

**income statement in 2025.** In this period

we incurred **$1.0bn in restructuring and** 

**other related costs,** primarily related to

severance.

**Strategic transactions**

–We are also focused on opportunities where

we have a clear competitive advantage and

accretive returns, and **we aim to redeploy** 

**approximately $1.8bn of additional costs** 

**saved from non-strategic activities into** 

**these areas** over the medium term. The

increase from $1.5bn reflects our intention

to redeploy an additional $0.3bn of costs

saved from the synergies generated from

our privatisation of Hang Seng Bank.

–In 2025, **we announced a further 11** 

**transactions, which are set to create** 

**incremental investment capacity for** 

**growth.** During the fourth quarter of 2025,

we completed the sales of our French

retained portfolio of home and certain other

loans, our France life insurance business, our

German private banking business and our

Bahrain retail banking business. Completed

or announced transactions are expected to

generate approximately $0.7bn of annualised

cost capacity for reallocation. The associated

businesses contributed around $1.0bn to

revenue in 2025.

–**Targeted strategic reviews of our retail** 

**businesses in Australia, Indonesia and** 

**Egypt remain underway on which no** 

**decisions have been made.** Our CIB

businesses in these markets are unaffected

by these reviews. In addition, **we have** 

**commenced a strategic review of HSBC** 

**Life Singapore.** 

**Progress in growth areas**

–In Wealth, we are investing in Wealth

Centres and hiring additional relationship

managers. **Wealth balances as at 31** 

**December 2025 across all of our business** 

**segments were $2.1tn, an increase of** 

**16% compared with the same period last** 

**year. Within this we have attracted net** 

**new invested assets of $80bn, with** 

**$39bn booked in Asia.** This compared with

net new invested assets in 2024 of $64bn,

with $47bn booked in Asia.

–Transaction banking continues to perform

well as we leverage our network and

capabilities to capture opportunities from

changing trade and capital flows. In 2025,

**fee and other income in Wholesale** 

**Transaction Banking performed well,** 

**rising by 4% compared with 2024,** 

particularly from growth in Global Foreign

Exchange.

🡠For more details on our strategic progress in

2025, see 'Our strategy' on page <u>[12](#i96daf02f42c54c2fa5f3e366af5e1baa_85)</u>.

🡠For more details on our businesses held for sale

and disposal groups, see Note 23 on the

financial statements on page 355.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **7** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Governance <br>Report of the Directors<br>| Financial statements | Additional <br>information<br>|

---

Who we are

Founded in 1865, HSBC is one of the world's largest banking and financial services

organisations. We're here to use our expertise, capabilities, breadth and

perspectives to help open up a world of opportunity for our customers.

---

| | |
|:---|:---|
| Our strategy | Our strategy supports our ambition to be the most trusted bank globally, putting customers at the heart of <br>everything we do. We help meet our customers' financial needs and support them to achieve their goals <br>with our products and services, while navigating the complexities of the global market through our deep <br>international network, supported with the stability and strength of our balance sheet. |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Our priorities | ► | Be simple <br>and agile<br>| ► | Drive customer- <br>centricity<br>| ► | Deliver focused <br>sustainable growth<br>|
| 🡠See page <u>[12](#i96daf02f42c54c2fa5f3e366af5e1baa_85)</u> for further details on <br>our strategy. <br>|  | We aim to make fast, safe <br>decisions – adapting to change <br>by staying relevant, driving <br>simplification and being future <br>ready through technology and <br>digitisation.<br>|  | We are intensely focused on <br>our customers – helping to <br>deliver excellent outcomes, <br>drive loyalty, and serve our <br>customers for the long term <br>through the depth of what we <br>offer as a franchise.<br>|  | As a leading international bank, <br>we aim to drive long-term, <br>sustainable growth, focused on <br>areas of competitive strength.<br>|

---

---

| | |
|:---|:---|
| Our organisational <br>structure<br>| Since 1 January 2025, the HSBC Group has operated through four new businesses to simplify our <br>organisational structure and accelerate delivery against our strategic priorities. |

---

**Revenue by business ($bn)**<sup>1</sup>

![11544872129456](hsbc-20251231_g5.gif)

**HK**

$15.9bn

**CIB**

$27.6bn

**UK**

$12.9bn

**IWPB**

$14.5bn

1 Calculation based on revenue of our business

segments excluding Corporate Centre.

---

| | |
|:---|:---|
| Hong Kong | UK |
| Our Hong Kong business has a leading <br>market position. It comprises Retail Banking <br>and Wealth and Commercial Banking of <br>HSBC Hong Kong and Hang Seng Bank. <br>| Our UK business has a leading market <br>position. It comprises Retail Banking and <br>Wealth (including first direct and M&S <br>Bank) and UK Commercial Banking, <br>including HSBC Innovation Bank. <br>|
| Corporate and Institutional <br>Banking<br>| International Wealth and <br>Premier Banking<br>|
| Our CIB business is a market leader in <br>cross-border transaction banking and capital <br>markets. It integrates our Commercial <br>Banking business (outside the UK and Hong <br>Kong) with our Global Banking and Markets <br>business. <br>| Our IWPB business comprises Premier <br>banking outside of Hong Kong and the UK, <br>our Private Bank, Asset Management and <br>Insurance businesses.<br>|
| 🡠See pages <u>[19](#i96daf02f42c54c2fa5f3e366af5e1baa_193)</u> to <u>[27](#i96daf02f42c54c2fa5f3e366af5e1baa_232)</u> for further details on our four businesses and Corporate Centre.  | 🡠See pages <u>[19](#i96daf02f42c54c2fa5f3e366af5e1baa_193)</u> to <u>[27](#i96daf02f42c54c2fa5f3e366af5e1baa_232)</u> for further details on our four businesses and Corporate Centre.  |

---

Our values

At HSBC, our values guide us in all our actions – from strategic decisions to day-to-day interactions with customers and each other. Our values are

rooted in HSBC's history, heritage and character, and help us deliver on our purpose.

---

| | | | |
|:---|:---|:---|:---|
| **We get it done** | **We value difference** | **We take responsibility** | **We succeed together** |
| Moving at pace and making <br>things happen<br>| Seeking out different <br>perspectives<br>| Holding ourselves accountable <br>and taking the long view<br>| Collaborating across <br>boundaries<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **8** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Group Chairman's shareholder letter

---

| |
|:---|
| ![1.5.7.3.2 RT_Brendan_Nelson 2025_sRGB_FLAT.jpg](hsbc-20251231_g6.jpg) |
| Brendan Nelson<br>Group Chairman<br>|
| We delivered strong performance and material returns for our <br>shareholders in 2025. By leveraging our unique global network and <br>leading capabilities, we helped our customers see past the sustained <br>uncertainty in the international environment and find the opportunities <br>that are driving the global economy forward. <br>|

---

It is with great pride that I have begun my

tenure as Group Chairman of HSBC. I am truly

privileged to serve such a remarkable

institution, working alongside exceptionally

talented colleagues.

Our 161-year history is firmly rooted in the

objective set by HSBC's founders – to

establish a bank in Hong Kong and Shanghai

that would facilitate local and international

trade.

By not losing sight of that foundational

objective and by remaining true to our purpose

and values, we have focused on what matters

most – our customers – moving forward

together through these most complex of

times.

Building on that forward momentum, the

Board and I will continue to closely partner

with our highly capable CEO, Georges

Elhedery, and his management team who are

accelerating the execution of our strategy,

with discipline and confidence.

**A Modern HSBC: Simple and More Agile** 

A key catalyst for achieving that acceleration

was the introduction in January 2025 of our

new organisational structure centred on our

four businesses: Hong Kong, the UK,

Corporate and Institutional Banking, and

International Wealth and Premier Banking.

By halving the number of operating

businesses and significantly streamlining the

new Operating Committee of the Group, we

embarked on a journey to become a simple

and more agile organisation; a modern

institution that reflects its cherished legacy,

while embracing technological advances as a

core enabler of future growth,

competitiveness, and, ultimately, customer

aspirations.

Today, HSBC is clear on its core strengths,

investing to further develop our competitive

advantages and deliver sustainable growth,

with an entirely attainable ambition to be the

most trusted bank globally, putting customers

at the heart of everything we do.

**Global Context** 

Global growth in 2025 was stronger than

expected, as the tariff-related headwinds were

offset by the significant momentum generated

by AI capital expenditure and trade growth,

and by the support provided by the ever-

resilient US consumer.

The global geopolitical context was marked by

continued uncertainty. The war in Ukraine,

which has entered its fifth year, and conflicts

in the Middle East and elsewhere, continue to

have significant human consequences.

In parallel, the changing approach to global

trade relations has increased economic

uncertainty. But as the resilience of global

trade growth demonstrates, the inter-

connectedness of the global economy,

underpinned by growing trade flows, is

compelling.

Faced with the re-configuration of the

globalised world, HSBC is optimally positioned

to help our customers capture the meaningful

opportunities that are driving the global

economy forward, across geographies and

throughout our unique global network. Our

strong financial performance and material

returns in 2025 point to that dynamic, along

with our focused approach to implementing

our strategic priorities.

**2025 Performance** 

In 2025, we delivered reported profit before

tax of $29.9bn. Our return on average tangible

equity was 13.3%, or 17.2% excluding the

impact of notable items.

We delivered material returns for our

shareholders. The Board approved a fourth

quarterly dividend of $0.45 per share, bringing

the total dividend announced for 2025 to $0.75

per share. In addition, we announced two

share buy-backs in respect of 2025 worth a

total of $6bn.

Dividends paid in 2025, together with a more

than 49% increase in the share price, delivered

a total shareholder return for the year of more

than 57%.

With our realigned structure providing a

decisive impetus, we achieved broad-based

profit generation through geographic and

business diversification. Our performance

reflects that, as does our ability to invest for

growth, while continuing to optimise cost and

capital allocation. Indeed, we are keeping to

our committed objective of delivering $1.5bn

of organisational simplification savings and

expect to have taken the relevant actions to

achieve it by the end of June 2026, which is

six months earlier than planned.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **9** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Group Chairman's letter | Group Chairman's letter |  |  |  |  |  |

---

"Today, HSBC is clear

on its core strengths,

investing to further

develop our competitive

advantages and deliver

sustainable growth, with

an entirely attainable

ambition to be the most

trusted bank globally,

putting customers at

the heart of everything

we do."

Against this backdrop, we believe that the

privatisation of Hang Seng Bank is a milestone

development that brings together two seminal

institutions that have served Hong Kong – a

home market for the Group – for generations.

We are absolutely committed to building on

that valued legacy. While respecting Hang

Seng's heritage and retaining its brand and

distinct customer proposition, we will continue

to invest and build on the complementary

strengths of our businesses, to the benefit of

our valued customers and the communities

that we serve.

**Sustainability**

Our ambition remains to become a net zero

bank by 2050. Supporting our customers is

core to our strategy – financing their transition

is both critical to them and aligned to our net

zero ambition.

In November 2025, we published our updated

Net Zero Transition Plan, setting out our

commercially-grounded sustainability strategy,

which reflects the realities of an evolving

global transition. We also set out our updated

interim financed emissions targets, metrics

and associated policies, seeking to remain

science-aligned and compatible with our own

net zero ambition.

We believe that supporting our customers'

transition is one of the most significant roles

we can play in the global transition to net zero.

We aim to provide and facilitate between

$750bn and $1tn of sustainable finance and

investment by 2030. In 2025, we provided and

facilitated $102bn in sustainable finance and

investment, bringing our cumulative total to

$495.6bn since January 2020. This puts us on

track to meet our target by 2030.

**Leadership and Board Changes** 

As I begin my first full year as Group

Chairman, I want to acknowledge and pay

tribute to Sir Mark Tucker's remarkable

leadership and exemplary commitment to the

Group.

Over a period of eight years, Mark helped

steer HSBC through a number of

unprecedented challenges – a global

pandemic, decades-high inflation and profound

shifts in the trade and geopolitical landscape –

leaving the Group more profitable, resilient,

and strongly positioned for accelerated

growth. I am very grateful to him for the

trusted partnership, friendship, and his support

in ensuring a smooth handover.

We also announced the appointment of Wei

Sun Christianson as an independent non-

executive Director, with effect from 1 January

2026. Wei brings extensive banking and

regulatory experience gained over a 30-year

international career, including as Co-CEO of

Asia Pacific at Morgan Stanley.

Ann Godbehere will be stepping down as a

Director of the Company and retire from the

Board at our 2026 AGM. I want to thank Ann

for her considerable contributions to the HSBC

Board.

In October, we announced the appointment of

Angela McEntee as Group Company Secretary

with effect from 1 January 2026.

In 2025, the Board held meetings in Hong

Kong, India, and London. These were

invaluable opportunities to meet with valued

clients, government representatives,

regulators and colleagues.

We also had productive engagements with our

shareholders on important Group-related

issues at our Annual General Meeting in

London and at the Informal Meeting of our

Hong Kong Shareholders.

**Year Ahead** 

We expect the global economy to expand in

2026. Despite significant policy uncertainty,

global trade is also set to grow, supported by

the expansion of new trade corridors and the

boom in AI hardware demand. Inflation should

continue drifting downward, although with

divergence across markets. Somewhat

uneven growth across industries and

geographies could contribute to periodic

financial volatility.

In China, a stronger policy push should anchor

its growth, and we expect it to broadly

maintain its expansion pace of recent years, as

structural reforms start to gain traction. As part

of its continued economic transformation, the

emphasis will be on strengthening domestic

demand – particularly consumption, but also

investment. Services consumption will benefit

from government policy priorities, as will

technology development. Hong Kong will

continue to benefit as the super-connector

between mainland China and the rest of the

world. Buoyant markets and improvements in

consumption are expected to support its

growth this year.

Elsewhere in Asia, robust consumption and

rising exports generated impressive growth in

a number of markets, in ASEAN in particular.

That combination is expected to continue in

2026. In India, domestic demand will likely be

the main driver of growth, reflecting robust

consumption, as well as ongoing government

infrastructure investment.

Economic diversification continues in the

Middle East, with deep capital reserves being

deployed into significant investments in

infrastructure, technology, and human capital.

The Asia–Middle East trade, investment, and

travel corridor continues to grow.

Europe's economy will be supported by fiscal

expansion, particularly in Germany, coupled

with lower effective interest rates and steady

consumption growth. We see euro area

growth maintaining its recent pace over the

next year. In the UK, greater fiscal headroom

should give markets and businesses more

confidence. Lower expected inflation and

interest rates should provide a tailwind for

consumption growth.

The US should be a key driver of global

growth, reaping the benefits of sizeable

investments in AI, tax cuts and incentives, as

well as substantial deregulation.

**Our Colleagues** 

I will end where I began, by recognising and

wholeheartedly thanking our HSBC colleagues.

They are the ones who deliver for our

customers, day in and day out, with

excellence, dedication, and respect.

They are the backbone of the Group,

embodying our high-performance culture.

Their commitment to our customers and to

maintaining and further strengthening the

relationships we have built with them is what

set us apart in 2025 and what will help us

thrive going forward, to the benefit of our

shareholders.

Brendan Nelson

Group Chairman

25 February 2026

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **10** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Group CEO's shareholder letter

---

| | |
|:---|:---|
|  | ![George Elhedery_NEW.jpg](hsbc-20251231_g7.jpg) |
| Georges Elhedery<br>Group CEO | Georges Elhedery<br>Group CEO |

---

**RoTE** ※

13.3%

(2024: 14.6%)

**RoTE excluding notable items** ※

17.2%

(2024: 15.6%)

**Profit before tax** 

$29.9bn

(2024: $32.3bn)

**Dear fellow shareholders,**

In previous letters I set out a clear agenda to

unlock HSBC's full potential. 2025 marked a

year of decisive action and swift execution.

We are performing, transforming and investing

for growth as demand for globally-connected

financial services increases, especially in the

world's fastest-growing regions.

We have aligned our structure with our

strategy and strengthened our four

complementary businesses. We are becoming

a simple, more agile, focused bank built for a

fast-changing world. One that stays true to our

strong foundations and hallmark financial

strength yet moves with the speed our

customers need to navigate the modern

world.

The dynamic market environment shows why

our global network, deep local expertise built

over generations and financial strength set us

apart. It also shows why our customers

continue to turn to us as their reliable and

trusted financial partner.

**New targets: 2026-2028**

Last February, we set out a three-year target

of a mid-teens return on average tangible

equity ('RoTE') in each of the three years from

2025 to 2027, excluding notable items. We

made clear progress against this target in

2025. That is why we are now raising our

ambition and targeting 17% RoTE or better in

each year from 2026 to 2028, excluding

notable items. We are also targeting year-on-

year revenue growth over the same period

rising to 5% in 2028 compared with 2027,

excluding notable items. We maintain our

dividend payout ratio target basis of 50% in

2026, 2027 and 2028. Our target basis payout

ratio is calculated as a percentage of EPS,

excluding material notable items and related

impacts.

**Strong performance** 

On a reported basis, profit before tax of

$29.9bn fell 7% year-on-year due to the impact

of notable items. These included dilution and

impairment losses of $2.1bn related to

BoCom, legal provisions of $1.4bn and $1.0bn

of restructuring and other related costs

associated with our organisational

simplification. On this basis, we delivered a

RoTE of 13.3%.

Excluding notable items, our RoTE was 17.2%

achieving our 'mid-teens, or better' target. Our

revenue increased 5% year-on-year to $71bn

and our profit before tax grew 7% to $36.6bn,

excluding notable items on a constant

currency basis. Our common equity tier 1

('CET1') capital ratio was 14.9%, reflecting our

long-standing financial strength.

We maintained tight cost discipline, managing

target basis cost growth to around 3%,

thereby achieving our target. This strong

performance enabled us to announce a total

ordinary dividend per share for 2025 of $0.75,

or $12.9bn, an increase of 14% on the prior

year. In addition, we completed $6bn of share

buy-backs taking total returns to $18.9bn.

**Momentum** 

Our four businesses are built on customer

trust and performed well. Revenue and

deposits grew in each and all four delivered

RoTE of mid-teens, or better, excluding

notable items. We saw growth accelerate in

areas of core strength and we are actively

investing in modern technology to enhance

innovation, productivity and customer

experience.

Turning to business-line performance on a

year-on-year and constant currency basis, our

market-leading Hong Kong business generated

revenue of $15.9bn, or 6% growth. Our

deposit base grew by 7% to more than

$540bn, helping us maintain our number one

position in Hong Kong with market share of

25%. Our UK business delivered revenue of

$12.9bn, an increase of 5%, supported by

robust balance sheet growth with customer

loans increasing by 6% to more than $300bn.

CIB increased revenue by 3% to $27.6bn, and

we generated $13.1bn of fee and other

income, which was 7% higher than the prior

year.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **11** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Group CEO's letter |  |  |  |  |  |  |

---

"We are becoming

a simple, more agile,

focused bank built for

a fast changing world."

In 2025, we facilitated around $900bn in trade,

which is comparable to the economic output

of a G20 economy. This represents the

equivalent of around $2.5bn of goods and

services moving through our global network

every single day. This scale, which gives

access to 86% of world trade flows, is why

we were voted in a survey of 13,000

corporates as Euromoney's 'World's Best

Trade Finance Bank' for the ninth consecutive

year. Across our network we processed

around $500tn of payment transactions in 130

currencies, equivalent to almost $1bn every

minute. That is why 30,000 customers

surveyed by Euromoney voted HSBC the

number one payments bank in products,

services and technology.

In IWPB, revenue was $14.5bn, an increase of

5%. Wealth fee and other income across all

our businesses was $9.4bn, up 24%. At 31

December 2025, bank-wide Wealth balances

were $2.1tn, of which more than $1tn was

booked in Asia, reflecting our position as the

leading wealth manager in Asia and the Middle

East. Given the importance of managing

customer deposits as well as their invested

assets, we are changing our wealth

disclosures. In 2026, we will replace Invested

assets (2025: $1.5tn) with a new calculation of

Wealth balances. The new disclosure adds our

wealth customers' deposits of $608bn and

removes $580bn of Asset Management third-

party distribution assets. On this new basis,

Wealth balances in 2025 were $1.6tn.

In 2025, we were pleased to update our Net

Zero Transition Plan, which reaffirms our

ambition to become a net zero bank by 2050

and emphasises the importance of supporting

our customers in their transitions.

**Discipline** 

We expect to have taken action to deliver our

$1.5bn organisational simplification saves by

the first half of 2026, six months ahead of

plan. The initiative is designed to make HSBC

simple and more agile with an immaterial

revenue impact. Cost efficiency is one of the

key benefits, clearer accountability and greater

collaboration are others. The saves will be

taken straight to the bottom line.

We have reviewed our portfolio against our

strategic priorities and are moving at pace to

exit non-strategic or low-returning activities.

This initiative is expected to release $1.5bn of

incremental investment capacity, which we

are actively reallocating to areas of competitive

strength where we can generate accretive

returns. In 2025, we announced 11 exits, of

which three have fully completed. These are in

addition to the two transactions we

announced in 2024.

Taken together, the completed and announced

exits will generate $0.7bn in annualised cost

savings and exits in active execution, including

activities under strategic review, are expected

to generate a further $0.6bn.

Following the privatisation of Hang Seng Bank,

reported cost synergies across HSBC and

Hang Seng Bank will release $0.3bn, which

we will direct towards growth opportunities in

Hong Kong. To reflect this, we are increasing

our medium-term cost reallocation

commitment from $1.5bn to $1.8bn.

**Investing for growth**

Our $13.7bn privatisation of Hang Seng Bank

brings together 255 years of history and

heritage, combining global reach and local

depth. It allows us to scale capabilities across

both banks for all customers. Hong Kong is a

dynamic economy, a top three global financial

centre and a thriving trade gateway. It is a

super-connector between mainland China and

the world. It is also poised to become the

world's leading cross-border wealth hub by

2029. The privatisation of Hang Seng Bank

reflects our confidence and conviction in Hong

Kong's future growth.

In our home markets, we are expanding the

number of Wealth Centres and enhancing our

wealth capabilities. In Hong Kong we opened

five new state-of-the-art Wealth Centres. They

provide a space where our Private Banking and

Premier customers can meet our wealth

specialists to plan, invest and manage their

long-term financial future. In the UK, our

flagship Wealth Centre launched in Mayfair,

London, and we opened a second in Leeds, a

major regional wealth hub.

Also in the UK, investment in our Business

Banking coverage model is generating results.

We are growing customer numbers, lowering

attrition rates and seeing greater advocacy.

In IWPB we opened a further 20 new Wealth

Centres focusing on Asia and the Middle East,

excluding those in markets under strategic

review. These are in many of the world's

fastest-growing wealth economies, such as

mainland China, Singapore and the UAE. We

became the world's first global asset manager

to establish an onshore platform in the UAE,

offering retail and institutional investors access

to 10 new funds. We refreshed our Premier

proposition for affluent customers in four

markets and it is now live in seven.

In CIB, we are using digital innovation to serve

customers faster. Our tokenised deposits now

offer next-generation real time payments

across our network. They are available in Hong

Kong, Singapore, the UK and Luxembourg.

Other markets will follow in 2026. With

mobile-first consumers changing customer

payment choices, we are changing digital

wallet collection capabilities. Our Digital

Merchant Services solution allows

omnichannel payments, making e-commerce

easier and more efficient for retailers. It is

currently available in Hong Kong, India and

Singapore, with six more markets launching in

2026. We are also reengineering HSBC while

focusing on resilience and risk management.

We are modernising the bank through AI and

automation to enhance customer experience,

increase productivity and boost efficiency. We

have more than 100 GenAI active use cases

and are increasing AI partnerships to

accelerate adoption of cutting-edge

technologies. More than 31,000 of our

engineers now use an AI-enabled coding

assistant and our HSBC Productivity Suite tool

is available to around 85% of our colleagues to

help summarise, analyse and translate

documents.

**High performance culture** 

A clear strategy sets our direction. A strong

culture is what turns it into results. This is why

we are investing to build a high-performance

culture. First, we refreshed our ambition: 'To

be the most trusted bank globally, putting

customers at the heart of everything we do'.

Second, we launched six new Leadership

Principles and How We Lead, our new Group-

wide leadership framework. All our senior

leaders, and the broader Managing Director

cohort, have now attended a two-day How We

Lead event and 86% surveyed believe it is

creating a positive cultural change. In 2026, we

will roll it out to our broader people leaders

globally. In the spirit of our Leadership

Principle that 'great leaders build better

leaders', more than 150 of our senior leaders

will facilitate a How We Lead event in 2026.

**Our people**

I would like to thank Sir Mark Tucker for his

exceptional leadership over the last eight years

and congratulate Brendan Nelson on his

appointment as Group Chairman. I look

forward to continue working with Brendan as

we pursue our clear agenda to unlock HSBC's

full potential.

I would also like to take this opportunity to

thank all my colleagues for their many valuable

contributions to our results. It is a privilege to

work with such talented people. Their

dedication, commitment and passion to deliver

for our customers truly differentiates HSBC

and is key to delivering sustainable long-term

growth for you, our shareholders.

Georges Elhedery

Group CEO

25 February 2026

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **12** |

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|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Our strategy

In 2025, we continued to implement our strategy that supports our ambition to be the most

trusted bank globally, putting customers at the heart of everything we do.

A growing, high-returning HSBC

Our strategic priorities remain clear: we aim to

drive customer-centricity, deliver focused

sustainable growth, and be simple and more

agile.

We are intensely focused on our customers.

The depth and quality of our customer

relationships and our ability to connect

customers globally help enable us to deliver

best-in-class products and service excellence.

Each of our four businesses is built on trust, as

demonstrated by our $2.1tn Wealth balances

and our $500tn annual payment volumes.

We are driving focused sustainable growth by

targeting areas of competitive strengths. The

privatisation of Hang Seng Bank is an example

of this. The transaction allows us to further

capture the growth opportunities in Hong Kong,

one of our home markets where we are already

the number one bank<sup>1</sup>. All four of our

businesses are high-returning, delivering mid-

teens or better RoTE individually.

We aim to be a simple and agile organisation

in accordance with the strategy we set out in

2024. We simplified our organisation down to

four connected businesses. We are also

exiting non-strategic businesses at pace,

freeing up investment to grow our core

businesses where we have scale and

competitive advantage.

1Based on deposit market share. Source: Hong

Kong Monetary Authority ('HKMA').

Strong performance in 2025

We delivered a strong set of results in 2025.

Our reported revenue was $68.3bn. On a

constant currency basis and excluding notable

items, our revenue was $71.0bn, 5% higher

compared with 2024.

Our reported profit before tax was $29.9bn.

On a constant currency basis and excluding

notable items, we grew our profit before tax

by 7% to $36.6bn.

We continue to grow our deposit base. On a

constant currency basis, customer deposits

increased by $68bn during 2025 and reached

$1.8tn as at 31 December 2025.

In 2025, we achieved a RoTE of 13.3%.

Excluding the impact of notable items, RoTE

was 17.2%, achieving our RoTE target of 'mid-

teens or better'. We delivered a 15.6% RoTE

excluding notable items in 2024.

Our strong performance in 2025 allowed us to

announce ordinary dividends of $0.75 per

share to our shareholders, compared with

$0.66 in 2024.

**CIB**

$11.4bn

**RoTE excluding notable items** ※

17.2%

(2024: 15.6%)

**Reported profit before tax by business** 

**segment ($bn)**

![342497872144752](hsbc-20251231_g8.gif)

**IWPB**

$4.4bn

**HK**

$9.6bn

**UK**

$6.7bn

Reshaping and focusing the Group

We continued to make progress in reshaping

the Group. We announced a further 11 exits in

2025. These included our business in Malta,

Sri Lanka retail banking, our UK life insurance

business, our Germany custody and fund

administration businesses, our stake in Grupo

Financiero Galicia, our French retained

portfolio of home and certain other loans, our

Uruguay business, our Bangladesh retail

banking business, equity capital markets

('ECM') and mergers and acquisitions ('M&A')

in the US, UK and Europe, and our Bahrain

retail banking unit.

The targeted strategic reviews of our retail

businesses in Australia, Indonesia and Egypt

remain underway, on which no decisions have

been made. We remain committed to our

wholesale banking activities in these markets.

In addition, we commenced a strategic review

of HSBC Life Singapore.

We completed the privatisation of Hang Seng

Bank on 26 January 2026. This transaction will

further simplify the Group and deepen our

presence in one of our home markets where

we are already the market leader.

We are committed to serving Hong Kong with

two iconic brands. We intend to retain Hang

Seng Bank as a separately-licensed bank with

its own governance, brand, distinct customer

proposition and branch network. We aim to

strengthen both the HSBC and Hang Seng

brands by focusing on their competitive

advantages, while allowing customers to

choose where to bank.

Connectivity – our key strength

Connectivity distinguishes HSBC. We have

four deeply-connected businesses that

complement each other. CIB and IWPB are

leading global franchises that serve the Group

by providing a wide range of products and

capabilities. Hong Kong and the UK are our

home markets where we have substantial

retail and wholesale distribution networks.

Our customers choose us because we are a

trusted bank with extensive international

connectivity. We connect customers across

borders in our 56 markets. We are well placed

to help our clients manage increased

complexity as global trade reconfigures, and

their wealth and investment needs globally.

We partner with our clients for the long term as

their business and wealth grow over time. We

are one of the few global universal banking

franchises that offer our clients a full banking

product suite and services for their diverse

financial needs. We serve clients from small

businesses to global institutions, from retail

customers to ultra-high net worth individuals.

As our customers grow, they grow with us.

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **13** |

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| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Strategy |  |  |  |  |  |  |

---

Our home markets

**Hong Kong**

Our Hong Kong business generated revenue

of $15.9bn in 2025, growing by 6% on a

constant currency basis. We have the market-

leading banking franchise in Hong Kong<sup>1</sup>. Our

deposit base grew by 7% to over $540bn,

maintaining our number one position in market

share<sup>1</sup> in Hong Kong at 25.4%<sup>2</sup>. We also

consistently lead peers in customer

satisfaction, retaining the number one position

in strategic net promoter scores ('NPS')<sup>3</sup>. In

our Commercial Banking ('CMB') business, we

focused on strengthening our market position

across multiple products. In trade finance, we

maintained our strong performance with a

market share of 32.6%<sup>2</sup>. We continued to

solidify and grow our Retail Banking and

Wealth ('RBW') business. We welcomed over

1.1 million new-to-bank customers, bringing

the total to over seven million<sup>4</sup>, and we

opened five new Wealth Centres in 2025.

These achievements reflect our ongoing

commitment to growth, customer satisfaction

and long-term value creation.

**UK**

Our UK business delivered revenue of $12.9bn

in 2025, an increase of 5% on a constant

currency basis, supported by robust balance

sheet growth, with customer loans increasing

by 6% to over $300bn. We continue to

support key growth sectors in the UK

economy, with our CMB business voted the

'Best Bank for Corporates' in the UK by

Euromoney for the second consecutive year.

We see an opportunity to build share in the

small and medium-sized enterprise ('SME')

segment and have introduced fee-free banking

for SME clients. In our RBW business, we aim

to support customers to manage and grow

their wealth. Following the relaunch of our

Premier proposition, we rolled out 'Funds on

Mobile' to make it easier for customers to buy,

sell and trade funds via the HSBC app, in

addition to opening two new Wealth Centres.

We continued to build on our mortgage

franchise, growing balances by $9bn on a

constant currency basis, taking market share

to 8.1%<sup>5</sup>.

32.6%

Trade finance market share in Hong Kong<sup>2</sup>

8.1%

Mortgage market share in the UK<sup>5</sup>

1HSBC internal analysis based on HSBC Group

deposit balances in Hong Kong as of 30 June

2025, and the financial data presented in the

2Q25 interim financial reports of 12 selected peer

banks.

2Market share refers to HSBC Group balances in

Hong Kong compared with the HKMA Hong

Kong market data as of December 2025.

3 Strategic NPS ranking based on a survey by

third-party vendors, InMoment and MDRi Asia

Limited. Scores pertain to our Retail Banking and

Wealth business only.

4 New-to-bank and total customer numbers

exclude Hang Seng Bank customers.

5 Source: Bank of England. Retail mortgages only.

Our network business

**Corporate and Institutional Banking**

In CIB, revenue was $27.6bn, an increase of

3% compared with 2024 on a constant

currency basis. HSBC continued to be a

leading global wholesale transaction bank.

Bank-wide, we generated $10.9bn of

wholesale transaction banking fees and other

income in 2025, which was 4% higher

compared with 2024. We also grew our

deposits by $10bn in 2025, bringing the total

to $600bn. We facilitated around $900bn in

trade<sup>6</sup>, and were ranked number one in 21

markets around the world<sup>7</sup>. In Global

Payments Solutions ('GPS'), HSBC was

recognised as the number one Global Cash

Management service provider in products,

service and technology<sup>8</sup>. In Foreign Exchange,

we were named the 'World's Best FX Bank for

Corporates'<sup>9</sup>. In addition, we were recognised

as 'Asia's Best Bank for Securities Services' by

Euromoney. We continued to invest in

innovative technologies to help build a bank for

the future. We launched a Tokenised Deposit

Service in four markets, enabling continuous

access to real-time settlement for corporate

clients.

**International Wealth and Premier** 

**Banking**

In IWPB, revenue was $14.5bn, an increase of

5% compared with 2024 on a constant

currency basis. We continued to execute our

bank-wide Wealth strategy in 2025. Our

Premier 3.0 service is now live in seven

markets and we opened 29 new Wealth

Centres across the Group, including seven in

our home markets. Bank-wide Wealth fee and

other income was $9.4bn, up 24% on a

constant currency basis, delivering on our

ambition of 'double-digit' growth. At 31

December 2025, wealth balances across all

our businesses were $2.1tn, of which $1.2tn

was booked in Asia, making us a leading

wealth manager in the region. We attracted

bank-wide net new invested assets of $80bn

in 2025, with $39bn booked in Asia. In our

insurance business, our insurance

manufacturing contractual service margin

('CSM') grew by 21% to $14.6bn, which is a

store of potential future revenue for us.

c.$900bn

Trade volumes facilitated<sup>6</sup>

$2.1tn

Wealth balances

increased by 16% compared with 2024

6HSBC internal management information.

7 Source: Euromoney Trade Finance Survey in

2025. 8Source: Euromoney Cash Management Survey

2025. 9Source: Euromoney Foreign Exchange Awards

2025. Performance across geographies

We have an established presence in a number

of markets globally. We are particularly

focused on mainland China, India, Singapore

and the UAE. These markets are especially

well connected to international trade, wealth

and investment flows and are key to our

strategy.

In 2025, we reported profit before tax of

$1.1bn in our mainland China business,

including a loss of $2.1bn related to the

dilution and impairment of our associate

BoCom. We continued to support our

customers expanding internationally, where

we serve approximately half of Fortune Global

500 companies. We were recognised as the

'Best International Bank' by Euromoney in

2025. We continued to perform strongly in

Wealth, where Wealth invested assets grew

by 37% compared with 2024, driven by strong

wealth distribution and growth in Private

Banking.

In Singapore, we generated profit before tax of

$1.5bn, and we remain the largest foreign

bank<sup>10</sup>. Singapore is our primary wholesale

offshore booking centre and wealth hub within

the ASEAN region. In 2025, we were

recognised by Euromoney as the 'Best Bank for

Large Corporates'. Singapore, where we

opened two new Wealth Centres, is our largest

Wealth business outside our home markets and

fast growing. Wealth fee and other income

grew by 27% and our Wealth invested assets

surpassed $100bn for the first time.

10Based on 9M25 profit before tax, using peers'

published results.

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **14** |

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| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Strategy |  |  |  |  |  |  |

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Performance across geographies (continued)

In India, we reported a profit before tax of

$1.9bn and continued to be the largest foreign

bank<sup>1</sup>. We are the leading bank for multinational

companies, of which around 50% bank with us<sup>2</sup>.

We launched HSBC Innovation Bank with a

$1bn financing pool and launched new digital

propositions in Payments and Trade. Our ECM

issuance grew more than 60% in 2025. We

expanded to four new cities with wealth and

international potential, remained the top wealth

manager across foreign banks<sup>3</sup> and were the

first bank to launch international wealth

solutions in GIFT City<sup>4</sup>.

In the UAE, we generated $0.8bn in profit

before tax, and are the largest foreign bank<sup>5</sup>.

We continued to further strengthen our

leadership in Corporate and Institutional

Banking. We were named 'Best Investment

Bank' in the Middle East<sup>6</sup>, including being top

ranked in debt capital markets in the region for

the fifth consecutive year<sup>7</sup>. Our UAE wealth

business saw strong growth, with invested

assets up 33% and international new-to-bank

customers up 12%. In 2025, we launched

Premier 3.0, opened a new Wealth Centre, and

introduced 10 new asset management funds.

1 HSBC internal analysis based on 1H25 revenue,

deposits and advances, using peers' published

results.

2 Source: Ministry of Commerce of India.

3 By Wealth AUM. Source: Indian Mutual Fund

Industry.

4 Gujarat International Finance Tec-City.

5 HSBC internal analysis based on 9M25 revenue,

deposits and advances, using peers' published

results.

6 Euromoney Awards for Excellence 2025.

7 Source: Bloomberg league table.

Deposit strength core to our strategy

The strength of our franchise is built on the

solid foundation of our $1.8tn deposit base,

which is comprised primarily of current and

savings accounts. We are proud of our

deposit strength, which is a product of the

trust of our customers and an important

source of funding for us, and forms the

foundation of our financial stability.

We have customer loans of $1.0tn, excluding

held for sale assets, representing 55% of

customer deposits. We operate with a

surplus of customer deposits relative to

loans in each of our four franchises and in

our major operating entities, including The

Hongkong and Shanghai Banking Corporation

Limited, HSBC UK and HSBC Bank plc.

$1.8tn

Customer deposit balances

(2024: $1.7tn)

Improving operational excellence through artificial intelligence

In 2025, we accelerated the adoption of

Generative AI ('GenAI') across HSBC, moving

from experimentation to scaled delivery.

Today, we have over 100 GenAI solutions in

use and a strong pipeline of use cases in

development. Our adoption of AI is

underpinned by our people, and we continue

to invest in training and tooling to support

staff in their roles. Around the globe, around

85% of our colleagues have access to our

large language model-based productivity

tool, HSBC Productivity Suite, which helps

them to analyse and translate documents,

summarise information and generate insights.

While the progress this year has been

significant, the opportunity ahead is far

greater. Our strategic partnership with Mistral

strengthens our commitment to scale GenAI

capabilities and we will continue to prioritise

areas that matter most to our customers and

colleagues, and drive performance. Through

2026, we intend to expand enterprise-wide

adoption of AI tools and strive to embed AI

deeper into our core processes.

>100

GenAI solutions in use

Our ambitions

**Revenue growth rising to 5% YoY**

We are focused on growth opportunities

within our strategy that play to our strengths,

while maintaining tight cost discipline and

continuing to invest in growth and efficiency.

We are targeting revenue growth rising to 5%

year-on-year by 2028 on a constant currency

basis excluding notable items. We see growth

opportunities in each of our four businesses. In

Hong Kong, we intend to consolidate market

leadership with the privatisation of Hang Seng

Bank. In the UK, we see the opportunity to

continue building our mortgage franchise and

build share in SME banking. In IWPB, we

intend to particularly focus on building our

successful wealth business, especially in Asia

and the Middle East. In CIB, the opportunities

include further expanding our international

network business and transaction banking.

Having simplified our approach to now include

a revenue growth target, we no longer provide

separate guidance on Wealth fee and other

income growth.

**RoTE of 17% or better**

Underpinned by the momentum in our earnings

and the positive progress we are making in our

strategic execution, we are targeting a RoTE

excluding notable items of 17% or better for

each of 2026, 2027 and 2028.

**Capital generation**

Our business model is designed to be highly

capital generative. In 2025, our CET1 capital

ratio was 14.9%, remaining stable compared

with 31 December 2024. During the calendar

year, we paid $5.2bn ordinary dividends with

respect to 2025, and we expect to pay a

further $7.7bn through the fourth interim

dividend with respect to 2025. We aim to

maintain a CET1 capital ratio in the range of

14-14.5% over the medium term<sup>8</sup>. Capital may

fall below our target range during the first half

of 2026 owing to the privatisation of Hang

Seng Bank. We plan to address this through

organic capital generation and pausing share

buy-backs until CET1 capital is back within or

above this range. A decision to recommence

buy-backs will be subject to our normal buy-

back considerations and process on a quarterly

basis.

Our primary use of capital generation is to pay

an ordinary dividend of 50% of profit

attributable to ordinary shareholders, excluding

material notable items and related impacts (our

dividend payout ratio target basis<sup>9</sup>). Our

preferred use of capital after paying the

dividend is to support the growth of our four

businesses.

**Our targets for 2026-2028**

Rising to 5%

Revenue growth YoY by 2028, on a constant

currency basis excluding notable items<sup>9</sup>

17% or better

RoTE excluding notable items target for 2026,

2027 and 2028<sup>9</sup>

50%

Dividend payout ratio target basis, 2026-2028<sup>9</sup>

8Medium term is defined as 3-5 years from 1

January 2026.

9 We do not reconcile our forward guidance on

revenue on a constant currency basis excluding

notable items, RoTE excluding the impact of

notable items or dividend payout ratio target

basis to their equivalent reported measures.

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **15** |

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| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

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Financial overview

Performance compared with our 2025 Group financial targets

**Return on average tangible equity** 

**excluding notable items** ※

17.2%

(2024: 15.6%)

In 2025, RoTE was 13.3%, a decrease of 1.3

percentage points from 2024.

For the purposes of measuring performance

against our Group target, we adjust RoTE to

exclude notable items.

RoTE excluding notable items was 17.2%, an

increase of 1.6 percentage points compared

with 2024 and above our mid-teens target for

2025. To better align with market practice, from our

2025 full-year results we no longer adjust the

'average tangible equity' for the post-tax

impact of notable items in each period. We

have re-presented comparatives on the

revised basis. This revision improved RoTE

excluding notable items by 16bps in 2025. In

2024, this revision had a 34bps adverse

impact.

🡠See pages 65 and 107 for further detail on RoTE

excluding notable items.

🡠See page 65 for further details on notable items.

**Target basis operating expenses** ※

$33.5bn

(2024: $32.5bn)

In 2025, operating expenses of $36.4bn

increased by $3.4bn or 10%, on a reported

basis.

Target basis operating expenses grew by 3%

compared with 2024 in line with our target of

approximately 3%. This primarily

reflected higher planned spend in technology,

higher performance-related pay and the impact

of inflation.

Our target basis operating expenses exclude

the direct cost impact of the business

disposals in Canada and Argentina, notable

items and the impact of retranslating the prior

year results of hyperinflationary economies at

constant currency.

Our target basis operating expenses included

the impact of simplification-related savings

associated with our reorganisation, which

generated $0.6bn of cost reductions in 2025.

We are on track to have taken actions to

deliver our $1.5bn annualised cost reduction

by the end of June 2026, which is six months

earlier than planned.

🡠See page 109 for a reconciliation of target basis

operating expenses to reported operating expenses.

**Capital and dividend policy**

**CET1 ratio** 

14.9%

(2024: 14.9%)

**Dividend payout ratio in respect of 2025**

50%

**on a dividend payout ratio target basis** ※

At 31 December 2025, our CET1 capital ratio

was 14.9%, which was higher than our

medium-term target range of 14% to 14.5%.

We intend to continue to manage the CET1

ratio within this range.

The total dividend per share announced in

respect of 2025 was $0.75. On a dividend

payout ratio target basis this resulted in a

payout ratio of 50% of earnings per share. For

the purposes of computing our target basis

dividend payout ratio, we exclude from

earnings per share material notable items and

related impacts.

🡠See page 110 for a reconciliation of basic

earnings per share excluding material notable

items and related impacts to basic earnings per

share.

Basis of presentation

**Constant currency performance**

Constant currency performance is computed

by adjusting reported results of comparative

periods for the effects of foreign currency

translation differences, which distort period-

on-period comparisons. Constant currency

performance provides useful information for

investors by aligning internal and external

reporting, reflecting how management

assesses period-on-period performance.

**Notable items and material notable items**

We separately disclose 'notable items', which

are components of our income statement that

management considers as outside the normal

course of business and generally non-recurring

in nature. Certain notable items are classified

as 'material notable items', a subset of notable

items. Categorisation as a material notable

item is dependent on the nature of each item

in conjunction with the financial impact on the

Group's income statement, and are excluded

from our target basis dividend payout ratio

calculation and earnings per share measure.

Material notable items in 2025 or relevant

comparative periods relate to the following:

–Income statement impacts associated with

actions to exit or wind down certain

businesses to redeploy costs from non-

strategic activities (reported under

'Disposals, wind-downs, acquisitions and

related costs' in notable items).

–Dilution and impairment losses on our

investment in BoCom.

–A legal provision following developments in

a claim in Luxembourg relating to the

Bernard L. Madoff Investment Securities

LLC fraud.

**Impact of strategic transactions**

To aid the understanding of our results, we

separately disclose the impact of strategic

transactions classified as material notable

items on the results of the Group and our

business segments. The distorting impact of

the operating income statement results related

to acquisitions and disposals that affect period-

on-period comparisons primarily related to our

disposals in Canada and Argentina.

**Management view of revenue on a** 

**constant currency basis**

We provide breakdowns of revenue for each

of our business segments on a constant

currency basis by major product. These reflect

the basis on which revenue performance of

the businesses is assessed and managed. In

the management view of revenue, notable

items are presented separately. We group

certain products in a consistent manner across

our business segments. Wholesale transaction

banking comprises our Global Foreign

Exchange, Global Payments Solutions ('GPS'),

Global Trade Solutions ('GTS') and Securities

Services businesses. Wealth comprises our

Investment Distribution, Insurance, Private

Bank and Asset Management businesses.

On page <u>[18](#i1b0fd14ec1914990b51666372175dbbf_50079)</u>, we provide a summarised

management view of revenue for the Group's

results to supplement the Group's reported

revenue performance using the product

grouping used to manage and assess our

segmental performance.

🡠See page 92 for further details on the impact of

strategic transactions.

🡠See page 65 for further details on basis of

preparation and use of alternative performance

measures.

🡠See pages 88 to 90 and pages 97 to 102 for

details of notable items in our business segments

and legal entities.

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **16** |

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| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Financial overview |  |  |  |  |  |  |

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Key financial metrics

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| | | | |
|:---|:---|:---|:---|
|  | For the year ended 31 Dec | For the year ended 31 Dec | For the year ended 31 Dec |
| **Reported results** | **2025** | 2024 | 2023 |
| Profit before tax ($m) | **29907** | 32309 | 30348 |
| Profit after tax ($m) | **23131** | 24999 | 24559 |
| Net operating income before change in expected credit losses and other credit<br>impairment charges ('revenue') ($m)<br>| **68274** | 65854 | 66058 |
| Cost efficiency ratio (%) | **53.4** | 50.2 | 48.5 |
| Net interest margin (%) | **1.59** | 1.56 | 1.66 |
| Basic earnings per share ($) | **1.21** | 1.25 | 1.15 |
| Diluted earnings per share ($) | **1.20** | 1.24 | 1.14 |
| Dividend per ordinary share (in respect of the period) ($)<sup>1</sup> | **0.75** | 0.87 | 0.61 |
| Dividend payout ratio (%)<sup>2</sup> | **50** | 50 | 50 |
| **Alternative performance measures** ※ |  |  |  |
| Constant currency profit before tax ($m) | **29907** | 32384 | 29802 |
| Constant currency revenue ($m) | **68274** | 66009 | 65040 |
| Constant currency banking net interest income ($m) | **44084** | 43550 | 42515 |
| Constant currency cost efficiency ratio (%) | **53.4** | 50.2 | 48.7 |
| Constant currency profit before tax excluding notable items ($m) | **36617** | 34181 | 32841 |
| Constant currency revenue excluding notable items ($m) | **71020** | 67591 | 64835 |
| Constant currency profit before tax excluding notable items and strategic transactions ($m) | **36617** | 33768 | N/A |
| Constant currency revenue excluding notable items and strategic transactions ($m) | **71020** | 66377 | N/A |
| Expected credit losses and other credit impairment charges (annualised) as a % of<br>average gross loans and advances to customers, including held for sale (%)<br>| **0.39** | 0.34 | 0.31 |
| Basic earnings per share excluding material notable items and related impacts ($) | **1.51** | 1.31 | 1.22 |
| Return on average ordinary shareholders' equity (annualised) (%) | **12.3** | 13.6 | 13.6 |
| Return on average tangible equity (annualised) (%) | **13.3** | 14.6 | 14.6 |
| Return on average tangible equity excluding notable items (annualised) (%) | **17.2** | 15.6 | 16.0 |
| Target basis operating expenses ($m) | **33464** | 32478 | N/A |
|  | At 31 Dec | At 31 Dec | At 31 Dec |
| **Balance sheet** | **2025** | 2024 | 2023 |
| Total assets ($m) | **3233034** | 3017048 | 3038677 |
| Net loans and advances to customers ($m) | **988399** | 930658 | 938535 |
| Constant currency net loans and advances to customers ($m) | **988399** | 970778 | 955706 |
| Customer accounts ($m) | **1786828** | 1654955 | 1611647 |
| Constant currency customer accounts ($m) | **1786828** | 1719240 | 1641000 |
| Average interest-earning assets, year to date ($m) | **2190078** | 2099285 | 2161746 |
| Loans and advances to customers as % of customer accounts (%) | **55.3** | 56.2 | 58.2 |
| Total shareholders' equity ($m) | **198225** | 184973 | 185329 |
| Tangible ordinary shareholders' equity ($m) | **165153** | 154295 | 155710 |
| Net asset value per ordinary share at period end ($) | **10.36** | 9.26 | 8.82 |
| Tangible net asset value per ordinary share at period end ($) | **9.64** | 8.61 | 8.19 |
| **Capital, leverage and liquidity** |  |  |  |
| Common equity tier 1 capital ratio (%)<sup>3,4</sup> | **14.9** | 14.9 | 14.8 |
| Risk-weighted assets ($m)<sup>3,4</sup> | **888647** | 838254 | 854114 |
| Total capital ratio (%)<sup>3,4</sup> | **20.5** | 20.6 | 20.0 |
| Leverage ratio (%)<sup>3,4</sup> | **5.3** | 5.6 | 5.6 |
| High-quality liquid assets (liquidity value) ($m)<sup>4,5</sup> | **702123** | 649210 | 647505 |
| Liquidity coverage ratio (%)<sup>4,5</sup> | **137** | 138 | 136 |
| Net stable funding ratio (%)<sup>4,5</sup> | **143** | 143 | 138 |
| **Share count** |  |  |  |
| Period end basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions)  | **17140** | 17918 | 19006 |
| Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares, after <br>deducting own shares held (millions)<br>| **17276** | 18062 | 19135 |
| Average basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | **17427** | 18357 | 19478 |

---

🡠For reconciliation and analysis of our reported results on a constant currency basis, including lists of notable items, see page 88. Definitions and calculations of

other alternative performance measures are included in 'Reconciliation of alternative performance measures' on page 106.

1In 2024, dividend per share includes the special dividend of $0.21 per ordinary share arising from the proceeds of the sale of our banking business in Canada to

Royal Bank of Canada.

2Our dividend payout ratio is adjusted for material notable items and related impacts, including all associated income statement impacts relating to those items.

3Regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. Effective 1

January 2025, the IFRS 9 transitional arrangements came to an end, followed by the end of the CRR II grandfathering provisions on 28 June 2025.

4Regulatory numbers and ratios are as presented at the date of reporting. Small changes may exist between these numbers and ratios and those submitted in

regulatory filings. Where differences are significant, we may restate in subsequent periods.

5The liquidity coverage ratio is based on the average value of the preceding 12 months. The net stable funding ratio is based on the average value of four preceding

quarters.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **17** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Financial overview |  |  |  |  |  |  |

---

Income statement results

2025 compared with 2024

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Movement in reported profit before tax compared with 2024 | Movement in reported profit before tax compared with 2024 | Movement in reported profit before tax compared with 2024 |  |  |  |  |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>1</sup><br>|
| **Reported results** | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Revenue** | **68274** | 65854 | 66058 | **2420** | **4** | **(1936)** |
| – of which: net interest income | **34794** | 32733 | 35796 | **2061** | **6** | **(1628)** |
| ECL | **(3850)** | (3414) | (3447) | **(436)** | **(13)** | **87** |
| **Net operating income** | **64424** | 62440 | 62611 | **1984** | **3** | **(1849)** |
| Total operating expenses | **(36428)** | (33043) | (32070) | **(3385)** | **(10)** | **606** |
| **Operating profit** | **27996** | 29397 | 30541 | **(1401)** | **(5)** | **(1243)** |
| Share of profit in associates and joint ventures less <br>impairment<br>| **1911** | 2912 | (193) | **(1001)** | **(34)** |  |
| **Profit before tax** | **29907** | 32309 | 30348 | **(2402)** | **(7)** | **(1243)** |
| Tax expense | **(6776)** | (7310) | (5789) | **534** | **7** |  |
| **Profit after tax** | **23131** | 24999 | 24559 | **(1868)** | **(7)** |  |
| **Revenue excluding notable items** ※ | **71020** | 67434 | 65723 | **3586** | **5** |  |
| **Profit before tax excluding notable items** ※ | **36617** | 34122 | 33198 | **2495** | **7** |  |

---

1For details, see 'Strategic transactions supplementary analysis' on page 92.

**Reported profit**

Reported profit before tax of $29.9bn was

$2.4bn or 7% lower, mainly due to a $4.9bn

year-on-year net adverse impact from notable

items.

In 2025, notable item impacts included

recognition of dilution and impairment losses

of $2.1bn related to BoCom, reserve recycling

losses of $1.5bn following the completion of

the sale of our French retained portfolio of

home and certain other loans, legal provisions

of $1.4bn and restructuring and other related

costs associated with our organisational

simplification of $1.0bn. In 2024, these

included a gain of $4.8bn on the disposal of

our banking business in Canada and the

impacts of the disposal of our business in

Argentina, comprising a $1.0bn loss on

disposal, and the recycling of foreign currency

reserve losses and other reserves of $5.2bn.

They also included a $0.2bn loss on the early

redemption of legacy securities.

On a constant currency basis, profit before tax

of $29.9bn was $2.5bn lower than in 2024,

while excluding notable items it increased by

$2.4bn or 7%.

**Reported revenue**

Reported revenue of $68.3bn was $2.4bn or

4% higher, reflecting strong fee and other

income growth. This was partly offset by a net

adverse movement in notable items of

$1.2bn, primarily relating to business

disposals, as well as a dilution loss of $1.1bn

following the completion of BoCom's capital

issuance in June 2025, which reduced our

interest from 19.03% to 16.00%.

Revenue excluding notable items increased by

$3.6bn, primarily reflecting higher fee and

other income in Wealth and Wholesale

Transaction Banking, as well as from the non-

recurrence of adverse hyperinflationary

impacts in Argentina.

In Wealth, there was a strong performance in

Insurance, due to a higher CSM release,

reflecting strong new business growth and

favourable net investment returns and

experience variances, and growth in our

Private Bank and investment distribution from

higher customer activity. In Wholesale

Transaction Banking, fee and other income

growth reflected a strong performance in

2025, particularly in Global Foreign Exchange

amid elevated market volatility.

**Net interest income**

NII increased by $2.1bn reflecting the benefit

of the reinvestment of our structural hedge at

higher yields, deposit balance growth and

higher NII in Markets Treasury. In addition, the

increase reflected the non-recurrence of a

$0.2bn loss in 2024 on the early redemption of

legacy securities. This was partly offset by the

adverse impact of $1.6bn from business

disposals in Argentina and Canada, and margin

compression on our deposits from lower

interest rates. The growth in NII also reflected

a benefit from lower funding costs associated

with the trading book of $1.7bn. Banking NII,

which excludes these funding costs, increased

by $0.3bn.

On a constant currency basis, revenue

increased by $2.3bn or 3% and banking NII

rose by $0.5bn.

---

| | | | |
|:---|:---|:---|:---|
| Notable items – on a reported basis | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs<sup>1</sup> | **(1642)** | (1343) | 1298 |
| Dilution loss of interest in BoCom associate | **(1104)** |  |  |
| Fair value movements on financial instruments | **—** |  | 14 |
| Disposal losses on Markets Treasury repositioning | **—** |  | (977) |
| Early redemption of legacy securities | **—** | (237) |  |
| Currency translation on revenue notable items | **—** | (2) | (130) |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(502)** | (199) | (321) |
| Restructuring and other related costs | **(1030)** | (34) | 136 |
| Legal provisions | **(1432)** |  |  |
| Currency translation on operating expenses notable items | **—** | 18 |  |
| **Share of profit in associates and joint ventures less impairment** |  |  |  |
| Impairment losses of interest in BoCom associate | **(1000)** |  | (3000) |
| Currency translation on associate notable items | **—** |  | (59) |

---

12024 includes losses of $0.2bn related to the sale of our business in Russia, which are not categorised as a material notable item.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **18** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Financial overview |  |  |  |  |  |  |

---

**Reported ECL**

Reported ECL charges of $3.9bn were $0.4bn

or 13% higher than 2024, including charges in

both periods related to the CRE sectors in

Hong Kong and mainland China. In 2025, the

charge in this sector in Hong Kong of $0.7bn

(2024: $0.1bn) reflected higher allowances for

new defaulted exposures, the impact of an

over-supply of non-residential properties that

has put continued downward pressure on

rental and capital values, and updates to our

models used for ECL calculations. The 2025

charge in the mainland China CRE sector was

$0.2bn (2024: $0.4bn).

🡠For further details of the calculation of ECL, see

pages 157 to 160.

**Reported operating expenses**

Reported operating expenses of $36.4bn were

$3.4bn or 10% higher. The increase primarily

reflected notable items in 2025, including legal

provisions of $1.4bn, restructuring and other

related costs in 2025 of $1.0bn and $0.5bn

related to disposals, wind-downs, acquisitions

and related costs.

The remaining growth in reported operating

expenses included higher planned spend and

investment in technology, higher performance-

related pay and the impacts of inflation. These

increases were partly offset by reductions

following the completion of business disposals

in Canada and Argentina, and the benefits

delivered by our restructuring activities.

Target basis operating expenses were

$33.5bn or 3% higher than in 2024 due to

higher planned spend and investment in

technology and the impact of inflation.

**Reported share of profit in associates and** 

**joint ventures less impairment** of $1.9bn

was $1.0bn or 34% lower, primarily due to an

impairment loss of $1.0bn recognised on

BoCom following our value-in-use assessment

made in 2025.

🡠For further details on our value-in-use

assessment, see Note 18: Interests in associates

and joint ventures on page 345.

**Tax expense** 

In 2025 tax expense was a charge of $6.8bn,

representing an effective tax rate of 22.7%

(2024: 22.6%). Excluding the non-deductible

impairment and dilution loss in BoCom and

legal provisions on which no tax benefit is

recorded, the effective rate for 2025 was

20.6% (2024: 21.5%, excluding the impact of

the non-taxable gains and losses on the sale of

our banking business in Canada and our

business in Argentina).

🡠For further details on tax expense, see page 70.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Supplementary management view of revenue ※ |  |  |  |  |  |  |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>1</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>2</sup> | **44084** | 43975 | 44095 | **109** | **0** | **(1603)** |
| **Fee and other income** | **26936** | 23459 | 21628 | **3477** | **15** | **128** |
| – Wealth  | **9390** | 7559 | 6339 | **1831** | **24** | **(164)** |
| – Wholesale Transaction Banking  | **10860** | 10433 | 10654 | **427** | **4** | **(171)** |
| – Other | **6686** | 5467 | 4635 | **1219** | **22** | **463** |
| **Revenue excluding notable items** | **71020** | 67434 | 65723 | **3586** | **5** | **(1475)** |
| Notable items | **(2746)** | (1580) | 335 | **(1166)** | **(74)** | **(461)** |
| **Revenue** | **68274** | 65854 | 66058 | **2420** | **4** | **(1936)** |

---

1For details, see 'Strategic transactions supplementary analysis' on page 92.

2For a reconciliation of banking NII to reported NII, see page 69. In the supplementary management view of revenue, banking NII in 2024 excludes notable items

of $0.2bn, which are separately presented in 'notable items'. There were no notable items in banking NII in 2025 or 2023.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis | Movement in reported profit before tax compared with 2024 – constant currency basis |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>1</sup><br>|
| **Results – on a constant currency basis** ※ | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Revenue** | **68274** | 66009 | 65040 | **2265** | **3** | **(1681)** |
| ECL | **(3850)** | (3392) | (3250) | **(458)** | **(14)** | **72** |
| Total operating expenses | **(36428)** | (33146) | (31691) | **(3282)** | **(10)** | **417** |
| **Operating profit** | **27996** | 29471 | 30099 | **(1475)** | **(5)** | **(1192)** |
| Share of profit in associates and joint ventures less impairment | **1911** | 2913 | (297) | **(1002)** | **(34)** | **—** |
| **Profit before tax** | **29907** | 32384 | 29802 | **(2477)** | **(8)** | **(1192)** |
| **Revenue excluding notable items** | **71020** | 67591 | 64835 | **3429** | **5** |  |
| **Profit before tax excluding notable items** | **36617** | 34181 | 32841 | **2436** | **7** |  |

---

1 For details, see 'Strategic transactions supplementary analysis' on page 92.

Balance sheet and capital

**Balance sheet strength**

Total assets of $3.2tn were $216bn higher than

at 31 December 2024 on a reported basis, and

$93bn higher on a constant currency basis. The

increase was driven by growth in financial

investments balances, higher trading assets

and reverse repurchase agreements and higher

other asset balances. This was partly offset by

lower cash and balances at central banks due

to redeployment opportunities and a decrease

in derivative assets. Loans and advances to

customers also increased, and as a percentage

of customer accounts they were 55.3%,

compared with 56.2% at 31 December 2024

(excluding balances classified as held for sale).

Given customer loan growth has been muted in

recent years, we will no longer provide

guidance on medium- to long-term customer

lending growth.

🡠For detailed balance sheet commentary, see

**Distributable reserves**

The distributable reserves of HSBC Holdings

at 31 December 2025 were $46.2bn, a

$17.9bn increase since 31 December 2024,

primarily driven by $22.1bn in profits and other

reserve movements generated in 2025,

cancellation of $16.6bn standing to the credit

of its share premium and capital redemption

reserves pursuant to the Court approval

obtained by HSBC Holdings on 24 June 2025,

offset by $20.8bn of dividends on ordinary

shares, additional tier 1 coupon and share buy-

back payments.

**Capital and liquidity position**

Our CET1 ratio at 31 December 2025

remained at 14.9%, unchanged from

31 December 2024. The average high-quality

liquid assets ('HQLA') we held was $702.1bn

(31 December 2024: $649.2bn). This excludes

HQLA in legal entities that are not transferable

due to local restrictions.

🡠For further details, see 'Capital overview' on

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **19** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Business segments

---

| | |
|:---|:---|
| Hong Kong | Our Hong Kong business has a leading market position in our home <br>market of Hong Kong. It comprises Retail Banking and Wealth and <br>Commercial Banking of HSBC Hong Kong and Hang Seng Bank. |

---

**Contribution to Group profit** 

**before tax** ※

![13194139533560](hsbc-20251231_g9.gif)

$9.6bn

Calculation is based on profit before tax of our

business segments excluding Corporate Centre.

**Divisional highlights** 

---

| | |
|:---|:---|
| 40% | 7% |
| Growth in Wealth fee and other <br>income compared with 2024, <br>on a constant currency basis. ※<br>| Growth in deposits compared with <br>2024, on a constant currency basis. ※<br>|

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| Revenue | **15878** | 15047 | 14532 | **831** | **6** | **—** |
| ECL | **(1476)** | (1077) | (1494) | **(399)** | **(37)** | **—** |
| Operating expenses | **(4826)** | (4841) | (4514) | **15** | **—** | **—** |
| Share of profit/(loss) from associates and joint ventures | **—** |  |  | **—** | **—** | **—** |
| **Profit before tax** | **9576** | 9129 | 8524 | **447** | **5** | **—** |
| RoTE<sup>1</sup> (%) | **35.5** | 37.5 | 34.7 |  |  |  |
| RoTE excluding notable items<sup>1</sup> (%) | **35.5** | 37.5 | 36.4 |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>3</sup> | **12082** | 11997 | 12108 | **85** | **1** | **—** |
| **Fee and other income**<sup>4</sup> | **3796** | 3050 | 2798 | **746** | **24** | **—** |
| **– Retail Banking and Wealth** | **2658** | 1941 | 1678 | **717** | **37** | **—** |
| – Retail Banking | **326** | 312 | 287 | **14** | **4** | **—** |
| – Wealth | **2206** | 1577 | 1203 | **629** | **40** | **—** |
| – Other<sup>5</sup> | **126** | 52 | 188 | **74** | **>100** |  |
| **– Commercial Banking** | **1138** | 1109 | 1120 | **29** | **3** | **—** |
| – Wholesale Transaction Banking | **730** | 709 | 692 | **21** | **3** | **—** |
| – Credit and Lending | **78** | 83 | 76 | **(5)** | **(6)** | **—** |
| – Other<sup>5</sup> | **330** | 317 | 352 | **13** | **4** | **—** |
| **Revenue excluding notable items** | **15878** | 15047 | 14906 | **831** | **6** | **—** |
| Notable items | **—** |  | (374) | **—** | **n/a** | **—** |
| **Revenue** | **15878** | 15047 | 14532 | **831** | **6** | **—** |
| 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. <br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **20** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Notable items |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposal losses on Markets Treasury repositioning | **—** |  | (373) |
| Currency translation on revenue notable items | **—** |  | (1) |
| **Operating expenses** |  |  |  |
| Restructuring and other related costs | **(16)** |  |  |
| Currency translation on operating expenses notable items | **—** |  |  |

---

**Financial performance** 

Profit before tax of $9.6bn increased by $0.4bn

or 5% compared with 2024, on a constant

currency basis.

Revenue of $15.9bn was $0.8bn or 6% higher,

on a constant currency basis.

Banking NII of $12.1bn was broadly stable

compared with 2024, as the benefit of growth

in deposit balances was largely offset by

margin compression on deposits in a lower

interest rate environment, together with lower

lending balances.

Fee and other income of $3.8bn grew by

$0.7bn or 24%, primarily reflecting an increase

of $0.6bn or 40% in Wealth from a strong

performance in investment distribution due to

higher customer activity.

ECL of $1.5bn increased by $0.4bn compared

with 2024, on a constant currency basis,

including charges in both periods related to the

Hong Kong CRE sector. In 2025, the increased

charge in this sector reflected higher

allowances for new defaulted exposures, the

impact of an over-supply of non-residential

properties that has put continued downward

pressure on rental and capital values, and

updates to our models used for ECL

calculations.

Operating expenses of $4.8bn were stable, on

a constant currency basis. This reflected lower

operations costs, which were broadly offset by

increases from planned higher spend on

technology, including the development of our

Wealth proposition, and the impact of inflation.

🡠For business segment financial performance

commentary for the year ended 31 December

2024 compared with 31 December 2023, see

pages 104 to 105.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **21** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | |
|:---|:---|
| UK | Our UK business has a leading market position in our home market of the <br>UK. It comprises UK Retail Banking and Wealth (including first direct and <br>M&S Bank) and UK Commercial Banking, including HSBC Innovation Bank. |

---

**Contribution to Group profit** 

**before tax** ※

![13194139533582](hsbc-20251231_g10.gif)

$6.7bn

Calculation is based on profit before tax of our

business segments excluding Corporate Centre.

**Divisional highlights** 

---

| |
|:---|
| 6% |
| Growth in loans and advances to customers <br>compared with 2024, on a constant <br>currency basis. ※<br>Growth in banking NII compared with 2024, <br>on a constant currency basis.<sup>3</sup> ※<br>|

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| Revenue | **12938** | 12342 | 13439 | **596** | **5** | **—** |
| ECL | **(696)** | (415) | (545) | **(281)** | **(68)** | **—** |
| Operating expenses | **(5537)** | (5104) | (4829) | **(433)** | **(8)** | **(7)** |
| Share of profit/(loss) from associates and joint ventures | **—** |  |  | **—** | **—** | **—** |
| **Profit before tax** | **6705** | 6823 | 8065 | **(118)** | **(2)** | **(7)** |
| RoTE<sup>1</sup> (%) | **22.6** | 25.0 | 33.3 |  |  |  |
| RoTE excluding notable items<sup>1</sup> (%) | **22.9** | 25.0 | 25.1 |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>3</sup> | **11096** | 10355 | 9903 | **741** | **7** | **—** |
| **Fee and other income**<sup>4</sup> | **1842** | 1987 | 2036 | **(145)** | **(7)** | **—** |
| **– Retail Banking and Wealth** | **617** | 744 | 749 | **(127)** | **(17)** | **—** |
| – Retail Banking | **255** | 273 | 260 | **(18)** | **(7)** | **—** |
| – Wealth | **339** | 391 | 419 | **(52)** | **(13)** | **—** |
| – Other<sup>5</sup> | **23** | 80 | 70 | **(57)** | **(71)** |  |
| **– Commercial Banking** | **1225** | 1243 | 1287 | **(18)** | **(1)** | **—** |
| – Wholesale Transaction Banking | **891** | 912 | 926 | **(21)** | **(2)** | **—** |
| – Credit and Lending | **238** | 216 | 178 | **22** | **10** | **—** |
| – Other<sup>5</sup> | **96** | 115 | 183 | **(19)** | **(17)** | **—** |
| **Revenue excluding notable items** | **12938** | 12342 | 11939 | **596** | **5** | **—** |
| Notable items | **—** |  | 1500 | **—** | **n/a** | **—** |
| **Revenue** | **12938** | 12342 | 13439 | **596** | **5** | **—** |
| 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br>4 For supplementary analysis of fee and other income, see page 91.<br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **22** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Notable items |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **—** |  | 1591 |
| Disposal losses on Markets Treasury repositioning | **—** |  | (142) |
| Currency translation on revenue notable items | **—** |  | 51 |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **1** | 6 | (45) |
| Restructuring and other related costs | **(70)** | 7 | 17 |
| Currency translation on operating expenses notable items | **—** |  | (3) |

---

**Financial performance**

Profit before tax of $6.7bn was $0.1bn or 2%

lower than 2024, on a constant currency basis.

Revenue of $12.9bn was $0.6bn or 5% higher

on a constant currency basis.

Banking NII of $11.1bn increased by $0.7bn or

7%, despite reductions in interest rates. This

increase was driven by the continued benefit

of our structural hedge, as well as higher

lending balances across mortgages and

corporate lending and from growth in deposit

balances, in line with the increase in the

overall market size. These increases were

partly offset by the impact of lower interest

rates.

Fee and other income of $1.8bn fell by 7%.

–In Retail Banking and Wealth, fee and other

income was lower reflecting an increased

cost of customer rewards following the

relaunch of HSBC Premier.

–In Commercial Banking, lower business

banking fees due to proposition changes

were partly offset by higher corporate

lending fees.

ECL of $0.7bn increased by $0.3bn compared

with 2024, on a constant currency basis. The

increase reflected a more normalised level of

ECL in 2025, as well as the non-recurrence of

releases against retail exposures in 2024.

Operating expenses of $5.5bn increased by

$0.4bn or 8%, on a constant currency basis,

including restructuring and other related costs

associated with our organisational

simplification of $0.1bn. The increase primarily

reflected planned higher investment spend in

technology, including on operational resilience.

🡠For business segment financial performance

commentary for the year ended 31 December

2024 compared with 31 December 2023, see

pages 104 to 105.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **23** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | |
|:---|:---|
| Corporate and <br>Institutional Banking<br>| Our CIB business is a market leader in cross-border transaction banking and <br>capital markets. |

---

**Contribution to Group profit** 

**before tax** ※

![13194139533619](hsbc-20251231_g11.gif)

$11.4bn

Calculation is based on profit before tax of our

business segments excluding Corporate Centre.

**Divisional highlights** 

---

| | |
|:---|:---|
| 7% | 16.2% |
| Growth in fees and other income compared <br>with 2024, on a constant currency basis. ※<br>| RoTE excluding notable items up 2.0 <br>percentage points compared with 2024. ※<br>|

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| Revenue | **27637** | 26772 | 24723 | **865** | **3** | **(638)** |
| ECL | **(696)** | (878) | (524) | **182** | **21** | **36** |
| Operating expenses | **(15556)** | (14612) | (13755) | **(944)** | **(6)** | **96** |
| Share of profit/(loss) from associates and joint ventures | **1** | 1 | (1) | **—** | **—** | **—** |
| **Profit before tax** | **11386** | 11283 | 10443 | **103** | **1** | **(506)** |
| RoTE<sup>1</sup> (%) | **14.9** | 14.2 | 14.3 |  |  |  |
| RoTE excluding notable items<sup>1</sup> (%) | **16.2** | 14.2 | 14.8 |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>3</sup> | **14532** | 14519 | 13399 | **13** | **0** | **(758)** |
| **Fee and other income**<sup>4</sup> | **13114** | 12267 | 11701 | **847** | **7** | **129** |
| – Wholesale Transaction Banking | **9239** | 8847 | 8920 | **392** | **4** | **(137)** |
| – Investment Banking | **962** | 946 | 851 | **16** | **2** | **(26)** |
| – Debt and Equity Markets | **2283** | 2252 | 1628 | **31** | **1** | **33** |
| – Wholesale Credit and Lending | **567** | 626 | 668 | **(59)** | **(9)** | **(52)** |
| – Other<sup>5</sup> | **63** | (404) | (366) | **467** | **>100** | **311** |
| **Revenue excluding notable items** | **27646** | 26786 | 25100 | **860** | **3** | **(629)** |
| Notable items | **(9)** | (14) | (377) | **5** | **36** | **(9)** |
| **Revenue** | **27637** | 26772 | 24723 | **865** | **3** | **(638)** |
| 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading <br>and fair value net assets are recorded in 'fee and other income'. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was <br>$9.7bn (2024: $11.5bn).<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **24** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Notable items |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(9)** | (14) |  |
| Disposal losses on Markets Treasury repositioning | **—** |  | (371) |
| Currency translation on revenue notable items | **—** |  | (6) |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(290)** | (10) | (7) |
| Restructuring and other related costs | **(348)** | (2) | 45 |
| Legal provisions | **(322)** |  |  |
| Currency translation on operating expenses notable items | **—** | 3 | 2 |

---

**Financial performance**

Profit before tax of $11.4bn was $0.1bn or

1% higher than in 2024, on a constant

currency basis.

Revenue of $27.6bn was $0.9bn or 3%

higher, on a constant currency basis, including

the adverse impact of $0.6bn from strategic

transactions.

Banking NII of $14.5bn was broadly stable in

comparison with 2024 including an adverse

impact of $0.8bn from strategic transactions.

Banking NII benefited from an increase in

allocated revenue from Markets Treasury

along with a strong growth of 8% in GTS,

mainly in Asia. This was offset by a reduction

in GPS due to the impact of lower interest

rates, offsetting a 5% growth in average

balances.

Fee and other income of $13.1bn increased

by $0.8bn or 7%.

–In Wholesale Transaction Banking, fee and

other income increased by $0.4bn or 4%,

mainly due to strong trading performance in

Global Foreign Exchange from elevated

market volatility and Securities Services,

reflecting improved market conditions and

new clients.

–In Debt and Equity Markets, fee and other

income increased by 1% from elevated

market volatility and strong client demand

from both wealth and corporate clients

within Equity Derivatives.

–In Other, fee and other income increased by

$0.5bn, largely due to the non-recurrence of

adverse hyperinflationary impacts in

Argentina.

ECL of $0.7bn decreased by $0.2bn compared

with 2024 on a constant currency basis. The

decrease reflected lower charges in Asia, due

to a reduction in ECL within the CRE sector in

mainland China.

Operating expenses of $15.6bn were $0.9bn

or 6% higher than in 2024 on a constant

currency basis, including a $0.1bn favourable

impact from strategic transactions. The

increase reflected the impact of notable items

of $1.0bn, including restructuring and other

related costs associated with our

organisational simplification of $0.3bn, legal

provisions of $0.3bn, and costs associated

with the wind-down of M&A and ECM

activities in the UK, Europe and the US. Cost

growth also reflected planned higher spend

and investment in technology, and inflationary

impacts.

🡠For business segment financial performance

commentary for the year ended 31 December

2024 compared with 31 December 2023, see

pages 104 to 105.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **25** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | |
|:---|:---|
| International Wealth and <br>Premier Banking<br>| Our IWPB business comprises Premier banking outside of Hong Kong and <br>the UK, our Private Bank, Asset Management and Insurance businesses. |

---

**Contribution to Group** 

**profit before tax** ※

![13194139533543](hsbc-20251231_g12.gif)

$4.4bn

Calculation is based on profit before tax of our

business segments excluding Corporate Centre.

**Divisional highlights** 

---

| | |
|:---|:---|
| 22% | 35% |
| Growth in wealth fees and other <br>income compared with 2024, on a constant <br>currency basis. ※<br>| Growth in Insurance manufacturing new <br>business CSM compared with 2024, up <br>$0.9bn. <br>|

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| Revenue | **14520** | 13817 | 12385 | **703** | **5** | **(590)** |
| ECL | **(892)** | (993) | (686) | **101** | **10** | **36** |
| Operating expenses | **(9285)** | (8900) | (8549) | **(385)** | **(4)** | **253** |
| Share of profit/(loss) from associates and joint ventures | **24** | 45 | 62 | **(21)** | **(47)** | **—** |
| **Profit before tax** | **4367** | 3969 | 3212 | **398** | **10** | **(301)** |
| RoTE<sup>1</sup> (%) | **17.8** | 15.7 | 13.1 |  |  |  |
| RoTE excluding notable items<sup>1</sup> (%) | **19.0** | 15.5 | 13.6 |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>3</sup> | **7000** | 7640 | 7288 | **(640)** | **(8)** | **(552)** |
| **Fee and other income**<sup>4</sup> | **7593** | 6151 | 5391 | **1442** | **23** | **61** |
| – Retail Banking | **665** | 765 | 745 | **(100)** | **(13)** | **(41)** |
| – Wealth | **6845** | 5618 | 4661 | **1227** | **22** | **(143)** |
| – Other<sup>5</sup> | **83** | (232) | (15) | **315** | **>100** | **245** |
| **Revenue excluding notable items** | **14593** | 13791 | 12679 | **802** | **6** | **(491)** |
| Notable items | **(73)** | 26 | (294) | **(99)** | **>(100)** | **(99)** |
| **Revenue** | **14520** | 13817 | 12385 | **703** | **5** | **(590)** |
| 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | 1 For details of our RoTE calculation by business segment, see page 108.<br>2 Impact of strategic transactions classified as material notable items. For further details, see 'Strategic transactions supplementary analysis' on page 92.<br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total <br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in 'fee and other income' in Wealth.<br>4 For supplementary analysis of fee and other income, see page 91. <br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **26** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Notable items |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(73)** | 28 | 4 |
| Disposal losses on Markets Treasury repositioning | **—** |  | (91) |
| Currency translation on revenue notable items | **—** | (2) | (207) |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(83)** | (3) | (53) |
| Restructuring and other related costs | **(161)** | (14) | 11 |
| Currency translation on operating expenses notable items | **—** |  |  |

---

**Financial performance**

Profit before tax of $4.4bn was $0.4bn higher

than in 2024, on a constant currency basis.

Revenue of $14.5bn was $0.7bn or 5% higher

on a constant currency basis. This included an

adverse impact of $0.6bn from strategic

transactions.

Banking NII of $7.0bn decreased by $0.6bn or

8%, primarily driven by the impact of strategic

transactions of $0.6bn, and the effects of

lower interest rates on deposits. This

reduction was partly offset by growth in

deposits and lending balances, mainly in Asia.

Fee and other income of $7.6bn was up by

$1.4bn or 23%, driven by Wealth due to

broad-based growth across all products and in

multiple markets, including Hong Kong,

mainland China, Singapore, Taiwan and

Mexico.

In Wealth, fee and other income of $6.8bn

was up $1.2bn or 22%, including an adverse

impact of $0.1bn from strategic transactions.

–Insurance increased by $0.6bn or 35%,

reflecting a higher CSM release given

continued year-on-year growth in our CSM

balance and favourable net investment

return and experience variances. The

insurance manufacturing CSM balance at 31

December 2025 was $14.6bn, up $2.5bn or

21% compared with 31 December 2024.

The increase primarily reflected new

business CSM growth of $3.4bn or 35% and

favourable market movements, partly offset

by CSM release.

–Private Bank increased by $0.2bn or 16%,

as increased customer activity supported by

business initiatives led to strong

performances in brokerage and trading, and

from higher annuity fees, driven by growth

in invested asset balances.

–Investment Distribution increased by $0.2bn

or 24% driven by higher sales of mutual

funds and structured products, mainly in

Asia.

In Other, fees and other income increased by

$0.3bn largely due to the non-recurrence of

adverse hyperinflationary impacts in Argentina.

The net loss in notable items of $0.1bn in

2025 was primarily related to net losses on

the disposals of our French and UK life

insurance businesses, partly offset by gains on

the sales of our private banking business in

Germany and our retail operations in Bahrain.

ECL of $0.9bn were broadly stable on a

constant currency basis.

Operating expenses of $9.3bn were $0.4bn or

4% higher than in 2024 on a constant currency

basis, including a $0.3bn favourable impact

from strategic transactions. The growth

primarily reflected continued investments in

Wealth, planned higher spend and investment

in technology, and the impact of inflation.

There was also a $0.1bn increase in

restructuring and other related costs

associated with our organisational

simplification.

🡠For business segment financial performance

commentary for the year ended 31 December

2024 compared with 31 December 2023, see

pages 104 to 105.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **27** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Business segments |  |  |  |  |  |  |

---

Corporate Centre

The results of Corporate Centre primarily comprise the financial impact of certain acquisitions and disposals

and the share of profit from our interests in our associates and joint ventures and related impairments. It also

includes Central Treasury, stewardship costs and consolidation adjustments.

**Financial performance**

Loss before tax of $2.1bn compared with a

profit before tax of $1.2bn in 2024, on a

constant currency basis, primarily due to the

impact from notable items. In 2025, these

included reserve recycling losses of $1.5bn

following the completion of the sale of our

French retained portfolio of home and certain

other loans, legal provisions of $1.1bn, a

$1.1bn loss from the dilution of our

shareholding and a $1.0bn impairment to the

carrying value of the Group's interest in our

associate BoCom. In 2024, notable items

included a net loss of $1.4bn related to

business disposals in Canada and Argentina,

as well as a $0.2bn loss related to the early

redemption of legacy securities.

🡠For further details of the dilution of our

shareholding in BoCom and our impairment

review process see Note 18: Interests in

associates and joint ventures on page 345.

Revenue was $0.7bn lower on a constant

currency basis. This primarily reflected the

impact of notable items, comprising the non-

recurrence of notable items in 2024 as

mentioned above, as well as the reserve

recycling losses recognised following the sale

of our French retained portfolio of home and

certain other loans and the dilution loss related

to BoCom, both in 2025.

Banking NII increased by $0.1bn on a constant

currency basis, primarily on the retained French

portfolio of home and certain other loans,

reflecting the effects of lower interest rates as

well as disposal of the portfolio. Banking NII in

2025 removes from NII the internal cost to fund

trading and fair value net assets, predominantly

in CIB, of $9.7bn (2024: $11.5bn).

Fee and other income of $0.6bn was $0.2bn

higher, primarily due to fair value movements

on financial instruments in Central Treasury

and structural foreign exchange hedges, and

the non-recurrence of an impairment in 2024

related to the sale of our operations in Armenia.

Operating expenses of $1.2bn increased by

$1.5bn on a constant currency basis, primarily

reflecting a legal provision of $1.1bn and a rise

in restructuring and other related costs

associated with our organisational simplification

of $0.4bn.

Share of profit from associates and joint

ventures less impairment of $1.9bn decreased

by $1.0bn on a constant currency basis,

primarily due to an impairment loss of $1.0bn

referred to above.

🡠For business segment financial performance

commentary for the year ended 31 December

2024 compared with 31 December 2023, see

pages 104 to 105.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ | Results – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| Revenue | **(2699)** | (1969) | (39) | **(730)** | **(37)** | **(453)** |
| ECL | **(90)** | (29) | (1) | **(61)** | **>(100)** | **—** |
| Operating expenses | **(1224)** | 311 | (44) | **(1535)** | **>(100)** | **75** |
| Share of profit in associates and joint ventures less impairment | **1886** | 2867 | (358) | **(981)** | **(34)** | **—** |
| **Profit/(loss) before tax** | **(2127)** | 1180 | (442) | **(3307)** | **>(100)** | **(378)** |
| RoTE<sup>1</sup> (%) | **(5.6)** | 0.7 | (1.0) |  |  |  |
| RoTE excluding notable items<sup>1</sup> (%) | **6.1** | 4.3 | 6.0 |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ | Management view of revenue – on a constant currency basis ※ |
|  | **2025** | 2024 | 2023 | **2025 vs 2024** | **2025 vs 2024** | **of which strategic** <br>**transactions**<sup>2</sup><br>|
|  | **$m** | $m | $m | **$m** | **%** | **$m** |
| **Banking NII**<sup>3</sup> | **(626)** | (726) | (183) | **100** | **14** | **105** |
| **Fee and other income** | **591** | 351 | 394 | **240** | **68** | **(199)** |
| **Revenue excluding notable items** | **(35)** | (375) | 211 | **340** | **91** | **(94)** |
| Notable items | **(2664)** | (1594) | (250) | **(1070)** | **(67)** | **(359)** |
| **Revenue**<sup>4</sup> | **(2699)** | (1969) | (39) | **(730)** | **(37)** | **(453)** |

---

1 For details of our RoTE calculation by business segment, see page 108.

2 Impact of strategic transactions classified as material notable items. For details, see 'Impact of strategic transactions' on page 91.

3 For a description of how we derive banking NII, see page 65. Corporate Centre banking NII includes funding charges on property and technology assets, and the

banking NII of the French retained portfolio of home and other loans prior to disposal. Banking NII in 2024 excludes notable items of $0.2bn, which are separately

presented in 'notable items'. There were no notable items in banking NII in 2025 or 2023.

4 Revenue from Markets Treasury, HSBC Holdings net interest expense and hyperinflation are allocated out to the business segments, to align them better with their

revenue and expense. The total Markets Treasury revenue component of this allocation for 2025 was $2.3bn (2024: $1.5bn; 2023: $0.4bn).

---

| | | | |
|:---|:---|:---|:---|
| Notable items |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(1560)** | (1357) | (297) |
| Dilution loss of interest in BoCom associate | **(1104)** |  |  |
| Fair value movements on financial instruments | **—** |  | 14 |
| Early redemption of legacy securities | **—** | (237) |  |
| Currency translation on revenue notable items | **—** |  | 33 |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(130)** | (192) | (216) |
| Restructuring and other related costs | **(435)** | (25) | 63 |
| Legal provisions | **(1110)** |  |  |
| Currency translation on operating expenses notable items | **—** | 15 |  |
| **Impairment of interest in associate** | **(1000)** | **—** | **(3000)** |
| Currency translation on associate notable items | **—** |  | (59) |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **28** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

ESG overview

Our approach to ESG is focused on creating long-term value for our customers

and wider stakeholders.

Our approach

Our approach to ESG focuses on three main

areas: the transition to net zero, building

inclusion and resilience, and acting

responsibly.

**Transition to net zero**

Our ambition is to become a net zero bank by

2050. Supporting our customers is core to our

strategy and financing their transition is both

critical to them and aligned to our net zero

ambition. We want to be our customers' most

trusted international financial partner through

the transition, creating long-term value for

them and our shareholders.

**Our updated Net Zero Transition Plan** 

Our updated Net Zero Transition Plan,

published in November 2025, sets out our

commercially-grounded approach to helping

our customers succeed as the world moves

towards net zero amid changing economic and

geopolitical conditions. It intensifies our efforts

to be customer-focused, commercial and agile.

Our refreshed strategy supports the transition of

our CIB customers, and Commercial Banking

customers in the UK and Hong Kong, by

directing our financing and capabilities to areas

where we believe we can have the greatest

impact on the real economy. Our aim is to

support our customers' transition by providing

and facilitating between $750bn and $1tn of

sustainable finance and investment by 2030.

**Targets and policies**

In our Net Zero Transition Plan, we also set out

our updated interim financed emissions

targets, metrics and associated policies,

seeking to remain science-aligned and

compatible with our own net zero ambition.

Our ability to meet our ambitions, targets and

commitments largely depends on the pace of

our customers' transition journeys in the real

economy.

In light of the latest credible industry-specific

net zero pathways and decarbonisation rates,

we have updated our interim sector-specific

financed emissions targets from fixed targets

to target ranges.

We have also published a new Sustainability

Risk Policies Framework, which details how

we identify, evaluate and manage risks related

to the delivery of our sustainability approach,

and which sets out our sector-specific

sustainability risk approach. It also includes our

Thermal Coal Phase-Out Policy.

🡠For more details, see HSBC Net Zero Transition

Plan at https://www.hsbc.com/who-we-are/our-

climate-strategy/our-net-zero-transition-plan

**Building inclusion and resilience** 

We seek to foster inclusion and build

resilience to help create long-term value for all

our stakeholders. For colleagues, we focus on

creating an inclusive environment and offer

resources that support well-being. In 2025, we

achieved an Inclusion Index score of 78%

against an ambition of 75%, as measured by

our employee engagement survey, Snapshot.

We work to improve accessibility through

products that support customers experiencing

challenges, such as disabilities, impairments,

or significant life events, while also fostering

financial education and well-being.

**Acting responsibly**

Our conduct approach guides us to do the

right thing and focus on the impact we have

on our customers and the financial markets in

which we operate.

Progress on our ESG metrics

We have established ambitions and targets that guide how we do business, including how we operate and how we serve our customers. We set out

below some of the key ESG metrics we use to measure progress against our ambitions. To help us achieve our ESG ambitions, a number of measures

are included in the incentive scorecards of the Group CEO, Group CFO and Group Operating Committee members that underpin some of the ESG

metrics in the table below. For a summary of how our non-financial metrics link to executive remuneration, see pages 253 - 256 of the Director's

remuneration report.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Environment |  | Social |  | Governance |
| **Transition to net zero** | **Transition to net zero** | **Building inclusion and resilience** | **Building inclusion and resilience** | **Acting responsibly**  |
| Sustainable finance and <br>investment<br>| Net zero in our own <br>operations<sup>1</sup><br>| Gender representation | Black heritage | Training |
| $495.6bn | 84.9% | 34.7% | 3.0% | 99% |
| Cumulative total provided and <br>facilitated since 1 January 2020 <br>(2024: $393.6bn)<br>| Reduction in absolute <br>operational greenhouse gas <br>emissions from 2019 baseline <br>(2024: 66.1%)<br>| Senior leadership roles held <br>by women <br>(2024: 34.6%)<br>| Senior leadership roles held <br>by Black heritage colleagues <br>in the UK and US combined <br>(2024: 3.0%)<br>| Employees who completed <br>conduct training in 2025 <br>(2024: 99%)<br>|
| 🡠Read more on page 35. | 🡠Read more on page 47. | 🡠Read more on page 51. | 🡠Read more on page 51. | 🡠Read more on page 61. |
| Financed emissions |  |  |  |  |
| 7 sectors |  |  |  |  |
| Number of sectors where we have <br>set interim financed emissions targets <br>|  |  |  |  |
| 🡠Read more on page 39. |  |  |  |  |

---

1This absolute greenhouse gas emission figure covers scope 1, scope 2 and scope 3 (business travel) emissions only.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **29** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| ESG overview |  |  |  |  |  |  |

---

Task Force on Climate-related Financial Disclosures ('TCFD')

**TCFD**<br>

We have considered our 'comply or explain'

obligation under both the UK Financial Conduct

Authority's Listing Rules 6.6.6R(8) ('UKLR')

and Sections 414CA and 414CB of the UK

Companies Act 2006 ('CA 2006'), collectively

referred to as the 'TCFD requirements' and

Hong Kong Listing Rules ('HKLR') Appendix C2

ESG Reporting Code Part D climate-related

disclosures ('HKLR Part D').

We perform an assessment to ascertain the

appropriate level of detail to be included in the

climate-related financial disclosures set out in

our Annual Report and Accounts 2025, as part

of considering what to measure and publicly

report.

Our assessment takes into account factors

such as the level of our exposure to climate-

related risks and opportunities, the scope and

objectives of our climate-related strategy,

transitional challenges, and the nature, size

and complexity of our business. See 'How we

decide what to measure' on page 385 for

further information.

Many of the climate-related requirements are

duplicated across both UKLR and HKLR Part

D, and as a result we have streamlined our

reporting approach where possible.

We confirm that we have made disclosures

consistent with the TCFD Recommendations

and Recommended Disclosures, including its

annexes and supplemental guidance, save for

one item: we do not plan to set short-term

targets for financed emissions, sustainable

finance or our own operations as our overall

climate strategy is focused on our ambition to

become a net zero bank by 2050. We have set

interim financed emissions 2030 targets and a

sustainable finance and investment ambition

by 2030. Further information can be found on

pages 35 and 41.

We disclose detailed explanatory statements

for TCFD requirements and HKLR Part D.

These statements include additional items that

we either do not currently disclose or partly

disclose within this report.

We further set out reasons for this, including

associated data and system limitations. Where

relevant, we also outline ongoing efforts to

enhance our reporting in these areas.

🡠For a full summary of our TCFD disclosures,

including cross-references to detailed disclosure

locations, see page 386.

🡠Our detailed HKLR Index, including HKLR Part D,

can be found in our ESG Data Pack at

www.hsbc.com/esg.

🡠Detailed explanatory statements for TCFD

requirements and HKLR Part D can be found

from pages 386 to 388.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **30** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Risk overview

Managing risk

We maintain a proactive approach to managing

our exposure to economic, financial and

geopolitical risks, supported by continuous

monitoring and review. Developments in these

areas have historically affected, and may in the

future materially affect, HSBC's customers,

operations and financial risk profile.

**Geopolitical and macroeconomic risk**

In 2025, the global economy showed resilience

to unpredictable US trade policies, heightened

geopolitical tensions and increased fiscal

concerns in our major markets. Global GDP

growth exceeded expectations, driven by export

growth related to the front-loading of trade

purchases to avoid US tariffs and a weaker US

dollar, as well as government spending.

Household consumption was more subdued

due to weak confidence, higher unemployment

and inflation concerns. In the US, GDP growth

outperformed initial forecasts, helped by the

surge of investment in the technology sector. In

mainland China and Hong Kong, exports to

markets in Asia and Latin America offset some

of the impact of US tariffs, while supportive

fiscal and monetary policies continued to

underpin growth.

Trade and tariff policies are expected to remain a

source of uncertainty for businesses and

consumers. Changes to tariff rates, including the

application of sector-specific levies, may deter

capital investment and consumer spending,

disrupt supply chains and reduce global trade

growth. Although the reconfiguration of supply

chains may offer new opportunities for

investment and growth, such developments

could also adversely affect the Group and our

customers who operate in some of the most

affected markets.

Financial markets have witnessed significant

valuation gains, including in the artificial

intelligence ('AI') and technology sectors. The

investment in these sectors may deliver gains

to productivity, but current high valuations also

raise the risk of a material fall in the markets if

the expected gains to productivity fail to

materialise. A disruptive market correction

could undermine economic growth, which

may in turn have an adverse effect on HSBC's

risk profile and earnings by increasing the

financial vulnerability of customers and

decreasing the value of collateral and other

claims.

We also remain subject to interest rate risk,

which can affect net interest income, the fair

value of our assets and liabilities, and overall

financial performance.

Major central banks have adjusted their policy

approach in response to changing inflation and

employment risks. The US Federal Reserve

resumed its cycle of interest rate cuts in

September 2025, after it assessed tariff-related

inflation risks as transitory but labour market

risks as having increased. The target range for

the Federal Funds rate is now 3.5%–3.75%. In

the UK, the Bank of England judged that inflation

pressures had moderated sufficiently to cut

interest rates in December 2025.

Although financial markets have priced in further

interest rate cuts, there is uncertainty around

their future trajectory. Policy rates could be

raised if inflation were to accelerate significantly

beyond central bank target ranges. Higher

interest rates may reduce loan demand across

key consumer and business segments, which

could lead to a deterioration in credit quality and

weigh on real estate and other asset prices. By

contrast, lower interest rates could pressure net

interest margins and adversely affect

profitability.

Our risk profile may be influenced by fiscal

policies, public deficits and levels of

indebtedness. In many of our major markets,

government debt levels are rising due to higher

social welfare costs and increased expenditure

on defence and climate transition. A fragmented

political landscape in many markets has

diminished the political will for fiscal tightening.

Higher long-term interest rates across major

economies could adversely impact the fiscal

capacity and debt sustainability of highly-

indebted sovereigns. The rise in funding costs in

our major markets could reduce the potential for

GDP growth by raising the cost of borrowing

while also creating refinancing risks for our

customers and counterparties.

Exchange rate volatility may also affect our risk

exposure through mark-to-market changes in

trading positions and the translation effects of

currency movements.

The geopolitical environment remains complex,

and tensions could impact the Group's

operations and risk profile. We continue to

monitor the Russia-Ukraine war, developments

in relation to conflict in the Middle East, and the

wider implications as a result of the US military

action in Venezuela, as well as any indication of

other potential military action or conflicts

elsewhere. These conflicts remain key sources

of uncertainty, and may impact HSBC and our

customers, including through increased market

volatility and supply chain disruptions.

Heightened strategic competition between the

US and China, including cross-border

investment restrictions, is also affecting the

configuration of global supply chains, which may

in turn affect the Group's operations.

Sanctions and restrictions on trade and

investment are continually evolving in response

to geopolitical events and may adversely affect

the Group, its customers and the markets in

which the Group operates. These factors may

result in increased legal, regulatory, reputational

and market risks, and a more complex operating

environment.

Signs of a recovery have begun to emerge in

the residential segment of Hong Kong's

commercial real estate market in the second

half of 2025. However, the office segment is still

facing pressure and market liquidity remains

tight, particularly for mid-sized and sub-

investment grade corporates. In mainland China,

the property market remains weak with

government stimulus yet to trigger a material

improvement in buyer sentiment.

At the end of 2025, management adjustments

to ECL were applied to reflect sector or portfolio

risks that are not fully captured by our models.

We continue to monitor, and seek to manage,

the potential implications of all the above

developments on our customers and our

business.

**Our key risk appetite metrics**

At 31 December 2025, our CET1 ratio and ECL

charges were within our defined risk appetite

thresholds. At 31 December 2025, our CET1

ratio was 14.9%, unchanged from 31

December 2024. Wholesale and Retail ECL

charges were within appetite at 0.4% and

0.34% of loans and advances, respectively.

**Our operations**

We remain committed to investing in the

reliability and resilience of our technology

systems and critical services, including our ability

to withstand and respond to cyber-attacks. We

assess our third parties to help ensure they

deliver the standard of services we require to

provide resilient services to our customers. We

do so to help protect our customers and

counterparties, and to help ensure that we

minimise any disruption to our services. In our

approach to defending against these threats, we

invest in business and technical controls to help

us detect, prevent, respond to, recover and learn

from issues in a timely manner within our risk

appetite.

HSBC is committed to using AI responsibly. We

are working to balance the opportunity AI

presents to accelerate delivery of our strategy

with the need for appropriate controls to help

mitigate the associated risks. To help meet the

Group's needs and regulatory expectations for

AI, whether developed internally or facilitated

through third parties, we continue to enhance

our Group-wide AI oversight, governance,

lifecycle management and risk framework.

HSBC's Principles for the Ethical Use of Data

and AI are available at www.hsbc.com/ai.

We continue to focus on improving the quality

and timeliness of the data used to support

informed management decisions, and we are

advancing our strategic and regulatory change

initiatives to help deliver the right outcomes for

our customers, people, investors and

communities.

🡠For further details of our Central and other

economic scenarios, see page 149.

🡠For further details on our CET1 ratio, see pages 5

and 192.

🡠For further details of our risk management

framework and risk appetite, see page 119.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **31** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Strategic report** | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
| Risk overview |  |  |  |  |  |  |

---

Top and emerging risks

Our top and emerging risks report identifies

forward-looking risks so that they can be

considered in determining whether any

incremental action is needed to either prevent

them from materialising or to limit their effect.

Top risks are those that have the potential to

have a material adverse impact on the financial

results, reputation or business model of the

Group. We actively manage and take actions

to mitigate our top risks. Emerging risks are

those that, while they could have a material

impact on our risk profile were they to occur,

are not considered immediate and are not

under active management. Our suite of top

and emerging risks is subject to regular review

by senior governance forums. We continue to

monitor closely the identified risks and agree

management actions to remediate and/or

reduce them to acceptable levels, as required.

🡠For further detail on our top and emerging risks,

see page 121.

---

| | | |
|:---|:---|:---|
| **Risk** | **Trend** | **Description** |
| **Externally driven** |  |  |
| Geopolitical and <br>macroeconomic risks <br>| 🞁 | Our operations and portfolios are subject to risks arising from political instability, civil unrest and military conflict, which may <br>lead to disruption of our operations, physical risk to our staff and/or physical damage to our assets. We are also subject to <br>macroeconomic risks, which may drive changes to our income growth and asset quality. Heightened geopolitical and <br>macroeconomic risk globally, including uncertainty in international trade policy, is subject to close monitoring and review.<br>|
| Technology and <br>cybersecurity risk<br>| 🞁 | There is an increased risk of service disruption or loss of data resulting from technology failures or malicious activities from <br>internal or external threats. We continue to monitor changes to the technology and threat landscape, including those arising <br>from ongoing geopolitical and macroeconomic events alongside third-party incidents and the impact this may have on risk <br>management. We operate a continuous improvement programme to help support the resilience and stability of our technology <br>operations and counter a fast-evolving and heightened cyber threat environment.<br>|
| Environmental, social <br>and governance <br>('ESG') risks<br>| 🞁 | We are subject to ESG risks, including in relation to climate change, nature and human rights. These risks have increased due <br>to diverging national and political agendas, a more complex and prescriptive regulatory environment across the jurisdictions <br>we operate in, as well as increasing frequency of severe weather events across the globe. Financial institutions' actions and <br>investment decisions in respect of ESG matters continue to be subject to heightened scrutiny by stakeholders. Failure to meet <br>these evolving expectations may have financial and non-financial impacts, including reputational, legal and regulatory <br>compliance risks.<br>|
| Financial crime risk  | 🞁 | We are exposed to financial crime risk from our customers, staff and third parties engaging in criminal activity. The financial <br>crime risk environment is heightened due to increasingly complex geopolitical challenges, the macroeconomic outlook, the <br>complex and dynamic nature of sanctions and export control compliance, evolving financial crime regulations, rapid <br>technological developments, an increasing number of national data privacy requirements and the increasing sophistication of <br>fraud. As a result, we will continue to face the possibility of regulatory enforcement and reputational risk.<br>|
| Digitalisation and <br>technological <br>advances risk<br>| 🞁 | Developments in technology and changes in regulations continue to enable new entrants to the banking industry as well as <br>new products and services offered by competitors. This challenges us to continue to innovate with new digital capabilities and <br>evolve our products, to attract, retain and best serve our customers. Along with opportunities, new technology, including <br>GenAI, can introduce risks and disruption. We seek to manage technology developments with appropriate controls and <br>oversight.<br>|
| Evolving regulatory <br>environment risk<br>| 🞁 | The regulatory and compliance risks are set against continued geopolitical risk and regulatory focus on operational resilience, <br>resolvability, prudential requirements, financial reporting and data, ESG, conduct, as well as sound risk and financial crime risk <br>management practices. The approach to regulation is increasingly fragmented, including in relation to AI and digital assets, <br>and a trend towards deregulation has emerged in some jurisdictions, concurrently with regulatory actions to support business <br>growth.<br>|
| **Internally driven** | **Internally driven** |  |
| Data risk | 🞂 | We use data to serve our customers and run our operations, often in real-time within digital experiences and processes. If our <br>data is not accurate and timely, our ability to serve customers, operate with resilience or meet regulatory requirements could <br>be impacted. We seek to ensure that non-public data is kept confidential, and that we comply with the growing number of <br>regulations that govern data privacy and cross-border movement of data.<br>|
| Risks arising from the <br>receipt of services <br>from third parties <br>| 🞁 | We procure goods and services from a range of third parties. In the current macroeconomic and geopolitical climate, the risk <br>of service disruption in supply chains is elevated, driven by an industry-wide increase in supply chain cyber threats. We <br>continue to strengthen our controls, oversight and risk management policies and processes to select and manage third parties, <br>including our third parties' own supply chains, particularly for key activities that could affect our operational resilience.<br>|
| Model risk | 🞂 | Model risk arises whenever business decision making includes reliance on models. We use models in both financial and non-<br>financial contexts, as well as in a range of business applications. Evolving regulatory requirements and enhanced expectations <br>continue to drive changes to the way model risk is managed across the banking industry, with a particular focus on capital and <br>credit loss models. New technologies, including AI, are driving a need for enhanced model risk controls.<br>|
| Strategic execution <br>risk<br>| 🞁 | Successful execution of our strategy enables us to help address the swiftly changing needs of our customers and <br>stakeholders. We are committed to enhancing the effectiveness of strategic execution risk controls and monitoring. This will <br>help us minimise disruptions during a period of heightened execution risk, driven by the complexity and scale of ongoing <br>strategic, regulatory and technological change.<br>|
| Risks associated with <br>workforce capability, <br>capacity and <br>environmental factors <br>with potential impact <br>on growth<br>| 🞁 | Our businesses, functions and geographies are exposed to risks associated with employee retention and talent availability, the <br>evolving skills requirements of our workforce, and compliance with employment laws and regulations. Voluntary attrition <br>across the Group remains stable, but failure to manage these risks may impact the delivery of our strategic objectives or lead <br>to regulatory sanctions or legal claims, and the risks are heightened during the implementation of organisational change.<br>|

---

🞁 Risk heightened during 2025 🞂 Risk remained at the same level as 2024

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **32** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Environmental,

social and

governance review

Our ESG review sets out our approach to our

environment, customers, employees and

governance. It explains how we aim to achieve

our purpose, deliver our strategy in a way that is

sustainable, and build strong relationships with all

of our stakeholders.

**How we present our TCFD disclosures**

Our overall approach to TCFD can be found on page 29 and

additional information is included on pages 385 to 388. Further

details have been embedded in this section and the Risk review

section on pages 203 to 212. Our TCFD disclosures are

highlighted with the following symbol:

**TCFD**<br>

---

| | |
|:---|:---|
| **Environmental** | **Environmental** |
| **33** | Our approach to the transition |
| **34** | Understanding our ESG reporting |
| **35** | Supporting our customers |
| **38** | Partnering for an enabling environment |
| **39** | Embedding net zero into the way we operate |
| **Social** | **Social** |
| **51** | Our commitment to inclusion |
| **53** | Building a healthy workplace |
| **55** | Developing skills, careers and opportunities |
| **56** | Building customer inclusion and resilience |
| **56** | Engaging with our communities |
| **Governance** | **Governance** |
| **57** | Setting high standards of governance |
| **58** | Human rights |
| **59** | Customer experience |
| **61** | Integrity, conduct and fairness |
| **63** | Safeguarding data |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **33** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Environmental

**TCFD**<br>

Transition to net zero

We aim to support the transition to net zero and a sustainable future

in partnership with our customers and other stakeholders

**Our approach to the transition**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Our Priorities** | Be simple and agile | Drive customer-centricity | Drive customer-centricity | Deliver focused sustainable growth | Deliver focused sustainable growth |
| **Our Values** | We value difference | We succeed together | We take responsibility  | We take responsibility  | We get it done |
| **Our Net Zero** <br>**Ambition**<br>| **Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy** | **Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy** | **Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy** | **Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy** | **Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy** |
| **Our Three Net** <br>**Zero Pillars**<br>| Supporting <br>our customers | Embedding net zero <br>into the way we operate | Embedding net zero <br>into the way we operate | Partnering for an enabling <br>environment | Partnering for an enabling <br>environment |
|  | We are seeking to align our capital <br>and capabilities with our <br>customers' transition goals, by <br>tailoring our products and services <br>to the specific needs of different <br>customers around the world. | We are working to incorporate net <br>zero considerations into our <br>broader decision-making activities, <br>our climate risk management <br>framework, our metrics, and in our <br>own operations and supply chains. | We are working to incorporate net <br>zero considerations into our <br>broader decision-making activities, <br>our climate risk management <br>framework, our metrics, and in our <br>own operations and supply chains. | Our ability to finance our customers' <br>transition is influenced by external <br>market and policy conditions, <br>therefore we seek to partner with <br>stakeholders and advocate for <br>progress across the financial system. | Our ability to finance our customers' <br>transition is influenced by external <br>market and policy conditions, <br>therefore we seek to partner with <br>stakeholders and advocate for <br>progress across the financial system. |

---

Our ambition is to become a net zero bank by

2050. Supporting our customers is core to our

strategy and financing our customers'

transition is both critical to them and aligned to

our net zero ambition.

**Our updated Net Zero Transition Plan**

When we published our first Net Zero

Transition Plan, we committed to evolving our

approach to keep pace with the dynamic world

in which we and our customers operate. Since

early 2024, the global landscape has shifted

markedly, making the pace of transition more

uneven. Against this broader landscape, we

updated our Net Zero Transition Plan in

November 2025, intensifying our efforts to be

customer focused, commercial and agile. It

sets out the actions we are continuing to take

to achieve our net zero ambition and to align

our financing with the Paris Agreement goals

of holding the increase in global average

temperature to well below 2°C above pre-

industrial levels, and pursuing efforts to limit

the temperature increase to 1.5°C.

Our Net Zero Transition Plan remains

structured around our three core

implementation pillars: supporting our

customers, embedding net zero into the way

we operate, and partnering for an enabling

environment.

**Supporting our customers**

As a global financial institution, we exist to

serve our customers. We believe supporting

our customers' transition is one of the most

significant roles we can play in the global

transition to net zero. This will help to deliver

long-term value for customers and

shareholders. We have refined our approach

to continue to be responsive to the diverse

realities faced by our different customers

across the world, from individuals through to

multinational corporates and institutions.

**Embedding net zero into the way we** 

**operate**

Our net zero ambition is an important part of our

corporate strategy. Our global businesses are

developing strategic plans that integrate climate

and sustainability considerations into their

operations. This approach reflects the diverse

transition maturities and local regulatory

expectations across our global footprint.

Our focus on the transition to net zero is well

established within our governance, culture,

and key performance indicators. A number of

measures supporting our progress towards

our net zero ambition are included in executive

performance scorecards and management

reporting, helping align accountability across

the organisation.

**Partnering for an enabling environment**

Recognising that our customers' transition, and

our ability to finance it, relies in part on external

market and policy conditions, we also seek to

support enabling environments that can help

accelerate the flow of capital towards business

innovation and transformation.

Our approach seeks to build support across a

range of stakeholder groups and reflect the

varying pace and shape of the transition across

sectors and geographies, as well as the size

and scope of our presence in local markets.

**Progress on our Net Zero Transition Plan** 

We continue to take actions across our

organisation to support the implementation of

our Net Zero Transition Plan. We continue to

focus on developing and maintaining the

capabilities of our people as the sustainability

landscape evolves. This report provides key

updates on our progress in 2025 and includes

our annual TCFD reporting.

🡠For further details on our climate risk exposures,

see page 203.

🡠For further details on building our net zero

capabilities and upskilling, and assumptions,

uncertainties and dependencies, see pages 9,

48, 49, and 57 of the HSBC Net Zero Transition

Plan.

🡠For the HSBC Net Zero Transition Plan refer to

https://www.hsbc.com/who-we-are/our-climate-

strategy/our-net-zero-transition-plan

---

| | | |
|:---|:---|:---|
| **Key changes to our 2025 disclosures**<br>In 2025, there was an impact on certain climate <br>disclosures, including:<br>–Financed emissions: We have updated our <br>interim 2030 financed emissions targets for <br>all of our in-scope carbon-intensive sectors, <br>apart from thermal coal mining. We have re-<br>baselined and restated prior year metrics <br>| to account for the latest methodology and <br>scope changes, including the addition of <br>short-term lending. For further details, see <br>page 39.<br>–Thermal coal financing drawn balance <br>exposure: In 2025 we amended product <br>scope in line with changes made for <br>financed emissions as discussed above <br>| and have developed a more detailed <br>framework for our approach to exclusions. <br>This resulted in a re-baseline of our 2020 <br>thermal coal financing drawn balance <br>exposure. For further details, see page 50.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **34** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

**Understanding our ESG reporting**

**Engaging with our stakeholders and our** 

**material ESG topics**

We know that engaging with our stakeholders

is core to being a responsible business. To

determine material topics that our

stakeholders are interested in, we conduct a

number of activities throughout the year. The

TCFD requirements, HKLR Appendix C2 ESG

Reporting Code Parts C and D and other

applicable rules and regulations are considered

as part of the identification of material issues

and disclosures. Additional information can be

found in the 'How we decide what to

measure' section on page 385. Material ESG

topics are listed on page 32 and related

disclosures are covered in this ESG review.

**Continuing to evolve our climate** 

**disclosures**

We engage with standard setters to support

the development of transparent and

consistent climate-related industry standards

in areas such as implementation of new

International Sustainability Standards across

jurisdictions, sustainable finance taxonomy

and emissions accounting. We have aligned

our definitions of risk and opportunities with

our strategic planning cycle. For climate

reporting, we define short-term as time

periods up to 2 years, medium-term is

between 3-5 years, and long-term is between

6-15 years.

We have reviewed our interim financed

emissions targets, metrics and associated

policies, seeking to remain science-aligned

and compatible with our own net zero

ambition, while remaining realistic and credible

given global developments.

We expect to periodically review and, if

required, update our targets. We seek to

monitor the latest developments in climate

science and associated scenarios to help

inform our approach to target setting and our

portfolio alignment to support the transition of

the real economy to net zero. In 2026, we will

continue to review and enhance our approach

to disclosures.

**Internal and external data challenges** 

The effective measurement, governance and

reporting of progress against our climate

ambitions is reliant on the availability of high-

quality, accessible, comparable and reliable

internal and external data. We are also reliant

on our own ability to collect and process such

relevant data as required in a timely manner.

Reported client emission data may have up to

a two-year lag, making alignment to financial

reporting dates challenging and leading to

further reliance on proxies.

Newer data sources and topics may be

difficult to assure using traditional verification

techniques. This, coupled with diverse

external data sources and complex structures,

further complicates data consolidation. Our

internal data on customer groups that was

used to source financial exposure and

emissions data is based on credit and

relationship management factors and is not

always aligned with the need to analyse

emissions across sector value chains. This can

result in inconsistencies in our financed

emissions calculations.

We continue to strengthen our ESG data and

analytics capability, working to deliver trusted

data assets, dashboards, AI, and advanced

analytics solutions that help support initiatives

like financed emissions, climate scenario

analysis, stress testing, sustainable finance

and portfolio optimisation.

Given our dependency on collecting emissions

data from our clients and the manual nature of

the process, enhanced verification and

assurance procedures are performed on a

sample basis over this data, including by the

first and second lines of defence. Our climate

models undergo independent review by an

internal model review group, and we obtain

limited assurance on our financed emissions

and sustainable finance disclosures from

external parties, including our external

auditors.

**Lack of consistency across sustainable** 

**finance taxonomies**

Sustainable finance metrics, taxonomies and

practices currently lack global consistency. As

standards develop and regulatory guidance

evolves across jurisdictions, our targets,

methodologies and disclosures may also need

to adapt. Recognising these challenges, we

annually refresh and disclose our Sustainable

Finance and Investment Data Dictionary to

accompany reporting against our sustainable

finance and investment ambition. For further

details, see page 35.

Our re-baseline and restatement policy defines

the circumstances for a restatement of

previously reported data. We continue to

engage with standard setters in different

regions to support the development of

transparent and consistent taxonomies to

encourage science-based decarbonisation,

particularly in high transition risk sectors.

**Impact on our reporting and financial** 

**statements**

We have assessed the impact of climate risk

on our balance sheet and have concluded that

no incremental adjustments were needed to

capture climate impacts in our financial

statements for the year ended 31 December

2025. The effects of climate change are a

source of uncertainty. We capture known and

observable potential impacts of climate-related

risks in our asset valuations and balance sheet

calculations. These are considered in relevant

areas of our balance sheet, including expected

credit losses, classification and measurement

of financial instruments, goodwill and other

intangible assets; and in making the long-term

viability and going concern assessment. As

part of assessing the impact on our financial

statements we conducted scenario analysis to

understand the impact of climate risk on our

business (see pages 49 and 206), and we also

used available information to perform a

climate ECL sensitivity analysis for both our

retail and wholesale portfolios (see page 212).

🡠For further details of how management

considered the impact of climate-related risks on

its financial position and performance, see

'Critical estimates and judgements' on page 301.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **35** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Supporting our customers**

Sustainable finance and investment

**TCFD**<br>

We aim to help our customers' transition to net

zero and a sustainable future by providing and

facilitating between $750bn and $1tn of

sustainable finance and investment by 2030.

Our sustainable finance and investment

ambition aims to help promote green,

sustainable and socially-focused business and

sustainable investment products and solutions.

Since 1 January 2020, we have provided and

facilitated a cumulative $437.9bn of sustainable

finance and $57.7bn of ESG and sustainable

investing, as defined in our Sustainable Finance

and Investment Data Dictionary 2025. This

included 39% where the use of proceeds was

dedicated to green financing, 11% to social

financing, and 14% to other sustainable

financing. It also included 24% of sustainability-

linked financing and 12% of net new

investment flows managed and distributed on

behalf of investors.

In 2025, our underwriting activity for green,

social, sustainability, and sustainability-linked

bonds declined, primarily due to challenging

market conditions, particularly in the latter half

of the year. The global social bond market

contracted during 2025, with HSBC's volume

reducing by approximately $4bn compared

with the previous year. Despite these

headwinds, on-balance sheet sustainable

lending transactions increased by 12% versus

2024, supported by strong growth of 15% in

ESG and sustainable investing flows.

In 2025, as part of our continued monitoring

and controls processes, we identified $0.3bn of

transactions that no longer fulfil our eligibility

criteria. These were declassified and removed

from the 2025 total, taking the total amount

declassified since 1 January 2020 to $1.6bn.

Continued progress towards achieving our

sustainable finance and investment ambition is

dependent on market demand for the products

and services set out in our Sustainable Finance

and Investment Data Dictionary 2025.

**Sustainable finance and investment**

## $495.6 bn <sup>†</sup>
Cumulative total provided and facilitated since

1 January 2020 (2024: $393.6bn)

---

| | | | | |
|:---|:---|:---|:---|:---|
| Sustainable finance and investment summary<sup>1</sup> | **2025**<br>**($bn)**<br>| 2024<br>($bn)<br>| 2023<br>($bn)<br>| **Cumulative** <br>**progress since** <br>**2020** <br>**($bn)**<br>|
| Balance sheet-related transactions provided<sup>2</sup> | **52.8** | 47.4 | 42.7 | **221.5** |
| Capital markets/advisory (facilitated) | **32.6** | 37.3 | 33.3 | **216.4** |
| ESG and sustainable investing (net new flows) | **16.6** | 14.5 | 7.7 | **57.7** |
| **Total contribution**<sup>†</sup> | **102.0** | 99.2 | 83.7 | **495.6** |
| **Sustainable finance and investment classification by theme**<sup>1</sup> | **Sustainable finance and investment classification by theme**<sup>1</sup> | **Sustainable finance and investment classification by theme**<sup>1</sup> | **Sustainable finance and investment classification by theme**<sup>1</sup> |  |
| Green use of proceeds<sup>5</sup> | **41.7** | 42.2 | 37.1 | **196.0** |
| Social use of proceeds | **6.9** | 9.6 | 8.4 | **52.6** |
| Other sustainable use of proceeds<sup>3</sup> | **14.2** | 13.9 | 10.7 | **71.4** |
| Sustainability-linked<sup>4</sup> | **22.6** | 19.0 | 19.8 | **117.9** |
| ESG and sustainable investing | **16.6** | 14.5 | 7.7 | **57.7** |
| **Total contribution**<sup>†</sup> | **102.0** | 99.2 | 83.7 | **495.6** |

---

<sup>†</sup>The $495.6bn cumulative progress since 1 January 2020 is subject to independent third-party limited assurance in accordance with International Standard on

Assurance Engagements 3000 (Revised) 'Assurance Engagements other than Audits or Reviews of Historical Financial Information'. Our Sustainable Finance and

Investment Data Dictionary 2025 and independent third-party limited assurance report is available at: www.hsbc.com/who-we-are/esg-and-responsible-business/

esg-reporting-centre.

1 The 2025 data in this table has been prepared in accordance with our Sustainable Finance and Investment Data Dictionary 2025, which includes green, social and

sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions provided (including drawn and

undrawn amounts), the proportional share of facilitated capital markets/advisory activities and ESG and sustainable investing net new flows of both HSBC Asset

Management sustainable investment funds and third-party solutions distributed through Private Bank and Retail Banking.

2 In 2024 only nine months of retail green/energy efficient mortgages were included for the first time within Other Qualified Green Lending. In 2025 reporting, 12

months of transactions were included, reported a quarter in arrear (1 October 2024 to 30 September 2025) due to the time lag in sourcing supporting third-party

data. For future years' reporting we will continue to report green/energy efficient mortgages a quarter in arrear.

3Sustainable use of proceeds can be used for green, social or a combination of green and social purposes, assessed by HSBC against internal standards and

relevant industry guidelines.

4 Sustainability-linked products, where the coupon or interest rate is dependent on whether the borrower achieves certain pre-defined sustainability performance

target(s), are assessed by HSBC against internal standards and relevant industry guidelines and can be used for general purposes, which may be sustainable or

non-sustainable.

5 Included within the total cumulative contribution towards our ambition are transactions to customers within the six high transition risk sectors (i.e. automotive,

chemicals, construction and building materials, metal and mining, oil and gas, and power and utilities) as described on page 204, of which approximately $71bn is

defined as green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2025.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **36** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial statements | Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

We believe supporting our customers'

transition is one of the most significant roles

we can play in the global transition to net zero.

Our Corporate and Institutional Banking ('CIB')

business, which incorporates HSBC

Infrastructure Finance, gives our customers

seamless access to global capital, markets

expertise and financing through a single

platform.

We have refreshed our strategy to support the

transitions of our CIB customers globally and

our Commercial Banking customers in the UK

and Hong Kong, and deliver on our growth

ambition. Our lending to corporate and

institutional customers makes up the majority

of our balance sheet and financed emissions,

so the role we play with these customers is

critical to achieving our net zero ambition.

We intend to become:

**–The leading bank for fast-growing** 

**transition ecosystems.** Our customer

base spans ecosystems like clean power,

electrification of transport, and data centres

and AI. These ecosystems represent a

significant volume of the transition capex

needed by 2030 as they are key

decarbonisation and transformation vectors

for the economy. Expanding clean

electrification will be an important step to

minimise AI's operational footprint while

maximising the technology's potential<sup>1</sup>.

**–The strategic transition partner for all** 

**our customers.** We aim to support all our

customers across segments and sectors to

meet their sustainability goals, leveraging

our debt financing and trade finance

capabilities across over 50 markets<sup>1</sup>.

**–Bank of choice to catalyse emerging** 

**climate tech.** With our HSBC Innovation

Banking platform and substantial balance

sheet, we can bridge the gap between early-

stage development and large-scale

deployment of climate-critical technologies.

–We are also well-positioned to connect

these start-ups with our corporate and

institutional customers that are looking to

invest in climate tech ventures, and adopt

their solutions to accelerate their transition

journey<sup>1</sup>.

–

**Understanding customer transition** 

**priorities**

We take a holistic approach to understanding

and supporting the transition journeys of our

customers and potential customers. We

regularly engage with our corporate customers

to help tailor our solutions to the diverse

realities they face around the globe, and the

different stages of their transition journey.

**Supporting personal customers**

We offer financing and investing options to

our individual banking customers in the key

areas where they may be able to influence

their carbon footprint.

1 For further details see HSBC Net Zero Transition

Plan at https://www.hsbc.com/who-we-are/our-

climate-strategy/our-net-zero-transition-plan

pages 26-28.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **37** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

ESG and sustainable investing

Our ambition is to be one of the leading global

asset and wealth managers and sustainability

is an important enabler to achieving this

ambition.

We offer a suite of ESG and sustainable

investing solutions to institutional and

individual investors who want to mitigate risk

or seek value creation through considering

climate, nature or other sustainability factors in

their investment horizon. Covering both

traditional and alternative investment areas,

our solutions aim to advance ESG and

sustainable goals. We take different

approaches to achieve this, such as investing

in issuers or securities that may either seek

stronger ESG performance, align to themes

such as climate or the net zero transition, or

seek to deliver environmental or social

outcomes.

As at 31 December 2025, HSBC Asset

Management managed $213bn in ESG and

sustainable investing solutions, marking an

increase of $33.3bn or 18.5% from 2024.

These assets include those that are distributed

by our Private Bank and Retail Banking, and

those that Asset Management manages on

behalf of HSBC Insurance. This increase

underscores our continued focus on providing

a range of solutions tailored to meet the

diverse investment objectives of our clients.

For our individual investors, our ESG and

sustainable investing solutions span multiple

asset classes, including mutual funds, ETFs,

equities, fixed income, alternatives, as well as

discretionary mandates. In 2025, we

expanded our investment offering with the

launch of four additional mutual funds and

ETFs. We regularly publish insights to help our

clients better understand the ESG implications

of their investments.

In our Insurance business, as an asset owner,

we seek to adopt a responsible investment

approach. We give customers access to

sustainability options through investment-

linked insurance products where we offer a

range of investment choices, including those

relating to ESG and sustainable investing.

Some may target specific net zero transition

and climate themes.

🡠For further details of our Asset Management

policies, see page 50.

Our sustainable finance and investment data dictionary

We define sustainable finance and investment

as any form of financial service that integrates

ESG criteria into business or investment

decisions. This includes financing, investing

and related activities that support the

achievement of the UN Sustainable

Development Goals, including but not limited

to the aims of the Paris Agreement on climate

change.

Our Sustainable Finance and Investment Data

Dictionary sets out our approach for classifying

financing and investment as sustainable for

the purpose of tracking and disclosing our

performance against our sustainable finance

and investment ambition.

We update our data dictionary annually,

including reviewing our product definitions,

adding new qualifying products and removing

products that no longer qualify, making

enhancements to our internal standards, and

developing our reporting and governance.

We engage in industry initiatives to develop

our understanding and approach to 'transition

finance'. We do not currently include transition

finance as a product label or stand-alone

category in our data dictionary and reporting,

and we will continue to monitor and consider

industry guidance for future updates to our

data dictionary.

We have established internal business

governance forums and processes to assess

and monitor the risks associated with

sustainable finance products, ranging from

product design, origination and approval, as

well as tracking and monitoring product

performance.

We recognise that there are products and

assets included in HSBC's ESG and

sustainable investing approach which may be

counted towards our sustainable finance and

investment ambition that do not necessarily

qualify as 'sustainable investments' as defined

by Sustainable Finance Disclosure Regulation

(SFDR) and/or other relevant regulations, and

may not qualify as 'sustainable' products for

the purposes of the UK Sustainability

Disclosure Requirements (SDR) and European

Securities and Markets Authority (ESMA) fund

naming guidance and/or any other regulatory

standards.

🡠For our 2025 ESG Data Pack and Sustainable

Finance and Investment Data Dictionary, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **38** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Partnering for an enabling environment**

Our ability to support our customers' transition

is heavily influenced by external market and

policy conditions. We seek to partner for an

enabling environment that can help to

accelerate the flow of capital towards scaling

transition solutions and innovation.

We aim to use our global reach and convening

ability to engage and collaborate with a range

of partners – including industry peers,

customers, governments, academia, civil

society and entrepreneurs – on solutions that

can help support the transition.

Through our philanthropy, we also partner with

a range of NGOs to help develop thought

leadership, spur innovation, build capacity,

mobilise capital and test and scale climate

solutions.

**Highlights from our sustainability-**

**aligned partnerships**

In 2025, we donated approximately $12.6m in

grant funding to help establish a portfolio of

partnerships aligned to the strategic focus

areas set out in our Net Zero Transition Plan.

We also supported initiatives focused on

driving progress on cross-cutting issues, such

as nature and the just transition.

---

| | |
|:---|:---|
| **Our just transition approach**<br>The speed and scale of the transition to net <br>zero will be influenced by how it impacts <br>communities, and how communities view <br>and support the transition. <br>Our approach to net zero considers how we <br>can support a just transition, including how <br>best to engage with and inform our <br>customers on the topic, as well as helping to <br>ensure the transition to net zero can <br>positively impact local communities. <br>Examples of our engagement include:<br>–In 2025, we supported the Just Transition <br>Finance Lab at the London School of <br>Economics, which produced thought<br>| –<br>–leadership on topics including 'promoting a <br>transition with inclusion in India' and <br>'mobilising bonds for a just transition'.<br>–HSBC Asset Management, in line with <br>relevant stewardship activities, <br>encourages companies to identify and <br>address the impacts of their climate <br>strategy on stakeholders, including <br>workers, suppliers and the communities in <br>which they operate. This may involve <br>setting specific metrics or objectives <br>concerning, but not limited to, employee <br>training and development, green job <br>creation, safeguarding workers' rights and <br>support for affected communities.<br>|

---

---

| | | |
|:---|:---|:---|
| Our approach to nature | Our approach to nature | Our approach to nature |
| Nature and its ecosystem services are <br>foundational to economic growth, resilience <br>and long-term value creation. Nature-related <br>opportunities and risks – which can stem <br>from the impacts and dependencies the <br>global economy and financial system have on <br>nature, as well as the complex interactions <br>and compounding effects of climate change – <br>are areas that require further consideration.<br>We have been developing our approach to <br>nature, aligning it with our net zero approach: <br>supporting our customers through financing <br>and investing in nature-related solutions; <br>starting to embed nature into the way we <br>operate, initially through understanding our <br>exposure to nature and managing nature-<br>related risk in our European business; and <br>| partnering for a supportive enabling <br>environment, for example, through our <br>nature-focused philanthropic partnerships.<br>In 2025, we established a Group Nature <br>Programme, including senior governance, <br>to oversee the development of our approach <br>to nature. We continued to advance our <br>approach to nature-related risk, initially <br>focused on key parts of our European <br>business, by starting to incorporate nature <br>into wholesale credit risk management <br>processes and completing a pilot nature <br>scenario analysis stress test. We continue to <br>enhance our capabilities, methodologies and <br>tools, in line with evolving regulatory and <br>reporting expectations.<br>| HSBC Asset Management highlights good <br>practices relating to nature in its Stewardship <br>Plan, emphasising natural capital strategy, <br>risk and reporting, governance and <br>engagement. We encourage priority investee <br>companies (as defined in our Stewardship <br>Plan), where nature-related issues are <br>relevant, to work towards these practices.<br>In 2025, Climate Asset Management, a joint <br>venture between HSBC Asset Management <br>and climate investment and advisory firm <br>Pollination, was ranked as Fund Manager of <br>the year in both Global and European <br>Categories at the Agri Investor Awards.<br>🡠For further details see HSBC Asset <br>Management Stewardship Plan at https://<br>www.assetmanagement.hsbc.co.uk/en/<br>institutional-investor/about-us/responsible-<br>investing/policies<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **39** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Embedding net zero into the way we operate**

Financed emissions

**TCFD**<br>

Financed emissions is one of the key metrics

we use to measure progress on the transition

of our portfolio. As part of our ambition to

become a net zero bank by 2050, we have set

financed emissions targets for 2030.

Our analysis of financed emissions comprises

'on-balance sheet financed emissions' and

'facilitated emissions', which we distinguish

where necessary in our reporting.

Financed emissions link the financing we

provide for our customers to their activities in

the real economy and provide an indication of

the associated GHG emissions. They form

part of our scope 3 emissions, which include

emissions associated with the use of a

company's products and services.

Our on-balance sheet financed emissions

include emissions related to on-balance sheet

lending, such as project finance and direct

lending. Our facilitated emissions include

emissions related to financing we help clients

to raise through capital markets activities. Our

analysis covers financing from CIB, and

Commercial Banking in the UK and Hong

Kong.

Our combined on-balance sheet financed and

facilitated emissions targets are for two

emissions-intensive sectors: oil and gas; and

power and utilities. Our on-balance sheet

financed emissions targets cover the following

sectors: cement; iron and steel; aviation;

automotive; and thermal coal mining.

We have set absolute emissions reduction

targets for the oil and gas, and thermal coal

mining sectors. For the power and utilities;

cement; iron and steel; aviation; and

automotive sectors, we have set emissions

intensity targets that allow us to deploy capital

towards decarbonisation solutions.

As part of our financial reporting, we present the

progress for these sectors against our financed

emissions baselines and targets.

Our approach to financed emissions

In our approach to assessing our financed

emissions, our key methodological decisions

are shaped in line with industry practices and

standards. We recognise that these practices

and standards are still developing. We will also

continue to review our reporting approach as

regulatory standards evolve, such as the

impact of the International Sustainability

Standards Board (ISSB) Standards.

**Coverage of our analysis**

Our analysis focuses on the most carbon-

emissive sectors and the parts of the value

chain where we believe most of the

emissions are produced, to help reduce

double counting of emissions. Double

counting may occur when GHG emissions are

counted more than once in the financed

emissions calculation. For instance, to

minimise the overlap of emissions captured,

we only include midstream activities of the

automotive sector, as upstream may be

included in other sectors that we finance, such

as iron and steel. This is different to the scope

of sectors within the wholesale corporate

lending portfolio that we use to manage

climate risk. These sectors are set out on page

204. By estimating emissions and setting targets for

customers that directly account for, or indirectly

influence, the majority of emissions in each of

the most carbon-emissive sectors, we can

focus our engagement and resources where we

believe the potential for change is highest. For

each sector, our reported emissions now

typically include all the major GHGs, including

carbon dioxide, methane and nitrous oxide,

among others. These are reported as tonnes of

CO2 equivalent ('tCO2e').

To calculate annual on-balance sheet financed

emissions, we have taken into consideration

guidance from the Partnership for Carbon

Accounting Financials ('PCAF') standard. We

use drawn balances as at 31 December in the

year of analysis related to wholesale credit and

lending, including business loans and project

finance, as the value of finance provided to

customers.

For facilitated emissions we considered all

capital market transactions in scope for the year

of analysis. These included debt and equity

capital markets, and syndicated loans.

🡠For further details see our Financed Emissions

and Thermal Coal Exposures Methodology at

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre

---

| | | |
|:---|:---|:---|
| Our financed emissions target refresh and associated changes | Our financed emissions target refresh and associated changes | Our financed emissions target refresh and associated changes |
| As stated in our 2025 Net Zero Transition <br>Plan, we have undertaken a detailed review of <br>each of our interim 2030 financed emissions <br>targets this year to seek to ensure our <br>approach continues to reflect the evolving <br>external context, including developments in <br>policy, technology, climate science, customer <br>actions, available data and methodologies.<br>We have updated our targets for all our in-<br>scope carbon-intensive sectors, apart from <br>thermal coal mining. Our thermal coal mining <br>target remains unchanged, in alignment with <br>our thermal coal phase-out policy and thermal <br>coal financing drawn balance exposure <br>reporting. <br>| The key change is the adoption of a target <br>range for our interim 2030 financed emissions <br>targets, informed by IEA's 2024 Net Zero <br>Emissions ('NZE') Scenario and Announced <br>Pledges Scenario ('APS'). <br>For our emissions intensity-based targets, we <br>have moved the baseline year from 2019 to <br>2023 to reflect improvements in available data <br>and methodology. Targets for these sectors <br>are point-in-time targets and independent <br>from the baseline. We continue to use 2019 <br>as the baseline year for our oil and gas <br>combined financed and facilitated emissions <br>target, and 2020 for our thermal coal mining <br>financed emissions target, as our absolute <br>emissions reduction targets are set based on <br>a percentage reduction from the baseline <br>year.<br>| Lending products that are short term in nature <br>are now included in our financed emissions <br>reporting. We have included short-term <br>lending with the aim to cover in-scope lending <br>activity and align with industry guidance. In <br>addition, we have descoped aluminium from <br>the previously reported iron, steel and <br>aluminium sector and changed the reporting <br>unit for aviation from revenue passenger <br>kilometre ('rpk') to revenue tonne kilometre <br>('rtk').<br>See page 45 for details on the scope and <br>methodology changes driving our re-baselines <br>and restatements. <br>🡠For further details see our Financed Emissions <br>and Thermal Coal Exposures Methodology at <br>www.hsbc.com/who-we-are/esg-and-<br>responsible-business/esg-reporting-centre<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **40** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

The chart below shows the scope of our

financed emissions analysis of seven sectors,

including upstream, midstream and

downstream activities within each sector. The

allocation of companies to different parts of

the value chain is highly dependent on expert

judgement and data available on company

revenue streams. As data quality improves,

this will be further refined.

Financed emissions analysis

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Sector** | **Scope of** <br>**emissions**<br>| **Value chain in scope** | **Value chain in scope** |  |  | **Coverage of GHGs** |
| Oil and gas | 1, 2 and 3 | Upstream <br>(e.g. extraction)<br>| Midstream<br>(e.g. transport)<br>| Downstream <br>(e.g. fuel use)<br>| Integrated/ <br>diversified<br>| All GHGs |
| Power and utilities | 1 and 2 | Upstream (e.g. <br>generation)<br>| Midstream<br>(e.g. transmission and distribution)<br>| Downstream<br> (e.g. retail)<br>| Diversified utilities - <br>Power generation<br>| All GHGs |
| Cement | 1 and 2 | Upstream (e.g. raw <br>materials, extraction)<br>| Midstream <br>(e.g. clinker and cement manufacturing) | Midstream <br>(e.g. clinker and cement manufacturing) | Downstream <br>(e.g. construction)<br>| All GHGs |
| Iron and steel | 1 and 2 | Upstream (e.g. raw <br>materials, extraction)<br>| Midstream<br>(e.g. ore to steel) | Midstream<br>(e.g. ore to steel) | Downstream <br>(e.g. construction)<br>| All GHGs |
| Aviation | 1 for airlines, <br>3 for aircraft <br>lessors<br>| Upstream (e.g. parts <br>manufacturers)<br>| Midstream <br>(e.g. aircraft manufacturing) | Midstream <br>(e.g. aircraft manufacturing) | Downstream <br>(e.g. airlines and air lessors)<br>| All GHGs |
| Automotive | 1, 2 and 3 | Upstream <br>(e.g. suppliers)<br>| Midstream <br>(e.g. motor vehicle manufacture) | Midstream <br>(e.g. motor vehicle manufacture) | Downstream <br>(e.g. retail)<br>| All GHGs |
| Thermal coal mining | 1, 2 and 3 | Upstream<br>(e.g. extraction)<br>| Midstream<br>(e.g. processing) | Midstream<br>(e.g. processing) | Downstream <br>(e.g. retail)<br>| All GHGs |
| Key: |  |  |  |  |  |  |

---

![](hsbc-20251231_g13.gif)

![](hsbc-20251231_g14.gif)

![](hsbc-20251231_g15.gif)

![](hsbc-20251231_g16.gif)

![](hsbc-20251231_g17.gif)

![](hsbc-20251231_g18.gif)

![](hsbc-20251231_g19.gif)

![](hsbc-20251231_g20.gif)

**Included in analysis**

**Setting our targets**

Our initial approach to target setting used a

single reference scenario – the 2021

International Energy Agency ('IEA') Net Zero

Emissions by 2050 Scenario ('NZE 2021'). We

have now introduced a target range for all our

in-scope carbon-intensive sectors (except for

thermal coal mining) informed by the IEA's

2024 NZE and APS Scenarios.

Our approach is aligned with the goals of the

Paris Agreement to hold the global

temperature increase to well below 2°C above

pre-industrial levels and pursuing efforts to

limit the temperature increase to 1.5°C above

pre-industrial levels. Adopting a target range

helps us to better navigate the inherent

uncertainty in the pace of transition in the real

economy.

Facilitated emissions included in our combined

metrics are weighted at 33%, in accordance

![](hsbc-20251231_g21.gif)

![](hsbc-20251231_g22.gif)

![](hsbc-20251231_g23.gif)

![](hsbc-20251231_g24.gif)

![](hsbc-20251231_g25.gif)

![](hsbc-20251231_g26.gif)

![](hsbc-20251231_g27.gif)

![](hsbc-20251231_g28.gif)

![](hsbc-20251231_g29.gif)

![](hsbc-20251231_g30.gif)

![](hsbc-20251231_g31.gif)

![](hsbc-20251231_g32.gif)

![](hsbc-20251231_g33.gif)

![](hsbc-20251231_g34.gif)

![](hsbc-20251231_g29.gif)

with the PCAF standard. To further reduce the

inherent volatility in facilitated emissions, we

apply a moving average up to three years

building up from the baseline year (e.g.

average of 2022, 2023 and 2024 for the 2024

oil and gas progress numbers) to track

progress towards our combined target. This

means that transactions facilitated in 2028 and

2029 will still have an impact on the 2030

progress number and will need to be taken

into consideration as we manage progress

towards our target.

We perform feasibility analysis of our financed

emissions targets, considering multiple

climate-related scenarios.

We do not plan to rely on purchasing credits

to achieve any interim 2030 financed

emissions targets we set.

![](hsbc-20251231_g35.gif)

**An evolving approach**

We continue to engage with regulators,

standard setters, investors and industry bodies

to help shape our approach to target setting and

managing portfolio alignment to support the

transition to net zero in the global economy.

For the agricultural, corporate and retail real

estate sectors, we continue to expect to

measure and report our financed emissions in

future disclosures and we are working on

improving the quality and granularity of internal

data and sourcing suitable external data for

reliable measurement.

🡠For further details see our Financed Emissions

and Thermal Coal Exposures Methodology at

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre

---

| | | |
|:---|:---|:---|
| Data and methodology limitations | Data and methodology limitations | Data and methodology limitations |
| Our financed emissions estimates and methodological choices are shaped by data availability for our sectors. We are members of the PCAF, <br>which defines and develops GHG accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for <br>Financed Emissions and for Facilitated Emissions provide detailed methodological guidance. | Our financed emissions estimates and methodological choices are shaped by data availability for our sectors. We are members of the PCAF, <br>which defines and develops GHG accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for <br>Financed Emissions and for Facilitated Emissions provide detailed methodological guidance. | Our financed emissions estimates and methodological choices are shaped by data availability for our sectors. We are members of the PCAF, <br>which defines and develops GHG accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for <br>Financed Emissions and for Facilitated Emissions provide detailed methodological guidance. |
| –We have found that data quality scores vary <br>across the different sectors and years of our <br>analysis. While we expect our data quality <br>scores to improve over time, as companies <br>continue to expand their disclosures to meet <br>growing regulatory and stakeholder <br>expectations, there may be fluctuations <br>within sectors year-on-year, and/or <br>differences in the data quality scores due to <br>changes in data availability.<br>| –Most of our clients do not yet report the full <br>scope of GHG emissions included in our <br>analysis, in particular scope 3 at a subsidiary <br>level. In the absence of client-reported <br>emissions, we estimated emissions using <br>proxies based on company production and <br>revenue figures. We applied industry <br>averages in our analysis where company-<br>specific data was unavailable, using third-<br>party datasets. As data improves for client-<br>reported emissions, our reliance on <br>estimates will continue to reduce.<br>| –Reported client emissions data may have up <br>to a two-year lag, which may result in <br>alignment challenges to financial reporting <br>dates and lead to further reliance on proxies.<br>–Mapping external datasets to our internal <br>client entities can be challenging due to <br>complex company ownership structures.<br>–The methodology and data used to assess <br>financed emissions and set targets continue <br>to evolve and we expect industry guidance, <br>market practice, and regulations to continue <br>to change.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **41** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

---

| | | |
|:---|:---|:---|
| Data and methodology limitations continued | Data and methodology limitations continued | Data and methodology limitations continued |
| –We remain conscious that the financed <br>emissions calculation is sensitive to volatility <br>in drawn amounts or market value <br>fluctuations, and we plan to be transparent <br>around drivers for change to portfolio <br>financed emissions where possible.<br>–We calculate sector-level emissions <br>intensity metrics using a portfolio-weighted <br>approach.<br>–Due to data limitations, we are unable to <br>obtain production data for all clients and so <br>we calculate an emissions intensity figure <br>using the 75th percentile of available data <br>points to meet this data gap, which we <br>consider as a conservative approach. <br>–Classification of our clients into sectors is <br>performed at a counterparty group level with <br>inputs from SMEs, and will continue to <br>evolve with improvements to data and our <br>sector classification approach. Our internal <br>data on customer groups used to source <br>financial exposure and emissions data is <br>based on credit and relationship <br>management attributes and may not always <br>be aligned to the data required to analyse <br>emissions across sector value chains.<br>| –As the sub-sector, and therefore the value <br>chain classification of a client, is based on <br>expert judgement, and as clients continue to <br>transition, classification changes can result <br>in sectoral movement year-on-year.<br>–Emissions are calculated at a counterparty <br>group level, rather than at subsidiary level, <br>mainly due to the availability of emissions <br>data, and this may lead to over- or under-<br>estimation of emissions compared with <br>calculation at the subsidiary level. <br>–Companies with multiple activities, such as <br>conglomerates with near to equal business <br>activity split across multiple sectors, are <br>excluded from our reporting as these can <br>have different activities and cannot be <br>allocated to one sector target.<br>–For scope 2 emissions, companies may <br>often choose between reporting location or <br>market-based emissions. For our analysis, <br>where available, market-based emissions <br>data is prioritised for sourcing compared <br>with location-based emissions. <br>| –We use structured entities to securitise <br>customer loans and advances we originate <br>and to diversify sources of funding for asset <br>origination and capital efficiency. These are <br>currently excluded and we will continue to <br>review our reporting approach as industry <br>guidance and methodology evolves. <br>–Where we have sponsored or invested in <br>our clients' securitisation vehicles, these <br>have been included in our analysis where <br>possible, recognising current data <br>limitations, applying the PCAF business <br>loans approach.<br>–The operating environment for climate <br>analysis and portfolio alignment is maturing. <br>We continue to work to improve our data <br>management processes. <br>🡠For further details see our Financed Emissions <br>and Thermal Coal Exposures Methodology at <br>www.hsbc.com/who-we-are/esg-and-<br>responsible-business/esg-reporting-centre<br>|

---

Targets and progress

We have set out in the table below our

combined on-balance sheet financed and

facilitated emissions targets for the oil and

gas, and power and utilities sectors. We also

set out our updated targets for the on-balance

sheet financed emissions for cement, iron and

steel, aviation and automotive, and our

existing thermal coal mining target.

For our combined on-balance sheet financed

and facilitated emissions targets in 2024, the

moving average for facilitated emissions with

a 33% weighting for the oil and gas sector

totals 5.0 Mt CO2e and for the power and

utilities sector, it totals 279 tCO2e/GWh.

These values are then combined with the on-

balance sheet numbers for the relevant year to

track progress to target. We set out the annual

figures before the application of the three-year

average built up from the baseline in the

facilitated emissions table on page 46.

This year we have a three-year moving

average for oil and gas in 2023 and 2024, and

a two-year moving average for power and

utilities in 2024. Averages will be built up to

three years over time.

We disclose emissions in 2023 and 2024 and

progress achieved in 2024 versus baseline for

each sector.

The table incorporates re-baselines and

restatements, where relevant, and in this

section we set out the approach we take to

target setting.

When assessing the changes from 2019 to

2024, it is important to emphasise how

changes to exposure and market fluctuations

impact yearly updates as we make progress

towards our interim targets. Movement from

one year to the next may not reflect future

trends for the financed emissions of our

portfolio.

See specific sector sections for further

information on key movements.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Sector**<sup>1</sup> | **Baseline** | **2023** | **2024** | **2024 % change** <br>**vs. baseline**<br>| **2030 target** | **Unit**<sup>2</sup> | **Target** <br>**type**<br>| **Target scenario** |
| **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average**  |
| Oil and gas  | 46.2 in 2019 | 28.9 | **28.5** | **(38)%** | (14-30)% | Mt CO2e | Absolute | IEA APS and NZE 2024  |
| Power and utilities | 295 in 2023 | 295 | **242** | **(18)%** | 195-270 | tCO2e/GWh | Intensity | IEA NZE and APS 2024 |
| **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** |
| Cement | 0.59 in 2023 | 0.59 | **0.61** | **3%** | 0.47-0.56 | tCO2e/t cement | Intensity | IEA NZE and APS 2024 |
| Iron and steel | 1.73 in 2023 | 1.73 | **1.81** | **5%** | 1.29-1.52 | tCO2e/t steel | Intensity | IEA NZE and APS 2024 |
| Aviation | 747 in 2023 | 747 | **737** | **(1)%** | 709-776 | tCO2e/million rtk<sup>3</sup> | Intensity | IEA NZE and APS 2024 |
| Automotive | 152.8 in 2023 | 152.8 | **146.8** | **(4)%** | 65.5-95.3 | tCO2e/million vkm | Intensity | IEA NZE and APS 2024 |
| Thermal coal mining<sup>4</sup> | 3.4 in 2020 | 1.03 | **0.22** | **(94)%** | (70)%<sup>4</sup> | Mt CO2e | Absolute | IEA NZE 2021 |

---

1 Our absolute and intensity emissions metrics and targets are measured based on the drawn exposures of the counterparties in scope for each sector. Emissions

intensity is a weighted average according to the portfolio weight of each investment, as a proportion of the total portfolio value.

2 For the oil and gas sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent ('Mt CO2e'); for the power and utilities sector, intensity

is measured in tonnes of carbon dioxide equivalent per gigawatt hour ('tCO2e/GWh'); for the cement sector, intensity is measured in tonnes of carbon dioxide

equivalent per tonne of cement ('tCO2e/t cement'); for the iron and steel sector, intensity is measured in tonnes of carbon dioxide equivalent per tonne of steel

('tCO2e/t steel'); for the aviation sector, intensity is measured in tonnes of carbon dioxide equivalent per million revenue tonne kilometres ('tCO2e/million rtk'); for

the automotive sector, intensity is measured in tonnes of carbon dioxide equivalent per million vehicle kilometres ('tCO2e/million vkm'); and for the thermal coal

mining sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent ('Mt CO2e').

3 We have changed our reporting unit for aviation from revenue passenger kilometre ('rpk') to revenue tonne kilometre ('rtk') to better align to counterparties in scope

which often include all airline activities (passengers, belly cargo, dedicated cargo). Additionally, this metric enables direct comparison to climate scenarios that are based

on traffic demand forecasts and aligns to industry practice.

4 The thermal coal mining scope differs from the other target sectors. We include solely emissions from thermal coal production and coal power generation, rather than

the total emissions of a counterparty within a sector, to reflect the thermal coal mining absolute financed emissions reduction target.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **42** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

We plan to report financed emissions and

progress against our targets annually, and to

be transparent in our disclosures about the

methodologies applied and any challenges or

dependencies. However, financed emissions

figures may not be reconcilable or comparable

year-on-year in future, and baselines and

targets may require updates or revisions as

data, methodologies and reference scenarios

develop.

Consistent with the PCAF guidance on

financed emissions accounting, we only

consider the outstanding drawn financing

amount, given this has a direct link to real

economy emissions.

A number of clients have material undrawn

balances that, if drawn, could significantly

increase the financed emissions related to

those clients. We expect to assess how to

manage these exposures on a forward-looking

basis as we progress towards our 2030

targets. In addition, for the sectors with

intensity-based targets, the emissions

intensity is sensitive to material clients, and

changes to drawn balances year-on-year can

therefore influence the trend.

We continue to engage with and support our

clients in their decarbonisation journey by

providing financing and advisory services.

The charts below display our progress to date

in relation to the updated 2030 target,

including historical progress metrics based on

our previous methodology.

🡠For further details see our Financed Emissions

and Thermal Coal Exposures Methodology at

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre

**Oil and gas**

For the oil and gas sector, our analysis

included scope 1, 2 and 3 emissions, including

carbon dioxide and methane, for upstream and

integrated companies. Our baseline and

progress figures reflect combined on-balance

sheet financed and facilitated emissions.

We have set a target to reduce absolute

combined on-balance sheet financed and

facilitated emissions for our oil and gas

portfolio by 14-30% by 2030 relative to our

2019 baseline. The percentage reduction

range is equivalent to the percentage decrease

that the IEA indicates in its APS and NZE 2024

scenarios for global sector emissions to 2030,

from a 2019 baseline.

We show in the chart our progress to date

against our 2030 target. For 2024, the oil and

gas sector represents 48% of the financed

emission footprint of our target sectors. In

2024, absolute combined on-balance sheet

financed and facilitated emissions in our

portfolio decreased by 38% to 28.5 million

tonnes of carbon dioxide equivalent ('Mt

CO2e') relative to the 2019 baseline and

decreased by 1% from 2023 to 2024.

The reduction was due to strategic portfolio

management actions, complemented by

temporary factors, such as low loan drawdown

levels. These factors offset increases in 2024

for both short-term lending and capital markets

transaction volumes, where capital markets

activity remains subdued compared with the

baseline year. Facilitated emissions are

incorporated on a three-year rolling average

basis, and lower volumes from 2022 and 2023

continue to be included in the 2024 reported

number.

We are currently reporting below the 2030

target range. Achieving the target range is

sensitive to market activities, such as clients

increasing capital markets transactions, and

volatility in short-term lending or external

factors leading clients to draw down on

existing facilities, all of which could lead to

increased financed emissions in our portfolio.

We continue to engage and support our clients

in their transition journey while managing

towards our risk appetite.

---

| | |
|:---|:---|
| **Oil and gas** <br>**Mt CO2e**<br>| **2024 progress** <br>**from baseline**<br>|
|  | **(38)%** |

---

![154481383906945](hsbc-20251231_g36.gif)

![](hsbc-20251231_g37.gif)

(14-30)%

![](hsbc-20251231_g38.gif)

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

**Power and utilities**

For the power and utilities sector, our analysis

included scope 1 and 2 emissions for

upstream power generation, and diversified

utilities power generation companies. Our

baseline and progress figures reflect combined

on-balance sheet financed and facilitated

emissions.

We target a combined on-balance sheet

financed and facilitated emissions intensity of

195-270 tonnes of carbon dioxide equivalent

per gigawatt hour ('tCO2e/GWh') by 2030. This

reduction range is equivalent to the global

sector average emissions intensity for 2030

that the IEA indicates in its NZE and APS 2024

scenarios.

We have chosen an intensity-based target to

enable increased financing of clients engaging

in low-emissions solutions and transition

initiatives, such as renewable and clean energy

deployment, grid modernisation, energy

storage and efficiency improvements. With

electricity demand expected to more than

double by 2050 due to population growth,

electrification of industry, transport and

buildings, and demand from air conditioners

and data centres, a shift to low carbon-

intensive power generation will be critical.

We show in the chart our progress to date

against our 2030 target. For 2024, the power

and utilities sector represents 14% of the

financed emission footprint of our target

sectors. In 2024, the combined on-balance

sheet financed and facilitated emissions

intensity in our portfolio decreased by 18% to

242 tCO2e/GWh relative to the 2023 baseline

and is currently within the 2030 target range.

This reduction was primarily driven by

increased financing to lower emission-

intensive clients and a greater shift towards

financing renewable energy projects and pure-

play companies.

---

| | |
|:---|:---|
| **Power and utilities** <br>**tCO2e/GWh**<br>| **2024 progress** <br>**from baseline**<br>|
|  | (18)% |

---

![69269232619179](hsbc-20251231_g42.gif)

195-270

![](hsbc-20251231_g37.gif)

![](hsbc-20251231_g43.gif)

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **43** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Cement**

For the cement sector, our analysis included

scope 1 and 2 emissions for midstream

companies with clinker and cement

manufacturing facilities.

We target an on-balance sheet financed

emissions intensity of 0.47-0.56 tonnes of

carbon dioxide equivalent per tonne of cement

('tCO2e/t cement') by 2030, using 2023 as our

baseline. This reduction is equivalent to the

global sector average emissions intensity for

2030 that the IEA indicates in its NZE and APS

2024 scenarios.

In the short term, the global cement industry

has demonstrated emissions reductions

through energy efficiency, alternative fuels,

kiln optimisation, lowering the clinker-to-

cement ratio and incorporating supplementary

cementitious materials. Achieving further

emissions reductions and enabling near-zero

emissions cement production in the medium

to long term will require significant investment

in emerging technologies, including alternative

cementitious materials, renewable industrial

heat, and large-scale carbon capture and

storage.

Globally, over 50 million tonnes per annum of

near-zero emissions cement and concrete

production capacity has been announced or is

under development.

We show in the chart our progress to date

against our 2030 target. For 2024, the cement

sector represents 11% of the financed

emission footprint of our target sectors.

The 2024 emissions intensity of our portfolio,

at 0.61 tCO2e/t cement, was 3% higher than

the 2023 baseline. The increase in 2024 was

mainly driven by sector mix. Our portfolio in

this sector is heavily concentrated and

emissions intensity trends are highly sensitive

to material client exposures and changes to

drawn balances year-on-year.

---

| | |
|:---|:---|
| **Cement**<br>**tCO2e/t cement**<br>| **2024 progress** <br>**from baseline**<br>|
|  | **3%** |

---

![69269232619184](hsbc-20251231_g44.gif)

0.47-0.56

![](hsbc-20251231_g37.gif)

![](hsbc-20251231_g45.gif)

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g46.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

**Iron and steel**

For the iron and steel sector, our analysis

included scope 1 and 2 for midstream iron and

steel production. We have now descoped

aluminium as our exposure to this sector is

very limited and the combination of two

metals with different emissions intensity

ranges and decarbonisation trajectories

created volatility in reporting.

We have currently not set a separate

aluminium target due to our low exposure to

the sector, both in terms of client numbers

and financed emissions. We will continue to

monitor our aluminium exposure and in the

event that it becomes a more material part of

our portfolio in future, we may consider

creating a separate target.

We target an on-balance sheet financed

emissions intensity of 1.29-1.52 tonnes of

carbon dioxide equivalent per tonne of steel

('tCO2e/t steel') by 2030, using 2023 as our

baseline. This reduction is equivalent to the

global sector average emissions intensity for

2030 that the IEA indicates in its NZE and APS

2024 scenarios.

To achieve near-term emissions reductions,

we note that steel producers are focusing on

enhanced energy efficiency, increased scrap

utilisation, procuring green electricity and

testing alternatives to coke. A smaller group of

clients are looking at more transformative

investments, such as closing old coal-reliant

capacity and replacing it with direct reduction

and electric arc furnaces, and investing in

upstream enablers, like high quality iron ore,

and green iron supply chains.

Further innovation and investments this

decade will be crucial to scale and

commercialise low-emissions iron and steel

production processes, which will be an

important factor in achieving our 2030 target.

We show in the chart our progress to date

against our 2030 target. For 2024, the iron and

steel sector represents 8% of the financed

emissions footprint of our target sectors.

The emissions intensity of our portfolio in 2024

rose by 5% to 1.81 tCO2e/t steel against our

2023 baseline, driven by a shift in our sector

mix across our low to high emissions-intensive

clients. The emissions intensity trends in this

sector are highly sensitive to volatility in client

exposures and changes to drawn balances

year-on-year.

---

| | |
|:---|:---|
| **Iron and steel** <br>**tCO2e/t steel**<sup>1</sup> <br>| **2024 progress** <br>**from baseline**<br>|
|  | 5% |

---

![69269232623083](hsbc-20251231_g47.gif)

![](hsbc-20251231_g37.gif)

1.29-1.52

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g48.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

1Previously reported progress figures include

aluminium.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **44** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Aviation**

For the aviation sector, our analysis included

passenger airlines' scope 1 and aircraft

lessors' scope 3 emissions, focusing on

downstream. We have changed our reporting

unit for aviation from revenue passenger

kilometre ('rpk') to revenue tonne kilometre

('rtk') to better align counterparties in scope,

which often include all airline activities

(passengers, belly cargo, dedicated cargo).

Additionally, this metric enables a direct

comparison with climate scenarios that are

based on traffic demand forecasts, and aligns

to industry practice.

We target an on-balance sheet financed

emissions intensity of 709-776 tonnes of

carbon dioxide equivalent per million revenue

tonne kilometres ('tCO2e/million rtk') by 2030,

using 2023 as our baseline. This reduction is

equivalent to the global sector average

emissions intensity for 2030 that the IEA

indicates in its NZE and APS 2024 scenarios.

We believe the sector needs significant policy

support, investments in alternative fuels, such

as sustainable aviation fuel ('SAF'), and new

efficient aircraft to reduce emissions.

The adoption of SAF is in its infancy, currently

accounting for an estimated 0.1% of all

aviation fuels consumed.

SAF use needs to increase to over 10% by

2030 to be in line with the IEA NZE 2024

scenario. This requires a significant ramp-up of

investment in production capacity and

supportive policies, such as fuel taxes and low

carbon fuel standards, as existing and planned

SAF projects are expected to meet just 2–4%

of jet fuel demand by 2030.

We show in the chart our progress to date

against our 2030 target. Historical progress

metrics are based on our previous

methodology, with tCO2e/rpk converted to

tCO2e/rtk using a multiplier of 10. For 2024,

the aviation sector represents 7% of the

financed emission footprint of our target

sectors.

In 2024, the emissions intensity of our

portfolio fell by 1% to 737 tCO2e/million rtk

relative to the 2023 baseline and is currently

within the 2030 target range. This decline was

primarily driven by higher exposure to airlines

that are transitioning to lower emissions.

Improved availability of client reported data has

also improved the quality of our reported

numbers. This sector is heavily concentrated,

and emissions-intensity trends are highly

sensitive to material client exposures and

changes to drawn balances year-on-year.

---

| | |
|:---|:---|
| **Aviation**<br>**tCO2e/million rtk**<sup>1</sup><br>| **2024 progress** <br>**from baseline**<br>|
|  | (1)% |

---

![69269232623086](hsbc-20251231_g49.gif)

709-776

![](hsbc-20251231_g37.gif)

![](hsbc-20251231_g50.gif)

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

1Previously reported progress figures in tCO2e/

million rpk are converted to tCO2e/million rtk

using a multiplier of 10.

**Automotive**

For the automotive sector, our analysis

included scope 1 and 2 for midstream

manufacturing of vehicles, and scope 3 for

tank-to-wheel exhaust pipe emissions for light-

duty vehicles. We excluded heavy-duty

vehicles from our analysis as the target

pathway derived from the IEA excludes them

as they have a different decarbonisation

pathway relative to light-duty vehicles. This

approach is also consistent with industry

practice. We will consider including heavy-duty

vehicles at a later stage of our analysis, as data

and methodologies develop.

We target an on-balance sheet financed

emissions intensity of 65.5-95.3 tonnes of

carbon dioxide equivalent per million vehicle

kilometres ('tCO2e/million vkm') by 2030 using

2023 as our baseline. This reduction is

equivalent to the global sector average

emissions intensity for 2030 that the IEA

indicates in its NZE and APS 2024 scenarios.

The IEA NZE 2024 scenario implies that by

2030, electric vehicle ('EV') share of sales

would be 30%, based on HSBC analysis.

During 2025, BloombergNEF estimates that

EV sales were 24%.

Achieving our 2030 financed emissions target

will be challenging unless there is a strong

acceleration in the share of EV sales in certain

markets. This will require large-scale

investments in new EVs and battery

manufacturing plants, alongside widespread

charging infrastructure and government

policies to support EVs.

We show in the chart our progress to date

against our 2030 target. For 2024, the

automotive sector represents 12% of the

financed emissions footprint of our target

sectors.

The 2024 emissions intensity of our portfolio

dropped by 4% to 146.8 tCO2e/million vkm

against our 2023 baseline of 152.8 tCO2e/

million vkm. The decline against our baseline

was driven by a sector mix towards lower

emissions-intensity clients.

---

| | |
|:---|:---|
| **Automotive**<br>**tCO2e/million vkm**<br>| **2024 progress** <br>**from baseline**<br>|
|  | (4)% |

---

![1722](hsbc-20251231_g51.gif)

![](hsbc-20251231_g37.gif)

![](hsbc-20251231_g45.gif)

65.5-95.3

![](hsbc-20251231_g39.gif)

![](hsbc-20251231_g52.gif)

![](hsbc-20251231_g40.gif)

![](hsbc-20251231_g41.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **45** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Thermal coal mining**

For the thermal coal mining sector, our

analysis focused on scope 1, 2 and 3

emissions in upstream companies, including

those involved in extraction. When calculating

our financed emissions from thermal coal

mining, we focused on thermal coal extraction

and processing companies, and diversified

mining companies. The majority of our

reported financed emissions relate to scope 3

emissions associated with coal mining,

representing financing provided to large

conglomerates that own diversified business

interests including coal.

We have set a target to reduce our absolute

on-balance sheet financed emissions by 70%

by 2030, relative to the re-baselined 2020

figure of 3.4 million tonnes of carbon dioxide

equivalent ('Mt CO2e'). We used 2020 as a

baseline to align with the baseline used for our

drawn balance exposure targets in our thermal

coal phase-out policy. Our target is consistent

with a global 1.5°C-aligned pathway, as

defined by the IEA NZE 2021 scenario.

We show in the chart our progress to date

against our 2030 target. For 2024, thermal coal

mining represents 0.5% of the financed

emissions footprint of our target sectors.

In 2024, absolute on-balance sheet financed

emissions decreased by 94% to 0.22 Mt CO2e

relative to the 2020 baseline and decreased by

79% from 2023 to 2024. The overall reduction

from the 2020 baseline figure for 2023 and

2024 was due to reduced project financing and

specific coal purpose loans, combined with

strategic decisions and low client drawdown

levels.

We are currently reporting below the 2030

target. Looking ahead, this number remains

sensitive to risk factors, such as increased

client drawdowns of existing facilities and

volatility in short-term lending products that

could result in an increase from the current

reported number. We continue to engage with

and support our clients in their transition

journey while managing these dynamics within

our risk appetite to remain on track to meet

the 2030 target.

---

| | |
|:---|:---|
| **Thermal coal mining**<br>**Mt CO2e**<br>| **2024 progress** <br>**from baseline**<br>|
|  | (94)% |

---

![2657](hsbc-20251231_g53.gif)

![](hsbc-20251231_g37.gif)

![](hsbc-20251231_g41.gif)

Our approach to re-baselines and restatements

Our re-baseline and restatement policy

defines the circumstances for a restatement

of previously reported data and targets,

including a re-baseline.

Changes to methodology, errors, and scope

or boundary changes are our key drivers of

change.

Climate-related data and processes are

continually evolving. Therefore, we do not

consider data and process enhancements to

be a key driver of change. This may change

over time as data and processes mature.

When key drivers, in aggregate, breach our

defined significance thresholds, a

restatement of previously reported data and

targets, including where necessary a re-

baseline, is required.

We expect our policy to evolve with further

industry guidance.

Financed emissions re-baselines and restatements

In 2025, we have re-baselined and restated

previously reported metrics to account for the

latest methodology and scope changes.

Lending products that are short term in

nature are now included in our financed

emissions reporting. This represents a scope

change and was a key driver of change for all

sectors except thermal coal mining.

We have refined our scope to include project

finance for the relevant part of the value chain

for each sector. This is a key driver of change

for oil and gas.

Divestments as at the latest reporting year

have been removed from all years of

reporting. This scope change mainly impacts

the oil and gas sector. We have also

descoped aluminium from the previously

reported iron, steel and aluminium sector.

Methodology changes include consideration

of use of proceeds financing and financing for

pure-play green clients, driving change in the

power and utilities sector. We also changed

the reporting unit for aviation from revenue

passenger kilometre ('rpk') to revenue tonne

kilometre ('rtk'). We have aligned thermal coal

mining financed emissions to the refined

thermal coal financing exposure basis of

preparation.

Additionally, enhancements to our internal and

external data have been reflected in our

restated metrics. This includes improvements

in our data sourcing of customer groups and

sector classifications, and other sector-specific

data enhancements aimed at reducing our

reliance on proxy emission calculations.

The aggregated change across all of these

items breaches the significance threshold for

absolute financed emissions or emissions

intensity for all sectors. We have set out in

the table below our re-baselined and restated

target metrics.

🡠For further details of our re-baselined and

restated metrics, see our ESG Data Pack at

www.hsbc.com/esg

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Restated target metrics** | **Restated target metrics** | **Previously Reported** | **Previously Reported** | **Previously Reported** | **Restated Metrics**<sup>1</sup> | **Restated Metrics**<sup>1</sup> | **Restated Metrics**<sup>1</sup> | **Percentage Change** | **Percentage Change** | **Percentage Change** |
| **Sector** | **Unit** | **2019** | **2020** | **2023** | **2019** | **2020** | **2023** | **2019** | **2020** | **2023** |
| **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  | **Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average**  |
| Oil and gas | Mt CO2e | 42.6 |  | 23.2 | **46.2** | **—** | **28.9** | 8% |  | 25% |
| Power and utilities | tCO2e/GWh |  |  | 349.0 | **—** | **—** | **295** |  |  | (15)% |
| **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** | **On-balance sheet financed emissions** |
| Cement | tCO2e/t cement  |  |  | 0.59 | **—** | **—** | **0.59** |  |  | 0% |
| Iron and steel<sup>2</sup> | tCO2e/t steel  |  |  | 2.1 | **—** | **—** | **1.73** |  |  | (18)% |
| Aviation<sup>3</sup>  | tCO2e/million rtk |  |  | 796 | **—** | **—** | **747** |  |  | (6)% |
| Automotive | tCO2e/million vkm |  |  | 152.4 | **—** | **—** | **152.8** |  |  | 0.3% |
| Thermal coal mining | Mt CO2e |  | 4.7 |  | **—** | **3.4** | **—** | **—** | **(28)%** | **—** |

---

1 All of the restated metrics set out below represent new baseline figures, apart from oil and gas 2023 which is a restated prior year comparative. Rounding in the

restated metrics has been adjusted to align with the updated target metrics where relevant.

2 Previously reported metrics for iron and steel include aluminium, which has now been descoped.

3 Previously reported progress numbers for aviation in tCO2e/million rpk are converted to tCO2e/million rtk using a multiplier of 10.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **46** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

On-balance sheet financed emissions

The table below summarises the results of our assessment of on-balance sheet financed emissions using 2023 and 2024 data.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | On-balance sheet financed emissions – wholesale credit lending and project finance<sup>1</sup>  | On-balance sheet financed emissions – wholesale credit lending and project finance<sup>1</sup>  | On-balance sheet financed emissions – wholesale credit lending and project finance<sup>1</sup>  | On-balance sheet financed emissions – wholesale credit lending and project finance<sup>1</sup>  | On-balance sheet financed emissions – wholesale credit lending and project finance<sup>1</sup>  |
| **Sector** | **Year** | **Scope 1-2 (Mt** <br>**CO2e)**<sup>†</sup> | **Scope 3 (Mt** <br>**CO2e)**<sup>†</sup> | **Emissions** <br>**intensity** | **PCAF Data quality score**<sup>2,†</sup> | **PCAF Data quality score**<sup>2,†</sup> |
| **Sector** | **Year** | **Scope 1-2 (Mt** <br>**CO2e)**<sup>†</sup> | **Scope 3 (Mt** <br>**CO2e)**<sup>†</sup> | **Emissions** <br>**intensity** | **Scope 1 and 2** | **Scope 3** |
| Oil and gas | 2023 | 2.6 | 19.7 | N/A | 2.2 | 2.7 |
| Oil and gas | **2024** | 3.0 | 20.4 | N/A | 2.3 | 2.8 |
| Power and utilities | 2023 | 7.1 | N/A | 288 | 2.9 | N/A |
| Power and utilities | **2024** | 6.6 | N/A | 232 | 3.0 | N/A |
| Cement | 2023 | 7.2 | N/A | 0.59 | 2.3 | N/A |
| Cement | **2024** | 5.1 | N/A | 0.61 | 2.2 | N/A |
| Iron and steel | 2023 | 3.2 | N/A | 1.73 | 2.9 | N/A |
| Iron and steel | **2024** | 3.7 | N/A | 1.81 | 2.9 | N/A |
| Aviation | 2023 | 2.9 | 0.51 | 747 | 2.2 | 2.5 |
| Aviation | **2024** | 2.8 | 0.60 | 737 | 2.2 | 2.7 |
| Automotive | 2023 | 0.16 | 9.3 | 152.8 | 2.2 | 3.2 |
| Automotive | **2024** | 0.11 | 5.9 | 146.8 | 2.3 | 3.2 |
| Thermal coal mining | 2023 | 0.06 | 0.97 | N/A | 3.2 | 3.2 |
| Thermal coal mining | **2024** | 0.01 | 0.21 | N/A | 3.0 | 3.0 |

---

Facilitated emissions

The table below summarises the results of our assessment of facilitated emissions for the oil and gas, and the power and utilities sectors.

As per the PCAF Standard for Facilitated Emissions, the facilitated emissions figures are weighted at 33%. We also disclose values at 100%

weighting. For all 100%-weighted facilitated values, please refer to the ESG Data Pack at www.hsbc.com/esg.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) | Facilitated emissions – ECM, DCM and syndicated loans<sup>3</sup>(33% weighting) |
| **Sector** | **Year** | **Scope 1-2 (Mt** <br>**CO2e)**<sup>†</sup> | **Scope 3 (Mt** <br>**CO2e)**<sup>†</sup> | **Emissions** <br>**intensity** | **PCAF Data quality score**<sup>2,†</sup> | **PCAF Data quality score**<sup>2,†</sup> |
| **Sector** | **Year** | **Scope 1-2 (Mt** <br>**CO2e)**<sup>†</sup> | **Scope 3 (Mt** <br>**CO2e)**<sup>†</sup> | **Emissions** <br>**intensity** | **Scope 1 and 2** | **Scope 3** |
| Oil and gas | 2023 | 0.32 | 3.1 | N/A | 2.1 | 2.5 |
| Oil and gas | **2024** | 0.50 | 6.7 | N/A | 2.2 | 2.4 |
| Power and utilities | 2023 | 1.2 | N/A | 320 | 2.4 | N/A |
| Power and utilities | **2024** | 1.7 | N/A | 247 | 2.5 | N/A |

---

1 For all sectors in scope of financed emissions targets, the total lending exposures included were approximately 3.3% of total loans and advances to customers at 31

December 2023 and approximately 3.5% at 31 December 2024. The total loans and advances have not been adjusted for assets held for sale. The methodology for

quantifying our lending exposure to financed emissions sectors will evolve over time as data and processes continue to improve.

2 PCAF scores where 1 is high and 5 is low. This is a weighted average score based on financing for on-balance sheet financed emissions or facilitated volumes.

3 The total capital markets activity analysed applying a 100% weighting in 2024 was $17.1.bn, representing 4.3% of in-scope capital markets activity at 31 December

2024. † Data is subject to independent third-party limited assurance in accordance with ISAE 3000 / ISAE 3410. For further details, see our Financed Emissions and Thermal

Coal Exposures Methodology and the independent third-party limited assurance report, which are available at www.hsbc.com/who-we-are/esg-and-responsible-

business/esg-reporting-centre.

Reducing emissions in assets under management

HSBC Asset Management continues to work

towards its interim target<sup>1</sup> of reducing scope 1

and 2 financed emissions intensity by 58%

between 2019 and 2030 for the in scope

assets under management ('AUM'), consisting

of listed equities and corporate fixed income

managed within our major investment hubs.

As of 31 December 2019, in scope assets

amounted to $193.9bn, equating to 38% of

global AUM. This financed emissions target

remains subject to developments in transition

pathways and consultation with stakeholders,

including investors, fund boards, industry

bodies and regulators.

As at 31 December 2024, the scope 1 and 2

financed emissions intensity of HSBC Asset

Management's in scope assets stood at 60.7

tCO2e/M$ invested, representing a 51%

reduction compared with the 2019 baseline.

The PCAF<sup>2</sup> Data Quality score for the 31

December 2024 financed emissions intensity

was 2.3.

Reported metrics<sup>3</sup>

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2019** | **2023** | **2024** | **Unit** |
| Scope 1 and 2 financed emissions intensity | 124.0 | 69.8 | **60.7** | &nbsp;&nbsp;&nbsp;&nbsp;tCO2e/M$ invested |
| AUM in scope | 193.9 | 223.0 | **250.2** | Billions $ |
| PCAF Data Quality Score<sup>4</sup> | 2.6 | 2.6 | **2.3** |  |

---

1This target remains subject to consultation with stakeholders including investors and fund boards on whose behalf we manage the assets. The 58% reduction

target is based on assumptions for financial markets and other data, including the IEA's 2021 Net Zero Emissions by 2050 scenario and its underlying activity

growth assumptions. Carbon emissions intensity is measured as tonnes of carbon dioxide equivalent per million USD invested (tCO2e/M$ invested), where

emissions are scaled by enterprise values including cash.

2 PCAF defines and develops greenhouse gas accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standard for Financed

Emissions provides detailed methodological guidance to measure and disclose financed emissions. PCAF Standards are available at: https://

carbonaccountingfinancials.com/standard. HSBC Asset Management reports financed emissions based on Part A – Financed emissions 2nd edition (2022).

3The 2024 metrics were subject to independent third-party limited assurance in accordance with the International Standard on Assurance Engagements 3000

(Revised) 'Assurance Engagements other than Audits or Reviews of Historical Financial Information', and with respect to the GHG emissions, in accordance with

the International Standard on Assurance Engagements 3410 'Assurance Engagements on Greenhouse Gas Statements', issued by the International Auditing and

Assurance Standards Board. For the independent third party's limited assurance report, see http://www.assetmanagement.hsbc.com/about-us/net-zero. The

methodology used is available at: http://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/creating-a-new-climate-for-change/financed-

emissions-disclosures-reporting-criteria.pdf.

4From 2024, PCAF Data Quality Score is weighted by market value. In prior years, PCAF Data Quality Score was weighted by financed emissions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **47** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

Net zero in our own operations

**TCFD**<br>

In line with our ambition to become a net zero

bank, we aim to achieve net zero emissions in

our own operations and supply chain by 2050.

**Reduce, replace and remove**

We continue to address the emissions from

our own operations and supply chain by

focusing on reducing our consumption and

replacing consumption with low carbon

alternatives.

Based on our current pathway to net zero, in

the interim we expect to achieve a reduction of

around 40% in emissions across our

operations, business travel and supply chain by

2030, compared with our 2019 baseline year.

We will only use high-integrity carbon credits to

remove any residual emissions from our own

operations that cannot otherwise be reasonably

reduced. We continue to monitor external

guidance, including from the Science Based

Targets initiative, to seek to ensure our

approach remains credible.

**Our energy consumption**

In 2025 we achieved a 34.5% reduction in our

energy consumption compared with 2019. This

was driven by our strategic divestments and

adoption of energy conservation programmes,

supported by more detailed and automated

metering and monitoring of our consumption.

In 2025, we increased our purchase of

electricity from renewable sources to 94.2%, a

key milestone towards our ambition to

purchase 100% renewable electricity across

our own operations by 2030.

We continue to search for opportunities to

procure renewable electricity in each of our

markets. We follow RE100 principles to focus

on creating additional renewable capacity

through power purchase agreements (PPAs),

where possible. Where regulation or our

energy profile does not allow for PPAs, we

pursue the procurement of renewable

electricity through our utility partners, as is the

case in France and regions of India. We are

also investigating bespoke solutions such as

on-site generation, direct investment into

renewable assets and private wire

agreements. If none of these options are

available to us, we source remaining renewable

electricity through energy attribute certificates.

**Business travel**

Connecting with clients and colleagues

remains an important part of how we do

business. We have introduced internal carbon

budgets and enhanced our internal reporting to

allow businesses and markets to monitor their

travel emissions in greater detail. Through

guidance on more sustainable ways to travel,

we encourage ownership and conscious

decision making.

Recognising the importance of sustainable

aviation fuel ('SAF') to the decarbonisation of

the aviation sector and following our 2024

strategic investment made in SAF through a

partnership with EcoCeres and Cathay Pacific,

we continue to explore new opportunities to

invest in SAF. We do not currently account for

the emissions reduction of SAF purchases in

our emissions reporting.

**Engaging with our supply chain** 

Our supply chain is the largest source of our

operational emissions and where we face the

most significant decarbonisation challenge,

reflecting the pace of the transition across the

real economy.

Our suppliers are at various stages in their

sustainability journey, and we aim to support

their transition while navigating external factors

and challenges. Given many of our suppliers are

also our customers, our customer engagement

model is also beneficial to reducing our supply

chain emissions. We consider sustainability and

supply chain decarbonisation in our sourcing and

supplier management process, where possible,

to support the reduction of our supply chain

emissions, being mindful of the business

importance of certain goods and services and

the varying regional approaches to the transition.

We support our sourcing teams to further

integrate sustainability into sourcing strategy

and decisions, including new supplier selection,

renewals and ongoing supplier management.

We continue to deepen collaboration with

suppliers and have increased our focus on

those without public disclosures or emissions

reduction plans, for example, by providing

them with additional guidance. We have

enhanced the questions we ask suppliers at

onboarding, to get a better view of their

transition journey, and are now including

suppliers' carbon footprint as a consideration in

our selection process.

Through ongoing engagement and targeted

collaboration events, we are partnering with

some of our suppliers that are more advanced

in their sustainability journey, to jointly develop

innovative ideas on decarbonisation and nature-

related topics. We aim to support smaller

suppliers in their transitions by providing

educational materials.

**Nature in our operations and supply chain**

Alongside our net zero operations ambition, we

aim to be a responsible consumer of natural

resources across our operations and supply

chain. In our supply chain, we have begun

developing sustainable sourcing roadmaps

across key categories, following a materiality

assessment of biodiversity and nature risks.

Wherever possible, we aim to protect the

environment and mitigate our impact on natural

resources through our procurement choices,

design and construction, and our operations

(e.g. reduction in waste generation and paper

consumption).

---

| |
|:---|
| **Our presence in environmentally** <br>**sensitive areas**<br>|
| Our global portfolio of buildings support <br>customers and communities in some <br>areas of water stress, and/or protected <br>areas of biodiversity. About 53% of our <br>global offices, branches and data centres <br>are in urban or city centre locations with <br>large, concentrated populations. These <br>areas have been identified as being <br>subject to water stress, accounting for <br>almost half of our annual water <br>consumption, with about 0.9% in <br>protected areas of biodiversity.<br>Although our industry is a low user of <br>potable water, we continue to implement <br>measures to reduce water consumption <br>across our portfolio, including the <br>installation of water efficient taps and <br>flow restrictors.<br>|

---

---

| | |
|:---|:---|
| ![1.5.14.5 RT_1.5.13.2.57 Pg49 case study.jpg](hsbc-20251231_g54.jpg) |  |
| ![1.5.14.5 RT_1.5.13.2.57 Pg49 case study.jpg](hsbc-20251231_g54.jpg) | Environmental management of our portfolio |
| ![1.5.14.5 RT_1.5.13.2.57 Pg49 case study.jpg](hsbc-20251231_g54.jpg) | Our buildings policy recognises that regulatory and environmental requirements differ across <br>regions. Supported by our real estate services procedures for environmental and sustainability <br>management, our buildings policy seeks to ensure that HSBC properties minimise their overall direct <br>environmental impact. Our green leasing programme supports close collaboration with our landlords <br>to drive better energy efficiency and we aim to achieve Leadership in Energy and Environmental <br>Design (LEED) or equivalent certification for our construction projects in key premises. <br>We seek to identify new opportunities to further reduce emissions and one of our emerging <br>priorities is decarbonising our heating through electrification and heat networks by overcoming <br>technical and engineering challenges. Detailed design considerations documented in our global <br>engineering standards aim to reduce or avoid depletion of critical resources, such as energy, water, <br>land and raw materials. Our suppliers are requested to comply with our Supplier Code of Conduct, <br>including having in place environmental policies appropriate to the size and nature of their operations <br>to reduce environmental impacts.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **48** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Operational and supply chain greenhouse gas emissions in tonnes CO**2**e** | **Operational and supply chain greenhouse gas emissions in tonnes CO**2**e** | **Operational and supply chain greenhouse gas emissions in tonnes CO**2**e** | **Operational and supply chain greenhouse gas emissions in tonnes CO**2**e** |  |
|  |  | **2025** | 2024 | 2019 baseline |
| Scope 1<sup>1†</sup> | 🞁 | **16698** | 15025 | 22066 |
| Scope 2 (market-based)<sup>1†</sup> | 🡃 | **19919** | 83760 | 392270 |
| Scope 3 | 🡃 | **1040300** | 1127909 | 1356631 |
| &nbsp;&nbsp;&nbsp;&nbsp;Category 1: Purchased goods and services<sup>2†</sup> | 🡃 | **807293** | 866873 | 1033972 |
| &nbsp;&nbsp;&nbsp;&nbsp;Category 2: Capital goods<sup>2†</sup> | 🞁 | **165988** | 127158 | 50651 |
| &nbsp;&nbsp;&nbsp;&nbsp;Category 6: Business travel<sup>1†</sup> | 🡃 | **67019** | 133878 | 272008 |
| Total | 🡃 | **1076917** | 1226693 | 1770967 |
| Included scope 1 and 2 of UK | 🞁 | **6357** | 5887 | 10432 |
| † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE <br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, <br>see our relevant Annual Report and Accounts.<br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time <br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current <br>year's Q4 data<br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry <br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is <br>low, based on the quality of emissions data. This is a weighted average score based on HSBC <br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br>🡠Our scope 2 location-based emissions in 2025 were 259,129<sup>†</sup> tonnes CO2e. For a detailed <br>breakdown, information about contractual instruments, and relevant environmental key facts, see <br>our ESG Data Pack at www.hsbc.com/esg.  | † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE <br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, <br>see our relevant Annual Report and Accounts.<br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time <br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current <br>year's Q4 data<br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry <br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is <br>low, based on the quality of emissions data. This is a weighted average score based on HSBC <br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br>🡠Our scope 2 location-based emissions in 2025 were 259,129<sup>†</sup> tonnes CO2e. For a detailed <br>breakdown, information about contractual instruments, and relevant environmental key facts, see <br>our ESG Data Pack at www.hsbc.com/esg.  | † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE <br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, <br>see our relevant Annual Report and Accounts.<br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time <br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current <br>year's Q4 data<br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry <br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is <br>low, based on the quality of emissions data. This is a weighted average score based on HSBC <br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br>🡠Our scope 2 location-based emissions in 2025 were 259,129<sup>†</sup> tonnes CO2e. For a detailed <br>breakdown, information about contractual instruments, and relevant environmental key facts, see <br>our ESG Data Pack at www.hsbc.com/esg.  | † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE <br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, <br>see our relevant Annual Report and Accounts.<br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time <br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current <br>year's Q4 data<br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry <br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is <br>low, based on the quality of emissions data. This is a weighted average score based on HSBC <br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br>🡠Our scope 2 location-based emissions in 2025 were 259,129<sup>†</sup> tonnes CO2e. For a detailed <br>breakdown, information about contractual instruments, and relevant environmental key facts, see <br>our ESG Data Pack at www.hsbc.com/esg.  | † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE <br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, <br>see our relevant Annual Report and Accounts.<br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time <br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current <br>year's Q4 data<br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry <br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is <br>low, based on the quality of emissions data. This is a weighted average score based on HSBC <br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br>🡠Our scope 2 location-based emissions in 2025 were 259,129<sup>†</sup> tonnes CO2e. For a detailed <br>breakdown, information about contractual instruments, and relevant environmental key facts, see <br>our ESG Data Pack at www.hsbc.com/esg.  |

---

**2025 emissions performance**

We continue to make progress towards our

2050 net zero ambition. In 2025 we achieved a

reduction in absolute operational greenhouse

gas emissions (scope 1, 2 and business travel)

of 84.9% from our 2019 baseline. Overall,

including supply chain emissions, we achieved

a 39.2% reduction against 2019 and 12.2%

compared with 2024.

**Scope 1 and 2 emissions** 

We have already reduced our scope 1 and 2

emissions considerably and are on track to

achieve a reduction of at least 90% by 2030.

In 2025, we reduced these emissions (i.e.

energy and road fleet) to 36,617 tonnes CO2e,

representing a 91.2% reduction from our 2019

baseline, and a 62.9% reduction from 2024,

driven by a reduction in energy consumption

and significant investment in renewable

electricity, in conjunction with an overall

reduction of the emission factors. For scope 1,

we saw an increase due to an adjustment of

our uplift rate to include estimated emissions

from refrigerant leaks in our cooling systems.

Refrigerant leaks occur when cooling gases

escape from equipment, contributing to

greenhouse gas emissions. Currently 94.2% of

our electricity comes from renewable sources

and we are on track for 100% renewable

electricity by 2030.

In addition to the reduction in energy

consumption driven by our strategic

divestments, we are increasingly adopting

innovative metering technologies and

collaborating with strategic partners to seek to

target the more challenging elements, such as

our remaining data centres.

Specifically in the UK, the increase in energy

and scope 1 and 2 emissions is driven by an

increase in electricity consumption in data

centres and an increase in primary fuels in our

offices and branches.

In addition to our focus on energy

consumption, we continue to transition our

vehicles to electric, ordering fully electric or

hybrid options, wherever possible.

**Emissions from travel**

We reduced our emissions from scope 3

business travel by 75.4% compared with 2019

and 49.9% compared with 2024. The decrease

was driven by improved oversight,

strengthened internal reporting and an overall

reduction in the emissions factors provided by

the UK Department for Energy Security and

Net Zero.

**Emissions from our supply chain**

In 2025, we reduced our overall supply chain

emissions (scope 3: category 1 and 2) by

10.3% against the 2019 baseline, and 2.1%

compared with 2024. This was primarily due to

the reduced emissions intensity (i.e. ratio of

emissions vs revenue) of suppliers providing

professional services and marketing, and who

reported emissions to us. However, this has

been partly counteracted by an increase in

spend on servers and data centres, and an

increase in the emissions intensity of suppliers

providing real estate services, which also

caused the increase in emissions from capital

goods.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Greenhouse gas emissions in tonnes CO**2**e** <br>**per FTE** | **Greenhouse gas emissions in tonnes CO**2**e** <br>**per FTE** | **Greenhouse gas emissions in tonnes CO**2**e** <br>**per FTE** | **Greenhouse gas emissions in tonnes CO**2**e** <br>**per FTE** | **Greenhouse gas emissions in tonnes CO**2**e** <br>**per FTE** | **Energy consumption in kWh in 000s** | **Energy consumption in kWh in 000s** | **Energy consumption in kWh in 000s** | **Energy consumption in kWh in 000s** | **Energy consumption in kWh in 000s** |
|  |  | **2025** | 2024 | 2019 |  |  | **2025** | 2024 | 2019 |
| Scope 1, 2 and <br>3 (Category 6)<br>| 🡃 | **0.5** | 1.1 | 2.9 | Total | 🡃 | **687521** | 728890 | 1049072 |
| Scope 1, 2 and <br>3 (Category 1, 2 <br>and 6)<br>| 🡃 | **5.1** | 5.7 | 7.8 | UK only | 🞁 | **211033** | 206028 | 281271 |

---

We continue to expand and improve our

reporting as more suppliers make emissions

data available.

**Emissions calculations approach**

Our emissions report adheres to the GHG

Protocol, which incorporates the scope 2

market-based emissions methodology. We

report GHG emissions associated with the

energy used in our premises and employees'

business travel and our supply chain in tonnes

of CO2 equivalent.

Based on our operational control boundary, in

2025 we collected data on energy use and

business travel for our operations in 34

countries and territories out of the 56 markets

we operate in, which accounted for

approximately 98.2% of our full-time equivalent

staff ('FTEs'). To estimate the emissions of our

operations in entities where we have

operational control and a small presence, we

scale up the emissions to 100%.

We have reviewed and updated the emission

uplift rate for scope 1 to reflect the actual data

and the uncertainty regarding the volume of

the estimated fugitive emissions. Following

improvements in our reporting process, we

have removed the uplift for scopes 2 and 3

(category 6: business travel). This approach is

consistent with both the Intergovernmental

Panel on Climate Change's Good Practice

Guidance and Uncertainty Management in

National Greenhouse Gas Inventories and our

internal analysis.

Our calculation methodology for supply chain

emissions follows the spend-based method

under the GHG Protocol; a combination of

supplier emissions data and industry averages.

We source actual data via CDP, or direct

engagement with suppliers through a third

party. In the absence of this we use

estimations data provided by a third party and

industry average carbon intensities from CDP

to estimate supply chain emissions.

As more of our suppliers report their

emissions, we should be able to include more

accurate data and fewer industry averages in

the calculation. We have applied a data quality

score to the sources of data we used to

determine supplier emissions.

In 2025 we conducted a materiality

assessment on scope 3 categories, and we

have identified categories 1 (purchased goods

and services), 2 (capital goods), and 6 (business

travel) as material.

🡠For further details of our methodologies,

assumptions, and sources of conversion factors

used for the reporting of emissions, see the GHG

Reporting Guidance 2025 at www.hsbc.com/

esg.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **49** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

Managing climate risk

**TCFD**<br>

Climate risk relates to the financial and non-

financial impacts that may arise as a result of

climate change and the move to a net zero

economy. We manage climate risk across all

our businesses and incorporate climate

considerations within our traditional risk types,

in line with our Group-wide risk management

framework.

Our material exposure to climate risk relates to

wholesale and retail client financing activity

within our banking portfolio. We are also

exposed to climate risk in relation to asset

ownership by our insurance business and

employee pension plans. Our clients are

exposed to climate-related investment risk in

our Asset Management business.

🡠For further details of our approach to climate

risk, see 'ESG risk' on page 122 and 'Climate

risk' on page 203.

**Banking**

Our banking business is well positioned to

support our customers managing their own

climate risk through financing. For our most

material wholesale customers, we use our

transition engagement questionnaire to

understand clients' climate strategies and

risks. We have set out a suite of policies to

guide our management of climate risk. We

continue to develop our climate risk appetite

and metrics to help manage climate exposures

in our wholesale and retail portfolios. We use

climate scenario analysis to gain insights into

the long-term effects of transition and physical

risks across our wholesale and retail portfolios

(for further details, see page 206).

**Asset management**

HSBC Asset Management recognises that

climate-related risks may impact the

operational and financial performance of

investee companies. The impact of these risks

will vary depending on characteristics such as

asset class, sector, business model and

geography. We continue to integrate climate

analysis into our actively managed product

offerings and seek to assess climate-related

risks that may impact investment

performance, where relevant.

As part of our stewardship activities, we

engage on climate change issues with

investee companies on a priority list, as

defined in our Stewardship Plan. HSBC Asset

Management acts independently in its

investment and voting decisions.

**Employee pensions** 

The Trustee of the HSBC Bank (UK) Pension

Scheme ('the Scheme'), our largest plan with

$38bn of assets under management, aims to

achieve net zero greenhouse gas emissions

across its defined benefit and defined

contribution assets by 2050. The amount

within the scheme includes defined benefit

assets of $25bn and defined contribution

assets amounting to $13bn. To help achieve

this, it is targeting an interim emissions

reduction of 50% by 2030 from 2019 levels for

its equity and corporate bond mandates. This

commitment was made in the context of

wider efforts to manage the impact of climate

change on the Scheme's investments and the

consequent impact on the financial interests of

members.

The Scheme reports the carbon footprint for

its equity and corporate bond mandates in its

annual TCFD Report, and will seek to widen

the coverage of its assessment and reporting

over time. In line with the Trustee's

commitment to good stewardship, the Trustee

engages its asset managers to seek to ensure

that financially material ESG risks are explicitly

considered in the investment process.

**Insurance** 

We are improving our ability to perform

exploratory solvency assessment of our

biggest insurance businesses under climate

stress scenarios.

🡠For further details of HSBC Asset Management's

Stewardship Plan, see:

www.assetmanagement.hsbc.co.uk/en/

institutional-investor/about-us/responsible-

investing/-/media/files/attachments/uk/policies/

stewardship-plan-uk.pdf.

🡠For further details of the HSBC Bank (UK)

Pension Scheme's annual TCFD statements and

UK Stewardship Code submission, see https://

futurefocus.staff.hsbc.co.uk/active-dc/

information-centre/search-documents.

Sustainability risk policies

**TCFD**<br>

Our sustainability risk policies form part of our

broader risk management framework and are

important mechanisms for managing risks,

including delivering our net zero ambition.

These policies focus on mitigating reputational,

credit, legal and other risks related to our

customers' environmental and social impacts.

**Our policies**

HSBC has sector-specific sustainability risk

policies covering the energy sector, thermal

coal, agricultural commodities, forestry, and

mining and metals. These are summarised in

our Sustainability Risk Policies Framework

which also contains HSBC's Thermal Coal

Phase-Out Policy. We also implement a cross-

sector policy for project-related financing,

informed by international standards.

The Framework provides an overview of how

HSBC identifies, evaluates and manages risks

related to the delivery of our sustainability

approach.

Implementation of the sector-specific policies

is achieved through internal policies and

procedures, supported by technical experts

and specialists and our relationship managers.

We take a risk-based approach when

identifying transactions and clients to which

our sustainability risk policies apply and, where

relevant, when reporting on relevant

exposures, adopting approaches proportionate

to risk and materiality. This helps to focus our

efforts on areas that we consider to be most

critical, taking into account experience from

policy implementation over time.

We continue to review policy implementation

as we apply our policies in practice, engage

customers on their transition plans and

consider how we can support them. We

conduct periodic policy reviews, incorporating

feedback and where appropriate, updating

based on factors including risk materiality,

implementation experience, evolving scientific

guidance, regulatory requirements and

evolving industry practices.

For customers in scope of sector-specific

policies, we will look to take actions as

outlined in our policies, such as enhanced due

diligence. Such instances may require

additional review and approval by our

sustainability risk specialists and risk

committees.

**Governance and implementation**

Our Group Risk and Compliance function has

specialists who review and support

implementation of our sustainability risk

policies. Our relationship managers are

primarily responsible for assessing relevant

considerations under our risk management

framework, including whether our clients may

be in scope of applicable sustainability risk

policies. Where considered appropriate, policy

matters are escalated to relevant governance

committees.

Oversight of the development and

implementation of policies is the responsibility

of relevant governance committees

comprising senior members of the Group Risk

and Compliance function and global

businesses.

🡠For further details of how we manage

sustainability risk and our Sustainability

Risk Policies Framework, see

https://www.hsbc.com/sustainability-risk.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **50** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Environment |  |  |  |  |  |

---

**Nature-related policies**

Our sustainability risk policies impose

restrictions on certain financing activities that

may have material negative impacts on nature.

Our forestry and agricultural commodities

policies focus specifically on the upstream

impacts of key agricultural commodities

including palm oil, timber, soy and cattle. We

also require palm oil customers to obtain

certification under the Roundtable on

Sustainable Palm Oil.

**Our energy policy**

Our energy policy applies to the broader

energy system, including upstream oil and gas,

fossil fuel power generation, hydrogen,

renewables and hydropower, nuclear, biomass

and energy from waste sectors.

The policy seeks to achieve two objectives: to

help drive global greenhouse gas emissions

reductions, both to achieve a net zero HSBC

portfolio and to support our customers in the

transition to a net zero global energy future;

and to identify and manage risks arising from

the provision of financing or advisory services

to customers with energy assets.

The energy policy was first published in

December 2022, and is reviewed periodically,

with the most recent update in November

2025. **Our thermal coal phase-out policy** 

Our thermal coal phase-out policy seeks to

achieve two objectives: to phase out the

financing of thermal coal-fired power and

thermal coal mining by 2030 in markets in the

European Union ('EU') and Organisation for

Economic Cooperation and Development

('OECD'), and by 2040 in other markets

(Phase-Out Commitment); and to identify and

manage risks arising from the provision of

financing or advisory services to customers

with thermal coal assets.

The policy was first published in December

2021 and is reviewed annually, with the most

recent update in November 2025.

🡠For further details of our energy policy and our

thermal coal phase-out policy see our

Sustainability Risk Policies Framework, at

https://www.hsbc.com/sustainability-risk

🡠For further details of our oil and gas, and power

and utilities financed emissions targets, see page

42. **Thermal coal financing exposures**

We aim to reduce thermal coal financing

drawn balance exposure from a 2020 baseline

by at least 25% by 2025, and aim to reduce it

by 50% by 2030.

Our basis of preparation for reporting on

thermal coal financing drawn balance

exposures is aligned with our thermal coal

phase-out policy and applies a risk-based

approach to reporting on relevant exposures.

This includes the use of globally recognised

third-party data sources to screen clients and

applies materiality considerations to product

type, customer type and exposure type, which

informs inclusion and exclusion requirements.

Specifically, for customer types, exclusions are

applied for certain customer types such as

sovereigns and individuals. For exposure

types, a threshold of $15m for drawn balances

is applied for thermal coal financing exposures

reporting.

We recognise that we provide financing to

groups of connected companies where the

wider group has thermal coal exposures, and

this introduces additional complexities when

estimating thermal coal exposure. In such

cases, we consider relevant factors, including

the nature and the extent of the connection to

thermal coal activity, any relevant structural

considerations in relation to the wider group

and any restrictions on use of financing

proceeds to fund thermal coal activities.

We continue to refine our basis of preparation

and have made further enhancements in 2025

to develop a more detailed framework for our

approach to exclusions from reporting.

In line with changes to financed emissions

product scope, short-term lending products are

now included in scope for thermal coal drawn

balance exposures.

Thermal coal financing drawn balance

exposure is sensitive to volatility from both

short-term lending products and additional

drawdowns under committed facilities.

Applying our refined basis of preparation

resulted in a net 10% increase in the thermal

coal financing drawn balance exposure

baseline (as of 31 December 2020) to $1.1bn<sup>†</sup>

from $1.0bn. This year we present figures for

2023 and 2024, therefore we are not restating

2021 and 2022 figures.

Our thermal coal financing drawn balance

exposures for 2023 and 2024 were $0.6bn<sup>†</sup>

and $0.5bn<sup>†</sup> respectively. We intend to

present our 2025 figures in our Annual Report

and Accounts 2026. The reductions from the

revised baseline were primarily driven by

natural amortisation and portfolio level

financing decisions.

---

| |
|:---|
| **Thermal coal financing drawn balance** <br>**exposure** |
| $bn |

---

![162177965411467](hsbc-20251231_g55.gif)

![](hsbc-20251231_g56.gif)

![](hsbc-20251231_g57.gif)

† Data is subject to independent third-party limited

assurance, in accordance with ISAE 3000/ISAE

3410. For further details, see our Financed

Emissions and Thermal Coal Exposures

Methodology and independent third-party limited

assurance report, which are available at

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre.

🡠For further details of our approach to financed

emissions, see page 39.

🡠For further details of our financed emissions and

thermal coal exposures methodology, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre.

Asset Management's Energy and Thermal Coal Policies

HSBC Asset Management's Energy and

Thermal Coal policies have been developed in

support of HSBC Group's net zero ambition.

Under the Energy Policy, HSBC Asset

Management aims to engage with and assess

transition plans of listed issuers responsible for

around 70% of relevant emissions covering

listed equity and corporate fixed income

issuers managed in its major investment

hubs. Engagement and assessment are

undertaken for the oil and gas, and power and

utilities issuers in this group.

The Thermal Coal Policy is developed in

support of the transition from thermal coal-

fired power and thermal coal mining (collectively

'thermal coal') within the 2030/40 timelines set

out in the HSBC Thermal Coal Phase-Out Policy.

🡠The current policies including their application can

be found here: https://

www.assetmanagement.hsbc.co.uk/en/

institutional-investor/about-us/responsible-

investing/policies.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **51** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Social

Building inclusion and resilience

We play an active role in opening up a world of opportunity for our customers,

colleagues and communities by connecting across our international networks

to help build a more inclusive and resilient society.

**Our commitment to inclusion**

Our approach

For 160 years, our core strategy has been

connecting people and businesses across

geographies and cultures.

By embracing diversity and fostering inclusive

thinking, we better meet our customers'

needs and deliver improved outcomes.

We are committed to continuing to build an

inclusive organisation by focusing on four key

areas as detailed below.

---

| | | | |
|:---|:---|:---|:---|
| The focus of our Global Inclusion strategy | The focus of our Global Inclusion strategy | The focus of our Global Inclusion strategy | |
| Building an <br>inclusive culture<br>We recognise the importance <br>of fostering an inclusive <br>culture, benefiting both our <br>colleagues and customers. <br>Embracing differences <br>enhances diversity of thought <br>and experiences, leading to <br>better outcomes. Our Global <br>Inclusion strategy embraces <br>our unique international <br>footprint, while seeking to <br>ensure it remains locally <br>relevant and compliant with <br>local laws.<br>| Fair and inclusive <br>recruiting<br>Having a diverse and <br>inclusive workforce that <br>better reflects the <br>communities we serve <br>remains one of our key <br>strategic pillars. <br>By ensuring a fair and <br>transparent recruitment <br>process, we aim to attract <br>and retain talent from all <br>backgrounds.<br>| Fair progression of <br>talent<br>We understand the <br>importance of having <br>motivated and engaged <br>teams. <br>By offering growth <br>opportunities, such as <br>training and development <br>programmes, and internal <br>mobility opportunities, we <br>aim to foster a strong sense <br>of belonging and equip our <br>people with the skills needed <br>for the future.<br>| Supporting an <br>inclusive society<br>We are dedicated to fostering <br>a culture where everyone <br>feels they belong, guided by <br>shared values and a <br>commitment to inclusion. <br>By listening to the voices of <br>both colleagues and <br>customers from all <br>backgrounds, we seek to <br>create a more inclusive and <br>accessible banking <br>experience, impacting <br>communities positively.<br>|

---

![](hsbc-20251231_g58.gif)

![](hsbc-20251231_g58.gif)

**Our progress**

Prior analysis of our workforce identified that

both women and Black heritage colleagues

were underrepresented across senior leadership

roles. We introduced a set of public aspirational

ambitions, which aimed to increase

representation of these two groups by 2025 and

improve our Inclusion Index score as measured

in our employee engagement survey, Snapshot.

By the end of 2025<sup>1</sup>, we achieved:

–a 34.7% representation of women in senior

leadership roles against an ambition of 35%<sup>1</sup>;

–a 3.0% representation of Black heritage

colleagues in senior leadership roles (UK/US

combined) against an ambition of 3.4%<sup>1</sup>; and

–an Inclusion Index score of 78% against an

ambition of 75%.

We have made annual progress in increasing

the representation of women in senior

leadership roles, strengthened by our hiring,

promotion and retention strategies. Over this

period, representation of women in senior

leadership roles has increased by three

percentage points. We narrowly missed our

gender representation ambition of 35%,

primarily due to a reduction in the number of

promotions and new hires in 2025. This has

also impacted our progress against our

![](hsbc-20251231_g58.gif)

ambition to achieve 3.4% of Black heritage

colleagues in senior leadership roles in the UK/

US combined since 2021, which has remained

steady since 2023<sup>1</sup>.<sup>.</sup>

Previously in 2020, we set an initial ambition to

double the number of Black heritage

colleagues in senior leadership roles globally

by the end of 2025. Over the past five years,

changes in our global organisation, such as the

divestiture of the US Wealth and Personal

Banking business, and increased investment

across Asia, have made achieving this

ambition more challenging. By the end of

2025, we increased the number of Black

heritage colleagues in senior leadership roles

by 48%<sup>1</sup>.

While our publicly stated aspirational ambitions

concluded at the end of 2025, we remain

committed to building an inclusive culture for

all colleagues, measured using our Inclusion

Index. We continue to work towards better

reflecting the communities we serve, in order

to deliver better outcomes for our customers.

**Data and transparency**

Colleagues' self-identification data enables us

to refine and evolve our Global Inclusion

strategy by ensuring we make informed

![](hsbc-20251231_g58.gif)

decisions and set priorities that will have the

greatest impact. It also helps us to identify and

address any inequalities or barriers.

We invite colleagues to voluntarily share their

demographic data with us including ethnicity,

sexual orientation and disability. In 2025,

69.1% of colleagues shared their ethnic

background. We collect data in markets and

territories where we are legally permitted to

do so.

We continue to disclose the shape of our

workforce publicly, as well as participating in

the government-led FTSE Women Leaders

Review and Parker Review benchmarks in the

UK, which track the gender and ethnicity

representation of our Operating Committee

and senior leadership population.

🡠For further details of our representation data, pay

gap data, and actions, see www.hsbc.com/who-

we-are/our-people/inclusion-at-hsbc and the ESG

Data Pack at www.hsbc.com/esg

1These numerical ambitions do not form part of

any US-based senior leader performance or

other objectives, or in other jurisdictions where

application of such objectives would be contrary

to local law.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **52** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Social |  |  |  |  |  |

---

Fostering an inclusive culture

**Embedding inclusion**

Our recruitment practices are designed to be

fair and transparent providing equal

opportunities for all colleagues to progress

their careers. We promote inclusive leadership

and recognise that diverse perspectives drive

innovation and stronger business outcomes.

In 2025, we partnered with KPMG to support

personal development opportunities for UK-

based Black heritage colleagues in our IWPB

and Global Functions teams. Fifteen individuals

were matched with sponsors aligned to their

career aspirations, who aim to broaden

participants' network and advocate for their

talent and career progression. In 2025 we

continued Solaris, our UK development

programme for female Black heritage

colleagues, with 19 individuals completing the

course in 2025.

**Removing barriers for colleagues with a** 

**disability**

In 2025, we led the way in benchmarking

disability confidence across Asia, aligning with

United Nations Guidelines for People with

Disabilities. HSBC is recognised for disability

inclusion as featured by the International

Labour Organisation (ILO) Global Business

Disability Network.

In 2025, our Digital Accessibility programme

garnered 15 awards, including recognition

from the Hong Kong Digital Accessibility

Recognition Scheme for the accessibility of

our digital channels. We were also honoured at

the Pay 360 Awards in the UK celebrating

outstanding achievements in the payments

industry.

We retained our Business Disability Forum

'Smart Gold' status in the UK in 2025. The

Disability Smart Framework helps businesses

enhance their performance for disabled

customers, service users, colleagues and

stakeholders.

We have developed a Disability Toolkit to

support colleagues with a disability and their

line managers, outlining the well-being

resources available and how each can help

colleagues manage their condition.

In the US, we have been recognised as a 'Best

Place to Work for Disability Inclusion' in the

Disability:IN, 2025 Disability Index.

We are enhancing our workplace adjustments

programme to better support colleagues with

their needs. In 2025, it was extended to

include colleagues in UAE, Egypt, Algeria,

Kuwait and Oman.

**Supporting colleagues from a lower** 

**socio-economic background**

Research indicates that individuals from low

socio-economic backgrounds encounter

additional barriers when entering the financial

services industry, and are less likely to

advance to senior leadership.

To support early career colleagues from these

backgrounds, we launched a grant initiative in

2025, offering new joiners £1,000 to support

pre-joining expenses.

In 2025, we improved our position in the UK

Social Mobility Index to 18th, up from 37th in

2024 and 67th in 2023.

We have also partnered with Community

Business, which is a non-governmental

organisation that advances research on social

mobility across Asia, focusing on Hong Kong,

mainland China, India, Singapore, Japan,

Korea, the Philippines and Malaysia.

**Inclusion for all**

In 2025, the Hong Kong-based Equal

Opportunities Commission introduced the

Racial Diversity & Inclusion Employers Award

Scheme to honour organisations committed to

racial equality, diversity and inclusion in the

workplace, and we received three gold

awards.

We were also named the Best Bank for

Diversity and Inclusion in Hong Kong at the

Euromoney Awards 2025 for the second year

running. We climbed to 2nd in the 2025 Hong

Kong Community Business LGBTQ+ Index,

marking us as the top financial institution and

improving from 6th in 2023.

In the US, we partnered with organisations

Handshake and HelloHive to broaden our

reach to undergraduate students from all

backgrounds. Community engagement

opportunities to support career readiness have

in turn resulted in increased candidate

applications to the HSBC US Early Careers

programme.

**Gender representation (%)**

---

| |
|:---|
| Holdings <br>Board |
| Holdings <br>Board |
| Group <br>Operating <br>Committee <br>('Group OpCo') |
| Group <br>Operating <br>Committee <br>('Group OpCo') |
| Combined <br>Group OpCo <br>and direct <br>reports<sup>1</sup> |
| Combined <br>Group OpCo <br>and direct <br>reports<sup>1</sup> |
| Subsidiary <br>directors<sup>2</sup> |
| Subsidiary <br>directors<sup>2</sup> |
| Senior <br>leadership<sup>3</sup> |
| Senior <br>leadership<sup>3</sup> |
| Middle <br>management<sup>3</sup> |
| Middle <br>management<sup>3</sup> |
| Junior <br>management<sup>3</sup> |
| Junior <br>management<sup>3</sup> |
| All employees<sup>4</sup> |
| All employees<sup>4</sup> |

---

![162177965285348](hsbc-20251231_g59.gif)

1 Combined Group OpCo and direct reports

includes Group OpCo members and their direct

reports (excluding administrative staff) as of 31

December 2025.

2 Directors (or equivalent) of subsidiary companies

that are included in the Group's consolidated

financial statements, excluding corporate

directors.

3 In our leadership structure, we classify senior

leadership as those at global career band 3 and

above; middle management as those at global

career band 4; and junior management as those

at global career bands 5 and 6.

4 As at 31 December 2025, the Group's headcount

consisted of 103,086 Males and 108,393

Females. Employees with undisclosed gender

have been included in the 'Male' category. Due

to local restrictions, Saudi Arabia headcount has

been excluded from gender reporting.

🡠For further details of our employee profile data,

see the ESG Data Pack at www.hsbc.com/esg

---

| | | |
|:---|:---|:---|
| **Representation and pay gaps**<br>Our reports on gender, ethnicity and disability <br>pay gaps show the difference in average pay <br>between these groups of people and the <br>wider workforce, regardless of their role or <br>seniority. <br>We have reported our UK gender <br>representation and pay gap data since 2017, in <br>line with reporting regulations. These UK <br>disclosures are available in our ESG Data Pack. <br>We have voluntarily extended this to include <br>the US, mainland China, Hong Kong, India, <br>Mexico, Singapore, Malaysia and the UAE, <br>alongside ethnicity data for the UK and US, <br>which are available on our website. <br>| In 2025, our mean aggregate UK-wide gender <br>pay gap was 39.4% (2024: 40.6%), and the <br>ethnicity pay gap was 9.8% (2024: 7.7%).<br>These gaps are primarily driven by workforce <br>composition, with more men in senior, higher-<br>paid roles and more women in junior, lower-paid <br>roles. While we are confident in our approach to <br>pay equity, average pay gaps will persist until <br>there is proportional representation of women <br>and ethnic minority colleagues at all levels.<br>| We are committed to paying colleagues fairly <br>regardless of their gender or ethnicity and <br>have processes to review that remuneration is <br>free from bias. We review our pay practices <br>regularly to ensure that our commitments to <br>equal pay are upheld.<br>🡠For further details of our representation data, pay <br>gap data, and actions see www.hsbc.com/who-<br>we-are/our-people/inclusion-at-hsbc and the ESG <br>Data Pack at www.hsbc.com/esg<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **53** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Social |  |  |  |  |  |

---

**Building a healthy workplace** 

Listening to our colleagues

We value difference at HSBC, and we do this

by seeking out different perspectives and

listening. Our colleagues succeed together by

being connected across the organisation, and

they take responsibility by speaking up. These

activities are core to our values and we

capture regular feedback from our colleagues

to help improve HSBC and the employee

experience.

**How we listen**

At the heart of our employee dialogue strategy

is listening to our people and responding to

their feedback, fostering open, two-way

communication between colleagues and the

organisation.

To support organisational change in 2025, we

enhanced our feedback process. In addition to

our annual Snapshot survey, we introduced a

monthly Pulse survey for quick leadership

insights. This complements our event-based

lifecycle surveys, capturing colleague

sentiment as they apply, join, transition and

leave HSBC.

We streamlined our 2025 Snapshot survey by

reducing the number of questions by 40%,

and aligning our reporting with overall strategic

priorities. A response rate of 87% was

achieved, with over 186,000 colleagues

sharing their insights.

Survey insights are shared with the Group

Operating Committee, the Board, and over

11,000 people leaders who receive 10 or more

team responses. We facilitate effective

feedback discussions by providing interactive

dashboards, action planning tools and

discussion guides.

Despite organisational change, our Snapshot

results remain robust, with only slight declines

in some areas. Our Employee Engagement

index, which reflects how our people feel

about HSBC, decreased by two percentage

points to 78%. This is four percentage points

above the global financial services benchmark.

Our Inclusion Index, an indicator of our

commitment to fostering an inclusive culture

at HSBC, remained at 78%. Our Well-being

Index increased by one percentage point,

positioning us five percentage points ahead of

our peers in the financial services sector.

While we were eight percentage points above

the financial services benchmark for our

Sustainable Growth Index, confidence in our

future direction decreased by three percentage

points to 76%. This decline was mainly due to

lower scores among groups more impacted by

ongoing organisational changes. We continue

to prioritise clear communication with our

colleagues about what these changes mean

for them.

Our new How We Lead Index, designed to

gauge the embedding of our new Group-wide

leadership framework, achieved 77%. This

surpassed the financial services benchmark by

five percentage points.

We launched four new values-aligned indices,

each scoring between 79% and 81%. Each

overall index score surpassed the financial

services benchmark.

Going forward we will continue to encourage

high levels of engagement and feedback.

🡠For further details of our Snapshot data, see the

ESG Data Pack at www.hsbc.com/esg.

**Employee relations**

We engage, consult, and where appropriate,

negotiate with employee representative

bodies. Our policy is to maintain well-

developed communications and consultation

programmes with all employee representative

bodies.

We are committed to complying with the

applicable employment laws and regulations in

all the jurisdictions in which we operate.

HSBC's employment practices and relations

policy provides the framework and controls

through which we seek to uphold that

commitment.

**Employee conduct and harassment**

We expect our employees to treat each other

with dignity and respect, and we do not

tolerate or condone discrimination,

harassment, bullying or retaliation in any form

as outlined in our Global Anti-Bullying and

Harassment Code. This is supported by our

Global Code of Conduct.

We encourage our colleagues to speak up

about poor behaviour. We measure confidence

of colleagues to speak up via our Snapshot

response, which stood at 81% in 2025.

We recognise the need for ongoing focus on

our speak-up culture to ensure we create the

right environment. We are committed to

raising awareness and providing education on

poor behaviours and strengthening our

response to these issues across the

organisation. Our colleagues receive training

on bullying, harassment, discrimination and

retaliation at least every other year through our

global mandatory training and as part of other

learning resources.

We monitor cases raised via our speak-up

channels, and data is reported to senior

leadership to ensure visibility. In 2025, we

received a total of 793 cases raised in relation

to bullying and harassment. Where the

concerns were substantiated following an

investigation, appropriate actions were taken,

including dismissal where warranted. In 2025,

30% of cases raised were either partly or fully

substantiated, and 38 colleagues were

dismissed in relation to bullying, harassment,

discrimination or retaliation.

We continue to act where we find that any

colleague has breached our values and high

standards of conduct.

How we listen

**Snapshot survey response**

87%

A response rate of 87% was achieved, with

over 186,000 colleagues sharing their insights.

**Employee Engagement Index**

78%

Our Employee Engagement Index decreased

by two percentage points to 78%. This is four

percentage points above the global financial

services benchmark.

**How We Lead Index**

77%

Our new How We Lead Index achieved 77%.

This surpasses the financial services

benchmark by five percentage points.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **54** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Social |  |  |  |  |  |

---

Being a great place to work

Reward and recognition

Our aim is to create an environment that

energises colleagues to perform at their best.

This is critical for attracting, retaining and

motivating our colleagues, supported by our

core reward principles: rewarding colleagues

responsibly, recognising colleagues' success

and supporting our colleagues to grow.

**Rewarding colleagues responsibly**

Pay is a key element of our overall proposition.

We aim to enhance transparency and clarity,

helping our colleagues to better understand

how we make our pay decisions. We remain

committed to providing a competitive total

compensation package that balances an

appropriate mix of fixed and variable pay.

HSBC achieved accreditation on 31 December

2024 from the Fair Wage Network, which

provides an independent source of wage

levels, as a global living wage employer for

two years. Following our accreditation, we

have collaborated with the Fair Wage Network

to ensure we continue to meet or surpass

local living wage benchmarks. A living wage

should be sufficient to cover an adequate

standard of living, given the cost of goods and

services in each country and territory where

we operate.

We also seek to implement contractual

clauses that encourage our suppliers to pay at

least a living wage in the UK, including our

most material consultancy and workforce

contracts.

**Recognising colleagues' success**

We have performance routines to foster a

high-performance culture, and in 2025 these

routines encouraged colleagues to set

challenging goals aligned with our strategic

priorities. Regular feedback exchanges helped

colleagues understand their progress and

areas for improvement. Ongoing performance

check-ins result in a clear and focused year-

end performance assessment that wraps up

these discussions.

In 2025, our Snapshot results showed that

86% of colleagues clearly understood what is

expected of them, aligned to the 2024 result

of 87%. Also, 81% of colleagues received

performance-improving feedback, consistent

with the results from 2024.

Our variable pay plans recognise the

performance and behaviours of our colleagues.

We operate Target Variable Pay for over

127,000 colleagues across 48 markets,

promoting clarity and transparency in pay

decisions. This helps colleagues understand

how they contribute to the organisation's

performance.

Our 'At Our Best' recognition platform

empowers our colleagues to recognise each

other for role model behaviours aligned with

our values. In 2025, we celebrated each other

1.4 million times. We also launched short-

term recognition campaigns engaging over

30,000 colleagues, encouraging nominations

for outstanding 'How We Succeed'

behaviours.

Share plans also empower colleagues to

engage in HSBC's success. In 2025, we

invited around 199,000 colleagues to join our

share plans, and 95% of colleagues globally

have eligibility. Currently, around 63,000

colleagues participate in one of the plans.

Supporting our colleagues to grow

We recognise the importance of personal and

professional growth for our colleagues, and

seek to support their mental, physical and

financial well-being.

We have refined our Well-being index in the

Snapshot survey to focus on where we can

make the most positive impact and updated

our questions to focus on happiness at work,

stress levels, job satisfaction, and sense of

purpose, aligning our methodology to the

Organisation for Economic Co-operation and

Development ('OECD') measures of well-

being.

In 2025 our Well-being index increased to

66%, with improvements of one percentage

point across happiness at work, stress levels

and job satisfaction.

**Mental health**

We were ranked 1st globally for the fourth

consecutive year in the CCLA Corporate

Mental Health Benchmark Global 100+. We

are the only organisation to achieve Tier 1

status since the benchmark's inception. In

2025, we scored 83%, significantly higher

than the financial services industry average of

34%.

In 2025, we hosted two global masterclass

series, one focused on mental health and

performance, and the other on sleep and well-

being. These events brought together senior

leaders and industry experts to share

evidence-based strategies for enhancing well-

being and performance, while addressing

workplace myths and stigma.

In 2025, we updated the well-being content in

our global mandatory training and launched a

new voluntary mental health module. The new

module has been completed over 1,300 times

since launch in November, with 27% of those

completions being done by people leaders.

Our network of over 250 mindfulness

champions delivered sessions to over 27,000

colleagues, up 43% on 2024, and enrolment to

the meditation app, Headspace, increased by

8%.

**Physical health**

We provided private medical insurance to 99%

of our permanent employees, and offered

telemedicine services in most countries and

territories. In some markets, we also have on-

site medical centres. In 2025, 80% of

colleagues can access free health

assessments. We also expanded medical

outpatient reimbursement to over 35,000

colleagues in India. In Singapore and the UK,

we introduced fertility medical support,

increasing the number of countries offering

this benefit to 10.

In 2025, we continued to offer the Personify

Health app to colleagues, helping boost their

physical activity. Over 33,000 colleagues have

downloaded the app, an increase of 57% on

2024. Additionally, over 11,400 colleagues

participated in the HSBC Global Activity

Challenge in September, an increase of over

149% in participation from 2024. We set a

new Guinness World Record for the most

participants in a 10,000 step challenge in 24

hours.

**Financial health**

We introduced a four-part financial well-being

series providing 'Money Skills That Make Life

Easier', which gained an overall satisfaction

score of 97%. According to our Performance

and Reward survey, 37% of colleagues

expressed a desire for more financial well-

being support. In response, we trialled an

independent financial well-being platform for

colleagues in Mexico, UAE, the UK and India

to enhance financial literacy. Over 1,600

colleagues are participating in the trial, which

concludes in March 2026.

**Flexible working**

We support hybrid working, with 85% of our

colleagues embracing this approach.

We value flexibility but also emphasise the

importance of in-person interactions to foster

collaboration, build trust, and demonstrate care

and empathy. Strong relationships among

colleagues lead to better outcomes for our

customers.

In 2025, we reset our expectations that

Managing Directors are present in the office a

minimum of four days a week, emphasising

the importance of relationships, as we evolve

our culture.

We enhanced our family leave policies to

promote flexibility and work-life balance. Over

99% of colleagues now have access to at

least 18 weeks of fully-paid parental leave for

primary caregivers, along with five paid

compassionate leave days. Additionally,

around 72% of colleagues can also use up to

five paid days as carer leave days, when

regular arrangements unexpectedly fall

through.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **55** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Social |  |  |  |  |  |

---

**Developing skills, careers and opportunities** 

Learning and skills development

Employee development energises our

colleagues for growth and helps equip them

with the skills they need today while also

preparing them to meet future challenges.

**Establishing our leadership framework**

To support our refreshed strategy and

ambition, a cross-section of business leaders

developed and launched a set of leadership

principles and a new Group-wide leadership

framework called How We Lead. This is

characterised by simple, practical and universal

tools and consistent leadership language for all

people leaders across HSBC.

**Supporting future skills**

We have evolved our platforms to offer skills,

opportunities and development pathways,

supporting our colleagues to grow, perform

and adapt in a changing environment. In 2025,

we:

–increased the number of active users and

participation in learning programmes. To

bridge skill gaps we offered access to

learning content, fostering knowledge-

sharing, collaboration and structured learning

pathways; and

–increased efforts in our digital badging to

recognise skill-building achievements, with

46 new badges launched and more than

42,000 credentials issued in areas across

data, digital, banking and finance, and

wealth.

**Maintaining our risk management** 

**culture**

We continue to improve our risk management

learning programmes to seek to ensure that

they maintain relevance and reinforce our risk

management culture.

In 2025, we introduced a multi-year Financial

Crime learning programme aimed at enhancing

our ability to manage financial crime risks. This

programme seeks to equip our colleagues in

high-risk roles with essential skills and

knowledge to effectively mitigate these risks.

Learning is delivered through role-specific

scenarios that assess capability by applying

knowledge and addressing skill gaps with

tailored content.

We have evolved our global mandatory

training, a key component of our risk and

compliance framework. Moving away from

traditional compliance methods, we have

adopted thematic structures in risk

management, financial crime, and conduct,

focusing on skills and behaviours. This

approach emphasises practical application and

tailors content to individual capabilities. By

2026, the training will develop into a dynamic,

personalised experience, emphasising

foundational knowledge for new joiners and

ongoing improvement for colleagues.

**Fostering AI adoption**

Our AI Academy continues to drive innovation

and improvement, equipping colleagues with

the skills to use AI technologies effectively

and ethically. Since its launch in 2024, the

Academy has evolved to focus on specialised

technical pathways tailored to employee roles

and their level of AI involvement. It provides

comprehensive training on AI literacy,

responsible AI, and AI ethics, with

participants earning badges to recognise their

achievements. In 2025, we piloted the AI

Ambassador mentorship programme to

empower a future-ready workforce. This

initiative accelerates skills development and

expands professional networks through

dynamic peer-to-peer mentorship and

meaningful connections.

Engagement with the AI Academy remained

strong throughout 2025, with 26,000

colleagues completing over 122,000 hours of

learning.

Hong Kong has progressed AI capability-

building with its 'Skills Galaxy' and 'Skills

Master' initiatives. These programmes focus

on AI, data and leadership. The Skills Galaxy

carnival attracted over 1,400 colleagues,

offering interactive booths, workshops and

information sessions. The Skills Master

initiative was launched as a self-paced online

learning journey, engaging over 3,300

colleagues in themed semesters to promote

continuous learning in AI and data.

**Advancing wealth management** 

**expertise**

In 2025 we introduced the Wealth Academy to

cultivate top-tier wealth managers. The

Academy offers a wealth knowledge hub with

198 topics across five core skills, offering 26

hours of learning content in four languages.

Our colleagues can earn digital badges at three

competency levels through passing online

assessments. By September 2025, over 1,000

team members interacted with the Hub, and

720 qualified for competency badges.

We have teamed up with the London

Business School for a nine-month programme

for our 70 top-performing wealth managers.

This programme combines academic rigour

with practical wealth management strategies,

virtual learning and customer-focused

challenges. Wealth managers will earn a

certificate from the London Business School

upon completion.

**Supporting in-person development**

In June, we opened our fourth HSBC

University campus in Nansha, Guangzhou with

an event that brought together senior leaders

from across the Group. Our flagship residential

learning campus is dedicated to uniting our

colleagues globally in a space designed for

learning and engagement. It features 170

guest rooms, a large auditorium, a multi-

purpose hall, modern flexible classrooms and

well-being areas. To date, over 4,500 senior

leaders globally have attended leadership

events held at the China campus.

---

| |
|:---|
| ![1.5.14.6 RT_1.5.13.2.58 PG57 ENERGISING COLLEAGUES.jpg](hsbc-20251231_g60.jpg) |
| Energising our <br>colleagues for growth<br>|
| This year, we made significant upskilling <br>efforts to fast track our digital, <br>sustainability and growth ambitions:<br>–Since its inception in 2024, our Digital <br>Acceleration Programme has delivered <br>over 25,000 hours of targeted training <br>for key roles, including product owners <br>and scrum masters. This strategic <br>investment in professional <br>development empowers our teams to <br>build superior products and deliver <br>services more efficiently, driving better <br>outcomes for our customers.<br>–We launched a programme to <br>strengthen our Sustainable Supply <br>Chain Finance CIB capabilities. This <br>initiative increased ESG-related activity <br>including client calls, deal pipeline and <br>mandates awarded.<br>–Expanding on our 'Doing Business In' <br>series, we focused on new growth <br>markets, such as India. In collaboration <br>with the Indian School of Business, we <br>conducted a four-day on-campus <br>programme that provided bankers with <br>a comprehensive understanding of the <br>Indian economy, business <br>environment, regulatory framework and <br>clients' banking priorities.<br>|

---

**Training at HSBC** 

5.6 million

Training hours by our colleagues in 2025.

(2024: 6.2 million)

26.8 hours

Training hours per FTE in 2025.

(2024: 29.6 hours)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **56** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Social |  |  |  |  |  |

---

**Building customer inclusion and resilience** 

Our approach to customer inclusion and resilience

We support our customers, colleagues and

communities through offering solutions that

aim to remove barriers to accessing financial

services. This section highlights some of the

solutions that we offer.

**Access to HSBC products and services** 

In the UK and Hong Kong, we offer no-cost

accounts for customers who do not qualify for

standard accounts or who might need additional

support due to social or financial vulnerability.

This aims to enable them access to essential

banking services. In the UK, through our

partnership with Shelter, we extend this service

to include customers with no fixed address, so

that people experiencing homelessness may be

able to access HSBC services.

The reduction in no-cost accounts between 2024 <br>and 2025 is in part due to bulk closure of inactive <br>accounts in the UK.<br>

**Making banking accessible**

The table shows the number of no-cost

accounts held by customers in the UK and

Hong Kong

---

| |
|:---|
| **2025** |
| 2024 |
| 2023 |

---

![154481384179117](hsbc-20251231_g61.gif)

**Supporting financial knowledge and** 

**education** 

We continue to invest in financial education

content and tools across different channels to

help customers, colleagues and communities

be confident users of financial services.

**Supporting customer financial well-being**

We seek to support the financial well-being of

our customers and employees so that they

can make the most of their money both day-

to-day and in the long term. We offer a

combination of personalised services and

digital tools, including a financial fitness test,

future planner, webinars and financial health

checks.

**Creating an inclusive banking** 

**experience** 

We seek to ensure that our banking products

and services are designed to be accessible for

customers experiencing either temporary or

permanent challenges, such as disability,

impairment or a major life event. We regularly

assess our web and mobile banking platforms

against Web Content Accessibility Guidelines

('WCAG') 2.2 AA standards. Our digital

accessibility programme has received industry

awards including accolades from the Hong

Kong Digital Accessibility Recognition Scheme,

and recognition at the UK Pay 360 Awards. To

foster inclusive digital environments, we are

providing public training resources through our

Accessibility Hub and Train 1000 programme,

which offer resources for digital professionals,

including developers, designers and content

authors. Over 100,000 individuals engaged

with these resources in 2025.

**Engaging with our communities**

Helping people and communities

We seek to support the communities in which

we operate, and work with charity partners to

initiate a range of programmes that help

people and communities respond to

opportunities and challenges.

We continued our partnership with the British

Council in Brazil, Mexico, India, Indonesia and

Vietnam, and with The King's Trust Group in

Australia, India and Malaysia to empower

young, marginalised people through training

and skills development on topics including

employability and climate, and to help equip

them for the new economy.

In the UK, Egypt and Mexico, we supported

financial and social empowerment: over

286,000 young people in the UK were

provided with financial skills in partnership

with Young Enterprise; 1,150 widows in Egypt

were supported to improve their self-reliance

through micro-banking with Global Fund For

Widows; and 800 incarcerated women in

Mexico with our charity partner La Cana were

supported in gaining employability and

emotional skills.

In China and India, HSBC initiatives aimed to

support financial literacy and entrepreneurship:

46,003 children and 26,291 families in China

benefited from financial education, while over

15,000 entrepreneurs in India, primarily

women, saw on average a 20% income

increase and improved access to credit,

markets and social security.

HSBC grants in the US trained 639 individuals

from low-income communities about clean

energy, benefiting 6,484 people.

In Hong Kong, Food Angel launched a new

production line to scale up cook-chill meal

operations, supporting 27,000 marginalised

elderly people with HSBC's support.

Philanthropy can also play an important role in

addressing the barriers to action, helping to

build capacity, and testing and scaling the

innovation required to achieve a resilient and

sustainable net zero future.

🡠For more information about our environment-

related philanthropy, refer to 'Partnering for an

enabling environment' on page 38.

**Community engagement and** 

**volunteering**

We offer paid volunteering days, and

encourage our people to offer their time, skills

and knowledge to causes within their

communities. In 2025, our colleagues gave

over 248,639 hours to community activities

during work hours and 272,088 hours during

their own time.

**Charitable contributions in 2025 (%)**![154481383796753](hsbc-20251231_g62.gif)

Social, including Future Skills: **36%**

Environment, including the Climate

Solutions Partnership: **38%**

Local Priorities: **7%**

Disaster relief and other giving: **19%**

**Cash charitable contributions**

$103.7m

**Total value of our contribution to** 

**communities** 

$137.8m

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **57** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Governance

Acting responsibly

**Setting high standards of governance** 

**TCFD**<br>

How ESG is governed

The Board takes overall responsibility for ESG

strategy, overseeing executive management in

developing the approach, execution and

associated reporting. Progress against our ESG

ambitions is reviewed through Board discussion

and review of key topics, such as updates on

the sustainability strategy and reviewing the

ESG strategy dashboard. The Board is regularly

provided with specific updates on ESG matters,

including the Net Zero Transition Plan,

philanthropy strategy, human rights and

workforce engagement. Board members

receive ESG-related training as part of their

induction and ongoing development, and seek

out further opportunities to build their skills and

experience in this area. For further details of

Board members' ESG skills and experience,

see page 220. For further details of their

induction and training in 2025, see page 231.

In March 2025, we streamlined our ESG

governance with the demise of the ESG

Committee, which was part of the Group

Operating Committee, with the business of the

meeting being embedded across the formal

Operating Committee level governance

meetings or managed via individual

accountability. We expect that our approach to

ESG governance is likely to continue to develop,

in line with our evolving approach to ESG

matters and stakeholder expectations.

The diagram on the right provides an illustration

of our ESG governance process, including how

the Board's strategy on climate is cascaded and

implemented throughout the organisation. It

identifies examples of forums that manage both

climate-related opportunities and risks, as well

as considering the associated trade-offs. Details

are also provided on their responsibilities and

the responsible chair. The structure of the

process remains consistent with a defined

escalation pathway for issues and emerging

challenges, with issues either resolved in a

given forum or raised to the appropriate level of

governance with appropriate scope and

authority.

Given the wide-ranging remit of ESG matters,

the governance activities are managed through

a combination of specialist governance

infrastructure and regular meetings and

committees, where appropriate. These include

the Group Risk Committee and Group Audit

Committee, which provide oversight for the

scope and content of ESG disclosures.

For some areas, such as climate where our

approach is more advanced, dedicated

governance activities exist to support the wide

range of activities.

The Group Chief Risk and Compliance Officer

and the chief risk officers of our PRA-regulated

businesses are the senior managers

responsible for climate financial risks under the

UK Senior Managers Regime. Climate risks are

considered in the Group Risk Management

Meeting and the Group Risk Committee, with

scheduled updates provided, as well as detailed

reviews of material matters, such as climate-

related stress-testing exercises.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded | How HSBC's climate strategy is cascaded |
| Opportunities | Opportunities | Opportunities |  |  |  |  | Risks |
|  |  | **Board level governance** | **Board level governance** | **Board level governance** | **Board level governance** | **Board level governance** |  |
|  | **Group Board**  | **Group Board**  | **Group Audit** <br>**Committee** | **Group Audit** <br>**Committee** | **Group Audit** <br>**Committee** | **Group Risk** <br>**Committee** | **Group Risk** <br>**Committee** |
|  | Takes overall responsibility <br>for climate strategy, <br>overseeing executive <br>management in <br>developing the approach <br>and execution. | Takes overall responsibility <br>for climate strategy, <br>overseeing executive <br>management in <br>developing the approach <br>and execution. | Monitors and assesses the <br>integrity of the Group's <br>financial disclosures, <br>including those relating to <br>ESG. | Monitors and assesses the <br>integrity of the Group's <br>financial disclosures, <br>including those relating to <br>ESG. | Monitors and assesses the <br>integrity of the Group's <br>financial disclosures, <br>including those relating to <br>ESG. | Oversees and advises the <br>Board on risk-related <br>matters including those <br>related to ESG risks <br>(incorporating climate <br>risk). | Oversees and advises the <br>Board on risk-related <br>matters including those <br>related to ESG risks <br>(incorporating climate <br>risk). |
|  | Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: James Forese | Chair: James Forese |
|  | **Specialist Board governance** | **Specialist Board governance** | **Specialist Board governance** | **Specialist Board governance** | **Specialist Board governance** | **Specialist Board governance** | **Specialist Board governance** |
|  | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham | **Sustainability Working Group**<br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term <br>sustainability strategy, including our progress towards our net zero ambition, taking into account <br>key factors such as risk appetite, commerciality, capability and data.<br>Chair: Geraldine Buckingham |
|  | **Management level governance** | **Management level governance** | **Management level governance** | **Management level governance** | **Management level governance** | **Management level governance** | **Management level governance** |
|  | **Group Operating Committee**<br>Receives regular ESG updates and <br>shapes and influences our strategy.<br>Chair: Group Chief Executive Officer | **Group Operating Committee**<br>Receives regular ESG updates and <br>shapes and influences our strategy.<br>Chair: Group Chief Executive Officer | **Group Operating Committee**<br>Receives regular ESG updates and <br>shapes and influences our strategy.<br>Chair: Group Chief Executive Officer |  | **Group Risk Management Meeting**<br>Oversees the enterprise-wide <br>management of all risks, including <br>updates relating to the Group's climate <br>risk profile and risk appetite, top and <br>emerging climate risks.<br>Chair: Group Chief Risk and <br>Compliance Officer | **Group Risk Management Meeting**<br>Oversees the enterprise-wide <br>management of all risks, including <br>updates relating to the Group's climate <br>risk profile and risk appetite, top and <br>emerging climate risks.<br>Chair: Group Chief Risk and <br>Compliance Officer | **Group Risk Management Meeting**<br>Oversees the enterprise-wide <br>management of all risks, including <br>updates relating to the Group's climate <br>risk profile and risk appetite, top and <br>emerging climate risks.<br>Chair: Group Chief Risk and <br>Compliance Officer |
|  | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** | **Regional, global business and group infrastructure** |
|  | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. | **Examples of ESG-related management governance**<br>The following governance bodies support management in its delivery of ESG activities. |
|  | **Group Reputational Risk Committee**<br>Provides recommendations and advice on <br>significant reputational risk matters with <br>impact across the Group.<br>Chair: Group Chief Risk and Compliance <br>Officer  | **Group Reputational Risk Committee**<br>Provides recommendations and advice on <br>significant reputational risk matters with <br>impact across the Group.<br>Chair: Group Chief Risk and Compliance <br>Officer  | **Group Reputational Risk Committee**<br>Provides recommendations and advice on <br>significant reputational risk matters with <br>impact across the Group.<br>Chair: Group Chief Risk and Compliance <br>Officer  | **Sustainability Leadership Meeting**<br>Monitors execution of the Group's <br>sustainability strategy and requirements.<br>Chair: Group Chief Sustainability Officer  | **Sustainability Leadership Meeting**<br>Monitors execution of the Group's <br>sustainability strategy and requirements.<br>Chair: Group Chief Sustainability Officer  | **Sustainability Leadership Meeting**<br>Monitors execution of the Group's <br>sustainability strategy and requirements.<br>Chair: Group Chief Sustainability Officer  | **Sustainability Leadership Meeting**<br>Monitors execution of the Group's <br>sustainability strategy and requirements.<br>Chair: Group Chief Sustainability Officer  |

---

![](hsbc-20251231_g63.gif)

![](hsbc-20251231_g63.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **58** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

**Human rights**

Our respect for human rights

As set out in our Human Rights Statement, we

recognise the role of business in respecting

human rights. Our approach is guided by the

UN Guiding Principles on Business and Human

Rights ('UNGPs') and the OECD Guidelines for

Multinational Enterprises on Responsible

Business Conduct.

**Our salient human rights issues**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Our salient human rights issues | Our salient human rights issues | Our salient human rights issues |  |  |  |  |
| Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. | Illustration of HSBC Group's inherent human rights risks mapped to our business activities. |
| **Inherent human rights risks** | **Inherent human rights risks** | Employer | Buyer | Provider of products <br>and services | Provider of products <br>and services | Investor |
| **Inherent human rights risks** | **Inherent human rights risks** | Employer | Buyer | Personal <br>customers<br>| Business <br>customers<br>| Investor |
| Right to <br>decent <br>work | Freedom from forced labour |  | ◆ |  | ◆ | ◆ |
| Right to <br>decent <br>work | Just and favourable conditions of work | ◆ | ◆ |  | ◆ | ◆ |
| Right to <br>decent <br>work | Right to health and safety at work | ◆ | ◆ |  | ◆ | ◆ |
| Right to equality and freedom from discrimination | Right to equality and freedom from discrimination | ◆ | ◆ | ◆ | ◆ | ◆ |
| Right to privacy | Right to privacy | ◆ |  | ◆ |  | ◆ |
| Cultural and land rights | Cultural and land rights |  | ◆ |  | ◆ | ◆ |
| Right to dignity and justice | Right to dignity and justice | ◆ | ◆ | ◆ | ◆ | ◆ |

---

We continue to develop our understanding of

our salient human rights issues. These are the

human rights at risk of the most severe

negative impact through our business activities

and relationships.

An extensive review of our salient human

rights issues conducted in 2022 identified five

human rights risks inherent to HSBC's

business globally, and five types of activity

through which such risks might arise. These

are represented in the adjacent table. We

reviewed those earlier findings in 2025,

drawing on consultations with stakeholders

including employees, customers, investors,

public authorities and civil society groups

representing potentially affected people. This

review validated our existing assessment, and

no substantive changes have been made to the

table as a result. Respondents highlighted

several developing issues, including the

potential social impacts of AI on communities.

In 2025, we continued to focus on our

approach to human rights risk management

relating to the goods and services we buy

from third parties and in respect of our

business customers.

**Managing risks to human rights**

We continued the process of adapting our risk

management procedures, reflecting what we

learned from the recent work on salient

human rights issues and continued to embed

the guidance documents issued in 2024 for

those who manage our relationships with

suppliers and with business customers.

Our Global Procurement function continued to

implement its human rights due diligence

operating procedure. This procedure sets out

how HSBC aims to identify suppliers where

the risk of human rights impact is considered

to be higher, and the process to be followed to

review and mitigate the associated risks. We

continued the human rights audits of suppliers

and closed out findings from the 2024 audits.

We use independent negative news data to

help identify controversies related to our

corporate customers, including on human

rights, which may lead to further review and

escalation.

🡠For further details of the actions taken to respect

the right to decent work, see our 2024 Annual

Statement under the UK Modern Slavery Act at

www.hsbc.com/modern-slavery-act.

🡠See 'Our approach to inclusion' on page 51 for

details relating to freedom from discrimination.

**Sustainability risk policies**

Some of our business customers operate in

sectors in which the risk of adverse human

rights impact is considered greater. Our

sustainability risk policies consider human

rights issues such as forced labour, harmful or

exploitative child labour, workers' rights, health

and safety of communities and land rights.

Through our membership of international

certification schemes, such as the Forestry

Stewardship Council, the Roundtable on

Sustainable Palm Oil and the Equator

Principles, we support standards aimed at

respecting human rights.

🡠For further details on our sustainability risk policies

see page 49.

**Financial crime controls** 

Our financial crime risk framework also seeks

to mitigate the risk of being associated with

adverse human rights impacts, by helping to

identify and assess the financial crime risk

associated with our customers, employees

and third parties.

🡠For further details of how we fight financial crime

see www.hsbc.com/fighting-financial-crime.

**Other principles** 

HSBC's Principles for the Ethical Use of Data

and Artificial Intelligence include how we seek

to respect the right to privacy while making

use of these technologies.

🡠For further details see www.hsbc.com/ai-principles.

**Supporting change**

We continued to participate in industry forums,

including the Thun Group of Banks, which is an

informal group that seeks to promote

understanding of the UNGPs within the sector,

and the UN Global Compact Human Rights

Working Group.

HSBC has been a member of the Mekong

Club since 2016. We are a participant in their

financial services working group, and we use

their informative typological toolkits,

infographics and other multimedia resources

covering current and emerging issues. Our

compliance teams regularly collaborate and

engage with the Mekong Club in designing

Group-wide knowledge sharing and training

sessions.

**Investments**

HSBC Asset Management acknowledges the

important role that business plays in

respecting human rights.

HSBC Asset Management engages with

companies prioritised for purposeful

engagement under its stewardship plan on

core relevant themes, including human rights.

Engagements may be on a one-on-one basis,

or collaboratively with other investors. Further

details can be found in its stewardship plan.

The Global Voting Guidelines provide an

overview of its approach to exercising its

shareholder rights in respect of ESG issues,

including human rights.

**Supporting those impacted and those** 

**potentially at risk** 

We continued to expand our Survivor Bank

programme, which has now supported over

4,100 (a more than 15% increase since last

year) survivors of modern slavery and human

trafficking in the UK.

Our personal customers (IWPB) team

continues to deliver training to raise

awareness of modern slavery, which seeks to

enable employees to spot signs of abuse and

escalate their concerns through established

channels. In addition, our customer-facing

employees globally are given training as part of

their induction which aims to help them

identify and support vulnerable customers.

🡠For further details of our work to support

vulnerable communities, see page 56.

**Effectiveness**

We increased the proportion of our suppliers

who had either confirmed adherence to

HSBC's code of conduct or their own

alternative, which was accepted by our Global

Procurement function, to 97.3%. We also

continued to train employees in relevant roles

on one or more aspects of a range of human

rights related topics, having now reached over

11,300 employees over the past 24 months.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **59** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

**Customer experience**

We remain committed to improving customers' experiences. In 2025, we gathered feedback from over one million customers across our four

business segments to help us understand our strengths and the areas we need to focus on.

Customer satisfaction

**Listening to drive improvement**

We continue to listen, learn and act on

customer feedback. We use the net promoter

score ('NPS') system to share feedback with

our front-line teams, allowing them to respond

directly to customers. We also run dedicated

global forums to provide oversight of our retail

and business customers' experiences and

promote continuous improvement.

**How we fared**

In Hong Kong, we were ranked in first place

for both RBW and CMB. Notably, we reached

a record high NPS in RBW.

We also reached our highest NPS to date in

the UK among RBW customers and improved

our rank.

In CMB, we ranked second for mid-market

enterprises, and improved our SME Business

Banking ranking to fifth.

In IWPB, among the mass affluent we

improved our NPS or rank in seven of 10 key

markets. We ranked in the top 3 of the eight

competitively benchmarked markets. We rose

to first place in Singapore and China and

maintained second place in Malaysia.

India and Mexico both experienced a decline in

NPS during the period. Although NPS is

influenced by various factors, the increase in

customer complaints contributed to a shift in

overall customer sentiment. For further details

on IWPB customer complaints, please refer to

In our private bank, our global NPS increased

to 54 points, compared with 48 points in 2024.

In CIB, among Corporates we were ranked

among the top 3 in seven of 10 key markets.

We led in three markets and held a stronger

position in Asia and the Middle East than in

Europe and the Americas.

How we listen

To improve how we serve our customers, we must be open to feedback and acknowledge when things go wrong. We continue to adapt at pace to

provide support for customers facing new challenges, new ways of working and those that require enhanced care needs. We aim to be open and

consistent in how we track, record and manage complaints, although as we serve a wide range of customers – from personal banking and wealth

customers to large corporates, institutions and governments – we tailor our approach in each of our global businesses.

---

| | |
|:---|:---|
| How we handle complaints | How we handle complaints |
| **Our principles** | **Our actions** |
| **Making it easy for** <br>**customers to complain**<br>| Customers can complain through the channel that best suits them. We provide a point of contact along with <br>clear information on next steps and timescales.<br>|
| **Acknowledging complaints** | All colleagues welcome complaints as opportunities and exercise empathy to acknowledge our customers' <br>issues. Complaints are escalated if they cannot be resolved at first point of contact.<br>|
| **Keeping the customer up to** <br>**date**<br>| We set clear expectations and keep customers informed throughout the complaint resolution process <br>through their preferred channel.<br>|
| **Ensuring fair resolution** | We thoroughly investigate all complaints to address concerns and ensure the right outcome for our <br>customers.<br>|
| **Providing available rights** | We provide customers with information on their rights and the appeal process if they are not satisfied with <br>the outcome of the complaint.<br>|
| **Undertaking root cause** <br>**analysis**<br>| Complaint causes are analysed on a regular basis to identify and address any systemic issues and to inform <br>process improvements.<br>|

---

Hong Kong

As of 31 December 2025, Hong Kong CMB

received 7,324 customer complaints, down

3.5% from the year before. The primary

drivers of these complaints were related to

servicing, policy, and digital issues. Policy-

related complaints focused on Client Selection

and Exit Management ('CSEM') cases and

CSEM appeals, while digital complaints

involved business internet banking log-on

problems, webpage design and online

transactions issues.

In 2025, despite a growing customer base, the

Hong Kong RBW average complaints per

1,000 customers per month decreased from

0.71 to 0.68.

**Acting on feedback**

The bi-monthly CMB complaint review forum

brings together key decision makers,

customer relationship owners and product and

process owners to identify the latest complaint

trends and concern areas. It oversees root

cause analysis and implements improvement

actions with the aim of reducing complaints

and enhancing customer service. Awareness

sessions are provided to client-facing staff to

reinforce the CMB complaint handling

procedure and customer feedback tool

functionalities, to help equip staff with relevant

skills and knowledge to manage complaints

effectively.

The improvement for Hong Kong RBW was

achieved through enhanced banking

capabilities and a focus on customer

experience. The positive trend stemmed from

fostering a customer-centric culture,

emphasising service resolutions, and

proactively addressing feedback through root

cause analysis and insights from complaint

management information and NPS.

Strengthened cross-departmental collaboration

and advanced technological methods in

complaint management further enhanced our

efficiency and responsiveness.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **60** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

UK

For UK CMB, complaints reduced by 13.8% in

2025 compared with 2024, with the most

common complaint categories continuing to

relate to telephony, servicing and transactions.

A refined customer contact strategy has been

embedded to drive improved outcomes and

customer experience.

In 2025, average complaints per 1,000

customers per month for UK RBW were 0.84.

Overall, complaints fell by 18% in 2025 vs

2024. During 2025, our two key priorities continued

to be complaints prevention and improving the

quality of resolution of the complaints we

received. We made good progress in both

areas, driven by targeted intervention in

priority areas and ongoing regular oversight.

**Acting on feedback**

A focus on root cause analysis identified

more than 240 opportunities to reduce

dissatisfaction in key customer journeys in

CMB.

In RBW, we focused on the top 35 complaint

themes – such as telephony customer

experience, transaction disputes and

international payment processing – and

allocating them to individual executives as

accountable 'owners' to remedy the root

cause.

Corporate and Institutional Banking

Within CIB, excluding Hong Kong CMB and UK

CMB, we achieved a 3.7% reduction in

complaints. Complaint volumes decreased in

2025, with 7,373 complaints received

compared with 7,655 in 2024, indicating an

overall downward trend.

In Markets and Securities Services (MSS)

complaints increased slightly by 4.6% to 320.

The majority of the complaints were

operational in nature and resolved in a timely

manner. Of the overall MSS complaints in

2025, 46% came from Asia-Pacific and 44%

came from Europe, our two largest markets.

**Acting on feedback**

These complaints were mainly related to

servicing and transactions across all regions,

with a notable concentration in Latin America,

the Middle East and North Africa, Asia-Pacific

and Europe.

To mitigate potential risks, comprehensive

mandated conduct and complaints training has

been provided to all CIB employees. This

training aims to strengthen a culture of

accountability, transparency and learning

aligned to our conduct principles.

In 2025, focus continued to be on increasing

the quality of the documentation of customer

feedback received within MSS. Continuous

training for front-line staff on recurring themes

that are identified when managing complaints

ensured that we continued to learn from

feedback, allowing us to further embed

changes into our processes, leading to a better

customer experience. Although complaint

volumes increased slightly, we identified

better quality of complaint documentation,

allowing us to address the issues more

effectively.

International Wealth and Premier Banking

In 2025, IWPB received approximately

717,000 complaints from customers in eight

priority markets. Average complaints per 1,000

customers (CPK) per month increased from

4.2 in 2024 to 4.7 in 2025. Our top three

markets – Mexico, Australia and India –

accounted for 88% of IWPB complaints

globally. The rise in complaints was primarily

driven by disputes in Mexico, largely

stemming from customer concerns about

unauthorised or fraudulent transactions.

Additionally, the introduction of credit card

annual fees, and more frequent risk reviews

contributed to higher complaint volumes in

Australia and India. We are closely monitoring

these trends and have initiated targeted

actions in each market to address the

underlying causes.

We continue our commitment to drive

accuracy over how we log and respond to

customer feedback.

In our Private Bank, we received 593

complaints, a decrease of 54 compared with

2024, helped by the sale of our private bank in

Germany. Banking products and service issues

accounted for the largest volume of

complaints overall, a high proportion of which

were attributable to issues with payment

processing and credit cards. Overall, our

Private Bank resolved 578 complaints in 2025.

**Acting on feedback**

In 2025, we further strengthened our

customer capabilities – the tools, skills, and

processes that empower our teams to better

understand, actively listen and improve the

customer experience globally.

We upgraded our listening platforms which

support our colleagues in meeting minimum

service standards and in prioritising customer

experience in their daily routines. A key

milestone was the launch of a new platform

designed to gather and analyse customer

feedback, generating actionable insights for

continuous improvement. These upgrades

help us to improve customer experience and

systematically track and measure our

progress.

🡠For further details of complaints volumes by

business lines, see our ESG Data Pack at

www.hsbc.com/esg.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **61** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

**Integrity, conduct and fairness**

Safeguarding the financial system

We have continued our efforts to combat

financial crime and reduce its impact on our

organisation, customers and the communities

that we serve. Financial crime includes fraud,

bribery and corruption, tax evasion and the

facilitation of tax evasion, sanctions and

export control violations and evasion, money

laundering, terrorist financing and proliferation

financing.

We manage financial crime risk because it is

the right thing to do to protect our customers,

shareholders, staff, the communities in which

we operate, as well as the integrity of the

financial system on which we all rely. Our

financial crime risk management framework

is applicable across all global businesses and

functions, and in all countries and territories

in which we operate. The financial crime risk

framework is overseen by the Board,

supported by our financial crime policy, and is

designed to enable adherence to applicable

laws and regulations globally.

Annual global mandatory training is provided

to all colleagues, with additional targeted

training tailored to certain individuals. We

carry out regular risk assessments to identify

where we need to respond to evolving

financial crime threats, as well as to monitor

and test our financial crime risk management

programme.

**Our anti-bribery and corruption policy**

We are required to comply with all applicable

anti-bribery and corruption laws in every

market and jurisdiction in which we operate.

We seek to focus not only on the letter, but

also on the spirit of relevant laws and

regulations to demonstrate our commitment

to ethical behaviours and conduct, as part of

our environmental, social and corporate

governance.

Our global financial crime policy requires that

all activity must be: conducted without intent

to bribe or corrupt; reasonable and

transparent; considered to be neither lavish

nor disproportionate to the professional

relationship; appropriately documented with

business rationale; and authorised at an

appropriate level of seniority. Our global

financial crime policy requires that we identify

and mitigate the risk of our employees,

customers and third parties committing

bribery or corruption. Among other controls,

we use risk assessments, due diligence and

ongoing monitoring following a risk-based

approach, to identify and help mitigate the

risk that our customers are involved in, or use

HSBC's products or services, to commit

bribery or corruption.

There were no concluded legal cases

regarding bribery or corruption brought

against HSBC or its employees in 2025.

---

| | |
|:---|:---|
| ![1.5.14.7 RT_1.5.13.2.59 PG63 SCALE OF OUR WORK.jpg](hsbc-20251231_g64.jpg) |  |
| ![1.5.14.7 RT_1.5.13.2.59 PG63 SCALE OF OUR WORK.jpg](hsbc-20251231_g64.jpg) |  |
| ![1.5.14.7 RT_1.5.13.2.59 PG63 SCALE OF OUR WORK.jpg](hsbc-20251231_g64.jpg) | The scale of our work |
| Each month in 2025 we monitored <br>approximately 980 million transactions for <br>signs of financial crime. We performed <br>daily screening of approximately 109 <br>million customer records for sanctions <br>exposure. In 2025, we filed nearly 137,000 <br>suspicious activity reports to law <br>enforcement and regulatory authorities <br>where we identified potential financial <br>crime.<br>|  |

---

99%

Total percentage of permanent and non-

permanent employees who received financial

crime training, including on anti-bribery and

corruption in 2025.

Whistleblowing

We want colleagues and stakeholders to

have confidence in speaking up when they

observe unlawful or unethical behaviour. We

offer a range of speak-up channels to listen to

the concerns of individuals and have a zero-

tolerance policy for acts of retaliation.

**Listening through whistleblowing** 

**channels** 

Our global whistleblowing channel, HSBC

Confidential, is one of our speak-up channels,

which allows colleagues past and present and

other stakeholders to raise concerns

confidentially and, if preferred, anonymously

(subject to local laws). In most of our

markets, HSBC Confidential concerns are

raised through an independent third party,

offering 24/7 hotlines and a web portal in

multiple languages. We also provide and

monitor an external email address for

concerns about accounting, internal financial

controls or auditing matters

(accountingdisclosures@hsbc.com).

Concerns are investigated proportionately and

independently, with action taken where

appropriate. This can include disciplinary

action, such as dismissal and adjustments to

variable pay and performance ratings, or

operational actions including changes to

policies and procedures.

We continue to actively promote our full range

of speak-up channels to colleagues to help

ensure their concerns are handled through the

most effective route. In 2025, 1,100 concerns

were investigated through HSBC Confidential

(2024: 925) with 34% found to have some

level of substantiation (2024: 35%) and a

further 19% identifying other issues (2024:

22%).

The Group Audit Committee has oversight of

the Group's whistleblowing arrangements, and

the Chair of the Group Audit Committee acts

as HSBC's Whistleblowers' Champion with

responsibility for ensuring and overseeing the

integrity, independence and effectiveness of

the Group's policies and procedures.

Regulatory Compliance sets the

whistleblowing policy and procedures and

provides the Group Audit Committee with

periodic updates on their effectiveness.

Specialist teams and investigation functions

own whistleblowing controls, with monitoring

in place to determine control effectiveness.

🡠For further details of the role of the Group Audit

Committee in relation to whistleblowing, see

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **62** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

A responsible approach to tax

We seek to pay our fair share of tax in all

jurisdictions in which we operate, applying

both the letter and spirit of the law, and to

minimise the risk of customers using our

products and services to evade or

inappropriately avoid tax. Our approach to tax

and governance processes is designed to

achieve these goals.

We maintain open and transparent

relationships with tax authorities. We

cooperate to resolve differing interpretations

or disputes in a timely manner.

Through adoption of the Group's risk

management framework, we seek to ensure

that we do not adopt inappropriately tax-

motivated transactions or products, and that

tax planning is scrutinised and supported by

genuine commercial activity. HSBC has no

appetite for using aggressive tax structures.

With respect to our customers' taxes, we

have made considerable investments to

support external tax transparency initiatives to

reduce the risk of banking services being used

to facilitate customer tax evasion and

implemented processes that aim to ensure

that inappropriately tax-motivated products and

services are not provided to our customers.

**Our tax contributions**

During 2025, we paid $7.7bn (2024: $9.2bn) in

respect of our own tax liabilities and collected

taxes of $10.0bn (2024: $10.1bn) on behalf of

governments around the world. Tax paid was

lower than in the previous year primarily due to

the 2025 corporate income tax assessments

for the Group's entities in Hong Kong being

received and paid in January 2026, whereas

the 2024 assessments were received and

settled during 2024.

**Taxes paid – by type of tax**

![162727720911341](hsbc-20251231_g65.gif)

Tax on profits **$4,296m** (2024: $6,080m)

Withholding taxes **$685m** (2024: $667m)

Employer taxes **$1,102m** (2024: $1,003m)

Bank levy **$273m** (2024: $135m)

Irrecoverable VAT **$1,160m** (2024: $1,098m)

Other duties and levies **$221m**<sup>1</sup> (2024: $229m)

1Other duties and levies includes property taxes of

$83m (2024: $76m).

Our approach to customer and market conduct

Our Conduct Approach guides us to do the

right thing and to focus on the impact we have

for our customers and the financial markets in

which we operate. It is embedded throughout

our product and services lifecycle, with a focus

on five clear outcomes:

–We understand our customers' needs.

–We provide products and services that offer

a fair exchange of value.

–We service customers' ongoing needs and

put it right if we make a mistake.

–We act with integrity in the financial markets

we operate in.

–We operate resiliently and securely to avoid

harm to customers and markets.

Our principles, policies and procedures set

standards to help ensure that we consider and

meet customer needs and protect market

integrity. They help ensure our products and

services remain fit-for-purpose, offer fair value

exchange and mitigate the risk of customer or

market detriment.

We train all our colleagues on the importance

of customer and market conduct, helping to

ensure our conduct outcomes are part of

everything we do.

Our approach with suppliers

We maintain global policies and procedures for

the onboarding and use of third-party

suppliers. We expect suppliers to meet our

third-party risk compliance requirements and

assess them to identify any financial stability

concerns.

**Sustainable procurement** 

Supporting and engaging with our supply chain

is vital to progressing our sustainable

procurement goals. In 2025:

–We continued gathering carbon emission

data from our suppliers through CDP

(formerly the Carbon Disclosure Project) and

an additional data collection source

introduced in 2024 to simplify and expand

our supplier outreach for scope 3 data

collection.

–We continued to deepen our collaboration

with suppliers and have increased our focus

on those without public disclosures or

emissions reduction plans, and supported

them by providing additional guidance where

appropriate.

–Through ongoing engagement and targeted

collaboration events, we are partnering with

–some of our suppliers who are more

advanced in their sustainability journey to

jointly develop innovative ideas on

decarbonisation and nature-related topics.

–We also supported our sourcing teams to

further integrate sustainability into sourcing

strategy and decision making, including new

supplier selection, renewals and ongoing

supplier management.

–As part of our nature approach, we have

begun developing sustainable sourcing

roadmaps across key sectors, such as

support services, technology services and

corporate real estate, following a materiality

assessment of biodiversity and nature risks.

The roadmaps will help us address high-risk

areas and include considerations for nature

and biodiversity within our procurement

activities.

–We continue to implement our human rights

due diligence process to help identify

supplier risks.

–We maintained an inclusive approach to

supplier engagement, supporting fair access

to procurement opportunities for all

suppliers.

**Supplier Code of Conduct** 

Our Supplier Code of Conduct ('the Code')

sets out the minimum standards we expect of

our suppliers in respect of the environment,

inclusion and human rights. In 2025, we

refreshed the Code to include principles on

responsible use of AI. We continue to

formalise adherence to the Code by seeking to

add clauses to our supplier contracts which

support the right to audit and act if a breach is

discovered. At the end of 2025, 97.3% of

approximately 9,830 contracted suppliers had

either confirmed adherence to the Code, or

provided their own alternative that was

accepted by our Global Procurement function.

Our Supplier Code of Conduct is available at:

www.hsbc.com/who-we-are/esg-and-

responsible-business/working-with-suppliers

🡠For further details of the number of suppliers in

each geographical region, see the ESG Data

Pack at www.hsbc.com/esg

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **63** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | **ESG review** | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  | Governance |  |  |  |  |  |

---

**Safeguarding data** 

Data privacy

We are committed to protecting and managing

the data we process, in accordance with the

laws and regulations of the markets in which

we operate. Our strategy rests on having the

right talent, technology, and processes to

manage privacy risks effectively. Our Group-

wide data risk policy provides a consistent

approach to data and privacy risk

management, applicable across all global

businesses and infrastructure. This policy is

reviewed annually with the aim of ensuring

that we remain responsive to regulatory

changes. Our HSBC Privacy Principles can be

found at: www.hsbc.com/ who-we-are/esg-

and-responsible-business/ managing-risk/

operational-risk.

We regularly provide employees with training

and awareness sessions on data privacy and

security, offering both mandatory and

supplementary sessions as required. In

addition, we mark International Data Privacy

Day each year, with events that discuss

developments in the data privacy landscape

and reinforce privacy awareness across HSBC.

We provide transparency to our customers,

employees and other stakeholders regarding

processing of personal data and their rights.

Where relevant, we work with third parties to

help ensure adequate protections are

provided, in line with our data risk policy and

regulatory requirements. We offer a broad

range of channels for customers, employees

and other stakeholders to raise privacy

concerns and questions.

Data privacy is regularly monitored at multiple

governance forums, including at Board level,

providing senior executive oversight on privacy

risk and global programmes. Our Global Internal

Audit function independently assures whether

our data privacy risk management approach is

effectively designed and operational. In addition,

we have established data privacy governance

structures and continue to embed accountability

across all businesses and functions.

We continue to review and implement

industry best practices for data privacy and

security, working closely with our data

protection officers, industry bodies, and

research institutions. Regular reviews and

privacy risk assessments are conducted to

strengthen our data privacy controls.

Procedures are in place to address data privacy

considerations, including notifying regulators,

customers and data subjects as required by

law in the event of a data privacy breach.

**Intellectual property rights practices**

Our Group intellectual property risk policy,

supported by comprehensive controls and

guidance, is designed to manage risks

associated with intellectual property. This

policy seeks to ensure that our commercially

and strategically valuable intellectual property

is properly identified and safeguarded. This

includes applying to register trademarks and

patents and enforcing our rights against third

parties making unauthorised use of our

intellectual property. Additionally, our

intellectual property framework helps prevent

infringement of third-party rights, thereby

supporting the consistent and effective

management of intellectual property risk in

alignment with our risk appetite.

Cybersecurity

The threat of a significant cyber incident

remains a concern for the Group and the

broader financial sector. As cyber threats

continue to evolve, failure to protect our

operations may result in disruption to our

business services and negative impacts on our

customers, such as a financial loss, loss of

sensitive data or damage to our reputation,

among other risks.

**Identify, protect, detect, respond and** 

**recover**

We invest in business and technical controls to

help prevent, detect and mitigate cyber threats.

Our controls follow a 'defence in depth'

approach, leveraging multiple security layers,

and recognising the complexity of our

environment. Our ability to detect and respond

to attacks through our round-the-clock security

operations is intended to help reduce the impact

of attacks. We routinely test our data backup

and disaster recovery processes with the aim of

limiting the impact on customers and restoring

services in the event of a cyber-attack.

Our cyber intelligence and threat analysis team

proactively collects and analyses internal and

external cyber information to evaluate threat

levels, including from ongoing geopolitical

events, potential outcomes, and what control

adjustments are needed to best defend

against them. We collaborate with the broader

cyber intelligence community, the financial

services industry and global government

agencies.

In 2025, we continued to enhance our

cybersecurity capabilities to help reduce the

likelihood and impact of unauthorised access,

security vulnerabilities being exploited, data

leakage, third-party security exposure and

advanced malware. We focused on

preparedness for emerging technology risks,

such as AI and quantum computing.

We work with third parties, suppliers and

financial infrastructure bodies to help reduce

the threat of cyber-attacks impacting our

business services. We have a third-party

security risk management process in place to

continually assess, identify and manage

cybersecurity risks with suppliers and other

third-party relationships. This includes

assessments of the third parties against our

own cybersecurity standards and

requirements.

**Policy and governance**

We have a suite of cybersecurity policies,

procedures and controls to help with the

effective oversight and management of the

organisation. This includes but is not limited to

defined information security responsibilities for

employees, contractors and third parties, as

well as standard procedures for cyber incident

identification, investigation, mitigation and

reporting. We operate a three lines of defence

model, aligned to the enterprise risk

management framework, to help the oversight

and challenge of our cybersecurity capabilities.

The assessment and management of our

cybersecurity risk is led and coordinated by our

Global Chief Information Security Officer

('CISO'), who has extensive experience in

financial services, security and resilience as

well as strategy, governance, risk

management and regulatory compliance. The

Global CISO is supported by business and

regional level CISOs. In the event of incidents,

both the Global and relevant supporting CISOs

are informed and are engaged in line with our

cybersecurity incident response protocols. Key

risk indicators, significant cyber incidents and

other matters related to cybersecurity are

presented on a regular basis to various risk and

control committees, including Board

committees, the Group Risk Management

Meeting and global businesses.

Our cybersecurity capabilities are periodically

assessed against standards issued by the

National Institute of Standards and Technology

and by independent third parties, and we

proactively collaborate with regulators to

participate in regular testing activities. In

addition, HSBC engages external, independent

third parties to support our penetration and

threat-led penetration testing.

**Cyber training and awareness**

Our people play an important role in protecting

against cybersecurity threats and we aim to

provide tools, and encourage behaviours, to

keep our organisation and customer data safe.

This includes cybersecurity training and

awareness for all our people and targeted

training for staff that are identified as having

elevated cyber risk exposure. We host an

annual Cyber Awareness Month, covering

topics such as online safety at home, social

media safety, safe hybrid working and cyber

incidents and response. We also provide a

wide range of education and guidance to our

customers about how to spot and prevent

online fraud.

🡠See 'Top and emerging risks' on pages 121 and

122 for more information relevant to data privacy

and cybersecurity.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **64** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Financial

review

The financial review gives detailed reporting of our

financial performance in 2025 at Group level, our

business segments and legal entities.

---

| | |
|:---|:---|
| **[65](#i866499906cd64e0199d2c5a630a09ec1_4032)** | Financial summary |
| **[88](#i866499906cd64e0199d2c5a630a09ec1_4042)** | Business segments and legal entities |
| **[106](#i866499906cd64e0199d2c5a630a09ec1_4051)** | Alternative performance measures |
| **<u>[111](#i866499906cd64e0199d2c5a630a09ec1_4214)</u>** | Other information |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **65** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Financial summary

Basis of presentation

Constant currency performance

Constant currency performance is computed by adjusting reported

results for the effects of foreign currency translation differences, which

reflect the movements of the US dollar against most major currencies

during 2025. Excluding these differences allows us to assess balance

sheet and income statement performance on a like-for-like basis and to

better understand the underlying trends in the business. Foreign

currency translation differences for 2025 are computed by retranslating

into US dollars for non-US dollar branches, subsidiaries, joint ventures

and associates:

–the income statement for the year ended 31 December 2024 at the

average rate of exchange for the year ended 31 December 2025;

and

–the balance sheets at 31 December 2024 at the prevailing rates of

exchange on 31 December 2025.

No adjustment has been made to the exchange rates used to translate

foreign currency-denominated assets and liabilities into the functional

currencies of any HSBC branches, subsidiaries, joint ventures or

associates. The constant currency data of our operations in Türkiye has

not been adjusted further for the impacts of hyperinflation. When

reference is made to foreign currency translation differences in tables

or commentaries, comparative data reported in the functional

currencies of HSBC's operations has been translated at the appropriate

exchange rates applied in the current period on the basis described

above.

Notable items and material notable items

We separately disclose 'notable items', which are components of our

income statement that management would consider as outside the

normal course of business and generally non-recurring in nature.

Certain notable items are classified as 'material notable items', which

are a subset of notable items. Categorisation as a material notable item

is dependent on the nature of each item in conjunction with the

financial impact on the Group's income statement, and are excluded

from our target basis dividend payout ratio calculation and earnings per

share measure. Material notable items in 2025 or relevant comparative

periods relate to the operating expenses associated with actions to exit

or wind down non-strategic businesses. They also include a dilution

loss and the recognition of an impairment of our investment in BoCom,

and a legal provision relating to developments in a claim in Luxembourg

relating to the Bernard L. Madoff Investment Securities LLC fraud.

🡠The tables on pages 88 to 90 and pages 97 to 102 detail the effects of notable

items on each of our business segments, legal entities and selected countries/

territories in 2025 and 2024.

Impact of strategic transactions

In addition to the items categorised as material notable items, the

impacts of strategic transactions include the distorting impact observed

between the periods of the operating income statement results related

to acquisitions, disposals and wind-downs that affect period-on-period

comparisons. Once a transaction has completed or a wind-down has

commenced, the impact will include the operating income statement

results of each business, which are not classified as notable items, in

any comparative period if there are no results in the current period as a

result of a transaction, or a reduction in revenue or costs has arisen

from the wind-down of a business. We consider the monthly impact of

distorting income statement results when calculating the impact of

strategic transactions. In the case of wind-downs, or transactions that

complete in phased tranches, there may be timing differences between

the recognition of operating cost impacts and operating revenue

impacts. These would arise in the event there is a timing lag between

the impact of cost actions and the resultant impact on operating

revenue.

Impact of hyperinflationary accounting

The sale of our business in Argentina, previously treated as a

hyperinflationary economy for accounting purposes, was completed in

2024. We continue to treat Türkiye as a hyperinflationary economy for

accounting purposes. The impact of applying International Accounting

Standard ('IAS') 29 'Financial Reporting in Hyperinflationary Economies'

and the hyperinflation provisions of IAS 21 'The Effects of Changes in

Foreign Exchange Rates' in the current period for our operations in

Türkiye was a decrease in the Group's profit before tax of $150m (2024:

$157m), comprising a decrease in revenue, including a loss on net

monetary position of $145m (2024: $146m) and an increase in ECL and

operating expenses of $4m (2024: increase of $11m). The consumer

price index at 31 December 2025 for Türkiye was 3,513.87, with an

increase in the period of 829.32 (2024: 825.55 increase).

Use of alternative performance

measures

Our reported results are prepared in accordance with International

Financial Reporting Standards as issued by the International Accounting

Standards Board ('IFRS Accounting Standards'), as detailed in the

financial statements starting on page 288.

To measure our performance, we supplement our IFRS Accounting

Standards figures with non-IFRS Accounting Standards measures,

which constitute alternative performance measures under European

Securities and Markets Authority guidance and non-GAAP financial

measures defined in and presented in accordance with US Securities

and Exchange Commission rules and regulations. These measures

include those derived from our reported results that eliminate factors

distorting year-on-year comparisons. The 'constant currency

performance' measure used throughout this report is described above.

Definitions and calculations of other alternative performance measures

are included in our 'Alternative performance measures' on page 106.

Additionally, the insurance-specific non-GAAP measure 'Insurance

equity plus CSM net of tax' is provided on page 93, along with its

definition and reconciliation to the GAAP measure. All alternative

performance measures are reconciled to the closest reported

performance measure.

Return on average tangible equity

excluding notable items

The calculation for RoTE excluding notable items adjusts the 'profit

attributable to the ordinary shareholders, excluding goodwill and other

intangible assets impairment' for the post-tax impact of notable items. To

better align with market practice, from 2025 we no longer adjust the

'average tangible equity' for the post-tax impact of notable items in each

period. Comparatives have been re-presented.

🡠See page 106 for the definition of return on average tangible equity excluding

notable items and page 107 for the reconciliation to the GAAP measure.

Banking net interest income

Banking net interest income ('banking NII') adjusts our NII primarily for

the impact of funding trading and fair value activities reported in interest

expense. It represents the Group's banking revenue that is directly

impacted by changes in interest rates. We use this measure to

determine the deployment of our surplus funding, and to help optimise

our structural hedging and risk management actions. For more

information on banking NII, see page 69.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **66** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Constant currency revenue and profit

before tax excluding notable items and the

impact of strategic transactions

To aid the understanding of our results, we separately report 'constant

currency revenue excluding notable items' and 'constant currency profit

before tax excluding notable items', which exclude the impact of notable

items and the impact of foreign exchange translation. We also separately

disclose 'constant currency revenue excluding notable items and the

impact of strategic transactions' and 'constant currency profit before tax

excluding notable items and the impact of strategic transactions', which

also exclude the impact of strategic transactions classified as material

notable items as described above. We consider these measures to provide

useful information to investors as they remove items that distort period-on-

period comparisons.

The impact of strategic transactions also includes the distorting impact

between the periods of the operating income statement results related

to acquisitions and disposals and that affect period-on-period

comparisons. These impacts are not included in our notable or material

notable items. The impact of strategic transactions is computed by

including the operating income statement results of each business in any

period for which there are no results in the comparative period.

🡠See page 107 for the reconciliation to the GAAP measure.

Target basis operating expenses

Target basis operating expenses is computed by excluding the direct cost

impact of the disposals of our banking business in Canada and our

business in Argentina from the 2024 baseline. It is measured on a

constant currency basis and excludes notable items and the impact of

retranslating the prior year results of hyperinflationary economies at

constant currency, which we consider to be outside of our control. We

consider target basis operating expenses to provide useful information to

investors by quantifying and excluding the notable items that

management considered when setting and assessing cost-related targets.

🡠See page 109 for further details and the reconciliation to the GAAP measure.

Basic earnings per share excluding

material notable items and related impacts

We established a dividend payout ratio target basis of 50% for 2025.

For the purposes of computing our dividend payout ratio target basis,

we exclude from earnings per share material notable items and related

impacts. Material notable items for the 'basic earnings per share

excluding material notable items and related impacts' measure in 2025

and comparative periods are described above.

Related impacts include those items that do not qualify for designation

as notable items but whose adjustment is considered by management

to be appropriate for the purposes of determining the basis for our

dividend payout ratio target basis calculation, for which we exclude

from earnings per share material notable items and related impacts.

🡠See page 92 for the supplementary analysis of the impact of strategic

transactions.

🡠See page 106 for the definition of basic earnings per share excluding material

notable items and related impacts and page 110 for the reconciliation to the

GAAP measure.

Critical estimates and judgements

The results of HSBC reflect the choice of accounting policies,

assumptions and estimates that underlie the preparation of HSBC's

consolidated financial statements. The material accounting policies,

including the policies which include critical estimates and judgements,

are described in Note 1.2 on the financial statements. The accounting

policies listed below are highlighted as they involve a high degree of

uncertainty and have a material impact on the financial statements:

–Impairment of amortised cost financial assets and financial assets

measured at fair value through other comprehensive income

('FVOCI'): The most significant judgements relate to defining what is

considered to be a significant increase in credit risk, determining the

lifetime and point of initial recognition of revolving facilities,

selecting and calibrating the probability of default ('PD'), the loss

given default ('LGD') and the exposure at default ('EAD') models, as

well as selecting model inputs and economic forecasts, making

assumptions and estimates to incorporate relevant information

about late-breaking and past events, current conditions and

forecasts of economic conditions, and selecting applicable recovery

strategies for certain wholesale credit-impaired loans. A high degree

of uncertainty is involved in making estimations using assumptions

that are highly subjective and very sensitive to the risk factors.

See Note 1.2(j) on page 306.

–Deferred tax assets: The most significant judgements relate to

those made in respect of recoverability, which are based on

expected future profitability. See Note 1.2(m) on page 310.

–Valuation of financial instruments: In determining the fair value of

financial instruments a variety of valuation techniques are used,

some of which feature significant unobservable inputs and are

subject to substantial uncertainty. See Note 1.2(d) on page 304.

–Impairment of investment in subsidiaries: Impairment testing,

including testing for reversal of impairment, involves significant

judgement in determining the value in use, and in particular

estimating the present values of cash flows expected to arise from

continuing to hold the investment, based on a number of

management assumptions. See Note 1.2(a) on page 301.

–Impairment of interests in associates: Impairment testing, including

testing for reversal of impairment, involves significant judgement in

determining the value in use, and in particular estimating the

present values of cash flows expected to arise from continuing to

hold the investment, based on a number of management

assumptions. The most significant judgements relate to the

impairment testing of our investment in Bank of Communications

Co., Limited ('BoCom'). See Note 1.2(a) on page 301.

–Impairment of goodwill and non-financial assets: A high degree of

uncertainty is involved in estimating the future cash flows of the

cash-generating units ('CGUs') and the rates used to discount these

cash flows. See Note 1.2(b) on page 302.

–Provisions: Significant judgement may be required due to the high

degree of uncertainty associated with determining whether a

present obligation exists, and estimating the probability and amount

of any outflows that may arise. See Note 1.2(n) on page 311.

–Post-employment benefit plans: The calculation of the defined

benefit pension obligation involves the determination of key

assumptions including discount rate, inflation rate, pension

payments and deferred pensions, pay and mortality. See Note 1.2(l)

on page 310.

Given the inherent uncertainties and the high level of subjectivity

involved in the recognition or measurement of the items above, it is

possible that the outcomes in the next financial year could differ from

the expectations on which management's estimates are based,

resulting in the recognition and measurement of materially different

amounts from those estimated by management in these financial

statements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **67** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Consolidated income statement

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Summary consolidated income statement | Summary consolidated income statement | Summary consolidated income statement | Summary consolidated income statement | Summary consolidated income statement | Summary consolidated income statement |
|  | **2025** | 2024 | 2023<sup>1</sup> | 2022 | 2021 |
|  | **$m** | $m | $m | $m | $m |
| Net interest income  | **34794** | 32733 | 35796 | 30377 | 26489 |
| Net fee income  | **13343** | 12301 | 11845 | 11770 | 13097 |
| Net income from financial instruments held for trading or managed on a fair value basis<sup>2</sup> | **19682** | 21116 | 16661 | 10278 | 7744 |
| Net income/(expense) from assets and liabilities of insurance businesses, including related <br>derivatives, measured at fair value through profit or loss<br>| **11175** | 5901 | 7887 | (13831) | 4053 |
| Net insurance premium income  | **—** |  |  |  | 10870 |
| Insurance finance (expense)/income | **(11197)** | (5978) | (7809) | 13799 |  |
| Insurance service result | **1825** | 1310 | 1078 | 809 |  |
| Gain on acquisition<sup>3</sup> | **—** |  | 1591 |  |  |
| Losses recognised on sale of business operations<sup>4</sup> | **(47)** | (1752) | (61) | (2678) |  |
| Other operating income/(expense)<sup>5,6</sup> | **(1301)** | 223 | (930) | 96 | 1687 |
| **Total operating income**  | **68274** | 65854 | 66058 | 50620 | 63940 |
| Net insurance claims and benefits paid and movement in liabilities to policyholders  | **—** |  |  |  | (14388) |
| **Net operating income before change in expected credit losses and other** <br>**credit impairment charges**<sup>7</sup><br>| **68274** | 65854 | 66058 | 50620 | 49552 |
| Change in expected credit losses and other credit impairment charges | **(3850)** | (3414) | (3447) | (3584) | 928 |
| **Net operating income**  | **64424** | 62440 | 62611 | 47036 | 50480 |
| Total operating expenses excluding impairment of goodwill and other intangible assets | **(36023)** | (32966) | (32355) | (32554) | (33887) |
| (Impairment)/reversal of impairment of goodwill and other intangible assets | **(405)** | (77) | 285 | (147) | (733) |
| **Operating profit** | **27996** | 29397 | 30541 | 14335 | 15860 |
| Share of profit in associates and joint ventures | **2911** | 2912 | 2807 | 2723 | 3046 |
| Impairment of interest in associate<sup>6</sup> | **(1000)** |  | (3000) |  |  |
| **Profit before tax**  | **29907** | 32309 | 30348 | 17058 | 18906 |
| Tax expense  | **(6776)** | (7310) | (5789) | (809) | (4213) |
| **Profit for the year**  | **23131** | 24999 | 24559 | 16249 | 14693 |
| Attributable to: |  |  |  |  |  |
| – ordinary shareholders of the parent company | **21102** | 22917 | 22432 | 14346 | 12607 |
| – preference shareholders of the parent company | **—** |  |  |  | 7 |
| – other equity holders | **1183** | 1062 | 1101 | 1213 | 1303 |
| – non-controlling interests | **846** | 1020 | 1026 | 690 | 776 |
| **Profit for the year** | **23131** | 24999 | 24559 | 16249 | 14693 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Five-year financial information | Five-year financial information | Five-year financial information | Five-year financial information | Five-year financial information | Five-year financial information |
|  | **2025** | 2024 | 2023<sup>1</sup> | 2022 | 2021 |
|  | **$** | $| $| $| $|
| Basic earnings per share | **1.21** | 1.25 | 1.15 | 0.72 | 0.62 |
| Diluted earnings per share | **1.20** | 1.24 | 1.14 | 0.72 | 0.62 |
| Dividends per ordinary share (paid in the period)<sup>8</sup> | **0.66** | 0.82 | 0.53 | 0.27 | 0.22 |
|  | **%** | % | % | % | % |
| Dividend payout ratio<sup>9</sup> | **50** | 50 | 50 | 44 | 40 |
| Post-tax return on average total assets | **0.7** | 0.8 | 0.8 | 0.5 | 0.5 |
| Return on average ordinary shareholders' equity | **12.3** | 13.6 | 13.6 | 9.0 | 7.1 |
| Return on average tangible equity | **13.3** | 14.6 | 14.6 | 10.0 | 8.3 |
| Effective tax rate | **22.7** | 22.6 | 19.1 | 4.7 | 22.3 |

---

1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended

31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 is prepared on an IFRS 4 basis.

2 In 2025, the amounts include a $0.1bn (2024: $0.1bn gain) mark-to-market gain on interest rate hedging of the portfolio of retained loans post sale of our retail

banking operations in France and a $0.1bn fair value loss on Grupo Financiero Galicia's ('Galicia') American Depositary Receipts ('ADRs') received as purchase

consideration from the sale of our business in Argentina. In 2024, the amounts include a $0.3bn gain (2023: $0.3bn loss) on the foreign exchange hedging of the

proceeds from the sale of our banking business in Canada.

3 Gain recognised in respect of the acquisition of SVB UK.

4 In 2024, the amount includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves

arising on sale of our business in Argentina. This was partly offset by a gain of $4.6bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve

losses and $0.4bn of other reserves losses but excluding the $0.3bn gain on the foreign exchange hedging (see footnote 2 above) on the sale of our banking

business in Canada. The amount in 2023 primarily reflected losses due to restrictions impacting the recoverability of assets in Russia, partly offset by a gain on

sale of our retail banking operations in France. The amount in 2022 included losses from classifying businesses as held for sale as part of a broader restructuring

of our European business.

5Includes a loss on net monetary positions of $0.2bn (2024: $1.2bn; 2023: $1.7bn) as a result of applying IAS 29 'Financial Reporting in Hyperinflationary

Economies'.

6 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans

following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the

dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment loss following an impairment test on the carrying value of the Group's

investment in BoCom in 'Impairment of interest in associate'. See Note 18 on pages 345 to 348.

7Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.

8Includes dividend paid during the period, which consisted of a fourth interim dividend of $0.36 per ordinary share in respect of the financial year ended

31 December 2024 paid in April 2025 and the first, second and third interim dividends of $0.30 per ordinary share in respect of the financial year ending

31 December 2025. In 2024, a special dividend of $0.21 per ordinary share from the Canada sale proceeds was paid in June.

9In 2025, 2024 and 2023, our dividend payout ratio was adjusted for material notable items and related impacts. In 2022, our dividend payout ratio was adjusted

for the loss on classification to held for sale of our retail banking business in France, items relating to the sale of our banking business in Canada, and the

recognition of certain deferred tax assets. No items were adjusted for in 2021.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **68** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Income statement commentary

The following commentary compares Group financial performance for the year ended 2025 with 2024, unless otherwise stated.

Net interest income

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Year ended | Year ended | Year ended | Quarter ended | Quarter ended | Quarter ended |
|  | **31 Dec 2025** | 31 Dec 2024 | 31 Dec 2023 | **31 Dec 2025** | 30 Sep 2025 | 31 Dec 2024 |
|  | **$m** | $m | $m | **$m** | $m | $m |
| Interest income | **97872** | 108631 | 100868 | **24503** | 24361 | 26004 |
| Interest expense  | **(63078)** | (75898) | (65072) | **(15307)** | (15584) | (17819) |
| **Net interest income** | **34794** | 32733 | 35796 | **9196** | 8777 | 8185 |
| Average interest-earning assets  | **2190078** | 2099285 | 2161746 | **2221054** | 2218472 | 2113276 |
|  | **%** | % | % | **%** | % | % |
| Gross interest yield<sup>1</sup> | **4.47** | 5.17 | 4.67 | **4.38** | 4.36 | 4.90 |
| Less: gross interest payable<sup>1</sup> | **(3.11)** | (3.95) | (3.47) | **(2.93)** | (3.01) | (3.60) |
| Net interest spread<sup>2</sup> | **1.36** | 1.22 | 1.20 | **1.45** | 1.35 | 1.30 |
| Net interest margin<sup>3</sup> | **1.59** | 1.56 | 1.66 | **1.64** | 1.57 | 1.54 |

---

1Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA'), net of amortised premiums and loan fees. Gross

interest payable is the average annualised interest cost as a percentage of average interest-bearing liabilities.

2Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average

annualised interest rate payable on average interest-bearing funds.

3Net interest margin is net interest income expressed as an annualised percentage of AIEA.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset | Summary of interest income by type of asset |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**income**<br>| **Yield** | Average<br>balance<br>| Interest<br>income<br>| Yield | Average<br>balance<br>| Interest<br>income<br>| Yield |
|  | **$m** | **$m** | **%** | $m | $m | % | $m | $m | % |
| Short-term funds and loans and advances to banks | **325790** | **11460** | **3.52** | 349517 | 14727 | 4.21 | 403674 | 14770 | 3.66 |
| Loans and advances to customers | **971804** | **46036** | **4.74** | 949825 | 49879 | 5.25 | 957717 | 47673 | 4.98 |
| Reverse repurchase agreements – non-trading<sup>1</sup> | **273941** | **16616** | **6.07** | 238694 | 17721 | 7.42 | 240263 | 14391 | 5.99 |
| Financial investments | **539107** | **20830** | **3.86** | 470182 | 20587 | 4.38 | 407363 | 16858 | 4.14 |
| Other interest-earning assets  | **79436** | **2930** | **3.69** | 91067 | 5717 | 6.28 | 152729 | 7176 | 4.70 |
| **Total interest-earning assets**  | **2190078** | **97872** | **4.47** | 2099285 | 108631 | 5.17 | 2161746 | 100868 | 4.67 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability | Summary of interest expense by type of liability |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**expense**<br>| **Cost** | Average<br>balance<br>| Interest<br>expense<br>| Cost | Average<br>balance<br>| Interest<br>expense<br>| Cost |
|  | **$m** | **$m** | **%** | $m | $m | % | $m | $m | % |
| Deposits by banks<sup>2</sup> | **76081** | **2613** | **3.43** | 66405 | 2930 | 4.41 | 60392 | 2401 | 3.98 |
| Customer accounts<sup>3</sup> | **1487032** | **33289** | **2.24** | 1385840 | 40173 | 2.90 | 1334803 | 34162 | 2.56 |
| Repurchase agreements – non-trading<sup>1</sup> | **188748** | **13629** | **7.22** | 187337 | 15617 | 8.34 | 146605 | 10858 | 7.41 |
| Debt securities in issue – non-trading | **198317** | **10847** | **5.47** | 196440 | 12806 | 6.52 | 184867 | 11223 | 6.07 |
| Other interest-bearing liabilities | **77793** | **2700** | **3.47** | 84773 | 4372 | 5.16 | 146216 | 6428 | 4.40 |
| **Total interest-bearing liabilities** | **2027971** | **63078** | **3.11** | 1920795 | 75898 | 3.95 | 1872883 | 65072 | 3.47 |

---

1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net

balance reported for repurchase agreements and thus higher cost.

2Including interest-bearing bank deposits only.

3Including interest-bearing customer accounts only.

**Net interest income ('NII')** for 2025 was $34.8bn, an increase of

$2.1bn or 6% compared with 2024. The increase reflected the benefit

of the reinvestment of our structural hedge at higher yields, deposit

balance growth and higher NII in Markets Treasury. In addition, the

increase included the non-recurrence of a $0.2bn loss in 2024 on the

early redemption of legacy securities. This was partly offset by the

adverse impact of $1.6bn from business disposals in Argentina and

Canada, and margin compression on our deposits from lower interest

rates. The growth in NII also reflected a benefit from lower funding

costs associated with the trading book of $1.7bn.

Excluding the unfavourable impact of foreign currency translation

differences of $0.2bn, net interest income increased by $2.3bn or 7%.

NII for 4Q25 was $9.2bn, up 5% compared with 3Q25, and up 12%

compared with 4Q24. The increase in NII compared with 3Q25 was

predominantly driven by the increase in short-term interest rates in

Hong Kong and deposit balance growth.

**Net interest margin ('NIM')** for 2025 of 1.59% was 3bps higher

compared with 2024, reflecting the reinvestment of our structural

hedge at higher yields and lower funding costs associated with the

trading book The increase in NIM included the adverse impact of

foreign currency translation differences. Excluding this, NIM increased

by 6bps.

4Q25 NIM was 1.64%, up 7bps compared with 3Q25, and up 10bps

compared with 4Q24. The increase against the previous quarter was

primarily driven by higher short-term interest rates in Hong Kong.

**Interest income** for 2025 of $97.9bn decreased by $10.8bn compared

with 2024, primarily due to lower market interest rates.

Interest income of $25bn in 4Q25 was $0.1bn higher compared with

3Q25, due to the increase of short-term interest rates in Hong Kong,

partly offset by lower interest rates in currencies including pounds

sterling and US dollar. Interest income in 4Q25 was down $1.5bn

compared with 4Q24.

The change in interest income in 2025 compared with 2024 included a

favourable impact of foreign currency translation differences of $0.2bn.

After excluding foreign currency translation differences, interest income

decreased by $11.0bn.

**Interest expense** for 2025 of $63.1bn decreased by $12.8bn compared

with 2024, primarily due to lower market interest rates. The fall in

interest expense included the adverse effects of foreign currency

translation differences of $0.5bn. Excluding this, interest expense

decreased by $13.3bn. Interest expense of $15.3bn in 4Q25 was

$0.3bn lower than 3Q25, and $2.5bn lower compared with 4Q24. The

decrease against the previous quarter was due lower market interest

rates, particularly in US dollars and pounds sterling.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **69** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Banking net interest income | Banking net interest income | Banking net interest income | Banking net interest income | Banking net interest income | Banking net interest income |
|  | Year ended | Year ended | Quarter ended | Quarter ended | Quarter ended |
|  | **31 Dec 2025** | 31 Dec 2024 | **31 Dec 2025** | 30 Sep 2025 | 31 Dec 2024 |
|  | **$m** | $m | **$m** | $m | $m |
| **Net interest income** | **34794** | 32733 | **9196** | 8777 | 8185 |
| Banking book funding costs used to generate 'net income from financial <br>instruments held for trading or managed on a fair value basis'<br>| **9686** | 11434 | **2592** | 2384 | 2874 |
| Third-party net interest income from insurance | **(396)** | (429) | **(66)** | (112) | (109) |
| **Banking net interest income** | **44084** | 43738 | **11722** | 11049 | 10950 |
| Currency translation |  | (188) |  | (34) | 136 |
| **Banking net interest income – on a constant currency basis** | **44084** | 43550 | **11722** | 11015 | 11086 |
| **Banking net interest income – on a reported basis** | **44084** | 43738 | **11722** | 11049 | 10950 |
| – of which: |  |  |  |  |  |
| The Hongkong and Shanghai Banking Corporation Limited | **21676** | 21691 | **5710** | 5351 | 5464 |
| HSBC UK Bank plc | **11523** | 10368 | **3046** | 2969 | 2663 |
| HSBC Bank plc | **5257** | 4630 | **1477** | 1351 | 1182 |

---

**Banking net interest income** adjusts our NII, primarily for the impact

of funding trading and fair value activities reported in interest expense.

It represents the Group's banking revenue that is directly impacted by

changes in interest rates. It is defined as Group net interest income

after deducting:

–the internal cost to fund trading and fair value net assets for which

associated revenue is reported in 'Net income from financial

instruments held for trading or managed on a fair value basis', also

referred to as 'trading and fair value income'. These funding costs

reflect proxy overnight or term interest rates as applied by internal

funds transfer pricing;

–the funding costs of foreign exchange swaps in Markets Treasury,

where an offsetting income or loss is recorded in trading and fair

value income. These instruments are used to manage foreign

currency deployment and funding in our entities; and

–third-party net interest income in our insurance business.

In our segmental disclosures, the funding costs of trading and fair value

net assets are predominantly recorded in CIB in 'net income from

financial instruments held for trading or managed on a fair value basis'.

On consolidation, this funding is eliminated in Corporate Centre,

resulting in an increase in the funding cost reported in NII with an

equivalent offsetting increase in 'net income from financial instruments

held for trading or managed on a fair value basis' in this segment. In the

consolidated Group results, the cost to fund these trading and fair value

net assets is reported in NII.

**Banking NII** was $44.1bn in 2025, an increase of $0.3bn or 1%

compared with 2024. The growth reflected the benefits of the

reinvestment of our structural hedge at higher yields, deposit balance

growth and higher NII in Markets Treasury. In addition, the increase

included the non-recurrence of a loss of $0.2bn in 2024 on the early

redemption of legacy securities. This was partly offset by the adverse

impact of $1.6bn from the disposals of our business in Argentina and

our banking business in Canada, and the impact of margin compression

on our deposits from lower interest rates.

Banking NII also deducts third-party NII related to our Insurance

business, which was $0.4bn, broadly stable compared with 2024. The

funding costs associated with generating trading and fair value income

were $9.7bn, a decrease of $1.7bn compared with 2024, reflecting the

reduction in interest rates that more than offset a rise in trading book

balances.

The internally allocated funding to generate trading and fair value

income was approximately $225bn at 31 December 2025, a rise of

approximately $25bn since 31 December 2024, and $11bn lower

compared with 30 September 2025. This relates to trading, fair value

and associated net asset balances predominantly in CIB.

**Net fee income** of $13.3bn was $1.0bn or 8% higher than in 2024, and

included an adverse impact of $0.3bn due to the disposal of our

banking business in Canada and business in Argentina. On a constant

currency basis, net fee income was $1.0bn higher. This primarily

reflected increased broking fee income in our Hong Kong business and

higher fee income from unit trusts and funds under management in

IWPB, primarily in Hong Kong and mainland China.

**Net income from financial instruments held for trading or** 

**managed on a fair value basis** of $19.7bn was $1.4bn lower

compared with 2024. This primarily reflected a decrease in the trading

book funding costs of $1.7bn associated with generating this income,

due to lower interest rates which more than offset the impact of a rise

in trading book balances, resulting in a corresponding increase in NII.

Inclusive of the reduction in funding costs, net trading income in CIB

was higher, notably as elevated market volatility and higher trading

volumes benefited Global Foreign Exchange and Debt and Equity

Markets.

The reduction of trading income in Corporate Centre also included an

adverse movement of $0.1bn in 2025 on American Depositary Receipts

received as purchase consideration from the sale of our business in

Argentina, which we disposed of in 2025. It also included the non-

recurrence of favourable fair value movements of $0.3bn in 2024 on

the foreign exchange hedging of the proceeds of the sale of our

banking business in Canada until the completion of the sale.

**Net income from assets and liabilities of insurance businesses,** 

**including related derivatives, measured at fair value through profit** 

**or loss** of $11.2bn increased by $5.3bn compared with 2024 reflecting

strong equity markets and the favourable impact of the downward

movement in interest rates on our fixed income investments in our

IWPB business in Hong Kong, partly offset by rising interest rates in

mainland China.

This favourable movement resulted in a corresponding movement in

insurance finance expense, which has an offsetting impact for the

related liabilities to policyholders.

**Insurance finance expense** of $11.2bn was $5.2bn higher than in

2024, reflecting the impact of investment returns on underlying assets

on the value of liabilities to policyholders, which moves inversely with

'net income from assets and liabilities of insurance businesses,

including related derivatives, measured at fair value through profit or

loss'.

**Insurance service result** of $1.8bn increased by $0.5bn compared

with 2024, reflecting higher contractual service margin ('CSM') release

as a result of strong new business growth, and favourable experience

variances from positive investment management fee, maintenance

expense and claims experience.

**Losses recognised on the sale of business operations** fell by $1.7bn

in 2025. In 2025, the net loss included a loss on the sale of our France life

insurance business, including the recycling of related reserves, and a loss

related to the sale of our UK life insurance entity. These were partly

offset by gains on the disposals of our private banking business in

Germany and our retail operations in Bahrain. In 2024, losses arose from

the completion of the disposal of our business in Argentina, comprising

the recycling of $5.2bn of foreign currency translation reserve losses and

other reserves to the income statement and a $1.0bn loss on disposal.

These were partly offset by a gain of $4.6bn in 2024 on the sale of our

banking business in Canada, inclusive of recycling of foreign currency

translation reserve and other reserve losses to the income statement.

**Other operating income/(expense)** was $1.5bn lower than in 2024.

The 2025 period included reserve recycling losses of $1.5bn following

the completion of the sale of our French retained portfolio of home and

certain other loans, and a dilution loss of $1.1bn on BoCom following the

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **70** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

completion of its capital issuance. This was partly offset by a lower loss

on net monetary positions in hyperinflationary economies following the

disposal of our business in Argentina.

**Change in expected credit losses and other credit impairment** 

**charges ('ECL')** of $3.9bn was $0.4bn higher than in 2024, including

charges in both periods related to the CRE sectors in Hong Kong and

mainland China. In 2025, the charge in this sector in Hong Kong of

$0.7bn (2024: $0.1bn) reflected higher allowances for new defaulted

exposures, the impact of an over-supply of non-residential properties

that has put continued downward pressure on rental and capital values,

and updates to our models used for ECL calculations. The 2025 charge

in the mainland China CRE sector was $0.2bn (2024: $0.4bn).

🡠For further details on the calculation of ECL, including the measurement

uncertainties and significant judgements applied to such calculations, the

impact of the economic scenarios and management judgemental

adjustments, see pages 148 to 157.

---

| | | | |
|:---|:---|:---|:---|
| Operating expenses | Operating expenses | Operating expenses | Operating expenses |
|  | Year ended | Year ended | Year ended |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Gross employee compensation and benefits | **21512** | 20153 | 19623 |
| Capitalised wages and salaries  | **(1959)** | (1688) | (1403) |
| Property and equipment | **5066** | 4786 | 4285 |
| Amortisation and impairment of intangibles | **2945** | 2235 | 1827 |
| UK bank levy | **290** | 249 | 339 |
| Legal proceedings and regulatory matters | **1542** | 145 | 188 |
| Other operating expenses<sup>1</sup> | **7032** | 7163 | 7211 |
| **Reported operating expenses**  | **36428** | 33043 | 32070 |
| Currency translation | **—** | 103 | (379) |
| **Constant currency operating expenses** | **36428** | 33146 | 31691 |

---

1Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel.

---

| | | | |
|:---|:---|:---|:---|
| Staff numbers (full-time equivalents)<sup>1</sup> | Staff numbers (full-time equivalents)<sup>1</sup> | Staff numbers (full-time equivalents)<sup>1</sup> | Staff numbers (full-time equivalents)<sup>1</sup> |
|  | **2025** | 2024 | 2023 |
| **Business segments** |  |  |  |
| Hong Kong | **29633** | 34578 | 34886 |
| UK | **29922** | 30783 | 30638 |
| Corporate and Institutional Banking | **78981** | 71935 | 72713 |
| International Wealth and Premier Banking | **69854** | 73668 | 82287 |
| Corporate Centre | **330** | 340 | 337 |
| **At 31 Dec** | **208720** | 211304 | 220861 |
| – of which (by country/territory): |  |  |  |
| India | **47423** | 44262 | 42287 |
| UK | **32294** | 33970 | 34125 |
| Hong Kong | **25639** | 26599 | 26472 |

---

1Represents the number of full-time equivalent staff ('FTE') with contracts of service with the Group who are being paid at the reporting date. Comprises FTE in

front-line roles and those providing dedicated support services managed by the business segments ('direct FTE') (at 31 December 2025: Hong Kong: 20,290; UK:

20,969; CIB: 45,970; IWPB: 53,136) and an allocation of Corporate Centre FTE in proportion to business usage of shared support services and global

infrastructure. During 2025, certain Operations FTE were transferred from Corporate Centre to the business segments for which they provide dedicated support

services (if these FTE had been transferred at 31 December 2024, the direct FTE of the segments would have been as follows: Hong Kong: 20,471; UK: 20,794;

CIB: 46,914; IWPB: 55,482).

**Reported operating expenses** of $36.4bn were $3.4bn or 10% higher

than in 2024. The increase primarily reflected notable items in 2025,

including legal provisions of $1.4bn, restructuring and other related

costs in 2025 of $1.0bn related to our organisational simplification,

mainly severance costs, and $0.5bn related to strategic transactions.

In addition, growth in reported operating expenses included higher

planned spend and investment in technology, and the impacts of

inflation. These increases were partly offset by reductions following the

completion of business disposals in Canada and Argentina, and benefits

delivered by our organisational simplification of $0.6bn.

Target basis operating expenses were $33.5bn or 3% higher than in

2024 due to higher planned spend and investment in technology,

higher performance-related pay and the impact of inflation.

🡠For a reconciliation of target basis operating expenses to reported operating

expenses see page 109.

The number of employees expressed in full-time equivalent ('FTE') staff

at 31 December 2025 was 208,720, a reduction of 2,584 compared

with 31 December 2024. The number of contractors at 31 December

2025 was 3,974, a reduction of 252 from 31 December 2024.

**Share of profit in associates and joint ventures** of $2.9bn was stable

compared with 2024.

**Impairment of interest in associate** of $1.0bn related to BoCom.

🡠For further details of our impairment review process, see Note 18: Interests

in associates and joint ventures on page 345.

Tax expense

Tax expense in 2025 was a charge of $6.8bn, representing an effective

tax rate of 22.7% (2024: 22.6%). The effective tax rate for 2025 was

increased by the non-deductible impairment and dilution loss in BoCom

and legal provisions on which no tax benefit is recorded. Excluding these

items, the effective rate for 2025 was 20.6% (2024: 21.5%, excluding

the impact of the non-taxable gains and losses on the sale of our

banking business in Canada and our business in Argentina). The

decrease in the effective tax rate excluding these items was primarily

the result of a reduction in the unfavourable impact of hyperinflation

following the sale of our business in Argentina in 2024.

---

| | | |
|:---|:---|:---|
| Tax expense | Tax expense | Tax expense |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Tax (charge)/credit** |  |  |
| Reported | **(6776)** | (7310) |
| Currency translation | **—** | (39) |
| **Constant currency tax (charge)/credit** | **(6776)** | (7349) |

---

---

| | | |
|:---|:---|:---|
| Notable items | Notable items | Notable items |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Tax** |  |  |
| Tax (charge)/credit on notable items | **440** | 108 |

---

Return on average tangible equity

In 2025, RoTE was 13.3%, compared with 14.6% in 2024. RoTE excluding

notable items was 17.2% in 2025, compared with 15.6% in 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **71** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Income statement commentary: 2024 compared with 2023

The following commentary compares Group financial performance for

the year ended 2024 with 2023.

**Net interest income ('NII')** for 2024 was $32.7bn, a decrease of

$3.1bn or 9% compared with 2023. The decrease included a $2.7bn

reduction mainly due to the redeployment of our commercial surplus to

net trading and fair value assets, for which the associated revenue is

reported in 'net income on financial instruments held for trading or

managed on a fair value basis'. The fall also reflected a $1.0bn loss due

to the disposal of our business in Canada and a $0.2bn loss in 2024

related to the early redemption of legacy securities. NII in HSBC UK

grew by $0.6bn, including the benefit of our structural hedge and

balance sheet growth, partly offset by mortgage pricing pressures.

There was also higher NII in Markets Treasury due to reinvestments in

our portfolio at higher yields. Excluding the unfavourable impact of

foreign currency translation differences, net interest income decreased

by $1.4bn or 4%. NII for the fourth quarter of 2024 was $8.2bn, up 7%

compared with the previous quarter, and down 1% compared with the

fourth quarter of 2023. The increase compared with 3Q24 was

predominantly driven by the non-recurrence of the adverse impact in

3Q24 from the early redemption of legacy securities. The decline in NII

compared with 4Q23 was predominantly driven by the impact of lower

AIEA.

**Net interest margin ('NIM')** for 2024 of 1.56% was 10bps lower

compared with 2023, reflecting redeployment of our commercial

surplus to net trading and fair value assets, and higher interest expense

due to higher market rates and an adverse impact of $0.2bn from the

early redemption of legacy securities. The decrease in NIM in 2024

included the unfavourable impact of foreign currency translation

differences. Excluding this, NIM decreased by 6bps. NIM for the fourth

quarter of 2024 was 1.54%, up 8bps compared with the previous

quarter, and up 2bps compared with the fourth quarter of 2023. The

increase against the previous quarter was primarily due to the non-

recurrence of the adverse impact from the early redemption of legacy

securities. The year-on-year increase was predominantly driven by

HSBC UK.

**Interest income** for 2024 of $108.6bn increased by $7.8bn compared

with 2023, primarily due to an increase in market interest rates.

Interest income of $26bn in the fourth quarter of 2024 was down

$1.3bn compared with the previous quarter, and down $0.7bn

compared with the fourth quarter of 2023. Both the declines were

primarily due to lower market interest rates.

The change in interest income in 2024 compared with 2023 included an

adverse impact of foreign currency translation differences of $2.7bn.

After excluding foreign currency translation differences, interest income

increased by $10.5bn.

**Interest expense** for 2024 of $75.9bn increased by $10.8bn compared

with 2023, primarily due to an increase in market interest rates, growth

in customer accounts with higher proportion for term deposits and the

impact of the early redemption of legacy securities.

The rise in interest expense included the favourable effects of foreign

currency translation differences of $1.1bn. Excluding this, interest

expense increased by $11.9bn.

Interest expense of $17.8bn in the fourth quarter of 2024 was $1.8bn

and $0.6bn lower compared with the third quarter of 2024 and the

fourth quarter of 2023 respectively. The decrease against the previous

quarter was due to the non-recurrence of an adverse impact from the

early redemption of legacy securities. The year-on-year decline was

primarily due to lower market interest rates.

**Banking NII** was $43.7bn in 2024. The funding costs associated with

generating trading and fair value income were $11.4bn, an increase of

$2.7bn compared with 2023, primarily reflecting redeployment of our

commercial surplus to net trading and fair value assets. Banking NII

also deducts third-party NII related to our insurance business, which

was $0.4bn, stable compared with 2023. The movement in banking NII

also included a reduction from the disposal of our business in Canada of

$1.0bn, a $0.2bn loss in 2024 related to the early redemption of legacy

securities and from higher interest expense on deposits in part due to

balance growth. Banking NII in HSBC UK grew by $0.7bn, including the

benefit of our structural hedge and balance sheet growth, partly offset

by mortgage pricing pressures. There was higher NII in Markets

Treasury due to reinvestments in our portfolio at higher yields.

The internally allocated funding to generate trading and fair value

income was approximately $200bn at 31 December 2024, a rise of

approximately $37bn since 31 December 2023, although it decreased

by approximately $9bn during 4Q24. This relates to trading, fair value

and associated net asset balances predominantly in CIB. The increase

reflected management decisions on the deployment of our commercial

surplus.

**Net fee income** of $12.3bn was $0.5bn or 4% higher than in 2023, and

included an adverse impact from foreign currency translation

differences of $0.2bn, as well as a reduction of $0.4bn due to the

impact of the disposal of our banking business in Canada.

The increase in net fee income was mainly in Wealth products in our

Hong Kong business and in IWPB in Hong Kong, reflecting stronger

equity markets and improved customer sentiment. It also included an

increase in cards income, mainly in Mexico and Asia in IWPB, as

customer spending increased, and in our Hong Kong business.

In CIB, net fee income was down by $0.1 bn. This included lower fees

from credit facilities, notably due to the disposal of our banking

operations in Canada. In addition, there was higher fee expense relating

to custody. This was partly offset by higher broking and underwriting

income in our main entity in Europe, although the associated fee

expense also increased.

**Net income from financial instruments held for trading or** 

**managed on a fair value basis** of $21.1bn was $4.5bn higher

compared with 2023. This included favourable fair value movements of

$0.6bn on the foreign exchange hedging of the proceeds of the sale of

our banking business in Canada until completion of the sale. The

increase also reflected higher client activity and elevated volatility in

Debt and Equity Markets in CIB. A component of funding costs

incurred to generate this income are reported in NII, and these

increased by $2.7bn, compared with 2023.

In IWPB, income rose by $0.2bn due to a favourable movement related

to derivatives in our insurance business and from higher customer

trading activity in Wealth, including in our main legal entity in Asia.

**Net expense from assets and liabilities of insurance businesses,** 

**including related derivatives, measured at fair value through profit** 

**or loss** of $5.9bn fell by $2.0bn compared with 2023. This decrease

reflected adverse fair value movements on debt securities, due to

movements in interest rates, including in our portfolios in Hong Kong

and France, partly offset by improved equity returns.

This unfavourable movement resulted in a corresponding movement in

insurance finance expense, which has an offsetting impact for the

related liabilities to policyholders.

**Insurance finance expense** of $6.0bn was $1.8bn lower than in 2023,

reflecting the impact of investment returns on underlying assets on the

value of liabilities to policyholders, which moves inversely with 'net

income from assets and liabilities of insurance businesses, including

related derivatives, measured at fair value through profit or loss'.

**Insurance service result** of $1.3bn increased by $0.2bn compared

with 2023, primarily due to an increase in the release of the contractual

service margin ('CSM').

**Gain on acquisition** fell by $1.6bn, reflecting the non-recurrence of a

gain recognised in respect of the acquisition of SVB UK in 1Q23.

**Losses recognised on sale of business operations** were $1.8bn in

2024. This compared with a gain of $61m in 2023. In 2024, there were

losses from completion of the disposal of our business in Argentina,

comprising the recycling of $5.2bn of foreign currency translation

reserve losses and other reserves to the income statement and a

$1.0bn loss on disposal. This was partly offset by a gain of $4.6bn on

the sale of our banking business in Canada, inclusive of recycling of

foreign currency translation reserve and other reserve losses to the

income statement.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **72** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

**Other operating income** of $0.2bn was $1.3bn higher than in 2023.

The increase primarily related to the non-recurrence of losses in 2023

of $1.0bn relating to Treasury repositioning and risk management.

The increase also included the non-recurrence of a loss of $0.3bn in

2023 relating to corrections to historical valuation estimates in our life

insurance business, and losses related to the disposal of our New

Zealand retail mortgage loan portfolio and the merger of HSBC Bank

Oman in 2023 with Sohar International.

**Changes in expected credit losses and other credit impairment** 

**charges ('ECL')** were a charge of $3.4bn, stable compared with 2023.

ECL in 2024 included charges of $0.4bn in respect of commercial real

estate in mainland China and of $0.1bn in the Hong Kong real estate

sector. This compared with charges of $1.0bn and $0.1bn respectively

in these sectors in 2023. In addition, ECL in CIB in 2024 included a

charge related to a single exposure in the UK, partly offset by a release

of stage 3 allowances in HSBC Bank plc related to a single exposure.

Charges in our UK business were $0.1bn lower compared with 2023.

In WPB, ECL charges were $1.1bn. up $0.2bn compared with 2023.

These primarily related to our legal entity in Mexico, reflecting growth

in our unsecured lending portfolio and unemployment trends.

🡠For further details on the calculation of ECL, including the measurement

uncertainties and significant judgements applied to such calculations, the

impact of the economic scenarios and management judgemental

adjustments, see pages 153 to 157.

**Operating expenses** of $33.0bn were $1.0bn or 3% higher than in

2023, including a favourable impact of $0.6bn from foreign currency

translation differences. The increase reflected higher spend and

investment in technology and inflationary impacts, while performance-

related pay remained stable. Operating expenses were adversely

impacted by the non-recurrence of a $0.2bn reversal of historical asset

impairments in 2023.

These increases were partly offset by the favourable impacts from the

completion of business disposals in Canada and France, and a lower UK

bank levy of $0.1bn, as 2023 included adjustments relating to prior

years. Operating expenses in 2024 benefited from the non-recurrence

of a $0.2bn charge in 2023 incurred in the US relating to the FDIC

special assessment.

Target basis operating expense growth was 5% compared with 2023,

in line with our cost growth target. This primarily reflected higher

investment spend, including in technology and from inflationary

pressures, while our performance-related pay accrual was broadly in

line with 2023. Our target basis operating expenses are measured on a

constant currency basis, excluding notable items, the impact of

retranslating the prior year results of hyperinflationary economies at

constant currency, and the direct costs from the sales of our French

retail banking operations and our banking business in Canada.

The number of employees expressed in full-time equivalent staff ('FTE')

at 31 December 2024 was 211,304, a decrease of 9,557 compared

with 31 December 2023, primarily reflecting the completion of the

sales of our banking business in Canada, our retail banking operations in

France and our business in Argentina. The number of contractors at 31

December 2024 was 4,226, a decrease of 450.

**Share of profit in associates and joint ventures** of $2.9bn was

$3.1bn higher than in 2023, including an increase in the share of profit

from SAB.

**Impairment of interest in associate** In relation to our investment in

BoCom, at 31 December 2024 we concluded that there was no

indication of further significant impairment (or indication that an

impairment may no longer exist or may have decreased significantly)

since 31 December 2023.

At 31 December 2023, the Group performed an impairment test on the

carrying value of our investment in BoCom which resulted in an

impairment of $3.0bn.

🡠For further details, see Note 18: Interests in associates and joint ventures

on page 345.

**Tax expense** The effective tax rate for 2024 of 22.6% was higher than

the 19.1% in 2023. The effective tax rate for 2024 was increased by 4.8

percentage points by the non-deductible loss on disposal of our

business in Argentina and by 0.7 percentage points by the tax charge

arising under the Global Minimum Tax rules, and reduced by 3.6

percentage points by the non-taxable gain on disposal of our banking

business in Canada. The effective tax rate for 2023 was increased by

2.3 percentage points by the non-deductible impairment of investments

in associates, and reduced by 1.6 percentage points by the release of

provisions for uncertain tax positions and by 1.5 percentage points by

the non-taxable accounting gain arising on the acquisition of SVB UK.

🡠Further details are provided in Note 7 on the financial statements of the

HSBC Holdings plc Form 20-F for the year ended 31 December 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **73** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Consolidated balance sheet

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Five-year summary consolidated balance sheet | Five-year summary consolidated balance sheet | Five-year summary consolidated balance sheet | Five-year summary consolidated balance sheet | Five-year summary consolidated balance sheet | Five-year summary consolidated balance sheet |
|  | **2025** | 2024 | 2023 | 2022<sup>1</sup> | 2021 |
|  | **$m** | $m | $m | $m | $m |
| **Assets** |  |  |  |  |  |
| Cash and balances at central banks | **242859** | 267674 | 285868 | 327002 | 403018 |
| Trading assets | **366153** | 314842 | 289159 | 218093 | 248842 |
| Financial assets designated and otherwise mandatorily measured at fair value <br>through profit or loss<br>| **133063** | 115769 | 110643 | 100101 | 49804 |
| Derivatives | **237740** | 268637 | 229714 | 284159 | 196882 |
| Loans and advances to banks | **108462** | 102039 | 112902 | 104475 | 83136 |
| Loans and advances to customers | **988399** | 930658 | 938535 | 923561 | 1045814 |
| Reverse repurchase agreements – non-trading | **298392** | 252549 | 252217 | 253754 | 241648 |
| Financial investments | **567211** | 493166 | 442763 | 364726 | 446274 |
| Assets held for sale | **11115** | 27234 | 114134 | 115919 | 3411 |
| Other assets | **279640** | 244480 | 262742 | 257496 | 239110 |
| **Total assets at 31 Dec** | **3233034** | 3017048 | 3038677 | 2949286 | 2957939 |
| **Liabilities** |  |  |  |  |  |
| Deposits by banks | **97952** | 73997 | 73163 | 66722 | 101152 |
| Customer accounts | **1786828** | 1654955 | 1611647 | 1570303 | 1710574 |
| Repurchase agreements – non-trading | **204974** | 180880 | 172100 | 127747 | 126670 |
| Trading liabilities | **72122** | 65982 | 73150 | 72353 | 84904 |
| Financial liabilities designated at fair value | **158456** | 138727 | 141426 | 127321 | 145502 |
| Derivatives | **237854** | 264448 | 234772 | 285762 | 191064 |
| Debt securities in issue | **99675** | 105785 | 93917 | 78149 | 78557 |
| Insurance contract liabilities | **122955** | 107629 | 120851 | 108816 | 112745 |
| Liabilities of disposal groups held for sale | **23382** | 29011 | 108406 | 114597 | 9005 |
| Other liabilities | **223170** | 203361 | 216635 | 212319 | 190989 |
| **Total liabilities at 31 Dec** | **3027368** | 2824775 | 2846067 | 2764089 | 2751162 |
| **Equity** |  |  |  |  |  |
| Total shareholders' equity | **198225** | 184973 | 185329 | 177833 | 198250 |
| Non-controlling interests | **7441** | 7300 | 7281 | 7364 | 8527 |
| **Total equity at 31 Dec** | **205666** | 192273 | 192610 | 185197 | 206777 |
| **Total liabilities and equity at 31 Dec** | **3233034** | 3017048 | 3038677 | 2949286 | 2957939 |

---

1From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended

31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.

🡠A more detailed consolidated balance sheet is contained in the financial statements on page 290.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Five-year selected financial information | Five-year selected financial information | Five-year selected financial information | Five-year selected financial information | Five-year selected financial information | Five-year selected financial information |
|  | **2025** | 2024 | 2023 | 2022<sup>1</sup> | 2021 |
|  | **$m** | $m | $m | $m | $m |
| Called up share capital  | **8588** | 8973 | 9631 | 10147 | 10316 |
| Capital resources<sup>2</sup> | **182371** | 172386 | 171204 | 162423 | 177786 |
| Undated subordinated loan capital  | **—** | 17 | 18 | 1967 | 1968 |
| Preferred securities and dated subordinated loan capital<sup>3</sup> | **37581** | 35258 | 36413 | 29921 | 28568 |
| Risk-weighted assets | **888647** | 838254 | 854114 | 839720 | 838263 |
| Total shareholders' equity | **198225** | 184973 | 185329 | 177833 | 198250 |
| Less: preference shares and other equity instruments | **(20716)** | (19070) | (17719) | (19746) | (22414) |
| **Total ordinary shareholders' equity** | **177509** | 165903 | 167610 | 158087 | 175836 |
| Less: goodwill and intangible assets (net of deferred tax) | **(12356)** | (11608) | (11900) | (11160) | (17643) |
| **Tangible ordinary shareholders' equity** | **165153** | 154295 | 155710 | 146927 | 158193 |
| **Financial statistics** |  |  |  |  |  |
| Loans and advances to customers as a percentage of customer accounts (%) | **55.3** | 56.2 | 58.2 | 58.8 | 61.1 |
| Average total shareholders' equity to average total assets (%) | **5.99** | 6.12 | 6.01 | 5.97 | 6.62 |
| Net asset value per ordinary share at year-end ($)<sup>4</sup> | **10.36** | 9.26 | 8.82 | 8.01 | 8.76 |
| Tangible net asset value per ordinary share at year-end ($)<sup>4</sup> | **9.64** | 8.61 | 8.19 | 7.44 | 7.88 |
| Tangible net asset value per fully diluted share at year-end ($) | **9.56** | 8.54 | 8.14 | 7.39 | 7.84 |
| Number of $0.50 ordinary shares in issue (millions)  | **17175** | 17947 | 19263 | 20294 | 20632 |
| Basic number of $0.50 ordinary shares outstanding, after deducting own shares <br>held (millions) <br>| **17140** | 17918 | 19006 | 19739 | 20073 |
| Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary <br>shares, after deducting own shares held (millions)<br>| **17276** | 18062 | 19135 | 19876 | 20189 |
| **Closing foreign exchange translation rates to $:** |  |  |  |  |  |
| $1: £ | **0.746** | 0.797 | 0.784 | 0.830 | 0.739 |
| $1: €  | **0.853** | 0.964 | 0.903 | 0.937 | 0.880 |

---

1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended

31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.

2Capital resources are regulatory total capital, the calculation of which is set out on page 192.

3 Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 359.

4 For the definition, see page <u>[106](#i866499906cd64e0199d2c5a630a09ec1_4502)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **74** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | |
|:---|:---|:---|
| Combined view of customer lending and customer deposits<sup>1</sup> | Combined view of customer lending and customer deposits<sup>1</sup> | Combined view of customer lending and customer deposits<sup>1</sup> |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Loans and advances to customers | **988399** | 930658 |
| Loans and advances to customers of disposal groups reported in 'Assets held for sale' | **2190** | 965 |
| – private banking business in Germany | **—** | 309 |
| – Germany custody business | **323** |  |
| – business in South Africa | **431** | 656 |
| – retail banking business in Sri Lanka | **101** |  |
| – business in Uruguay | **1314** |  |
| – other | **21** |  |
| Non-current assets held for sale | **1303** | 12 |
| **Combined customer lending** | **991892** | 931635 |
| Currency translation | **—** | 40108 |
| **Combined customer lending at constant currency** | **991892** | 971743 |
| Customer accounts | **1786828** | 1654955 |
| Customer accounts reported in 'Liabilities of disposal groups held for sale' | **16173** | 5399 |
| – private banking business in Germany | **—** | 2085 |
| – Germany custody business | **12316** |  |
| – business in South Africa | **2056** | 3294 |
| – retail banking business in Sri Lanka | **430** |  |
| – business in Uruguay | **1369** |  |
| – other | **2** | 20 |
| **Combined customer deposits** | **1803001** | 1660354 |
| Currency translation | **—** | 64285 |
| **Combined customer deposits at constant currency** | **1803001** | 1724639 |

---

1On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to sell its business in Argentina to Galicia. The sale was completed on 6 December

2024, so is not included in the table above.

Balance sheet commentary compared with 31 December 2024

At 31 December 2025, total assets of $3.2tn were $216bn or 7%

higher on a reported basis and increased by $93bn or 3% on a constant

currency basis.

Reported loans and advances to customers as a percentage of

customer accounts was 55.3% compared with 56.2% at 31 December

2024 (excluding balances classified as held for sale). The movement in

this ratio reflected a higher growth in customer accounts than in

lending.

Assets

**Cash and balances at central banks** decreased by $25bn or 9%,

which included a $22bn favourable impact of foreign currency

translation differences. The reduction was primarily due to lower

allocated balances from Markets Treasury within HSBC Bank plc,

leading to decreases across CIB and IWPB. Cash also declined in our

UK business, driven by increased customer lending and redeployment

into other asset classes.

**Trading assets** rose by $51bn or 16%, which included a favourable

impact of foreign currency translation differences of $13bn. The growth

was mainly in our CIB business reflecting increased client demand and

an increase in valuations.

**Derivative assets** decreased by $31bn or 12%, which included a

favourable impact of foreign currency translation differences of $17bn.

The reduction was primarily in our CIB business and reflected fair value

movements on foreign exchange contracts, driven by foreign exchange

rate volatility, and reductions in the fair value of interest rate contracts

resulting from curve movements. The decrease in derivative assets

was consistent with the decrease in derivative liabilities, as the

underlying risk is broadly matched.

**Loans and advances to customers** of $988bn were $58bn or 6%

higher on a reported basis. This included a favourable impact of foreign

currency translation differences of $40bn.

On a constant currency basis, loans and advances to customers

increased by $18bn, reflecting the following movements:

–In our UK business, customer lending rose by $18bn, primarily

driven by continued growth in mortgage balances as well as

increased commercial lending.

–In CIB, customer lending increased by $7bn. This was driven by

term lending growth in our main legal entities in Asia, including,

Australia, India and Hong Kong, and from an increase in the Middle

East, partly offset by the reclassification of our business in Uruguay

to held for sale.

–In IWPB, customer lending increased by $6bn, primarily driven by

wealth lending growth in the Private Bank, notably in our main legal

entity in Hong Kong.

–In our Hong Kong business, customer lending decreased by $6bn,

primarily in wholesale lending, reflecting low demand driven by

macroeconomic conditions.

–In Corporate Centre, customer lending decreased by $8bn following

the reclassification and subsequent sale of a portfolio of home and

certain other loans retained in France following the disposal of our

French retail operations.

**Reverse repurchase agreements – non-trading** rose by $46bn or

18%, primarily reflecting client demand.

**Financial investments** increased by $74bn or 15% The increase was

across both debt instruments held at fair value through other

comprehensive income and instruments held at amortised cost, as we

redeployed our commercial surplus to benefit from higher yield curves

and enhanced our structural hedge.

**Assets held for sale** decreased by $16bn or 59%, primarily due to the

reductions in IWPB following the completion of the sales of our French

life insurance business and our German private banking business, partly

offset by reclassification of assets from our UK life insurance business.

There were also increases in CIB and IWPB following the

announcement of the planned sale of our Uruguay business.

**Other assets** grew by $35bn or 14% reflecting higher settlement

accounts balances, notably in CIB, from higher client-driven trading

activity with a corresponding increase in settlement liabilities. In

addition, the growth reflected higher valuations on bullion.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **75** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Liabilities

**Deposits by banks** increased by $24bn or 32%, reflecting an increase

in client inflows, notably in our CIB business.

**Customer accounts** of $1.8tn increased by $132bn or 8% on a

reported basis. This included a favourable impact of foreign currency

translation differences of $64bn, mainly in our UK entities.

On a constant currency basis, customer accounts increased by $68bn,

reflecting the following movements:

–In our Hong Kong business, customer accounts increased by $37bn,

primarily in retail deposits, reflecting broader market growth.

–In our UK business, customer accounts increased by $11bn

primarily due to market growth in retail and corporate savings.

–In CIB, customer accounts increased by $10bn mainly driven by

strong deposit momentum in Asia, including in mainland China and

India, partly offset by the reclassification of our Germany custody

business to held for sale.

–In IWPB, customer accounts rose by $9bn, notably in the Private

Bank in Hong Kong, Singapore and the UK, reflecting strong wealth

deposit inflows amidst market volatility.

**Repurchase agreements – non-trading** increased by $24bn or 13%,

with increases in our CIB and UK businesses.

**Financial liabilities designated at fair value** increased by $20bn or

14%, notably in Corporate Centre, reflecting an increase in debt

securities in issue of $10bn in 2025, and in our CIB business from

increased medium-term note issuances by our Debt and Equity

Markets business.

**Liabilities of disposal groups held for sale** decreased by $6bn or

19%, primarily due to reductions in IWPB following the completion of

the sales of our French life insurance business and our German private

banking business, partly offset by reclassification of liabilities from our

UK life insurance business. There were also additions in CIB and IWPB

following the announcement of the planned sale of our Uruguay

business.

**Other liabilities** increased by $20bn or 10%. This included a rise of

$7bn in settlement accounts in our main legal entity in the US from an

increase in trading activity.

Equity

**Total shareholders' equity,** including non-controlling interests, of

$206bn increased by $13bn or 7% compared with 31 December 2024.

Profits generated of $22bn and net gains through other comprehensive

income ('OCI') of $10bn were partly offset by the impact of dividends

paid of $13bn, and the impact of our $8bn share buy-back activities in

2025, which included the $2bn buy-back announced with our 2024

annual results in February 2025.

The net gains through OCI of $10bn included $7bn of exchange

differences and a $2bn increase in the cash flow hedging reserve.

Financial investments

As part of our interest rate hedging strategy, we hold a portfolio of debt

instruments, reported within financial investments, which are classified

as hold-to-collect-and-sell. As a result, the change in value of these

instruments is recognised through 'debt instruments at fair value

through other comprehensive income' in equity. At 31 December 2025,

we had recognised a pre-tax cumulative unrealised loss reserve

through other comprehensive income of $1.1bn related to these hold-

to-collect-and-sell positions, excluding investments held in our

insurance business. This compared with an unrealised loss of $3.8bn at

31 December 2024, and reflected a $2.7bn pre-tax gain in 2025,

inclusive of movements on related fair value hedges.

We also hold a portfolio of financial investments measured at amortised

cost, which are classified as hold-to-collect and are primarily held to

manage our interest rate exposure. At 31 December 2025, the debt

instruments within this portfolio had a cumulative unrecognised loss of

$0.4 bn, representing a $2.5bn improvement during 2025.

---

| | | |
|:---|:---|:---|
| Customer accounts by country/territory | Customer accounts by country/territory | Customer accounts by country/territory |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Hong Kong | **619029** | 575141 |
| UK | **568712** | 524251 |
| US | **99458** | 99278 |
| Singapore | **81740** | 76737 |
| Mainland China | **69473** | 63169 |
| France | **50880** | 40384 |
| Australia | **34171** | 31951 |
| Germany<sup>1</sup> | **15588** | 23564 |
| Mexico | **29493** | 27525 |
| UAE | **30861** | 28008 |
| India | **28725** | 27199 |
| Taiwan | **18771** | 17067 |
| Malaysia | **20252** | 17038 |
| Egypt | **5610** | 4137 |
| Indonesia | **5777** | 5558 |
| Türkiye | **3624** | 3489 |
| Other<sup>1</sup> | **104664** | 90459 |
| **At 31 Dec** | **1786828** | 1654955 |

---

1At 31 December 2025, customer accounts of $16.2bn met the criteria to be classified as held for sale and are reported within 'Liabilities of disposal groups held

for sale' on the balance sheet, of which $12.3bn, $2.1bn, $1.4bn and $0.4bn belongs to the planned sale of our German custody business, South Africa business,

HSBC Bank (Uruguay) S.A., and Sri Lanka retail banking business, respectively. Refer to Note 23 on page 355 for further details.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **76** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency | Loans and advances, deposits by currency |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
| **$m** | **USD** | **GBP** | **HKD** | **EUR** | **CNY** | **Others**<sup>1</sup> | **Total** |
| Loans and advances to banks | **38546** | **17085** | **3716** | **4810** | **9146** | **35159** | **108462** |
| Loans and advances to customers | **171177** | **323026** | **201691** | **71148** | **54015** | **167342** | **988399** |
| **Total loans and advances** | **209723** | **340111** | **205407** | **75958** | **63161** | **202501** | **1096861** |
| Deposits by banks | **43915** | **14910** | **4427** | **11995** | **5308** | **17397** | **97952** |
| Customer accounts | **529437** | **465673** | **320778** | **134689** | **72626** | **263625** | **1786828** |
| **Total deposits** | **573352** | **480583** | **325205** | **146684** | **77934** | **281022** | **1884780** |
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
| Loans and advances to banks | 33727 | 15267 | 5340 | 4137 | 8129 | 35439 | 102039 |
| Loans and advances to customers | 171530 | 286797 | 203586 | 68437 | 51966 | 148342 | 930658 |
| Total loans and advances | 205257 | 302064 | 208926 | 72574 | 60095 | 183781 | 1032697 |
| Deposits by banks | 31415 | 18771 | 3973 | 8788 | 4114 | 6936 | 73997 |
| Customer accounts | 476210 | 426747 | 316997 | 124452 | 67405 | 243144 | 1654955 |
| Total deposits | 507625 | 445518 | 320970 | 133240 | 71519 | 250080 | 1728952 |

---

1'Others' includes items with no currency information available of $0.5bn for loans and advances to banks (2024: $0.9bn), and $1.3bn for loans and advances to

customers (2024: $0.9bn), Nil for deposits by banks (2024: Nil) and $0.2bn for customer accounts (2024: $6m).

Risk-weighted assets

Risk-weighted assets ('RWAs') increased by $50.3bn during the year,

including an increase of $27.4bn from foreign currency translation

differences. The remaining increase was largely driven by $39.9bn of

asset size movements; which included an $11.6bn rise in operational

risk, driven by higher average income. Further increases were due to

corporate lending growth, largely in our UK and CIB business segments

and in SAB within Corporate Centre.

These increases were partly offset by an $11.6bn decrease in RWAs

due to credit risk parameter refinements, including methodology

changes to our undrawn exposures within our UK and CIB businesses;

and a UK transaction where some credit risk was transferred to a third

party, and a $4.5bn decrease from strategic disposals.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| RWAs by currency | RWAs by currency | RWAs by currency | RWAs by currency | RWAs by currency | RWAs by currency | RWAs by currency | RWAs by currency |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
| **$m** | **USD** | **GBP** | **HKD** | **EUR** | **CNY** | **Others** | **Total** |
| RWAs<sup>1</sup> | **210900** | **189045** | **133894** | **75334** | **55811** | **223663** | **888647** |
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
| RWAs<sup>1</sup> | 205645 | 165684 | 136001 | 67440 | 56561 | 206923 | 838254 |

---

1 RWAs include credit risk, counterparty credit risk, market risk and operational risk RWAs.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **77** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Average balance sheet

Average balance sheet and net interest income

Average balances and related interest are shown for the domestic

operations of our principal commercial banks by legal entity. 'Other

trading entities' comprise the operations of our principal commercial

banking and consumer finance entities outside their domestic markets

and all other banking operations, including investment banking balances

and transactions.

Average balances are based on daily averages for the principal areas of

our banking activities with monthly or less frequent averages used

elsewhere.

Balances and transactions with fellow subsidiaries are reported gross in

the principal commercial banking and consumer finance entities, and

the elimination entries are included within 'Holding companies, shared

service centres and intra-group eliminations'.

Net interest margin numbers are calculated by dividing net interest

income as reported in the income statement by the average interest-

earning assets from which interest income is reported within the 'Net

interest income' line of the income statement. Total interest-earning

assets include credit-impaired loans where the carrying amount has

been adjusted as a result of impairment allowances. In accordance with

IFRSs, we recognise interest income on credit-impaired assets after the

carrying amount has been adjusted as a result of impairment. Fee

income that forms an integral part of the effective interest rate of a

financial instrument is recognised as an adjustment to the effective

interest rate and recorded in 'Interest income'.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Assets | Assets | Assets | Assets | Assets | Assets | Assets |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**income**<br>| **Yield** | Average<br>balance<br>| Interest<br>income<br>| Yield |
|  | **$m** | **$m** | **%** | $m | $m | % |
| **Summary** |  |  |  |  |  |  |
| Interest-earning assets measured at amortised cost (itemised below)  | **2190078** | **97872** | **4.47** | 2099285 | 108631 | 5.17 |
| Trading assets and financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| **262719** | **8169** | **3.11** | 244686 | 7943 | 3.25 |
| Expected credit losses provision | **(10151)** | **N/A** | **N/A** | (10633) | N/A | N/A |
| Non-interest-earning assets  | **755734** | **N/A** | **N/A** | 729136 | N/A | N/A |
| **Total assets and interest income**  | **3198380** | **106041** | **3.32** | 3062474 | 116574 | 3.81 |
| Average yield on all interest-earning assets |  |  | **4.32** |  |  | 4.97 |
| **Short-term funds and loans and advances to banks** |  |  |  |  |  |  |
| HSBC Bank plc | **146469** | **4321** | **2.95** | 151675 | 5993 | 3.95 |
| HSBC UK Bank plc | **65457** | **2493** | **3.81** | 76705 | 3255 | 4.24 |
| The Hongkong and Shanghai Banking Corporation Limited | **82451** | **2561** | **3.11** | 86976 | 3250 | 3.74 |
| HSBC Bank Middle East Limited | **7398** | **464** | **6.27** | 6960 | 418 | 6.01 |
| HSBC North America Holdings Inc. | **28832** | **1136** | **3.94** | 29434 | 1275 | 4.33 |
| HSBC Bank Canada | **—** | **—** | **—** | 13 |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **2759** | **208** | **7.54** | 3037 | 298 | 9.81 |
| Other trading entities | **5761** | **957** | **16.61** | 5992 | 812 | 13.55 |
| Holding companies, shared service centres and intra-group eliminations | **(13337)** | **(680)** | **5.10** | (11275) | (574) | 5.09 |
| **At 31 Dec** | **325790** | **11460** | **3.52** | 349517 | 14727 | 4.21 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Loans and advances to customers** |  |  |  |  |  |  |
| HSBC Bank plc | **107315** | **4850** | **4.52** | 110123 | 5740 | 5.21 |
| HSBC UK Bank plc | **295491** | **14060** | **4.76** | 275614 | 13176 | 4.78 |
| The Hongkong and Shanghai Banking Corporation Limited | **459820** | **18940** | **4.12** | 455258 | 21804 | 4.79 |
| HSBC Bank Middle East Limited | **21910** | **1220** | **5.57** | 20558 | 1313 | 6.39 |
| HSBC North America Holdings Inc. | **56893** | **3136** | **5.51** | 56149 | 3403 | 6.06 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **25872** | **3299** | **12.75** | 26704 | 3631 | 13.60 |
| Other trading entities | **4901** | **662** | **13.51** | 5642 | 918 | 16.27 |
| Holding companies, shared service centres and intra-group eliminations | **(398)** | **(131)** | **32.91** | (223) | (106) | 47.53 |
| **At 31 Dec** | **971804** | **46036** | **4.74** | 949825 | 49879 | 5.25 |
| **Reverse repurchase agreements – banks**<sup>1</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **41903** | **2695** | **6.43** | 38819 | 3293 | 8.48 |
| HSBC UK Bank plc | **5424** | **220** | **4.06** | 2401 | 109 | 4.54 |
| The Hongkong and Shanghai Banking Corporation Limited | **56488** | **2058** | **3.64** | 57293 | 2384 | 4.16 |
| HSBC Bank Middle East Limited | **5723** | **267** | **4.67** | 4195 | 243 | 5.79 |
| HSBC North America Holdings Inc. | **13708** | **745** | **5.43** | 12262 | 840 | 6.85 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **2217** | **188** | **8.48** | 2599 | 281 | 10.81 |
| Other trading entities | **1641** | **155** | **9.45** | 2182 | 363 | 16.64 |
| Holding companies, shared service centres and intra-group eliminations | **(8702)** | **(576)** | **6.62** | (15962) | (833) | 5.22 |
| **At 31 Dec** | **118402** | **5752** | **4.86** | 103789 | 6680 | 6.44 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **78** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Assets (continued) | Assets (continued) | Assets (continued) | Assets (continued) | Assets (continued) | Assets (continued) | Assets (continued) |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**income**<br>| **Yield** | Average<br>balance<br>| Interest<br>income<br>| Yield |
|  | **$m** | **$m** | **%** | $m | $m | % |
| **Reverse repurchase agreements – customers**<sup>1</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **53110** | **4083** | **7.69** | 46092 | 4178 | 9.06 |
| HSBC UK Bank plc | **12062** | **629** | **5.21** | 7832 | 478 | 6.10 |
| The Hongkong and Shanghai Banking Corporation Limited | **51842** | **1491** | **2.88** | 41295 | 1368 | 3.31 |
| HSBC Bank Middle East Limited | **3155** | **146** | **4.63** | 2644 | 135 | 5.11 |
| HSBC North America Holdings Inc. | **44485** | **4495** | **10.10** | 42410 | 4851 | 11.44 |
| HSBC Bank Canada | **—** | **—** | **—** | 2 |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **274** | **21** | **7.66** | 280 | 32 | 11.43 |
| Other trading entities | **—** | **—** | **—** |  |  |  |
| Holding companies, shared service centres and intra-group eliminations | **(9389)** | **(1)** | **0.01** | (5650) | (1) | 0.02 |
| **At 31 Dec** | **155539** | **10864** | **6.98** | 134905 | 11041 | 8.18 |
| **Financial investments** |  |  |  |  |  |  |
| HSBC Bank plc | **79377** | **3025** | **3.81** | 70702 | 3013 | 4.26 |
| HSBC UK Bank plc | **54417** | **2157** | **3.96** | 41036 | 1845 | 4.50 |
| The Hongkong and Shanghai Banking Corporation Limited | **313880** | **10934** | **3.48** | 274924 | 11023 | 4.01 |
| HSBC Bank Middle East Limited | **13379** | **591** | **4.42** | 11690 | 565 | 4.83 |
| HSBC North America Holdings Inc. | **48984** | **2085** | **4.26** | 44044 | 1945 | 4.42 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **6839** | **577** | **8.44** | 5150 | 481 | 9.34 |
| Other trading entities | **4226** | **759** | **17.96** | 3375 | 802 | 23.76 |
| Holding companies, shared service centres and intra-group eliminations | **18005** | **702** | **3.90** | 19261 | 913 | 4.74 |
| **At 31 Dec** | **539107** | **20830** | **3.86** | 470182 | 20587 | 4.38 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Other interest-earning assets** |  |  |  |  |  |  |
| HSBC Bank plc | **66389** | **2206** | **3.32** | 59244 | 2587 | 4.37 |
| HSBC UK Bank plc | **336** | **30** | **8.93** | 252 | 35 | 13.89 |
| The Hongkong and Shanghai Banking Corporation Limited | **14897** | **599** | **4.02** | 10747 | 653 | 6.08 |
| HSBC Bank Middle East Limited | **289** | **13** | **4.50** | (178) | 1 | (0.56) |
| HSBC North America Holdings Inc. | **5710** | **229** | **4.01** | 3726 | 195 | 5.23 |
| HSBC Bank Canada | **—** | **—** | **—** | 19475 | 984 | 5.05 |
| Grupo Financiero HSBC, S.A. de C.V. | **279** | **9** | **3.23** | 315 | 15 | 4.76 |
| Other trading entities | **749** | **171** | **22.83** | 3551 | 1922 | 54.13 |
| Holding companies, shared service centres and intra-group eliminations | **(9213)** | **(327)** | **3.55** | (6065) | (675) | 11.13 |
| **At 31 Dec** | **79436** | **2930** | **3.69** | 91067 | 5717 | 6.28 |
| **Total interest-earning assets** |  |  |  |  |  |  |
| HSBC Bank plc | **494563** | **21180** | **4.28** | 476655 | 24804 | 5.20 |
| HSBC UK Bank plc | **433187** | **19589** | **4.52** | 403840 | 18898 | 4.68 |
| The Hongkong and Shanghai Banking Corporation Limited | **979378** | **36583** | **3.74** | 926493 | 40482 | 4.37 |
| HSBC Bank Middle East Limited | **51854** | **2701** | **5.21** | 45869 | 2675 | 5.83 |
| HSBC North America Holdings Inc. | **198612** | **11826** | **5.95** | 188025 | 12509 | 6.65 |
| HSBC Bank Canada | **—** | **—** | **—** | 19490 | 984 | 5.05 |
| Grupo Financiero HSBC, S.A. de C.V. | **38240** | **4302** | **11.25** | 38085 | 4738 | 12.44 |
| Other trading entities | **17278** | **2704** | **15.65** | 20742 | 4817 | 23.22 |
| Holding companies, shared service centres and intra-group eliminations | **(23034)** | **(1013)** | **4.40** | (19914) | (1276) | 6.41 |
| **At 31 Dec** | **2190078** | **97872** | **4.47** | 2099285 | 108631 | 5.17 |

---

1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net

balance reported for repurchase agreements and thus higher cost.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **79** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Equity and liabilities | Equity and liabilities | Equity and liabilities | Equity and liabilities | Equity and liabilities | Equity and liabilities | Equity and liabilities |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**expense**<br>| **Cost** | Average<br>balance<br>| Interest<br>expense<br>| Cost |
|  | **$m** | **$m** | **%** | $m | $m | % |
| **Summary** |  |  |  |  |  |  |
| Interest-bearing liabilities measured at amortised cost (itemised below) | **2027971** | **63078** | **3.11** | 1920795 | 75898 | 3.95 |
| Trading liabilities and financial liabilities designated at fair value <br>(excluding own debt issued) <br>| **153896** | **5114** | **3.32** | 143636 | 5271 | 3.67 |
| Non-interest bearing current accounts  | **214507** | **N/A** | **N/A** | 220291 | N/A | N/A |
| Total equity and other non-interest bearing liabilities  | **802006** | **N/A** | **N/A** | 777753 | N/A | N/A |
| **Total equity and liabilities**  | **3198380** | **68192** | **2.13** | 3062475 | 81169 | 2.65 |
| Average cost on all interest-bearing liabilities  |  |  | **3.13** |  |  | 3.93 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Deposits by banks**<sup>1</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **39910** | **1236** | **3.10** | 33041 | 1376 | 4.16 |
| HSBC UK Bank plc | **12550** | **602** | **4.80** | 13265 | 743 | 5.60 |
| The Hongkong and Shanghai Banking Corporation Limited | **25823** | **532** | **2.06** | 24561 | 611 | 2.49 |
| HSBC Bank Middle East Limited | **7693** | **355** | **4.61** | 5870 | 303 | 5.16 |
| HSBC North America Holdings Inc. | **12509** | **345** | **2.76** | 9012 | 329 | 3.65 |
| HSBC Bank Canada | **—** | **—** | **—** | 27 |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **563** | **53** | **9.41** | 648 | 74 | 11.42 |
| Other trading entities | **1468** | **161** | **10.97** | 890 | 46 | 5.17 |
| Holding companies, shared service centres and intra-group eliminations | **(24435)** | **(671)** | **2.75** | (20909) | (552) | 2.64 |
| **At 31 Dec** | **76081** | **2613** | **3.43** | 66405 | 2930 | 4.41 |
| **Debt Securities in issue – non trading** |  |  |  |  |  |  |
| HSBC Bank plc | **47563** | **1909** | **4.01** | 47684 | 2536 | 5.32 |
| HSBC UK Bank plc | **24781** | **1334** | **5.38** | 22042 | 1357 | 6.16 |
| The Hongkong and Shanghai Banking Corporation Limited | **42396** | **2305** | **5.44** | 45303 | 2772 | 6.12 |
| HSBC Bank Middle East Limited | **2132** | **89** | **4.17** | 1668 | 67 | 4.02 |
| HSBC North America Holdings Inc. | **25048** | **1408** | **5.62** | 26551 | 1694 | 6.38 |
| HSBC Bank Canada | **—** | **—** | **—** | 181 | 12 | 6.63 |
| Grupo Financiero HSBC, S.A. de C.V. | **3712** | **334** | **9.00** | 3429 | 353 | 10.29 |
| Other trading entities | **1386** | **150** | **10.82** | 1608 | 142 | 8.83 |
| Holding companies, shared service centres and intra-group eliminations | **51299** | **3318** | **6.47** | 47974 | 3873 | 8.07 |
| **At 31 Dec** | **198317** | **10847** | **5.47** | 196440 | 12806 | 6.52 |
| **Customer accounts**<sup>2</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **275748** | **8778** | **3.18** | 258026 | 10753 | 4.17 |
| HSBC UK Bank plc | **304835** | **5863** | **1.92** | 279227 | 6156 | 2.20 |
| The Hongkong and Shanghai Banking Corporation Limited | **793610** | **14024** | **1.77** | 738028 | 17654 | 2.39 |
| HSBC Bank Middle East Limited | **18669** | **520** | **2.78** | 14725 | 520 | 3.53 |
| HSBC North America Holdings Inc. | **80866** | **2627** | **3.25** | 78919 | 3030 | 3.84 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **21679** | **1135** | **5.24** | 22573 | 1555 | 6.89 |
| Other trading entities | **5805** | **828** | **14.26** | 7123 | 1012 | 14.21 |
| Holding companies, shared service centres and intra-group eliminations | **(14180)** | **(486)** | **3.43** | (12781) | (507) | 3.97 |
| **At 31 Dec** | **1487032** | **33289** | **2.24** | 1385840 | 40173 | 2.90 |
| **Repurchase agreements – with banks**<sup>3</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **15015** | **1615** | **10.76** | 17981 | 2212 | 12.30 |
| HSBC UK Bank plc | **1856** | **123** | **6.63** | 317 | 23 | 7.26 |
| The Hongkong and Shanghai Banking Corporation Limited | **66984** | **2293** | **3.42** | 60491 | 2640 | 4.36 |
| HSBC Bank Middle East Limited | **4516** | **198** | **4.38** | 3276 | 178 | 5.43 |
| HSBC North America Holdings Inc. | **11369** | **604** | **5.31** | 10110 | 655 | 6.48 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **1684** | **156** | **9.26** | 181 | 25 | 13.81 |
| Other trading entities | **363** | **7** | **1.93** | 304 | 43 | 14.14 |
| Holding companies, shared service centres and intra-group eliminations | **(15877)** | **(614)** | **3.87** | (18373) | (881) | 4.80 |
| **At 31 Dec** | **85910** | **4382** | **5.10** | 74287 | 4895 | 6.59 |
| **Repurchase agreements – with customers**<sup>3</sup> |  |  |  |  |  |  |
| HSBC Bank plc | **40513** | **3721** | **9.18** | 44267 | 4090 | 9.24 |
| HSBC UK Bank plc | **2597** | **251** | **9.66** | 3147 | 273 | 8.67 |
| The Hongkong and Shanghai Banking Corporation Limited | **14778** | **549** | **3.71** | 22262 | 1108 | 4.98 |
| HSBC Bank Middle East Limited | **11** | **0.4** | **3.64** | 19 | 1 | 5.26 |
| HSBC North America Holdings Inc. | **42483** | **4360** | **10.26** | 42071 | 4821 | 11.46 |
| HSBC Bank Canada | **—** | **—** | **—** | 230 | 13 | 5.65 |
| Grupo Financiero HSBC, S.A. de C.V. | **4521** | **365** | **8.07** | 3850 | 415 | 10.78 |
| Other trading entities | **—** | **—** | **—** | 10 | 1 | 10.00 |
| Holding companies, shared service centres and intra-group eliminations | **(2065)** | **0.6** | **(0.03)** | (2806) |  |  |
| **At 31 Dec** | **102838** | **9247** | **8.99** | 113050 | 10722 | 9.48 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **80** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Equity and liabilities (continued) | Equity and liabilities (continued) | Equity and liabilities (continued) | Equity and liabilities (continued) | Equity and liabilities (continued) | Equity and liabilities (continued) | Equity and liabilities (continued) |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Interest**<br>**expense**<br>| **Cost** | Average<br>balance<br>| Interest<br>expense<br>| Cost |
|  | **$m** | **$m** | **%** | $m | $m | % |
| **Other interest-bearing liabilities** |  |  |  |  |  |  |
| HSBC Bank plc | **66070** | **2236** | **3.38** | 54689 | 2582 | 4.72 |
| HSBC UK Bank plc | **309** | **11** | **3.56** | 426 | 16 | 3.76 |
| The Hongkong and Shanghai Banking Corporation Limited | **12607** | **410** | **3.25** | 14052 | 619 | 4.41 |
| HSBC Bank Middle East Limited | **823** | **18** | **2.19** | 274 | 14 | 5.11 |
| HSBC North America Holdings Inc. | **9180** | **350** | **3.81** | 7582 | 367 | 4.84 |
| HSBC Bank Canada | **—** | **—** | **—** | 16483 | 659 | 4.00 |
| Grupo Financiero HSBC, S.A. de C.V. | **157** | **31** | **19.75** | 183 | 24 | 13.11 |
| Other trading entities | **757** | **138** | **18.23** | 2882 | 798 | 27.69 |
| Holding companies, shared service centres and intra-group eliminations | **(12110)** | **(494)** | **4.08** | (11798) | (707) | 5.99 |
| **At 31 Dec** | **77793** | **2700** | **3.47** | 84773 | 4372 | 5.16 |
| **Total interest-bearing liabilities**  |  |  |  |  |  |  |
| HSBC Bank plc | **484819** | **19495** | **4.02** | 455688 | 23549 | 5.17 |
| HSBC UK Bank plc | **346928** | **8184** | **2.36** | 318424 | 8568 | 2.69 |
| The Hongkong and Shanghai Banking Corporation Limited | **956198** | **20113** | **2.10** | 904697 | 25404 | 2.81 |
| HSBC Bank Middle East Limited | **33844** | **1179** | **3.48** | 25832 | 1083 | 4.19 |
| HSBC North America Holdings Inc. | **181455** | **9694** | **5.34** | 174245 | 10896 | 6.25 |
| HSBC Bank Canada | **—** | **—** | **—** | 16921 | 684 | 4.04 |
| Grupo Financiero HSBC, S.A. de C.V. | **32316** | **2074** | **6.42** | 30864 | 2446 | 7.93 |
| Other trading entities | **9779** | **1284** | **13.13** | 12817 | 2042 | 15.93 |
| Holding companies, shared service centres and intra-group eliminations | **(17368)** | **1055** | **(6.07)** | (18693) | 1226 | (6.56) |
| **At 31 Dec** | **2027971** | **63078** | **3.11** | 1920795 | 75898 | 3.95 |

---

1This includes interest-bearing bank deposits only. See page 12 for an analysis of all bank deposits.

2This includes interest-bearing customer accounts only. See page 13 for an analysis of all customer accounts.

3The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net

balance reported for repurchase agreements and thus higher cost.

---

| | | | |
|:---|:---|:---|:---|
| Net interest margin<sup>1</sup> | Net interest margin<sup>1</sup> | Net interest margin<sup>1</sup> | Net interest margin<sup>1</sup> |
|  | **2025** | 2024 | 2023 |
|  | **%** | % | % |
| HSBC Bank plc | **0.34** | 0.26 | 0.55 |
| HSBC UK Bank plc | **2.63** | 2.56 | 2.43 |
| The Hongkong and Shanghai Banking Corporation Limited | **1.68** | 1.63 | 1.81 |
| HSBC Bank Middle East Limited | **2.94** | 3.47 | 3.62 |
| HSBC North America Holdings Inc. | **1.07** | 0.86 | 0.98 |
| HSBC Bank Canada | **—** | 1.54 | 1.54 |
| Grupo Financiero HSBC, S.A. de C.V. | **5.83** | 6.02 | 6.17 |
| Other trading entities | **8.23** | 13.37 | 7.71 |
| **At 31 Dec** | **1.59** | 1.56 | 1.66 |

---

1Net interest margin is calculated as net interest income divided by average interest-earning assets.

---

| | | | |
|:---|:---|:---|:---|
| Distribution of average total assets | Distribution of average total assets | Distribution of average total assets | Distribution of average total assets |
|  | **2025** | 2024 | 2023 |
|  | **%** | % | % |
| HSBC Bank plc | **30.5** | 30.6 | 30.0 |
| HSBC UK Bank plc | **14.1** | 13.7 | 14.0 |
| The Hongkong and Shanghai Banking Corporation Limited | **45.9** | 45.4 | 44.0 |
| HSBC Bank Middle East Limited | **2.0** | 1.9 | 2.0 |
| HSBC North America Holdings Inc. | **8.4** | 8.4 | 8.0 |
| HSBC Bank Canada | **—** | 0.7 | 3.0 |
| Grupo Financiero HSBC, S.A. de C.V. | **1.5** | 1.6 | 2.0 |
| Other trading entities | **1.0** | 1.1 | 2.0 |
| Holding companies, shared service centres and intra-group eliminations | **(3.4)** | (3.4) | (5.0) |
| **At 31 Dec** | **100.0** | 100.0 | 100.0 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **81** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Analysis of changes in net interest income and net interest expense

The following tables allocate changes in interest income and interest expense between volume and rate for 2025 compared with 2024, and for

2024 compared with 2023. We isolate rate variances and allocate any change arising from both volume and rate/volume to volume.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Interest income | Interest income | Interest income | Interest income | Interest income | Interest income | Interest income | Interest income |
|  |  | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** |  | Increase/(decrease) <br>in 2024 compared <br>with 2023 | Increase/(decrease) <br>in 2024 compared <br>with 2023 |  |
|  | **2025** | **Volume** | **Rate** | 2024 | Volume | Rate | 2023 |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Short-term funds and loans and advances to banks** |  |  |  |  |  |  |  |
| HSBC Bank plc | **4321** | **(155)** | **(1517)** | 5993 | (887) | 679 | 6201 |
| HSBC UK Bank plc | **2493** | **(432)** | **(330)** | 3255 | (1017) | 786 | 3486 |
| The Hongkong and Shanghai Banking Corporation Limited | **2561** | **(141)** | **(548)** | 3250 | (48) | 220 | 3078 |
| HSBC Bank Middle East Limited | **464** | **28** | **18** | 418 | 40 | 24 | 354 |
| HSBC North America Holdings Inc. | **1136** | **(24)** | **(115)** | 1275 | (155) | 294 | 1136 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  | (2) | 2 |
| Grupo Financiero HSBC, S.A. de C.V. | **208** | **(21)** | **(69)** | 298 | 42 | (11) | 267 |
| Other trading entities | **957** | **(38)** | **183** | 812 | (916) | 921 | 807 |
| Holding companies, shared service centres and intra-group eliminations | **(680)** | **(105)** | **(1)** | (574) | 138 | (151) | (561) |
| **At 31 Dec** | **11460** | **(855)** | **(2412)** | 14727 | (2263) | 2220 | 14770 |
| **Loans and advances to customers** |  |  |  |  |  |  |  |
| HSBC Bank plc | **4850** | **(130)** | **(760)** | 5740 | 28 | 723 | 4989 |
| HSBC UK Bank plc | **14060** | **939** | **(55)** | 13176 | 676 | 1281 | 11219 |
| The Hongkong and Shanghai Banking Corporation Limited | **18940** | **186** | **(3050)** | 21804 | (578) | 561 | 21821 |
| HSBC Bank Middle East Limited | **1220** | **76** | **(169)** | 1313 | 50 | 34 | 1229 |
| HSBC North America Holdings Inc. | **3136** | **42** | **(309)** | 3403 | 125 | 103 | 3175 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **3299** | **(105)** | **(227)** | 3631 | 252 | (27) | 3406 |
| Other trading entities | **662** | **(100)** | **(156)** | 918 | (2512) | 1092 | 2338 |
| Holding companies, shared service centres and intra-group eliminations | **(131)** | **(58)** | **33** | (106) | 74 | 324 | (504) |
| **At 31 Dec** | **46036** | **1001** | **(4844)** | 49879 | (380) | 2586 | 47673 |
| **Reverse repurchase agreements – with banks**  |  |  |  |  |  |  |  |
| HSBC Bank plc | **2695** | **198** | **(796)** | 3293 | (1205) | 1321 | 3177 |
| HSBC UK Bank plc | **220** | **123** | **(12)** | 109 | 32 | 8 | 69 |
| The Hongkong and Shanghai Banking Corporation Limited | **2058** | **(28)** | **(298)** | 2384 | (334) | 281 | 2437 |
| HSBC Bank Middle East Limited | **267** | **71** | **(47)** | 243 | 63 | 9 | 171 |
| HSBC North America Holdings Inc. | **745** | **79** | **(174)** | 840 | 233 | (38) | 645 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **188** | **(32)** | **(61)** | 281 | 20 | 7 | 254 |
| Other trading entities | **155** | **(51)** | **(157)** | 363 | (274) | 33 | 604 |
| Holding companies, shared service centres and intra-group eliminations | **(576)** | **480** | **(223)** | (833) | 481 | (443) | (871) |
| **At 31 Dec** | **5752** | **712** | **(1640)** | 6680 | (609) | 803 | 6486 |
| **Reverse repurchase agreements – with customers** |  |  |  |  |  |  |  |
| HSBC Bank plc | **4083** | **536** | **(631)** | 4178 | 877 | 594 | 2707 |
| HSBC UK Bank plc | **629** | **221** | **(70)** | 478 | 122 | 29 | 327 |
| The Hongkong and Shanghai Banking Corporation Limited | **1491** | **301** | **(178)** | 1368 | (254) | 652 | 970 |
| HSBC Bank Middle East Limited | **146** | **24** | **(13)** | 135 | 11 | 11 | 113 |
| HSBC North America Holdings Inc. | **4495** | **212** | **(568)** | 4851 | 865 | 230 | 3756 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  | (2) | 2 |
| Grupo Financiero HSBC, S.A. de C.V. | **21** | **—** | **(11)** | 32 | 1 |  | 31 |
| Other trading entities | **—** | **—** | **—** |  |  |  |  |
| Holding companies, shared service centres and intra-group eliminations | **(1)** | **(1)** | **1** | (1) | (1) | 1 | (1) |
| **At 31 Dec** | **10864** | **1442** | **(1619)** | 11041 | 645 | 2491 | 7905 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **82** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Interest income (continued) | Interest income (continued) | Interest income (continued) | Interest income (continued) | Interest income (continued) | Interest income (continued) | Interest income (continued) | Interest income (continued) |
|  |  | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** |  | Increase/(decrease) <br>in 2024 compared <br>with 2023 | Increase/(decrease) <br>in 2024 compared <br>with 2023 |  |
|  | **2025** | **Volume** | **Rate** | 2024 | Volume | Rate | 2023 |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Financial investments** |  |  |  |  |  |  |  |
| HSBC Bank plc | **3025** | **330** | **(318)** | 3013 | 835 | 312 | 1866 |
| HSBC UK Bank plc | **2157** | **534** | **(222)** | 1845 | 630 | 324 | 891 |
| The Hongkong and Shanghai Banking Corporation Limited | **10934** | **1368** | **(1457)** | 11023 | 1345 | 1014 | 8664 |
| HSBC Bank Middle East Limited | **591** | **74** | **(48)** | 565 | 49 | 65 | 451 |
| HSBC North America Holdings Inc. | **2085** | **210** | **(70)** | 1945 | 179 | 132 | 1634 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **577** | **142** | **(46)** | 481 | 103 | 87 | 291 |
| Other trading entities | **759** | **153** | **(196)** | 802 | (1834) | 728 | 1908 |
| Holding companies, shared service centres and intra-group eliminations | **702** | **(49)** | **(162)** | 913 | (126) | (114) | 1153 |
| **At 31 Dec** | **20830** | **2688** | **(2445)** | 20587 | 2751 | 978 | 16858 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Interest expense | Interest expense | Interest expense | Interest expense | Interest expense | Interest expense | Interest expense | Interest expense |
|  |  | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** |  | Increase/(decrease) <br>in 2024 compared <br>with 2023 | Increase/(decrease) <br>in 2024 compared <br>with 2023 |  |
|  | **2025** | **Volume** | **Rate** | 2024 | Volume | Rate | 2023 |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Deposits by banks** |  |  |  |  |  |  |  |
| HSBC Bank plc | **1236** | **210** | **(350)** | 1376 | 160 | 79 | 1137 |
| HSBC UK Bank plc | **602** | **(35)** | **(106)** | 743 | 20 | 107 | 616 |
| The Hongkong and Shanghai Banking Corporation Limited | **532** | **27** | **(106)** | 611 | 52 | 52 | 507 |
| HSBC Bank Middle East Limited | **355** | **84** | **(32)** | 303 | 83 | 20 | 200 |
| HSBC North America Holdings Inc. | **345** | **96** | **(80)** | 329 | 32 | (18) | 315 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  | (6) | 6 |
| Grupo Financiero HSBC, S.A. de C.V. | **53** | **(8)** | **(13)** | 74 | 12 | (39) | 101 |
| Other trading entities | **161** | **63** | **52** | 46 | (122) | 137 | 31 |
| Holding companies, shared service centres and intra-group eliminations | **(671)** | **(96)** | **(23)** | (552) | (7) | (33) | (512) |
| **At 31 Dec** | **2613** | **334** | **(651)** | 2930 | 269 | 260 | 2401 |
| **Customer accounts** |  |  |  |  |  |  |  |
| HSBC Bank plc | **8778** | **579** | **(2554)** | 10753 | 1134 | 1108 | 8511 |
| HSBC UK Bank plc | **5863** | **489** | **(782)** | 6156 | 225 | 1399 | 4532 |
| The Hongkong and Shanghai Banking Corporation Limited | **14024** | **946** | **(4576)** | 17654 | 882 | 2249 | 14523 |
| HSBC Bank Middle East Limited | **520** | **110** | **(110)** | 520 | 61 | 77 | 382 |
| HSBC North America Holdings Inc. | **2627** | **63** | **(466)** | 3030 | 51 | 248 | 2731 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **1135** | **(48)** | **(372)** | 1555 | (2) | 68 | 1489 |
| Other trading entities | **828** | **(188)** | **4** | 1012 | (3094) | 1710 | 2396 |
| Holding companies, shared service centres and intra-group eliminations | **(486)** | **(48)** | **69** | (507) | (115) | 10 | (402) |
| **At 31 Dec** | **33289** | **2263** | **(9147)** | 40173 | 1473 | 4538 | 34162 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **83** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Interest expense (continued) | Interest expense (continued) | Interest expense (continued) | Interest expense (continued) | Interest expense (continued) | Interest expense (continued) | Interest expense (continued) | Interest expense (continued) |
|  |  | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** | **Increase/(decrease)** <br>**in 2025 compared** <br>**with 2024** |  | Increase/(decrease) <br>in 2024 compared <br>with 2023 | Increase/(decrease) <br>in 2024 compared <br>with 2023 |  |
|  | **2025** | **Volume** | **Rate** | 2024 | Volume | Rate | 2023 |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Repurchase agreements – with banks** |  |  |  |  |  |  |  |
| HSBC Bank plc | **1615** | **(320)** | **(277)** | 2212 | (511) | 808 | 1915 |
| HSBC UK Bank plc | **123** | **102** | **(2)** | 23 | (25) | 14 | 34 |
| The Hongkong and Shanghai Banking Corporation Limited | **2293** | **222** | **(569)** | 2640 | 758 | 514 | 1368 |
| HSBC Bank Middle East Limited | **198** | **54** | **(34)** | 178 | 70 | 9 | 99 |
| HSBC North America Holdings Inc. | **604** | **67** | **(118)** | 655 | 296 | (85) | 444 |
| HSBC Bank Canada | **—** | **—** | **—** |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **156** | **139** | **(8)** | 25 | (16) | 5 | 36 |
| Other trading entities | **7** | **1** | **(37)** | 43 | (61) | (10) | 114 |
| Holding companies, shared service centres and intra-group eliminations | **(614)** | **96** | **171** | (881) | 309 | (181) | (1009) |
| **At 31 Dec** | **4382** | **594** | **(1107)** | 4895 | 1621 | 273 | 3001 |
| **Repurchase agreements – with customers** |  |  |  |  |  |  |  |
| HSBC Bank plc | **3721** | **(342)** | **(27)** | 4090 | 929 | 647 | 2514 |
| HSBC UK Bank plc | **251** | **(53)** | **31** | 273 | (382) | 227 | 428 |
| The Hongkong and Shanghai Banking Corporation Limited | **549** | **(276)** | **(283)** | 1108 | (12) | 126 | 994 |
| HSBC Bank Middle East Limited | **0.4** | **(0.6)** | **—** | 1 | 1 |  |  |
| HSBC North America Holdings Inc. | **4360** | **44** | **(505)** | 4821 | 1249 | 34 | 3538 |
| HSBC Bank Canada | **—** | **(13)** | **—** | 13 | (15) | 3 | 25 |
| Grupo Financiero HSBC, S.A. de C.V. | **365** | **54** | **(104)** | 415 | 45 | (12) | 382 |
| Other trading entities | **—** | **(1)** | **—** | 1 |  |  | 1 |
| Holding companies, shared service centres and intra-group eliminations | **0.6** | **(0.2)** | **0.8** |  |  | 25 | (25) |
| **At 31 Dec** | **9247** | **(921)** | **(554)** | 10722 | 1537 | 1328 | 7857 |
| **Debt securities in issue – non trading** |  |  |  |  |  |  |  |
| HSBC Bank plc | **1909** | **(2)** | **(625)** | 2536 | 512 | 137 | 1887 |
| HSBC UK Bank plc | **1334** | **149** | **(172)** | 1357 | 230 | 368 | 759 |
| The Hongkong and Shanghai Banking Corporation Limited | **2305** | **(159)** | **(308)** | 2772 | (210) | 166 | 2816 |
| HSBC Bank Middle East Limited | **89** | **19** | **3** | 67 | (12) | 6 | 73 |
| HSBC North America Holdings Inc. | **1408** | **(84)** | **(202)** | 1694 | 167 | 22 | 1505 |
| HSBC Bank Canada | **—** | **(12)** | **—** | 12 | (37) | (2) | 51 |
| Grupo Financiero HSBC, S.A. de C.V. | **334** | **25** | **(44)** | 353 | 178 | 83 | 92 |
| Other trading entities | **150** | **(24)** | **32** | 142 | (3) | (10) | 155 |
| Holding companies, shared service centres and intra-group eliminations | **3318** | **213** | **(768)** | 3873 | (147) | 135 | 3885 |
| **At 31 Dec** | **10847** | **104** | **(2063)** | 12806 | 751 | 832 | 11223 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **84** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Loan maturity and interest sensitivity analysis

The analysis of loan maturity and interest sensitivity is presented for

loans where repayment is expected to occur on a contractual

repayment basis (presented within Loans and advances to banks and

Loans and advances to customers on our balance sheet). Loans that

have been re-classified to Assets held for sale are excluded as recovery

is expected from sale proceeds within the next 12 months rather than

individual contractual repayment terms. The analysis of loan maturity

and interest sensitivity by loan type on a contractual repayment basis

was as follows.

---

| | | |
|:---|:---|:---|
|  | **Total** | Total |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Maturity of 1 year or less** |  |  |
| Loans and advances to banks | **101823** | 97156 |
| Loans and advances to customers | **361354** | 341022 |
|  | **463177** | 438178 |
| **Maturity after 1 year but within 5 years** |  |  |
| Loans and advances to banks | **5968** | 4513 |
| Loans and advances to customers | **285116** | 268427 |
|  | **291084** | 272940 |
| **Interest rate sensitivity of loans and advances to banks** |  |  |
| Fixed interest rate | **1937** | 1217 |
| Variable interest rate | **4031** | 3296 |
|  | **5968** | 4513 |
| **Interest rate sensitivity of loans and advances to customers** |  |  |
| Fixed interest rate | **66999** | 60088 |
| Variable interest rate | **218117** | 208339 |
|  | **285116** | 268427 |
| **Maturity after 5 years but within 15 years** |  |  |
| Loans and advances to banks | **678** | 383 |
| Loans and advances to customers | **177571** | 164603 |
|  | **178249** | 164986 |
| **Interest rate sensitivity of loans and advances to banks** |  |  |
| Fixed interest rate | **678** | 333 |
| Variable interest rate | **—** | 50 |
|  | **678** | 383 |
| **Interest rate sensitivity of loans and advances to customers** |  |  |
| Fixed interest rate | **77525** | 69464 |
| Variable interest rate | **100045** | 95139 |
|  | **177570** | 164603 |
| **Maturity after 15 years** |  |  |
| Loans and advances to banks | **—** |  |
| Loans and advances to customers | **175050** | 166321 |
|  | **175050** | 166321 |
| **Interest rate sensitivity of loans and advances to banks** |  |  |
| Fixed interest rate | **—** |  |
| Variable interest rate | **—** |  |
|  | **—** |  |
| **Interest rate sensitivity of loans and advances to customers** |  |  |
| Fixed interest rate | **83388** | 76945 |
| Variable interest rate | **91662** | 89376 |
|  | **175050** | 166321 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **85** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Deposits

The following tables summarise the average amount of bank deposits,

customer deposits and certificates of deposit ('CDs') and other money

market instruments (that are included within 'Debt securities in issue'

in the balance sheet), together with the average interest rates paid

thereon for each of the past two years.

The analysis of average deposits by legal entity is based on the legal

entity in which the deposits are recorded and excludes balances with

HSBC companies.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Deposits by banks |  |  |  |  |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Average**<br>**rate**<br>| Average<br>balance<br>| Average<br>rate<br>|
|  | **$m** | **%** | $m | % |
| **HSBC UK Bank plc** | **12498** | **—** | 13243 |  |
| – demand and other – non-interest bearing | **13** | **—** | 31 |  |
| – demand – interest bearing  | **30** | **4.5** | 11 | 2.7 |
| – time  | **12455** | **4.8** | 13201 | 5.5 |
| – other | **—** | **—** |  |  |
| **HSBC Bank plc** | **40789** | **—** | 33104 |  |
| – demand and other – non-interest bearing | **8031** | **—** | 6159 |  |
| – demand – interest bearing  | **23186** | **3.4** | 18384 | 4.9 |
| – time  | **8145** | **3.5** | 8197 | 3.9 |
| – other | **1427** | **—** | 364 |  |
| **The Hongkong and Shanghai Banking Corporation Limited** | **22932** | **—** | 21785 |  |
| – demand and other – non-interest bearing  | **3480** | **—** | 3412 |  |
| – demand – interest bearing  | **15211** | **2.1** | 13326 | 2.3 |
| – time  | **4236** | **3.8** | 5035 | 5.0 |
| – other  | **5** | **—** | 12 |  |
| **HSBC Bank Middle East Limited** | **3333** | **—** | 2566 |  |
| – demand and other – non-interest bearing  | **113** | **—** | 101 |  |
| – demand – interest bearing  | **744** | **0.9** | 721 | 0.6 |
| – time  | **2401** | **5.2** | 1665 | 5.9 |
| – other  | **75** | **—** | 79 |  |
| **HSBC North America Holdings Inc.** | **7837** | **—** | 5449 |  |
| – demand and other – non-interest bearing  | **706** | **—** | 942 |  |
| – demand – interest bearing  | **6471** | **3.7** | 4271 | 4.8 |
| – time  | **660** | **4.1** | 236 | 5.5 |
| – other  | **—** | **—** |  |  |
| **Grupo Financiero HSBC, S.A. de C.V** | **575** | **—** | 662 |  |
| – demand and other – non-interest bearing  | **13** | **—** | 14 |  |
| – demand – interest bearing  | **45** | **8.4** | 34 | 11.8 |
| – time  | **517** | **9.0** | 614 | 10.7 |
| – other  | **—** | **—** |  |  |
| **Other trading entities** | **489** | **—** | 271 |  |
| – demand and other – non-interest bearing  | **16** | **—** | 16 |  |
| – demand – interest bearing  | **2** | **1.5** | 13 | 7.7 |
| – time  | **471** | **4.1** | 242 | 10.7 |
| – other  | **—** | **—** |  |  |
| **Total** | **88453** | **3.0** | 77080 | 3.8 |
| – demand and other – non-interest bearing | **12372** | **—** | 10675 |  |
| – demand – interest bearing  | **45689** | **3.0** | 36760 | 3.9 |
| – time  | **28885** | **4.4** | 29190 | 5.1 |
| – other  | **1507** | **—** | 455 |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **86** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Customer accounts | Customer accounts | Customer accounts | Customer accounts | Customer accounts |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Average**<br>**balance**<br>| **Average**<br>**rate**<br>| Average<br>balance<br>| Average<br>rate<br>|
|  | **$m** | **%** | $m | % |
| **HSBC UK Bank plc** | **356138** | **—** | 336151 |  |
| – demand and other – non-interest bearing | **56526** | **—** | 58672 |  |
| – demand – interest bearing | **255665** | **1.6** | 224061 | 1.9 |
| – savings | **30936** | **3.4** | 39915 | 3.0 |
| – time | **13011** | **3.4** | 13473 | 4.3 |
| – other | **—** | **0.5** | 30 | 3.3 |
| **HSBC Bank plc** | **311416** | **—** | 297942 |  |
| – demand and other – non-interest bearing | **43164** | **—** | 49569 |  |
| – demand – interest bearing | **174895** | **3.3** | 164360 | 4.2 |
| – savings | **58187** | **2.7** | 49037 | 3.3 |
| – time | **35061** | **4.0** | 34976 | 5.1 |
| – other | **109** | **3.1** |  |  |
| **The Hongkong and Shanghai Banking Corporation Limited** | **866221** | **—** | 805694 |  |
| – demand and other – non-interest bearing | **73600** | **—** | 68539 |  |
| – demand – interest bearing | **465021** | **0.7** | 416431 | 1.0 |
| – savings | **318953** | **3.3** | 311870 | 4.1 |
| – time | **8643** | **3.6** | 8704 | 4.9 |
| – other | **4** | **3.3** | 150 |  |
| **HSBC Bank Middle East Limited** | **35832** | **—** | 33470 |  |
| – demand and other – non-interest bearing | **17184** | **—** | 18761 |  |
| – demand – interest bearing | **10102** | **2.0** | 6372 | 2.4 |
| – savings | **7451** | **3.7** | 7186 | 4.2 |
| – time | **1095** | **4.6** | 1151 | 5.6 |
| – other | **—** | **—** |  |  |
| **HSBC North America Holdings Inc.** | **97508** | **—** | 95893 |  |
| – demand and other – non-interest bearing | **17066** | **—** | 17409 |  |
| – demand – interest bearing | **37156** | **3.2** | 34270 | 3.7 |
| – savings | **43286** | **3.3** | 44214 | 4.0 |
| – time | **—** | **—** |  |  |
| – other | **—** | **—** |  |  |
| **Grupo Financiero HSBC, S.A. de C.V.** | **28009** | **4.1** | 29311 | 5.3 |
| – demand and other – non-interest bearing | **6330** | **—** | 6738 |  |
| – demand – interest bearing | **13432** | **4.2** | 13881 | 5.6 |
| – savings | **—** | **—** |  |  |
| – time | **8247** | **6.9** | 8692 | 8.9 |
| – other | **—** | **—** |  |  |
| **Other trading entities** | **10442** | **8.0** | 11504 | 12.8 |
| – demand and other – non-interest bearing  | **4664** | **—** | 4438 |  |
| – demand – interest bearing  | **1374** | **1.2** | 2252 | 8.0 |
| – savings | **4183** | **19.2** | 4060 | 30.9 |
| – time  | **221** | **7.1** | 754 | 5.6 |
| – other  | **—** | **—** |  |  |
| **Total** | **1705566** | **2.0** | 1609965 | 2.6 |
| – demand and other – non-interest bearing | **218534** | **—** | 224126 |  |
| – demand – interest bearing | **957645** | **1.6** | 861627 | 2.1 |
| – savings | **462996** | **3.4** | 456282 | 4.3 |
| – time | **66278** | **4.2** | 67750 | 5.4 |
| – other | **113** | **3.7** | 180 | 2.2 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **87** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Financial summary |  |  |  |  |

---

Net charge-offs to average loans

The following table provides the net charge-offs to average loans for

loans and advances to banks and customers.

---

| | | |
|:---|:---|:---|
| Net charge-offs to average loans | Net charge-offs to average loans | Net charge-offs to average loans |
|  | **2025** | 2024 |
|  | **%** | % |
| Loans and advances to banks | **—** |  |
| Loans and advances to customers | **0.33** | 0.44 |

---

Allowances for credit losses to total loans are presented in Summary of

credit risk (excluding debt instruments measured at FVOCI) by stage

distribution and ECL coverage by industry sector at page 145.

Estimate of uninsured deposits and

uninsured time deposits

HSBC provides deposit services to customers across the many

countries in which we operate and are therefore subject to differing

national and state deposit insurance regimes. Uninsured deposits are

presented on an estimated basis using the same methodologies and

assumptions inherent in our liquidity reporting requirements to our

primary regulator, the Prudential Regulation Authority.

The insured status of a deposit is determined on the basis of individual

insurance limits enacted within local regulations.

At 31 December 2025, the amount of uninsured deposits was $1.4tn

(31 December 2024: $1.3tn).

Uninsured time deposits are uninsured deposits which are subject to

contractual maturity requirements prior to withdrawal. Amounts are

presented on a residual contractual maturity basis and exclude

overnight deposits where contractual requirements are imminently

satisfied.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Maturity analysis of uninsured time deposits | Maturity analysis of uninsured time deposits | Maturity analysis of uninsured time deposits | Maturity analysis of uninsured time deposits | Maturity analysis of uninsured time deposits | Maturity analysis of uninsured time deposits |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **3 months or** <br>**less**<br>| **After 3 months** <br>**but within 6** <br>**months**<br>| **After 6 months** <br>**but within 12** <br>**months**<br>| **After** <br>**12 months**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Uninsured time deposits** | **294755** | **15139** | **8416** | **6340** | **324650** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
| Uninsured time deposits | 262,268 | 20,540 | 9,433 | 4,783 | 297,024 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **88** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Business segments and legal entities

Basis of preparation

Business segments

Our business segments – Hong Kong, UK, Corporate and Institutional

Banking, and International Wealth and Premier Banking – along with

Corporate Centre, are our reportable segments under IFRS 8 'Operating

Segments'. Reconciliations of the total constant currency business

segment results to the Group's reported results are presented on

The Group Operating Committee is considered the Chief Operating

Decision Maker ('CODM') for the purposes of identifying the Group's

reportable segments. Business segment results are assessed by the

CODM on the basis of constant currency performance. We separately

disclose 'notable items', as described on page 65.

Our operations are closely integrated and, accordingly, the presentation

of data includes internal allocations of certain items of income and

expense. These allocations include the costs of certain support services

and global infrastructures to the extent that they can be meaningfully

attributed to business segments. While such allocations have been

made on a systematic and consistent basis, they involve a certain

degree of subjectivity. Costs that are not allocated to business

segments are included in Corporate Centre.

Where relevant, income and expense amounts presented include the

results of inter-segment funding along with inter-company and inter-

business line transactions. All such transactions are undertaken on

arm's length terms. The intra-Group elimination items for business

segments are presented in Corporate Centre.

Effective 1 January 2026, we have transitioned certain clients, primarily

from Hong Kong and the UK to the Corporate and Institutional Banking

segment to better serve their specific needs. Such transition did not

involve a change in our reportable segments.

Legal entities

The results of main legal entities are presented on a reported and

constant currency basis, including HSBC UK Bank plc, HSBC Bank plc,

The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank

Middle East Limited, HSBC North America Holdings Inc., and Grupo

Financiero HSBC, S.A. de C.V.

HSBC Holdings incurs the liability of the UK bank levy, with the cost

being recharged to its UK operating subsidiaries. The current year

expense will be reflected in the fourth quarter as it is assessed on our

balance sheet position as at 31 December.

The results of legal entities are presented on a reported basis on

page <u>[95](#i866499906cd64e0199d2c5a630a09ec1_271)</u> and a constant currency basis on page <u>[97](#i866499906cd64e0199d2c5a630a09ec1_274)</u>.

Supplementary analysis of constant currency results and notable items by business

segment

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results |  |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Revenue | **15878** | **12938** | **27637** | **14520** | **(2699)** | **68274** |
| ECL | **(1476)** | **(696)** | **(696)** | **(892)** | **(90)** | **(3850)** |
| Operating expenses | **(4826)** | **(5537)** | **(15556)** | **(9285)** | **(1224)** | **(36428)** |
| Share of profit in associates and joint ventures | **—** | **—** | **1** | **24** | **1886** | **1911** |
| **Profit/(loss) before tax** | **9576** | **6705** | **11386** | **4367** | **(2127)** | **29907** |
| Loans and advances to customers (net) | **229491** | **303698** | **305022** | **150047** | **141** | **988399** |
| Customer accounts | **543381** | **364323** | **597719** | **281058** | **347** | **1786828** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Notable items | Notable items | Notable items | Notable items | Notable items | Notable items | Notable items |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Notable items** |  |  |  |  |  |  |
| **Revenue** |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs<sup>1</sup> | **—** | **—** | **(9)** | **(73)** | **(1560)** | **(1642)** |
| Dilution loss of interest in BoCom associate<sup>2</sup> | **—** | **—** | **—** | **—** | **(1104)** | **(1104)** |
| **Operating expenses** |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **—** | **1** | **(290)** | **(83)** | **(130)** | **(502)** |
| Restructuring and other related costs<sup>3</sup> | **(16)** | **(70)** | **(348)** | **(161)** | **(435)** | **(1030)** |
| Legal provisions<sup>4</sup> | **—** | **—** | **(322)** | **—** | **(1110)** | **(1432)** |
| **Impairment loss of interest in BoCom associate**<sup>2</sup> | **—** | **—** | **—** | **—** | **(1000)** | **(1000)** |

---

1Amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of

its sale to a consortium comprising Rothesay Life plc and CCF.

2 Amounts include a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn

impairment loss following an impairment test on the carrying value of the Group's investment in BoCom in 'Impairment loss of interest in BoCom associate'. See

Note 18 on pages 345 to 348.

3Amounts include a $1.0bn organisational simplification provision recognised in 2025.

4 Amounts include a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff

Investment Securities LLC fraud and a $0.3bn provision in connection with certain historical trading activities in HSBC Bank plc.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **89** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | Hong<br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |
| – Reported | 15034 | 11954 | 26819 | 13976 | (1929) | 65854 |
| – Currency translation | 13 | 388 | (47) | (159) | (40) | 155 |
| – Constant currency | 15047 | 12342 | 26772 | 13817 | (1969) | 66009 |
| ECL |  |  |  |  |  |  |
| – Reported | (1076) | (402) | (869) | (1038) | (29) | (3414) |
| – Currency translation | (1) | (13) | (9) | 45 |  | 22 |
| – Constant currency | (1077) | (415) | (878) | (993) | (29) | (3392) |
| Operating expenses |  |  |  |  |  |  |
| – Reported | (4837) | (4947) | (14544) | (9013) | 298 | (33043) |
| – Currency translation | (4) | (157) | (68) | 113 | 13 | (103) |
| – Constant currency | (4841) | (5104) | (14612) | (8900) | 311 | (33146) |
| Share of profit/(loss) in associates and joint ventures |  |  |  |  |  |  |
| – Reported |  |  | 1 | 47 | 2864 | 2912 |
| – Currency translation |  |  |  | (2) | 3 | 1 |
| – Constant currency |  |  | 1 | 45 | 2867 | 2913 |
| Profit/(loss) before tax |  |  |  |  |  |  |
| – Reported | 9121 | 6605 | 11407 | 3972 | 1204 | 32309 |
| – Currency translation | 8 | 218 | (124) | (3) | (24) | 75 |
| – Constant currency | 9129 | 6823 | 11283 | 3969 | 1180 | 32384 |
| Loans and advances to customers (net) |  |  |  |  |  |  |
| – Reported | 235208 | 267293 | 284701 | 136325 | 7131 | 930658 |
| – Currency translation | (155) | 18485 | 13176 | 7702 | 912 | 40120 |
| – Constant currency | 235053 | 285778 | 297877 | 144027 | 8043 | 970778 |
| Customer accounts |  |  |  |  |  |  |
| – Reported | 507389 | 330012 | 557796 | 259443 | 315 | 1654955 |
| – Currency translation | (832) | 22821 | 30130 | 12145 | 21 | 64285 |
| – Constant currency | 506557 | 352833 | 587926 | 271588 | 336 | 1719240 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | Hong<br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | $m | $m | $m | $m | $m | $m |
| Notable items |  |  |  |  |  |  |
| Revenue |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs<sup>1</sup> |  |  | (14) | 28 | (1357) | (1343) |
| Early redemption of legacy securities |  |  |  |  | (237) | (237) |
| Operating expenses |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs |  | 6 | (10) | (3) | (192) | (199) |
| Restructuring and other related costs<sup>2</sup> |  | 7 | (2) | (14) | (25) | (34) |

---

1Amounts include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of

our business in Argentina, partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign exchange

hedging of the sale proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.

2Amounts include organisational simplification provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **90** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) | Reconciliation of reported results to constant currency results – business segments (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | Hong<br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |
| – Reported | 14476 | 12690 | 25762 | 13329 | (199) | 66058 |
| – Currency translation | 56 | 749 | (1039) | (944) | 160 | (1018) |
| – Constant currency | 14532 | 13439 | 24723 | 12385 | (39) | 65040 |
| ECL |  |  |  |  |  |  |
| – Reported | (1488) | (516) | (601) | (841) | (1) | (3447) |
| – Currency translation | (6) | (29) | 77 | 155 |  | 197 |
| – Constant currency | (1494) | (545) | (524) | (686) | (1) | (3250) |
| Operating expenses |  |  |  |  |  |  |
| – Reported | (4499) | (4551) | (14005) | (9072) | 57 | (32070) |
| – Currency translation | (15) | (278) | 250 | 523 | (101) | 379 |
| – Constant currency | (4514) | (4829) | (13755) | (8549) | (44) | (31691) |
| Share of profit/(loss) in associates and joint ventures |  |  |  |  |  |  |
| – Reported |  |  | (1) | 65 | (257) | (193) |
| – Currency translation |  |  |  | (3) | (101) | (104) |
| – Constant currency |  |  | (1) | 62 | (358) | (297) |
| Profit/(loss) before tax |  |  |  |  |  |  |
| – Reported | 8489 | 7623 | 11155 | 3481 | (400) | 30348 |
| – Currency translation | 35 | 442 | (712) | (269) | (42) | (546) |
| – Constant currency | 8524 | 8065 | 10443 | 3212 | (442) | 29802 |
| Loans and advances to customers (net) |  |  |  |  |  |  |
| – Reported | 239218 | 264544 | 288351 | 146155 | 267 | 938535 |
| – Currency translation | 955 | 13681 | 1876 | 650 | 9 | 17171 |
| – Constant currency | 240173 | 278225 | 290227 | 146805 | 276 | 955706 |
| Customer accounts |  |  |  |  |  |  |
| – Reported | 485039 | 330480 | 539139 | 256393 | 596 | 1611647 |
| – Currency translation | 1834 | 17090 | 9136 | 1271 | 22 | 29353 |
| – Constant currency | 486873 | 347570 | 548275 | 257664 | 618 | 1641000 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) | Notable items (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | Hong<br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | $m | $m | $m | $m | $m | $m |
| Notable items |  |  |  |  |  |  |
| Revenue |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs<sup>1,2,3</sup> |  | 1591 |  | 4 | (297) | 1298 |
| Fair value movements on financial instruments<sup>4</sup> |  |  |  |  | 14 | 14 |
| Disposal losses on Markets Treasury repositioning | (373) | (142) | (371) | (91) |  | (977) |
| Operating expenses |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs |  | (45) | (7) | (53) | (216) | (321) |
| Restructuring and other related costs<sup>5</sup> |  | 17 | 45 | 11 | 63 | 136 |
| Impairment loss of interest in BoCom associate<sup>6</sup> |  |  |  |  | (3000) | (3000) |

---

1Amounts include impact of the sale of our retail banking operations in France.

2Amounts include the gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3Amounts include fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.

4Amounts relate to fair value movements on non-qualifying hedges in HSBC Holdings.

5Amounts relate to reversals of restructuring provisions recognised during 2022.

6Amounts relate to an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **91** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

Fee and other income supplementary analysis

The following table presents an analysis of the components of fee and other income by business segment.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| Net fee income | **2776** | **1804** | **4489** | **4263** | **11** | **13343** |
| Net income from financial instruments held for trading or managed <br>on a fair value basis<br>| **622** | **(25)** | **7660** | **678** | **10747** | **19682** |
| Insurance revenue<sup>1</sup> | **89** | **—** | **—** | **1756** | **(42)** | **1803** |
| Gain less impairment relating to sale of business operations | **—** | **—** | **(15)** | **(31)** | **(1)** | **(47)** |
| Other operating (expense)/income | **309** | **63** | **971** | **458** | **(3102)** | **(1301)** |
| **Total** | **3796** | **1842** | **13105** | **7124** | **7613** | **33480** |
| Banking book funding costs used to generate 'net income from <br>financial instruments held for trading or managed on a fair value <br>basis'<br>| **—** | **—** | **—** | **—** | **(9686)** | **(9686)** |
| Third-party net interest income from insurance | **—** | **—** | **—** | **396** | **—** | **396** |
| Notable items | **—** | **—** | **9** | **73** | **2664** | **2746** |
| **Fee and other income** | **3796** | **1842** | **13114** | **7593** | **591** | **26936** |
| **Supplementary management view of fee and other income -** <br>**on a constant currency basis** <br>|  |  |  |  |  |  |
| Wholesale Transaction Banking | **730** | **891** | **9239** | **—** | **—** | **10860** |
| –Global Foreign Exchange | **183** | **166** | **5345** | **—** | **—** | **5694** |
| –Global Payments Solutions | **343** | **534** | **1417** | **—** | **—** | **2294** |
| –Global Trade Solutions | **204** | **191** | **1067** | **—** | **—** | **1462** |
| –Securities Services | **—** | **—** | **1410** | **—** | **—** | **1410** |
| Wealth | **2206** | **339** | **—** | **6845** | **—** | **9390** |
| –Investment Distribution | **2124** | **335** | **—** | **1165** | **—** | **3624** |
| –Insurance<sup>1</sup> | **82** | **4** | **—** | **2513** | **—** | **2599** |
| –Asset Management | **—** | **—** | **—** | **1500** | **—** | **1500** |
| –Private Bank | **—** | **—** | **—** | **1667** | **—** | **1667** |
| Investment Banking, Debt and Equity Markets | **—** | **—** | **3245** | **—** | **—** | **3245** |
| Retail Banking  | **326** | **255** | **—** | **665** | **—** | **1246** |
| Wholesale Credit and Lending | **78** | **238** | **567** | **—** | **—** | **883** |
| Other | **456** | **119** | **63** | **83** | **591** | **1312** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| Net fee income | 2305 | 1821 | 4345 | 3857 | (27) | 12301 |
| Net income from financial instruments held for trading or managed <br>on a fair value basis<br>| 390 | 13 | 7304 | 517 | 12892 | 21116 |
| Insurance revenue<sup>1</sup> | 27 |  |  | 1209 | (3) | 1233 |
| Gain less impairment relating to sale of business operations |  |  | (26) | (3) | (1723) | (1752) |
| Other operating (expense)/income | 325 | 91 | 422 | 85 | (700) | 223 |
| Total | 3047 | 1925 | 12045 | 5665 | 10439 | 33121 |
| Banking book funding costs used to generate 'net income from <br>financial instruments held for trading or managed on a fair value <br>basis'<br>|  |  |  |  | (11434) | (11434) |
| Third-party net interest income from insurance |  |  |  | 429 |  | 429 |
| Notable items |  |  | 14 | (28) | 1357 | 1343 |
| Currency translation | 3 | 62 | 208 | 85 | (11) | 347 |
| Fee and other income | 3050 | 1987 | 12267 | 6151 | 351 | 23806 |
| Supplementary management view of fee and other income - on a <br>constant currency basis<br>|  |  |  |  |  |  |
| Wholesale Transaction Banking | 709 | 912 | 8847 |  |  | 10468 |
| –Global Foreign Exchange | 180 | 165 | 5096 |  |  | 5441 |
| –Global Payments Solutions | 326 | 552 | 1383 |  |  | 2261 |
| –Global Trade Solutions | 203 | 195 | 1059 |  |  | 1457 |
| –Securities Services |  |  | 1309 |  |  | 1309 |
| Wealth | 1577 | 391 |  | 5618 |  | 7586 |
| –Investment Distribution | 1535 | 384 |  | 938 |  | 2857 |
| –Insurance<sup>1</sup> | 42 | 7 |  | 1864 |  | 1913 |
| –Asset Management |  |  |  | 1373 |  | 1373 |
| –Private Bank |  |  |  | 1443 |  | 1443 |
| Investment Banking, Debt and Equity Markets |  |  | 3198 |  |  | 3198 |
| Retail Banking  | 312 | 273 |  | 765 |  | 1350 |
| Wholesale Credit and Lending | 83 | 216 | 626 |  |  | 925 |
| Other | 369 | 195 | (404) | (232) | 351 | 279 |

---

1Includes Group 'net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss',

'insurance finance expense' and 'insurance service result'.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **92** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

Strategic transactions supplementary analysis

The following table presents the selected impacts of strategic transactions on the Group and our business segments for transactions that are

classified as material notable items. See page <u>[65](#i866499906cd64e0199d2c5a630a09ec1_10)</u> for further information on material notable items and the impact of strategic transactions.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results | Constant currency results |
|  |  |  |  | **of which** | **of which** | **of which** | **of which** | **of which** |
|  | **2025** | 2024 | **Variance** <br>**2025 vs. 2024**<br>| **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>|
|  | **$m** | $m | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Revenue | **(1642)** | 39 | **(1681)** | **—** | **—** | **(638)** | **(590)** | **(453)** |
| – distorting impact of operating <br>results<br>| **—** | 1214 | **(1214)** | **—** | **—** | **(629)** | **(491)** | **(94)** |
| – notable items | **(1642)** | (1175) | **(467)** | **—** | **—** | **(9)** | **(99)** | **(359)** |
| ECL | **—** | (72) | **72** | **—** | **—** | **36** | **36** | **—** |
| Operating expenses | **(502)** | (919) | **417** | **—** | **(7)** | **96** | **253** | **75** |
| – distorting impact of operating <br>results<br>| **—** | (729) | **729** | **—** | **—** | **381** | **336** | **12** |
| – notable items | **(502)** | (190) | **(312)** | **—** | **(7)** | **(285)** | **(83)** | **63** |
| Share of profit in associates and <br>joint ventures<br>| **—** |  | **—** | **—** | **—** | **—** | **—** | **—** |
| **Profit before tax** | **(2144)** | (952) | **(1192)** | **—** | **(7)** | **(506)** | **(301)** | **(378)** |
| – distorting impact of operating <br>results<br>| **—** | 413 | **(413)** | **—** | **—** | **(212)** | **(119)** | **(82)** |
| – notable items | **(2144)** | (1365) | **(779)** | **—** | **(7)** | **(294)** | **(182)** | **(296)** |
| **Profit before tax**<sup>1</sup> |  |  |  |  |  |  |  |  |
| – business in Argentina | **(107)** | (5990) | **5883** | **—** | **—** | **(160)** | **(14)** | **6057** |
| – banking business in Canada | **(3)** | 4980 | **(4983)** | **—** | **—** | **(143)** | **(67)** | **(4773)** |
| – wind-down of M&A and ECM <br>in the UK, Europe and US<br>| **(114)** | (98) | **(16)** | **—** | **—** | **(16)** | **—** | **—** |
| – France life insurance business | **(231)** | (6) | **(225)** | **—** | **—** | **—** | **(214)** | **(11)** |
| – retained French portfolio of <br>home and certain other loans<br>| **(1468)** | 91 | **(1559)** | **—** | **—** | **—** | **—** | **(1559)** |
| – Germany private banking <br>business<br>| **142** | 13 | **129** | **—** | **—** | **—** | **134** | **(5)** |
| – other strategic transactions | **(363)** | 58 | **(421)** | **—** | **(7)** | **(187)** | **(140)** | **(87)** |

---

1Represents the impact on profit before tax due to strategic transactions, inclusive of the notable items impacts and the distorting impact of operating results.

This does not represent the profit before tax of each disposed business. In the case of wind-downs, there may be timing differences between the recognition of

operating cost impacts and operating revenue impacts. These would arise in the event there is a timing lag between the impact of cost actions and the resultant

impact on operating revenue.

Reconciliation of reported and constant currency risk-weighted assets

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate** <br>**Centre**<br>| **Total**<br>**RWAs**<br>|
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| **Risk-weighted assets** |  |  |  |  |  |  |
| Reported | **139.6** | **152.9** | **408.7** | **89.9** | **97.5** | **888.6** |
| **Constant currency** | **139.6** | **152.9** | **408.7** | **89.9** | **97.5** | **888.6** |
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
| Risk-weighted assets |  |  |  |  |  |  |
| Reported | 143.7 | 133.5 | 388.0 | 85.7 | 87.4 | 838.3 |
| Currency translation | 0.1 | 9.3 | 12.7 | 4.0 | 1.1 | 27.2 |
| Constant currency | 143.8 | 142.8 | 400.7 | 89.7 | 88.5 | 865.5 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | At 31 Dec 2023 | At 31 Dec 2023 | At 31 Dec 2023 | At 31 Dec 2023 | At 31 Dec 2023 | At 31 Dec 2023 |
| Risk-weighted assets |  |  |  |  |  |  |
| Reported | 145.2 | 124.9 | 398.2 | 97.6 | 88.2 | 854.1 |
| Currency translation | 0.7 | 6.5 | (3.9) | (1.9) | (0.5) | 0.9 |
| Constant currency | 145.9 | 131.4 | 394.3 | 95.7 | 87.7 | 855.0 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **93** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

Supplementary tables for Wealth

Insurance business performance

The following table provides an analysis of the results of our insurance business for the year. It comprises income earned by IWPB insurance

manufacturing operations, income earned by wealth distribution channels within our IWPB, Hong Kong and UK business segments, and

consolidation adjustments.

---

| | | | |
|:---|:---|:---|:---|
| Total insurance profit and loss (constant currency) |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Net fee income | **287** | 223 | 194 |
| Insurance service result | **1825** | 1317 | 1078 |
| – release of contractual service margin | **1593** | 1339 | 1125 |
| – risk adjustment release | **65** | 66 | 36 |
| – experience variance and other | **254** | 35 | 26 |
| – loss from onerous contracts | **(87)** | (123) | (109) |
| Investment income | **11387** | 6115 | 8027 |
| – net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair <br>value through profit or loss<br>| **11175** | 5865 | 7743 |
| – other investment income | **212** | 250 | 284 |
| Insurance finance expense | **(11197)** | (5949) | (7781) |
| Other income | **297** | 207 | (54) |
| **Revenue**<sup>1</sup> | **2599** | 1913 | 1464 |
| ECL | **(1)** |  | 4 |
| **Net operating income** | **2598** | 1913 | 1468 |
| Operating expenses | **(789)** | (724) | (690) |
| **Operating profit** | **1809** | 1189 | 778 |
| Share of profit in associates and JVs | **15** | 32 | 49 |
| **Profit before tax** | **1824** | 1221 | 827 |

---

1'Revenue' of $2.6bn (2024: $1.9bn; 2023: $1.5bn) includes $2.5bn earned within IWPB (2024: $1.8bn; 2023: $1.4bn) and $0.1bn earned within Hong Kong (2024:

$0.1bn; 2023: $0.1bn). This comprises revenue from insurance manufacturing operations of $2.3bn (2024: $1.7bn; 2023: $1.3bn), and revenue from wealth

distribution channels and consolidation impacts of $0.3bn (2024: $0.2bn; 2023: $0.2bn).

Total insurance revenue of $2.6bn was $0.7bn higher than in 2024

reflecting the following:

–Insurance service result of $1.8bn increased by $0.5bn compared

with 2024 reflecting higher CSM release as a result of strong new

business growth, and favourable experience variances from positive

investment management fee, maintenance expense and claims

experience.

–Net income from assets and liabilities of insurance businesses,

including related derivatives, measured at fair value through profit or

loss of $11.2bn increased by $5.3bn compared with 2024 reflecting

strong equity markets and the favourable impact of downward

movements in interest rates on our fixed income investments in

Hong Kong, partly offset by rising rates in mainland China.

–This was offset by Insurance finance expense of $11.2bn, which

moves inversely with investment income. The margin between

investment income and insurance finance expense benefited from

increases in interest rates in mainland China.

–Other income increased by $0.1bn compared with 2024 from gains

on reinsurance contracts in Hong Kong.

---

| | | | |
|:---|:---|:---|:---|
| Insurance key performance metrics |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Annualised new business premiums of insurance manufacturing operations | **6505** | 4912 | 3797 |
| Insurance manufacturing new business contractual service margin | **3405** | 2515 | 1686 |
| Consolidated Group new business contractual service margin | **3799** | 2729 | 1812 |
| Net dividends of insurance manufacturing operations | **962** | 1522 | 813 |
| Insurance equity plus CSM net of tax ※ | **18800** | 17025 | 16583 |

---

**Annualised new business premiums ('ANP')** is used to assess new

insurance premiums generated by the business. It is calculated as

100% of annualised first year regular premiums and 10% of single

premiums, before reinsurance ceded. ANP increased by 32%

compared with 2024, primarily from strong new business sales in Hong

Kong.

**Consolidated Group new business contractual service margin** 

represents insurance manufacturing new business CSM and the

consolidation impact of inclusion of our bank distribution channel.

Consolidated Group new business contractual service margin increased

by $1.1bn compared with 2024, reflecting strong sales in Hong Kong

and increased sales of higher margin products, contributing to the

overall Group CSM at 31 December 2025 of $15.7bn (2024: $12.8bn;

2023: $11.4bn).

**Net dividends of insurance manufacturing operations** represents

dividends paid to immediate parent companies net of CET1 qualifying

injections to fund business growth. Net dividends of insurance

manufacturing operations in 2025 included dividends paid to immediate

parent companies of $1.2bn (2024: $1.6bn; 2023: $1.0bn) net of CET1

qualifying injections to fund business growth of $0.2bn (2024: $0.1bn;

2023: $0.2bn). Net dividends decreased by $0.6bn due to the non-

recurrence of a 2024 release of surplus regulatory capital in Hong Kong.

**Insurance equity plus CSM net of tax** is a non-GAAP alternative

performance measure that provides information about our insurance

manufacturing operations' net asset value plus the future earnings from

in-force business. At 31 December 2025, insurance equity plus CSM

net of tax was calculated as follows:

---

| | | | |
|:---|:---|:---|:---|
| Insurance equity plus CSM net of tax | Insurance equity plus CSM net of tax | Insurance equity plus CSM net of tax | Insurance equity plus CSM net of tax |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Insurance manufacturing operations <br>equity<br>| **6715** | 7015 | 7731 |
| Insurance manufacturing CSM | **14598** | 12063 | 10786 |
| CSM deferred tax recognised | **(2513)** | (2053) | (1934) |
| Insurance equity plus CSM net of tax ※ | **18800** | 17025 | 16583 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **94** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

Wealth balances

The following table shows our wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets

either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our

customers. From 1 January 2026, we have updated the definition of our wealth balances to exclude Asset Management third-party distribution.

This will enhance comparability with industry peers.

---

| | | |
|:---|:---|:---|
| Reported wealth balances<sup>1</sup> | Reported wealth balances<sup>1</sup> | Reported wealth balances<sup>1</sup> |
|  | **2025** | 2024 |
|  | **$bn** | $bn |
| Private Bank invested assets<sup>2</sup> | **465** | 395 |
| Retail invested assets | **490** | 409 |
| Asset Management third-party distribution<sup>3</sup> | **580** | 489 |
| **Reported invested assets**<sup>1</sup> | **1535** | 1293 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | **773** | 645 |
| **Wealth deposits (Premier and Private Bank)**<sup>4</sup> | **608** | 555 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | **407** | 372 |
| **Total reported wealth balances** | **2143** | 1848 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | **1180** | 1017 |
| **Total reported wealth balances excluding Asset Management third-party distribution** | **1563** | 1359 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | **1055** | 907 |

---

1Invested assets are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as

investment manager.

2Private Bank client balances, which comprise invested assets and customer deposits, were $566bn (31 December 2024: $484bn).

3Total assets under management manufactured by Asset Management, which includes third-party distribution and other components that are reported in the

Private Bank and Retail invested assets in the table above, were $866bn (31 December 2024: $731bn). This includes balances related to The Hongkong and

Shanghai Banking Corporation Limited, of which $260bn (31 December 2024: $223bn).

4Premier and Private Bank deposits, which include Prestige deposits in Hang Seng Bank, form part of the total IWPB, Hong Kong and UK businesses' customer

accounts balance on page <u>[88](#i866499906cd64e0199d2c5a630a09ec1_232)</u>.

Invested assets

'Net new invested assets' represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Private

Bank invested assets. It excludes all customer deposits.

---

| | | |
|:---|:---|:---|
| Invested assets | **2025** | 2024 |
|  | **$bn** | $bn |
| Opening balance | **1293** | 1191 |
| Net new invested assets | **80** | 64 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | **39** | 47 |
| Net market movements | **125** | 97 |
| Foreign exchange and others | **37** | (59) |
| **Closing balance** | **1535** | 1293 |

---

Net new money

Net new money ('NNM') represents our net customer inflows from

Private Bank and Retail invested assets and wealth deposits. It

excludes foreign exchange movements and market and other

movements not relating to client inflows/outflows which are reported

within 'foreign exchange and others' and 'net market movements',

respectively. This metric excludes net customer inflows from Asset

Management third-party distribution. From 1 January 2026

management will disclose NNM as the key wealth metric, offering

greater comparability to industry peers. From 1 January 2026, we no

longer intend to disclose invested assets as a key metric.

---

| | | |
|:---|:---|:---|
| Net new money | **2025** | 2024 |
|  | **$bn** | $bn |
| Opening balance (total reported wealth balances excluding Asset Management third-party distribution) | **1359** | 1282 |
| Net new money<sup>3</sup> | **86** | 80 |
| – of which: Net new invested assets excluding Asset Management third-party distribution  | **46** | 51 |
| – of which: Change in deposits | **40** | 29 |
| Net market movements excluding Asset Management third-party distribution | **91** | 60 |
| Foreign exchange and others excluding Asset Management third-party distribution, including wealth deposits<sup>1</sup> | **27** | (63) |
| **Closing balance**<sup>2</sup> | **1563** | 1359 |
| Net new money – The Hongkong and Shanghai and Banking Corporation Limited  | **72** | 71 |
| – of which: net new invested assets excluding Asset Management third-party distribution | **41** | 43 |
| – of which: change in deposits on a constant currency basis | **31** | 28 |

---

1Includes foreign exchange on wealth deposits.

2Closing balance includes invested assets of $1,535bn (2024: $1,293bn), excluding Asset Management third-party distribution invested assets of $580bn (2024:

$489bn) and includes wealth deposit balances of $608bn (2024: $555bn).

3 Clients' assets are translated at the average quarterly rates of foreign exchange applicable to the respective quarters, with the effects of currency translation

reported separately.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **95** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

CIB: Securities Services and Issuer Services

Assets held in custody

Custody is the safekeeping and servicing of securities and other

financial assets on behalf of clients. Assets held in custody are not

reported on the Group's balance sheet, except where it is deemed that

we are acting as principal rather than agent in our role as investment

manager. At 31 December 2025, we held $12.9tn of assets as

custodian, an increase of 21% compared with 31 December 2024. The

balance comprised $11.9tn of assets in Securities Services, which

were recorded at market value, and $1.0tn of assets in Issuer Services,

recorded at book value.

Assets under administration

Our assets under administration business includes the provision of

bond and loan administration services, transfer agency services and the

valuation of portfolios of securities and other financial assets on behalf

of clients and complements the custody business. At 31 December

2025, the value of assets held under administration by the Group

amounted to $6.0tn, which was 16% higher than at 31 December

2024. The balance comprised $3.6tn of assets in Securities Services,

which were recorded at market value, and $2.4tn of assets in Issuer

Services, recorded at book value.

Analysis of reported results by legal entities

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data | HSBC reported profit/(loss) before tax and balance sheet data |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The** <br>**Hongkong** <br>**and** <br>**Shanghai** <br>**Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC** <br>**Bank** <br>**Middle** <br>**East** <br>**Limited**<br>| **HSBC** <br>**North** <br>**America** <br>**Holdings** <br>**Inc.**<br>| **HSBC** <br>**Bank** <br>**Canada**<br>| **Grupo** <br>**Financiero** <br>**HSBC,** <br>**S.A. de** <br>**C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Holding** <br>**companies,** <br>**shared** <br>**service** <br>**centres and** <br>**intra-Group** <br>**eliminations**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Net interest income | **11406** | **1684** | **16471** | **1524** | **2130** | **—** | **2229** | **1422** | **(2072)** | **34794** |
| Net fee income | **1696** | **1618** | **6483** | **555** | **1513** | **—** | **635** | **996** | **(153)** | **13343** |
| Net income from financial <br>instruments held for trading or <br>managed on a fair value basis<br>| **568** | **6490** | **10910** | **339** | **548** | **—** | **440** | **112** | **275** | **19682** |
| Net income from assets and <br>liabilities of insurance businesses, <br>including related derivatives, <br>measured at fair value through <br>profit and loss<br>| **—** | **1364** | **9741** | **—** | **—** | **—** | **49** | **15** | **6** | **11175** |
| Insurance finance income/(expense) | **—** | **(1462)** | **(9695)** | **—** | **—** | **—** | **(43)** | **—** | **3** | **(11197)** |
| Insurance service result | **—** | **218** | **1538** | **—** | **—** | **—** | **69** | **—** | **—** | **1825** |
| Other income/(expense)<sup>1</sup> | **132** | **(874)** | **(194)** | **192** | **539** | **—** | **94** | **150** | **(1387)** | **(1348)** |
| **Net operating income before** <br>**change in expected credit losses** <br>**and other credit impairment** <br>**charges**<br>| **13802** | **9038** | **35254** | **2610** | **4730** | **—** | **3473** | **2695** | **(3328)** | **68274** |
| Change in expected credit losses <br>and other credit impairment <br>charges<br>| **(710)** | **(203)** | **(1635)** | **(186)** | **(201)** | **—** | **(786)** | **(25)** | **(104)** | **(3850)** |
| **Net operating income**  | **13092** | **8835** | **33619** | **2424** | **4529** | **—** | **2687** | **2670** | **(3432)** | **64424** |
| Total operating expenses excluding <br>impairment of goodwill and other <br>intangible assets<br>| **(5663)** | **(8818)** | **(15132)** | **(1332)** | **(3326)** | **—** | **(2045)** | **(1544)** | **1837** | **(36023)** |
| Impairment of goodwill and other <br>intangible assets<br>| **(21)** | **(323)** | **(49)** | **(2)** | **(5)** | **—** | **(3)** | **—** | **(2)** | **(405)** |
| **Operating profit/(loss)** | **7408** | **(306)** | **18438** | **1090** | **1198** | **—** | **639** | **1126** | **(1597)** | **27996** |
| Share of profit in associates and <br>joint ventures less impairment<sup>2</sup><br>| **1** | **82** | **1150** | **—** | **—** | **—** | **10** | **672** | **(4)** | **1911** |
| **Profit/(loss) before tax** | **7409** | **(224)** | **19588** | **1090** | **1198** | **—** | **649** | **1798** | **(1601)** | **29907** |
|  | **%** | **%** | **%** | **%** | **%** | **%** | **%** | **%** | **%** | **%** |
| Share of HSBC's profit before tax | **24.8** | **(0.7)** | **65.5** | **3.6** | **4.0** | **—** | **2.2** | **6.0** | **(5.4)** | **100.0** |
| Cost efficiency ratio  | **41.2** | **101.1** | **43.1** | **51.1** | **70.4** | **—** | **59.0** | **57.3** | **55.1** | **53.4** |
| **Balance sheet data** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Loans and advances to customers <br>(net)<br>| **310116** | **106409** | **467842** | **22618** | **52178** | **—** | **25252** | **3971** | **13** | **988399** |
| Total assets  | **475752** | **950562** | **1492150** | **64295** | **261401** | **—** | **50197** | **32339** | **(93662)** | **3233034** |
| Customer accounts | **376903** | **321451** | **911725** | **37010** | **99458** | **—** | **29493** | **10781** | **7** | **1786828** |
| Risk-weighted assets<sup>3,4</sup> | **157963** | **146010** | **411824** | **27180** | **73961** | **—** | **32509** | **57014** | **2106** | **888647** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **96** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and <br>Shanghai <br>Banking <br>Corporation <br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo <br>Financiero <br>HSBC, S.A. <br>de C.V.<br>| Other <br>trading <br>entities<br>| Holding <br>companies, <br>shared <br>service <br>centres and <br>intra-Group <br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Net interest income | 10331 | 1254 | 15077 | 1590 | 1613 | 300 | 2292 | 2774 | (2498) | 32733 |
| Net fee income | 1672 | 1629 | 5449 | 508 | 1372 | 129 | 630 | 1076 | (164) | 12301 |
| Net income from financial <br>instruments held for trading or <br>managed on a fair value basis<br>| 580 | 6042 | 11781 | 331 | 914 | 33 | 504 | 411 | 520 | 21116 |
| Net income from assets and <br>liabilities of insurance businesses, <br>including related derivatives, <br>measured at fair value through <br>profit and loss<br>|  | 1100 | 4608 |  |  |  | 22 | 183 | (12) | 5901 |
| Insurance finance income/(expense) |  | (1261) | (4562) |  |  |  | (26) | (150) | 21 | (5978) |
| Insurance service result |  | 217 | 1042 |  |  |  | 76 | (7) | (18) | 1310 |
| Other income/(expense) | 169 | 576 | 658 | 75 | 365 |  | 75 | (984) | (2463) | (1529) |
| Net operating income before <br>change in expected credit losses <br>and other credit impairment <br>charges<br>| 12752 | 9557 | 34053 | 2504 | 4264 | 462 | 3573 | 3303 | (4614) | 65854 |
| Change in expected credit losses <br>and other credit impairment <br>charges<br>| (405) | (211) | (1532) | (198) | (81) | (40) | (864) | (93) | 10 | (3414) |
| Net operating income  | 12347 | 9346 | 32521 | 2306 | 4183 | 422 | 2709 | 3210 | (4604) | 62440 |
| Total operating expenses excluding <br>impairment of goodwill and other <br>intangible assets<br>| (5124) | (6718) | (14296) | (1191) | (3349) | (236) | (1992) | (1959) | 1899 | (32966) |
| Impairment of goodwill and other <br>intangible assets<br>| (11) | (5) | (33) | (1) | (2) |  | (2) | (22) | (1) | (77) |
| Operating profit/(loss) | 7212 | 2623 | 18192 | 1114 | 832 | 186 | 715 | 1229 | (2706) | 29397 |
| Share of profit in associates and <br>joint ventures less impairment<br>| 1 | 22 | 2278 |  |  |  | 15 | 600 | (4) | 2912 |
| Profit/(loss) before tax | 7213 | 2645 | 20470 | 1114 | 832 | 186 | 730 | 1829 | (2710) | 32309 |
|  | % | % | % | % | % | % | % | % | % | % |
| Share of HSBC's profit before tax | 22.2 | 8.2 | 63.4 | 3.4 | 2.6 | 0.6 | 2.3 | 5.7 | (8.4) | 100.0 |
| Cost efficiency ratio  | 40.3 | 70.3 | 42.1 | 47.6 | 78.6 | 51.1 | 55.8 | 60.0 | 41.1 | 50.2 |
| Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers <br>(net)<br>| 272973 | 103464 | 449940 | 20440 | 55786 |  | 23439 | 4617 | (1) | 930658 |
| Total assets  | 426165 | 914506 | 1400456 | 57215 | 253251 |  | 46007 | 26623 | (107175) | 3017048 |
| Customer accounts | 340233 | 297785 | 845284 | 34808 | 99278 |  | 27525 | 9999 | 43 | 1654955 |
| Risk-weighted assets<sup>3,4</sup> | 138332 | 137609 | 402847 | 26624 | 74416 |  | 29671 | 50731 | (648) | 838254 |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
| Net interest income | 9684 | 2674 | 16705 | 1551 | 1712 | 1275 | 2148 | 3765 | (3718) | 35796 |
| Net fee income | 1597 | 1527 | 4859 | 475 | 1237 | 559 | 581 | 1225 | (215) | 11845 |
| Net income from financial <br>instruments held for trading or <br>managed on a fair value basis<br>| 516 | 4220 | 9507 | 397 | 729 | 110 | 437 | 1054 | (309) | 16661 |
| Net income/(expense) from assets <br>and liabilities of insurance <br>businesses, including related <br>derivatives, measured at fair value <br>through profit and loss<br>|  | 1438 | 6258 |  |  |  | 39 | 323 | (171) | 7887 |
| Insurance finance income/(expense) |  | (1460) | (6237) |  |  |  | (44) | (166) | 98 | (7809) |
| Insurance service result |  | 154 | 838 |  |  |  | 87 | 9 | (10) | 1078 |
| Other income/(expense) | 1608 | 736 | (31) | 2 | 185 | 22 | 65 | (1481) | (506) | 600 |
| Net operating income before <br>change in expected credit losses <br>and other credit impairment <br>charges<br>| 13405 | 9289 | 31899 | 2425 | 3863 | 1966 | 3313 | 4729 | (4831) | 66058 |
| Change in expected credit losses <br>and other credit impairment <br>(charges)/recoveries<br>| (523) | (212) | (1641) | (90) | (94) | (46) | (696) | (279) | 134 | (3447) |
| Net operating income  | 12882 | 9077 | 30258 | 2335 | 3769 | 1920 | 2617 | 4450 | (4697) | 62611 |
| Total operating expenses excluding <br>impairment of goodwill and other <br>intangible assets<br>| (4602) | (6483) | (13379) | (1095) | (3473) | (1049) | (1823) | (2631) | 2180 | (32355) |
| Impairment of goodwill and other <br>intangible assets<br>| (10) | 97 | (16) | (1) | 222 |  | (3) | (4) |  | 285 |
| Operating profit/(loss) | 8270 | 2691 | 16863 | 1239 | 518 | 871 | 791 | 1815 | (2517) | 30541 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **97** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) | HSBC reported profit/(loss) before tax and balance sheet data (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and <br>Shanghai <br>Banking <br>Corporation <br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo <br>Financiero <br>HSBC, S.A. <br>de C.V.<br>| Other <br>trading <br>entities<br>| Holding <br>companies, <br>shared <br>service <br>centres and <br>intra-Group <br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Share of profit in associates and <br>joint ventures less impairment<sup>2</sup><br>|  | (52) | (696) |  |  |  | 14 | 544 | (3) | (193) |
| Profit/(loss) before tax | 8270 | 2639 | 16167 | 1239 | 518 | 871 | 805 | 2359 | (2520) | 30348 |
|  | % | % | % | % | % | % | % | % | % | % |
| Share of HSBC's profit before tax | 27.2 | 8.7 | 53.3 | 4.1 | 1.7 | 2.9 | 2.6 | 7.8 | (8.3) | 100.0 |
| Cost efficiency ratio  | 34.4 | 68.7 | 42.0 | 45.2 | 84.2 | 53.4 | 55.1 | 55.7 | 45.1 | 48.5 |
| Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers <br>(net)<br>| 270208 | 95750 | 455315 | 20072 | 54829 |  | 26410 | 15951 |  | 938535 |
| Total assets  | 423029 | 896682 | 1333911 | 50612 | 252339 | 90731 | 47309 | 59051 | (114987) | 3038677 |
| Customer accounts | 339611 | 274733 | 801430 | 31341 | 99607 |  | 29423 | 35326 | 176 | 1611647 |
| Risk-weighted assets<sup>3,4</sup> | 129211 | 131468 | 396677 | 24294 | 72248 | 31890 | 32639 | 59574 | 6704 | 854114 |

---

1 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans

following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the

dilution of our shareholding in BoCom.

2Includes impairment losses of $1.0bn (2025) and $3.0bn (2023) recognised in respect of the Group's investment in BoCom. See Note 18 on pages 345 to 348.

3Risk-weighted assets are non-additive across the legal entities due to market risk diversification effects within the Group.

4Balances are on a third-party Group consolidated basis.

Summary information – legal entities and selected countries/territories

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results | Legal entity reported and constant currency results |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **HSBC** <br>**UK Bank** <br>**plc**<br>| **HSBC** <br>**Bank plc**<br>| **The** <br>**Hongkong** <br>**and** <br>**Shanghai** <br>**Banking** <br>**Corpo-**<br>**ration** <br>**Limited**<br>| **HSBC** <br>**Bank** <br>**Middle** <br>**East** <br>**Limited**<br>| **HSBC** <br>**North** <br>**America** <br>**Holdings** <br>**Inc.**<br>| **HSBC** <br>**Bank** <br>**Canada**<br>| **Grupo**<br>**Financiero**<br>**HSBC, S.A.**<br>**de C.V.**<br>| **Other** <br>**trading** <br>**entities**<sup>1</sup><br>| **Holding**<br>**companies,**<br>**shared**<br>**service**<br>**centres and**<br>**intra-Group**<br>**eliminations**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Revenue | **13802** | **9038** | **35254** | **2610** | **4730** | **—** | **3473** | **2695** | **(3328)** | **68274** |
| ECL | **(710)** | **(203)** | **(1635)** | **(186)** | **(201)** | **—** | **(786)** | **(25)** | **(104)** | **(3850)** |
| Operating expenses | **(5684)** | **(9141)** | **(15181)** | **(1334)** | **(3331)** | **—** | **(2048)** | **(1544)** | **1835** | **(36428)** |
| Share of profit in associates and joint <br>ventures less impairment<br>| **1** | **82** | **1150** | **—** | **—** | **—** | **10** | **672** | **(4)** | **1911** |
| **Profit/(loss) before tax** | **7409** | **(224)** | **19588** | **1090** | **1198** | **—** | **649** | **1798** | **(1601)** | **29907** |
| Loans and advances to customers (net) | **310116** | **106409** | **467842** | **22618** | **52178** | **—** | **25252** | **3971** | **13** | **988399** |
| Customer accounts | **376903** | **321451** | **911725** | **37010** | **99458** | **—** | **29493** | **10781** | **7** | **1786828** |

---

1Includes the results of entities located in Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do not consolidate into

HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group's reported profit before tax of $1.5bn.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **98** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items | Legal entity results: notable items |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The** <br>**Hongkong** <br>**and** <br>**Shanghai** <br>**Banking** <br>**Corpo-**<br>**ration** <br>**Limited**<br>| **HSBC** <br>**Bank** <br>**Middle** <br>**East** <br>**Limited**<br>| **HSBC** <br>**North** <br>**America** <br>**Holdings** <br>**Inc.**<br>| **HSBC** <br>**Bank** <br>**Canada**<br>| **Grupo**<br>**Financiero**<br>**HSBC, S.A.**<br>**de C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Holding**<br>**companies,**<br>**shared**<br>**service**<br>**centres and**<br>**intra-Group**<br>**eliminations**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Revenue** |  |  |  |  |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions <br>and related costs<sup>1</sup><br>| **—** | **(1546)** | **—** | **71** | **—** | **—** | **—** | **—** | **(167)** | **(1642)** |
| Dilution loss of interest in BoCom<sup>2</sup> | **—** | **—** | **(1138)** | **—** | **—** | **—** | **—** | **—** | **34** | **(1104)** |
| **Operating expenses** |  |  |  |  |  |  |  |  |  |  |
| Disposals, wind-downs, acquisitions <br>and related costs<br>| **(1)** | **(388)** | **(46)** | **(16)** | **(18)** | **—** | **—** | **(2)** | **(31)** | **(502)** |
| Restructuring and other related costs<sup>3</sup> | **(161)** | **(350)** | **(300)** | **(27)** | **(66)** | **—** | **(65)** | **(31)** | **(30)** | **(1030)** |
| Legal provisions<sup>4</sup> | **—** | **(1197)** | **—** | **—** | **—** | **—** | **—** | **—** | **(235)** | **(1432)** |
| Impairment loss of interest in BoCom <br>associate<sup>2</sup><br>| **—** | **—** | **(1000)** | **—** | **—** | **—** | **—** | **—** | **—** | **(1000)** |

---

1Includes recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of its sale

to a consortium comprising Rothesay Life plc and CCF.

2 Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment

loss following an impairment test on the carrying value of the Group's investment in BoCom in 'Impairment loss of interest in BoCom associate'. See Note 18 on

pages 345 to 348.

3Amounts include organisational simplification provision recognised in 2025.

4 Includes a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff

Investment Securities LLC fraud in HSBC Bank plc and Holding companies and a $0.3bn provision in connection with certain historical trading activities in HSBC

Bank plc.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results | Selected countries/territories results | Selected countries/territories results | Selected countries/territories results | Selected countries/territories results |  |
|  | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **UK**<sup>1</sup> | **Hong**<br>**Kong**<br>| **Mainland**<br>**China**<br>| **US** | **Mexico** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| Revenue | **22346** | **23935** | **3314** | **4644** | **3473** |
| ECL | **(839)** | **(1478)** | **(68)** | **(200)** | **(785)** |
| Operating expenses | **(16064)** | **(9429)** | **(3236)** | **(3332)** | **(2048)** |
| Share of profit/(loss) in associates and joint ventures less impairment | **81** | **(2)** | **1077** | **—** | **10** |
| **Profit before tax** | **5524** | **13026** | **1087** | **1112** | **650** |
| Loans and advances to customers (net) | **357246** | **273396** | **45585** | **52178** | **25252** |
| Customer accounts | **568712** | **619029** | **69473** | **99458** | **29493** |

---

1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately

incorporated group of service companies ('ServCo Group').

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results: notable items | Selected countries/territories results: notable items | Selected countries/territories results: notable items | Selected countries/territories results: notable items | Selected countries/territories results: notable items |  |
|  | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **UK** | **Hong**<br>**Kong**<br>| **Mainland**<br>**China**<br>| **US** | **Mexico** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Revenue** |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(211)** | **—** | **—** | **—** | **—** |
| Restructuring and other related costs | **188** | **18** | **12** | **6** | **—** |
| Dilution loss of interest in BoCom associate | **—** | **—** | **(1104)** | **—** | **—** |
| **Operating expenses** |  |  |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(41)** | **(16)** | **(5)** | **(18)** | **—** |
| Restructuring and other related costs | **(481)** | **(179)** | **(60)** | **(72)** | **(65)** |
| Legal provisions<sup>1</sup> | **(566)** | **—** | **—** | **—** | **—** |
| **Impairment loss of interest in BoCom associate** | **—** | **—** | **(1000)** | **—** | **—** |

---

1 Includes $0.2bn in relation to internal reinsurance arrangements relating to the Bernard L. Madoff Investment Securities LLC fraud provision and a $0.3bn

provision in connection with certain historical trading activities in HSBC Bank plc.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **99** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and Shanghai <br>Banking <br>Corporation<br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo<br>Financiero<br>HSBC, <br>S.A.<br>de C.V.<br>| Other <br>trading <br>entities<sup>1</sup><br>| Holding<br>companies,<br>shared<br>service<br>centres and<br>intra-Group<br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |  |  |  |  |
| – Reported | 12752 | 9557 | 34053 | 2504 | 4264 | 462 | 3573 | 3303 | (4614) | 65854 |
| – Currency translation | 405 | 296 | 13 | 1 |  | (27) | (163) | (380) | 10 | 155 |
| – Constant currency | 13157 | 9853 | 34066 | 2505 | 4264 | 435 | 3410 | 2923 | (4604) | 66009 |
| ECL |  |  |  |  |  |  |  |  |  |  |
| – Reported  | (405) | (211) | (1532) | (198) | (81) | (40) | (864) | (93) | 10 | (3414) |
| – Currency translation | (14) | (6) | (1) |  | 1 | 2 | 24 | 15 | 1 | 22 |
| – Constant currency | (419) | (217) | (1533) | (198) | (80) | (38) | (840) | (78) | 11 | (3392) |
| Operating expenses |  |  |  |  |  |  |  |  |  |  |
| – Reported | (5135) | (6723) | (14329) | (1192) | (3351) | (236) | (1994) | (1981) | 1898 | (33043) |
| – Currency translation | (162) | (258) | (14) |  |  | 14 | 84 | 240 | (7) | (103) |
| – Constant currency | (5297) | (6981) | (14343) | (1192) | (3351) | (222) | (1910) | (1741) | 1891 | (33146) |
| Share of profit/(loss) in <br>associates and joint ventures<br>|  |  |  |  |  |  |  |  |  |  |
| – Reported  | 1 | 22 | 2278 |  |  |  | 15 | 600 | (4) | 2912 |
| – Currency translation |  | 1 |  |  |  |  | (1) | 1 |  | 1 |
| – Constant currency | 1 | 23 | 2278 |  |  |  | 14 | 601 | (4) | 2913 |
| Profit before tax |  |  |  |  |  |  |  |  |  |  |
| – Reported | 7213 | 2645 | 20470 | 1114 | 832 | 186 | 730 | 1829 | (2710) | 32309 |
| – Currency translation | 229 | 33 | (2) | 1 | 1 | (11) | (56) | (124) | 4 | 75 |
| – Constant currency | 7442 | 2678 | 20468 | 1115 | 833 | 175 | 674 | 1705 | (2706) | 32384 |
| Loans and advances to <br>customers (net)<br>|  |  |  |  |  |  |  |  |  |  |
| – Reported  | 272973 | 103464 | 449940 | 20440 | 55786 |  | 23439 | 4617 | (1) | 930658 |
| – Currency translation | 18878 | 10852 | 6722 | 9 |  |  | 3607 | 51 | 1 | 40120 |
| – Constant currency | 291851 | 114316 | 456662 | 20449 | 55786 |  | 27046 | 4668 |  | 970778 |
| Customer accounts |  |  |  |  |  |  |  |  |  |  |
| – Reported  | 340233 | 297785 | 845284 | 34808 | 99278 |  | 27525 | 9999 | 43 | 1654955 |
| – Currency translation | 23529 | 26782 | 9773 | 28 |  |  | 4236 | (62) | (1) | 64285 |
| – Constant currency | 363762 | 324567 | 855057 | 34836 | 99278 |  | 31761 | 9937 | 42 | 1719240 |

---

1Other trading entities includes the results of entities located in Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do

not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group's reported profit before tax of $1.4bn, and constant

currency profit before tax of $1.4bn.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and<br>Shanghai<br>Banking<br>Corporation<br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo<br>Financiero<br>HSBC, S.A.<br>de C.V.<br>| Other <br>trading <br>entities<br>| Holding<br>companies,<br>shared<br>service<br>centres and<br>intra-Group<br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |  |  |  |  |
| Disposals, acquisitions and <br>related costs<sup>1</sup><br>|  | (148) |  |  |  |  |  | (23) | (1172) | (1343) |
| Early redemption of legacy <br>securities<br>|  |  |  |  |  |  |  |  | (237) | (237) |
| Operating expenses |  |  |  |  |  |  |  |  |  |  |
| Disposals, acquisitions and <br>related costs<br>| 8 | (9) |  |  | (29) | (36) |  | (61) | (72) | (199) |
| Restructuring and other <br>related costs<sup>2</sup><br>| 3 | 15 | (5) | (2) | (4) |  |  | (9) | (32) | (34) |

---

1Includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of our

business in Argentina. This was partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign exchange

hedging of the sales proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.

2Amounts relate to organisational simplification provision recognised in 2024 and reversals of restructuring provisions recognised during 2022.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **100** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | UK<sup>1</sup> | Hong<br>Kong<br>| Mainland<br>China<br>| US | Mexico |
|  | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |
| – Reported | 21017 | 22038 | 4078 | 4216 | 3573 |
| – Currency translation | 704 | 18 | 3 |  | (163) |
| – Constant currency | 21721 | 22056 | 4081 | 4216 | 3410 |
| ECL |  |  |  |  |  |
| – Reported  | (526) | (1273) | (121) | (81) | (864) |
| – Currency translation | (13) | (1) |  |  | 24 |
| – Constant currency | (539) | (1274) | (121) | (81) | (840) |
| Operating expenses |  |  |  |  |  |
| – Reported | (13725) | (8886) | (2971) | (3350) | (1994) |
| – Currency translation | (420) | (6) | (6) |  | 84 |
| – Constant currency | (14145) | (8892) | (2977) | (3350) | (1910) |
| Share of profit/(loss) in associates and joint ventures |  |  |  |  |  |
| – Reported  | 24 | 8 | 2241 |  | 15 |
| – Currency translation |  | 1 | 2 |  | (1) |
| – Constant currency | 24 | 9 | 2243 |  | 14 |
| Profit before tax |  |  |  |  |  |
| – Reported | 6790 | 11887 | 3227 | 785 | 730 |
| – Currency translation | 271 | 12 | (1) |  | (56) |
| – Constant currency | 7061 | 11899 | 3226 | 785 | 674 |
| Loans and advances to customers (net) |  |  |  |  |  |
| – Reported  | 313925 | 272152 | 44551 | 55786 | 23439 |
| – Currency translation | 21709 | (629) | 1956 |  | 3607 |
| – Constant currency | 335634 | 271523 | 46507 | 55786 | 27046 |
| Customer accounts |  |  |  |  |  |
| – Reported  | 524251 | 575141 | 63169 | 99278 | 27525 |
| – Currency translation | 36254 | (1330) | 2773 |  | 4236 |
| – Constant currency | 560505 | 573811 | 65942 | 99278 | 31761 |

---

1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo

Group.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | UK | Hong<br>Kong<br>| Mainland<br>China<br>| US | Mexico |
|  | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |
| Disposals, acquisitions and related costs<sup>1</sup> | 285 |  |  |  |  |
| Early redemption of legacy securities | (237) |  |  |  |  |
| Operating expenses |  |  |  |  |  |
| Disposals, acquisitions and related costs | (50) | (2) | (7) | (28) |  |
| Restructuring and other related costs | (42) | (4) |  | (4) |  |

---

1Includes fair value movements on the foreign exchange hedging of the sale of our banking business in Canada, which is booked in HSBC Overseas Holdings (UK)

Limited.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **101** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) | Legal entity reported and constant currency results (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and Shanghai <br>Banking <br>Corporation <br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo<br>Financiero<br>HSBC, <br>S.A.<br>de C.V.<br>| Other <br>trading <br>entities<sup>1</sup><br>| Holding<br>companies,<br>shared<br>service<br>centres and<br>intra-Group<br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |  |  |  |  |
| – Reported | 13405 | 9289 | 31899 | 2425 | 3863 | 1966 | 3313 | 4729 | (4831) | 66058 |
| – Currency translation | 775 | 287 | (86) | 2 |  | (67) | (250) | (1800) | 121 | (1018) |
| – Constant currency | 14180 | 9576 | 31813 | 2427 | 3863 | 1899 | 3063 | 2929 | (4710) | 65040 |
| ECL |  |  |  |  |  |  |  |  |  |  |
| – Reported  | (523) | (212) | (1641) | (90) | (94) | (46) | (696) | (279) | 134 | (3447) |
| – Currency translation | (30) | (15) | (2) | (1) |  | 1 | 48 | 193 | 3 | 197 |
| – Constant currency | (553) | (227) | (1643) | (91) | (94) | (45) | (648) | (86) | 137 | (3250) |
| Operating expenses |  |  |  |  |  |  |  |  |  |  |
| – Reported | (4612) | (6386) | (13395) | (1096) | (3251) | (1049) | (1826) | (2635) | 2180 | (32070) |
| – Currency translation | (283) | (330) | 16 |  |  | 36 | 139 | 910 | (109) | 379 |
| – Constant currency | (4895) | (6716) | (13379) | (1096) | (3251) | (1013) | (1687) | (1725) | 2071 | (31691) |
| Share of profit/(loss) in <br>associates and joint ventures<br>|  |  |  |  |  |  |  |  |  |  |
| – Reported  |  | (52) | (696) |  |  |  | 14 | 544 | (3) | (193) |
| – Currency translation |  |  | (102) |  |  |  | (1) |  | (1) | (104) |
| – Constant currency |  | (52) | (798) |  |  |  | 13 | 544 | (4) | (297) |
| Profit before tax |  |  |  |  |  |  |  |  |  |  |
| – Reported | 8270 | 2639 | 16167 | 1239 | 518 | 871 | 805 | 2359 | (2520) | 30348 |
| – Currency translation | 462 | (58) | (174) | 1 |  | (30) | (64) | (697) | 14 | (546) |
| – Constant currency | 8732 | 2581 | 15993 | 1240 | 518 | 841 | 741 | 1662 | (2506) | 29802 |
| Loans and advances to <br>customers (net)<br>|  |  |  |  |  |  |  |  |  |  |
| – Reported  | 270208 | 95750 | 455315 | 20072 | 54829 |  | 26410 | 15951 |  | 938535 |
| – Currency translation | 13974 | 5357 | 186 | 7 |  |  | (1595) | (758) |  | 17171 |
| – Constant currency | 284182 | 101107 | 455501 | 20079 | 54829 |  | 24815 | 15193 |  | 955706 |
| Customer accounts |  |  |  |  |  |  |  |  |  |  |
| – Reported  | 339611 | 274733 | 801430 | 31341 | 99607 |  | 29423 | 35326 | 176 | 1611647 |
| – Currency translation | 17563 | 14913 | 1855 | 17 |  |  | (1777) | (3218) |  | 29353 |
| – Constant currency | 357174 | 289646 | 803285 | 31358 | 99607 |  | 27646 | 32108 | 176 | 1641000 |

---

1Other trading entities includes the results of entities located in Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank)

which do not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group's reported profit before tax of $1.3bn and

constant currency profit before tax of $1.1bn.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) | Legal entity results: notable items (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | HSBC UK <br>Bank plc<br>| HSBC <br>Bank plc<br>| The <br>Hongkong <br>and<br>Shanghai<br>Banking<br>Corporation<br>Limited<br>| HSBC <br>Bank <br>Middle <br>East <br>Limited<br>| HSBC <br>North <br>America <br>Holdings <br>Inc.<br>| HSBC <br>Bank <br>Canada<br>| Grupo<br>Financiero<br>HSBC, S.A.<br>de C.V.<br>| Other <br>trading <br>entities<br>| Holding<br>companies,<br>shared<br>service<br>centres and<br>intra-Group<br>eliminations<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |  |  |  |  |  |
| Disposals, acquisitions and <br>related costs<sup>1,2,3</sup><br>| 1591 | (14) |  |  |  |  |  |  | (279) | 1298 |
| Fair value movements on <br>financial instruments<sup>4</sup><br>|  |  |  |  |  |  |  |  | 14 | 14 |
| Restructuring and other <br>related costs<br>|  | 361 |  |  |  |  |  |  | (361) |  |
| Disposal losses on Markets <br>Treasury repositioning<br>| (145) | (94) | (473) | (20) | (246) |  |  |  | 1 | (977) |
| Operating expenses |  |  |  |  |  |  |  |  |  |  |
| Disposals, acquisitions and <br>related costs<br>| (45) | (111) |  |  | (11) | (115) |  |  | (39) | (321) |
| Restructuring and other <br>related costs<sup>5</sup><br>| 20 | 30 | 10 | 2 | 10 |  | 6 | 2 | 56 | 136 |
| Impairment loss of interest <br>in BoCom associate<sup>6</sup><br>|  |  | (3000) |  |  |  |  |  |  | (3000) |

---

1 Includes the impact of the sale of our retail banking operations in France.

2 Includes the gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3 Includes fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.

4 Fair value movements on non-qualifying hedges in HSBC Holdings.

5 Balances relate to reversals of restructuring provisions recognised during 2022.

6 Includes an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **102** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) | Selected countries/territories results (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | UK<sup>1</sup> | Hong<br>Kong<br>| Mainland<br>China<br>| US | Mexico |
|  | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |
| – Reported | 19092 | 20611 | 3923 | 3796 | 3313 |
| – Currency translation | 1310 | 86 | (59) |  | (250) |
| – Constant currency | 20402 | 20697 | 3864 | 3796 | 3063 |
| ECL |  |  |  |  |  |
| – Reported  | (594) | (1529) | (93) | (94) | (696) |
| – Currency translation | (35) | (5) | (2) |  | 48 |
| – Constant currency | (629) | (1534) | (95) | (94) | (648) |
| Operating expenses |  |  |  |  |  |
| – Reported | (12485) | (8244) | (2713) | (3251) | (1826) |
| – Currency translation | (726) | (33) | 37 |  | 139 |
| – Constant currency | (13211) | (8277) | (2676) | (3251) | (1687) |
| Share of profit/(loss) in associates and joint ventures |  |  |  |  |  |
| – Reported  | (53) | 30 | (746) |  | 14 |
| – Currency translation | 1 | 1 | (102) |  | (1) |
| – Constant currency | (52) | 31 | (848) |  | 13 |
| Profit before tax |  |  |  |  |  |
| – Reported | 5960 | 10868 | 371 | 451 | 805 |
| – Currency translation | 550 | 49 | (126) |  | (64) |
| – Constant currency | 6510 | 10917 | 245 | 451 | 741 |
| Loans and advances to customers (net) |  |  |  |  |  |
| – Reported  | 309262 | 279551 | 44275 | 54829 | 26410 |
| – Currency translation | 15994 | 1013 | 685 |  | (1595) |
| – Constant currency | 325256 | 280564 | 44960 | 54829 | 24815 |
| Customer accounts |  |  |  |  |  |
| – Reported  | 508181 | 543504 | 56006 | 99607 | 29423 |
| – Currency translation | 26280 | 1969 | 868 |  | (1777) |
| – Constant currency | 534461 | 545473 | 56874 | 99607 | 27646 |

---

1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo

Group.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) | Selected countries/territories results: notable items (continued) |
|  | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | UK | Hong<br>Kong<br>| Mainland<br>China<br>| US | Mexico |
|  | $m | $m | $m | $m | $m |
| Revenue |  |  |  |  |  |
| Disposals, acquisitions and related costs<sup>1</sup> | 1272 |  |  |  |  |
| Fair value movements on financial instruments | 14 |  |  |  |  |
| Disposal losses on Markets Treasury repositioning | (239) | (473) |  | (246) |  |
| Operating expenses |  |  |  |  |  |
| Disposals, acquisitions and related costs | (71) | (1) | (5) | (11) |  |
| Restructuring and other related costs | 75 | 9 | 4 | 10 | 6 |
| Impairment loss of interest in BoCom associate |  |  | (3000) |  |  |

---

1Includes the impairment gain relating to the sale of our retail banking operations in France.

Analysis by country/territory

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments | Profit/(loss) before tax by country/territory within business segments |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| UK<sup>1</sup> | **(346)** | **6687** | **(487)** | **75** | **(405)** | **5524** |
| – of which: HSBC UK Bank plc (ring-fenced bank) | **—** | **7044** | **161** | **135** | **68** | **7408** |
| – of which: HSBC Bank plc (non-ring-fenced bank) | **—** | **—** | **758** | **375** | **(145)** | **988** |
| – of which: Holdings and other | **(346)** | **(357)** | **(1406)** | **(435)** | **(328)** | **(2872)** |
| France | **—** | **—** | **116** | **(71)** | **(1566)** | **(1521)** |
| Germany | **—** | **—** | **46** | **147** | **(57)** | **136** |
| Hong Kong | **9891** | **—** | **1770** | **1948** | **(583)** | **13026** |
| Australia | **—** | **—** | **519** | **159** | **(14)** | **664** |
| India | **—** | **12** | **1500** | **88** | **266** | **1866** |
| Indonesia | **—** | **—** | **172** | **3** | **(1)** | **174** |
| Mainland China<sup>2</sup> | **5** | **—** | **888** | **98** | **96** | **1087** |
| Malaysia | **1** | **—** | **367** | **168** | **(6)** | **530** |
| Singapore | **2** | **—** | **967** | **598** | **(29)** | **1538** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **103** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) | Profit/(loss) before tax by country/territory within business segments (continued) |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Taiwan | **—** | **—** | **277** | **144** | **(10)** | **411** |
| Egypt | **—** | **1** | **453** | **100** | **(5)** | **549** |
| UAE | **—** | **—** | **547** | **283** | **(51)** | **779** |
| Saudi Arabia<sup>3</sup> | **—** | **—** | **97** | **—** | **665** | **762** |
| US | **—** | **—** | **1165** | **152** | **(205)** | **1112** |
| Canada | **—** | **—** | **—** | **—** | **6** | **6** |
| Mexico | **—** | **—** | **497** | **195** | **(42)** | **650** |
| Other | **23** | **5** | **2492** | **280** | **(186)** | **2614** |
| **Year ended 31 Dec 2025** | **9576** | **6705** | **11386** | **4367** | **(2127)** | **29907** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | $m | $m | $m | $m | $m | $m |
| UK<sup>1</sup> | (288) | 6605 | (457) | 85 | 845 | 6790 |
| – of which: HSBC UK Bank plc (ring-fenced bank) |  | 6889 | 146 | 106 | 72 | 7213 |
| – of which: HSBC Bank plc (non-ring-fenced bank) |  |  | 754 | 534 | (359) | 929 |
| – of which: Holdings and other | (288) | (284) | (1357) | (555) | 1132 | (1352) |
| France |  |  | 322 | 61 | (153) | 230 |
| Germany |  |  | 182 | 27 | 5 | 214 |
| Hong Kong | 9377 |  | 1373 | 1619 | (482) | 11887 |
| Australia |  |  | 477 | 141 | (9) | 609 |
| India |  |  | 1323 | 96 | 269 | 1688 |
| Indonesia |  |  | 219 | 7 | (5) | 221 |
| Mainland China<sup>2</sup> | 9 |  | 891 | (154) | 2481 | 3227 |
| Malaysia |  |  | 374 | 143 | (3) | 514 |
| Singapore | 1 |  | 823 | 572 | (21) | 1375 |
| Taiwan |  |  | 293 | 113 | (8) | 398 |
| Egypt |  |  | 501 | 122 | (16) | 607 |
| UAE |  |  | 583 | 371 | (83) | 871 |
| Saudi Arabia<sup>3</sup> |  |  | 112 |  | 596 | 708 |
| US |  |  | 909 | 74 | (198) | 785 |
| Canada<sup>4</sup> |  |  | 153 | 70 | 4503 | 4726 |
| Mexico |  |  | 542 | 185 | 3 | 730 |
| Other<sup>5</sup> | 22 |  | 2787 | 440 | (6520) | (3271) |
| Year ended 31 Dec 2024 | 9121 | 6605 | 11407 | 3972 | 1204 | 32309 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
|  | $m | $m | $m | $m | $m | $m |
| UK<sup>1</sup> | (346) | 7623 | (1011) | (106) | (200) | 5960 |
| – of which: HSBC UK Bank plc (ring-fenced bank) |  | 7922 | 144 | 114 | 90 | 8270 |
| – of which: HSBC Bank plc (non-ring fenced bank) |  |  | 416 | 396 | 177 | 989 |
| – of which: Holdings and other | (346) | (299) | (1571) | (616) | (467) | (3299) |
| France |  |  | 364 | (36) | 10 | 338 |
| Germany |  |  | 273 | 43 | 4 | 320 |
| Hong Kong | 8760 |  | 1150 | 1262 | (304) | 10868 |
| Australia |  |  | 403 | 178 | (15) | 566 |
| India |  |  | 1171 | 57 | 289 | 1517 |
| Indonesia |  |  | 191 | 24 | (7) | 208 |
| Mainland China<sup>2</sup> | 31 |  | 976 | (96) | (540) | 371 |
| Malaysia |  |  | 377 | 111 | (21) | 467 |
| Singapore |  |  | 879 | 234 | (31) | 1082 |
| Taiwan |  |  | 270 | 99 | (7) | 362 |
| Egypt |  |  | 401 | 141 | (11) | 531 |
| UAE |  |  | 589 | 387 | (83) | 893 |
| Saudi Arabia<sup>3</sup> |  |  | 118 |  | 539 | 657 |
| US |  |  | 624 | 225 | (398) | 451 |
| Canada |  |  | 681 | 293 | (96) | 878 |
| Mexico |  |  | 520 | 316 | (31) | 805 |
| Other | 44 |  | 3179 | 349 | 502 | 4074 |
| Year ended 31 Dec 2023 | 8489 | 7623 | 11155 | 3481 | (400) | 30348 |

---

1 UK includes results from the ultimate holding company, HSBC Holdings plc, and the ServCo Group.

2Includes our share of the profits of our associate, BoCom. Amounts in 2025 include a $1.1bn loss on dilution of our shareholding in BoCom and a $1.0bn

impairment loss on Group's investment in BoCom. See Note 18 on pages 345 to 348. Amounts in 2023 include an impairment loss of $3.0bn recognised in

respect of the Group's investment in BoCom.

3Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

4Corporate Centre in 2024 includes a gain on the sale of our banking business in Canada excluding the fair value movements on the foreign exchange hedging of

the sale which is booked in HSBC Overseas Holdings (UK) Limited.

5Corporate Centre in 2024 includes a loss of $6.2bn relating to the sale of our business in Argentina and inter-company debt eliminations of $0.3bn.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **104** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

The following commentary compares business segment financial

performance on a constant currency basis for the year ended 31

December 2024 with 31 December 2023, represented based on our

reportable segments under IFRS 8 'Operating Segments' effective

from 1 January 2025.

🡠For business segment performance commentary for the year ended 31

December 2025 compared with 31 December 2024, see pages 19 to 27.

Hong Kong Business

2024 compared with 2023

Financial performance (on a constant

currency basis)

Profit before tax of $9.1bn was $0.6bn or 7% higher than in 2023 on a

constant currency basis.

Revenue of $15.0bn was $0.5bn or 4% higher on a constant currency

basis.

Banking NII of $12.0bn fell $0.1bn or 1%. This was due to the impact

of lower margins in 2024 relative to 2023 but partly offset by deposit

balance growth.

Fee and other income of $3.1bn was up $0.3bn or 9%.

–In Wealth, investment distribution revenue grew by $0.4bn or 31%

driven by higher sales of mutual funds, structured products and

bonds due to our focus on investment in Wealth and improved

market sentiment.

–In Other, revenue decreased by $0.1bn due to lower revenue

allocated from Markets Treasury.

Notable items in 2023 include $0.4bn from the non-recurrence of

disposal losses relating to Markets Treasury repositioning and risk

management.

ECL were $1.1bn, a decrease of $0.4bn compared with 2023 on a

constant currency basis, reflecting a reduction in ECL in the commercial

real estate sector in 2024.

Operating expenses of $4.8bn were $0.3bn higher on a constant

currency basis, reflecting continued investments in Wealth, higher

spend and investment in technology, higher performance-related pay

and inflationary impacts. These were partly offset by continued cost

discipline.

UK Business

2024 compared with 2023

Financial performance (on a constant

currency basis)

Profit before tax of $6.8bn was $1.2bn or (15)% lower than in 2023 on

a constant currency basis.

Revenue of $12.3bn was $1.1bn or (8)% lower on a constant currency

basis.

Banking NII of $10.4bn increased by $0.5bn or 4.6% despite two base

rate cut in 2024. The increase reflected balance sheet growth, the full

year impact of our acquisition of SVB UK, and benefit from our

structural hedges. These increases were partly offset by mortgage

pricing pressures, as well as a change in deposit mix towards interest-

bearing deposit accounts.

Fee and other income of $2.0bn was broadly stable.

Notable items in 2023 include the non-recurrence of a $1.7bn gain

recognised on the acquisition of SVB UK which was partly offset by the

non-recurrence of $0.1bn disposal losses relating to Markets Treasury

repositioning and risk management.

ECL were $0.4bn, a decrease of $0.1bn compared with 2023 on a

constant currency basis, reflecting lower stage 3 charges combined

with improved forward economic outlook in 2024.

Operating expenses of $5.1bn were $0.3bn higher on a constant

currency basis. This includes the Bank of England levy introduced in

2024. The increase also reflects incremental costs in IVB following the

acquisition of SVB, higher spend and investment in technology, higher

performance-related pay and inflationary impacts. These were partly

offset by continued cost discipline.

Corporate and Institutional Banking

2024 compared with 2023

Financial performance (on a constant

currency basis)

Profit before tax of $11.3bn was $0.8bn or 8% higher than in 2023 on a

constant currency basis.

Revenue of $26.8bn was $2.0bn or 8% higher on a constant currency

basis.

Banking NII of $14.5bn was up $1.1bn or 8%. This was largely driven

by the hyperinflationary impacts in Argentina along with higher

allocated revenue from Markets Treasury.

Fee and other income of $12.3bn was up $0.6bn or 5%.

–In Debt and Equity Markets, fee and other income rose by $0.6bn or

38.3%. In Equities, fee and other income increased amid improved

market sentiment, which drove higher client demand for wealth

products, as well as higher levels of volatility in 2H24. In Debt

Markets the growth reflected client demand for financing products

and increased volumes, primarily from emerging markets credit,

–In Investment Banking, fee and other income increased by $0.1bn

or 11%, due to higher advisory and financing activity, supported by

the recovery in global capital markets.

–In Wholesale Transaction Banking, fee and other income fell by

$0.1bn or 1% driven by a decrease in Foreign Exchange as client

activity remained resilient given the market environment, and the

impact of the disposal of our banking business in Canada. This was

partly offset by an increase fee and other income in GPS reflecting

business initiatives, repricing and transaction volume growth, and in

GTS reflecting growth from guarantees.

Notable items in 2023 included $0.4bn from the non-recurrence of

disposal losses relating to Markets Treasury repositioning and risk

management.

ECL charges of $0.9bn were $0.4bn higher on a constant currency

basis. ECLs in 2024 reflected higher CRE charges in Asia, and in the

Middle East reflecting higher oil and gas and construction sector

charges.

Operating expenses of $14.6bn were $0.9bn or 6% higher on a

constant currency basis. The increase reflected hyperinflationary

impacts in Argentina, incremental costs following the acquisition of

SVB UK, higher spend and investment in technology, and inflationary

impacts. These increases were in part mitigated by continued cost

discipline and lower costs following the disposal of our banking

business in Canada.

International Wealth and Premier

Banking

2024 compared with 2023

Financial performance (on a constant

currency basis)

Profit before tax of $4.0bn was $0.8bn or 24% higher than in 2023 on a

constant currency basis.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **105** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Business segments and legal entities | Business segments and legal entities |  |  |  |

---

Revenue of $13.8bn was $$1.4bn or 12% higher on a constant

currency basis.

Banking NII of $7.6bn was $0.4bn higher or 5%. This was driven by

increase in revenue allocated from Markets Treasury and continued

balance sheet growth, partly offset by narrower margins and our

business disposals in Canada and France.

Fee and other income of $6.2bn was up $0.8bn or 14% driven by

strong growth across all products in Wealth.

In Wealth, fee and other income of $5.6bn was up $1.0bn or 21%.

–Insurance increased by $0.5bn, reflecting a higher contractual

service margin ('CSM') release, largely due to continued growth in

the CSM balance, as well as due to the impact of corrections to

historical valuation estimates recognised in 2023.

–Private Bank increased by $0.3bn, primarily driven by a strong

performance in brokerage and trading in our entities in Asia.

–Asset Management increased by $0.1bn, driven by an increase in

assets under management due to inflows and positive market

movements partly offset by the impact of our business disposal in

Canada and France.

Notable items in 2023 included $0.2bn impact of the sale of our retail

banking operations in France, and $0.1bn from the non-recurrence of

disposal losses relating to Markets Treasury repositioning and risk

management.

ECL were $1.0bn, an increase of $0.3bn compared with 2023 on a

constant currency basis, primarily reflecting higher charges in our legal

entity in Mexico, mainly in our unsecured portfolio, due to portfolio

growth and unemployment trends.

Operating expenses of $8.9bn were $0.4bn higher on a constant

currency basis, reflecting continued investments in Wealth in Asia,

higher spend and investment in technology, higher performance-related

pay and from the impact of higher inflation. These were partly offset by

continued cost discipline and the impact of the business disposals in

France and Canada.

Corporate Centre

2024 compared with 2023

Financial performance (on a constant

currency basis)

Profit before tax of $1.2bn was $1.6bn higher than in 2023 on a

constant currency basis.

Revenue of $2.0bn was $1.9bn lower on a constant currency basis,

primarily due to the impact of notable items.

In 2024, these included a loss on disposal of $1.0bn, as well as foreign

currency and other reserve losses of $5.2bn, following the disposal of

our business in Argentina. They also included a loss of $0.1bn related to

the recycling of reserves following the completion of the sale of our

business in Russia, and a $0.2bn loss on the early redemption of legacy

securities. These were partly offset by a $4.8bn gain on the sale of our

banking business in Canada, inclusive of fair value gains on related

hedging and recycling of related reserves.

In 2023, notable items included fair value losses of $0.3bn relating to

the hedging of the proceeds of the sale of our business in Canada.

Banking NII in 2024 removes from NII the internal costs to funding

trading and fair value net assets, predominately in CIB, of $11.4bn

(2023: $8.7bn). Banking NII was a net expense of $0.7bn. This was

$0.5bn higher than in 2023. The movement in Banking NII reflected the

impact of the transfer of the retained French retail lending portfolio

from IWPB.

Fee and other income of $0.4bn was broadly stable.

Operating expenses decreased by $0.4bn on a constant currency basis.

This included a lower impact from levies, including in relation to the

FDIC special assessment and the UK bank levy.

Share of profit from associates and joint ventures of $2.9bn increased

by $3.2bn on a constant currency basis, primarily reflecting the non-

recurrence of an impairment charge of $3.0bn in 2023 relating to our

investment in BoCom and an increase in share of profit from SAB.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **106** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Alternative performance measures

The following tables provide the calculation, definition and reconciliation of alternative performance measures to the closest reported performance

measure. For further details and an explanation of their basis of preparation, including constant currency, notable items and material notable items,

and the impact of strategic transactions and hyperinflationary accounting, see page 65.

---

| | |
|:---|:---|
| **Alternative performance measure** | **Definition** |
| Reported revenue excluding notable items | Reported revenue after excluding notable items reported under revenue |
| Reported profit before tax excluding notable items | Reported profit before tax after excluding notable items reported under revenue less notable <br>items reported under operating expenses |
| Constant currency revenue excluding notable items | Reported revenue excluding notable items and the impact of foreign exchange translation |
| Constant currency profit before tax excluding notable items | Reported profit before tax excluding notable items and the impact of foreign exchange <br>translation |
| Constant currency revenue excluding notable items and <br>strategic transactions<br>| Reported revenue excluding notable items, strategic transactions and the impact of foreign <br>exchange translation |
| Constant currency profit before tax excluding notable items <br>and strategic transactions<br>| Reported profit before tax excluding notable items, strategic transactions and the impact of <br>foreign exchange translation |
| Return on average ordinary shareholders' equity ('RoE') | Profit attributable to the ordinary shareholders  |
| Return on average ordinary shareholders' equity ('RoE') |  |
| Return on average ordinary shareholders' equity ('RoE') | Average ordinary shareholders' equity |
| Return on average tangible equity ('RoTE') | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other <br>intangible assets |
| Return on average tangible equity ('RoTE') |  |
| Return on average tangible equity ('RoTE') | Average ordinary shareholders' equity adjusted for goodwill and intangibles |
| Return on average tangible equity ('RoTE') excluding <br>notable items | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other <br>intangible assets and notable items |
| Return on average tangible equity ('RoTE') excluding <br>notable items |  |
| Return on average tangible equity ('RoTE') excluding <br>notable items | Average ordinary shareholders' equity adjusted for goodwill and intangibles |
| Net asset value per ordinary share | Total ordinary shareholders' equity<sup>1</sup> |
| Net asset value per ordinary share |  |
| Net asset value per ordinary share | Basic number of ordinary shares in issue after deducting own shares held |
| Tangible net asset value per ordinary share | Tangible ordinary shareholders' equity<sup>2</sup> |
| Tangible net asset value per ordinary share |  |
| Tangible net asset value per ordinary share | Basic number of ordinary shares in issue after deducting own shares held |
| Post-tax return on average total assets | Profit after tax |
| Post-tax return on average total assets |  |
| Post-tax return on average total assets | &nbsp;&nbsp;&nbsp;&nbsp;Average total assets  |
| Average total shareholders' equity on average total assets | Average total shareholders' equity |
| Average total shareholders' equity on average total assets |  |
| Average total shareholders' equity on average total assets | Average total assets |
| Banking net interest income | Banking net interest income adjusts our reported NII, primarily for the impact of funding <br>trading and fair value activities reported in interest expense and to exclude third-party <br>insurance NII<sup>3</sup> |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers | Annualised constant currency ECL |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers |  |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers | Constant currency average gross loans and advances to customers |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers, including held for sale | Annualised constant currency ECL |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers, including held for sale |  |
| Expected credit losses and other credit impairment <br>charges ('ECL') as % of average gross loans and advances <br>to customers, including held for sale | Constant currency average gross loans and advances to customers, including held for sale |
| Target basis operating expenses | Reported operating expenses excluding notable items, foreign exchange translation and <br>other excluded items |
| Basic earnings per share excluding material notable items <br>and related impacts | Profit attributable to ordinary shareholders excluding material notable items and related <br>impacts |
| Basic earnings per share excluding material notable items <br>and related impacts |  |
| Basic earnings per share excluding material notable items <br>and related impacts | Weighted average number of ordinary shares outstanding after deducting own shares held |
| Multi-jurisdictional client revenue | Total client revenue we generate from clients that hold a relationship with us that<br>generates revenue in more than one market |

---

1Total ordinary shareholders' equity is total shareholders' equity less non-cumulative preference shares and capital securities.

2Tangible ordinary shareholders' equity is total ordinary shareholders' equity excluding goodwill and other intangible assets (net of deferred tax).

3For details on the calculation of banking NII, see page 69.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **107** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Alternative performance measures | Alternative performance measures | Alternative performance measures |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Constant currency revenue and profit before tax excluding notable items and strategic transactions | Constant currency revenue and profit before tax excluding notable items and strategic transactions | Constant currency revenue and profit before tax excluding notable items and strategic transactions | Constant currency revenue and profit before tax excluding notable items and strategic transactions |
|  | Year ended | Year ended | Year ended |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Revenue**  |  |  |  |
| Reported | **68274** | 65854 | 66058 |
| Notable items | **2746** | 1580 | (335) |
| **Reported revenue excluding notable items** | **71020** | 67434 | 65723 |
| Currency translation<sup>1</sup> |  | 157 | (888) |
| **Constant currency revenue excluding notable items** | **71020** | 67591 | 64835 |
| Constant currency impact of strategic transactions (distorting impact of operating results between periods)<sup>2</sup> | **—** | (1214) | N/A |
| **Constant currency revenue excluding notable items and strategic transactions** | **71020** | 66377 | N/A |
| **Profit before tax** |  |  |  |
| Reported | **29907** | 32309 | 30348 |
| Notable items | **6710** | 1813 | 2850 |
| **Reported profit before tax excluding notable items** | **36617** | 34122 | 33198 |
| Currency translation<sup>1</sup> | **—** | 59 | (357) |
| **Constant currency profit before tax excluding notable items** | **36617** | 34181 | 32841 |
| Constant currency impact of strategic transactions (distorting impact of operating results between periods)<sup>2</sup> | **—** | (413) | N/A |
| **Constant currency profit before tax excluding notable items and strategic transactions** | **36617** | 33768 | N/A |

---

1Currency translation on the reported balance excluding currency translation on notable items.

2For more details of strategic transactions, please refer to page 92.

---

| | | | |
|:---|:---|:---|:---|
| Return on average ordinary shareholders' equity, return on average tangible equity and return on average tangible equity excluding notable <br>items | Return on average ordinary shareholders' equity, return on average tangible equity and return on average tangible equity excluding notable <br>items | Return on average ordinary shareholders' equity, return on average tangible equity and return on average tangible equity excluding notable <br>items | Return on average ordinary shareholders' equity, return on average tangible equity and return on average tangible equity excluding notable <br>items |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Profit after tax** |  |  |  |
| Profit attributable to the ordinary shareholders of the parent company | **21102** | 22917 | 22432 |
| Impairment of goodwill and other intangible assets (net of tax) | **144** | 118 | 43 |
| **Profit attributable to the ordinary shareholders, excluding goodwill and other**<br>**intangible assets impairment**<br>| **21246** | 23035 | 22475 |
| Impact of notable items<sup>1</sup> | **6126** | 1588 | 2173 |
| **Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment** <br>**and notable items**<br>| **27372** | 24623 | 24648 |
| **Equity** |  |  |  |
| Average total shareholders' equity | **191598** | 187507 | 184029 |
| Effect of average preference shares and other equity instruments | **(19987)** | (18480) | (18794) |
| **Average ordinary shareholders' equity** | **171611** | 169027 | 165235 |
| Effect of goodwill and other intangibles (net of deferred tax) | **(12040)** | (11626) | (11480) |
| **Average tangible equity** | **159571** | 157401 | 153755 |
|  | **%** | % | % |
| **Ratio** |  |  |  |
| Return on average ordinary shareholders' equity | **12.3** | 13.6 | 13.6 |
| Return on average tangible equity | **13.3** | 14.6 | 14.6 |
| Return on average tangible equity excluding notable items | **17.2** | 15.6 | 16.0 |

---

1For details of notable items please refer to Supplementary financial information on page 88.

To better align our return on average tangible equity ('RoTE') excluding notable items measure with market practice, from our 2025 full-year results

we no longer adjust the 'average tangible equity' for the post-tax impact of notable items in each period. Comparatives have been re-presented.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **108** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Alternative performance measures | Alternative performance measures | Alternative performance measures |  |  |

---

The following table details the adjustments made to reported results by business segment:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Return on average tangible equity by business segment | Return on average tangible equity by business segment | Return on average tangible equity by business segment | Return on average tangible equity by business segment | Return on average tangible equity by business segment | Return on average tangible equity by business segment |  |
|  | **Year ended 31 Dec 2025** | **Year ended 31 Dec 2025** | **Year ended 31 Dec 2025** | **Year ended 31 Dec 2025** | **Year ended 31 Dec 2025** | **Year ended 31 Dec 2025** |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Profit before tax** | **9576** | **6705** | **11386** | **4367** | **(2127)** | **29907** |
| Tax expense | **(1604)** | **(1953)** | **(2414)** | **(987)** | **182** | **(6776)** |
| **Profit after tax** | **7972** | **4752** | **8972** | **3380** | **(1945)** | **23131** |
| Less attributable to: preference shareholders, other equity <br>holders, non-controlling interests<br>| **(898)** | **(221)** | **(504)** | **(193)** | **(213)** | **(2029)** |
| **Profit attributable to ordinary shareholders of the parent** <br>**company**<br>| **7074** | **4531** | **8468** | **3187** | **(2158)** | **21102** |
| Other adjustments | **339** | **210** | **(168)** | **64** | **(301)** | **144** |
| **Profit attributable to ordinary shareholders** | **7413** | **4741** | **8300** | **3251** | **(2459)** | **21246** |
| Impact of notable items | **9** | **45** | **717** | **226** | **5129** | **6126** |
| Profit attributable to ordinary shareholders, excluding notable <br>items<br>| **7422** | **4786** | **9017** | **3477** | **2670** | **27372** |
| Average tangible shareholders' equity | **20889** | **20936** | **55828** | **18313** | **43605** | **159571** |
| RoTE (%) (annualised) | **35.5** | **22.6** | **14.9** | **17.8** | **(5.6)** | **13.3** |
| RoTE (%), excluding notable items (annualised) | **35.5** | **22.9** | **16.2** | **19.0** | **6.1** | **17.2** |
|  | Year ended 31 Dec 2024 | Year ended 31 Dec 2024 | Year ended 31 Dec 2024 | Year ended 31 Dec 2024 | Year ended 31 Dec 2024 | Year ended 31 Dec 2024 |
| Profit before tax | 9121 | 6605 | 11407 | 3972 | 1204 | 32309 |
| Tax expense | (1219) | (1844) | (2734) | (781) | (732) | (7310) |
| Profit after tax | 7902 | 4761 | 8673 | 3191 | 472 | 24999 |
| Less attributable to: preference shareholders, other equity <br>holders, non-controlling interests<br>| (944) | (225) | (487) | (158) | (268) | (2082) |
| Profit attributable to ordinary shareholders of the parent company | 6958 | 4536 | 8186 | 3033 | 204 | 22917 |
| Other adjustments | 239 | 222 | (427) | (46) | 130 | 118 |
| Profit attributable to ordinary shareholders | 7197 | 4758 | 7759 | 2987 | 334 | 23035 |
| Impact of notable items |  | (9) | 18 | (34) | 1613 | 1588 |
| Profit attributable to ordinary shareholders, excluding notable <br>items<br>| 7197 | 4749 | 7778 | 2953 | 1946 | 24623 |
| Average tangible shareholders' equity  | 19199 | 19010 | 54819 | 19019 | 45354 | 157401 |
| RoTE (%) (annualised) | 37.5 | 25.0 | 14.2 | 15.7 | 0.7 | 14.6 |
| RoTE (%), excluding notable items (annualised) | 37.5 | 25.0 | 14.2 | 15.5 | 4.3 | 15.6 |

---

---

| | | | |
|:---|:---|:---|:---|
| Net asset value and tangible net asset value per ordinary share | Net asset value and tangible net asset value per ordinary share | Net asset value and tangible net asset value per ordinary share | Net asset value and tangible net asset value per ordinary share |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Total shareholders' equity | **198225** | 184973 | 185329 |
| Preference shares and other equity instruments  | **(20716)** | (19070) | (17719) |
| **Total ordinary shareholders' equity** | **177509** | 165903 | 167610 |
| Goodwill and intangible assets (net of deferred tax) | **(12356)** | (11608) | (11900) |
| **Tangible ordinary shareholders' equity** | **165153** | 154295 | 155710 |
| Basic number of $0.50 ordinary shares outstanding, after deducting own shares held | **17140** | 17918 | 19006 |
| **Value per share** | **$** | $| $|
| Net asset value per ordinary share | **10.36** | 9.26 | 8.82 |
| Tangible net asset value per ordinary share | **9.64** | 8.61 | 8.19 |

---

---

| | | | |
|:---|:---|:---|:---|
| Post-tax return and average total shareholders' equity on average total assets | Post-tax return and average total shareholders' equity on average total assets | Post-tax return and average total shareholders' equity on average total assets | Post-tax return and average total shareholders' equity on average total assets |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Profit after tax | **23131** | 24999 | 24559 |
| Average total shareholders' equity | **191598** | 187507 | 184029 |
| Average total assets | **3198379** | 3062474 | 3059887 |
| **Ratio** | **%** | % | % |
| Post-tax return on average total assets | **0.7** | 0.8 | 0.8 |
| Average total shareholders' equity to average total assets | **5.99** | 6.12 | 6.01 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **109** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Alternative performance measures | Alternative performance measures | Alternative performance measures |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit<br>losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale | Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit<br>losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale | Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit<br>losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale | Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit<br>losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Expected credit losses and other credit impairment charges ('ECL') | **(3850)** | (3414) | (3447) |
| Currency translation | **—** | 22 | 197 |
| **Constant currency** | **(3850)** | (3392) | (3250) |
| Average gross loans and advances to customers | **975905** | 952484 | 955585 |
| Currency translation | **12891** | 23848 | 30056 |
| **Constant currency** | **988796** | 976332 | 985641 |
| Average gross loans and advances to customers, including held for sale | **977814** | 968785 | 1020992 |
| Currency translation | **12959** | 23308 | 29489 |
| **Constant currency** | **990773** | 992093 | 1050481 |
| **Ratio** | **%** | % | % |
| Expected credit losses and other credit impairment charges (annualised) as a % of<br>average gross loans and advances to customers (%)<br>| **0.39** | 0.35 | 0.33 |
| Expected credit losses and other credit impairment charges (annualised) as a % of<br>average gross loans and advances to customers, including held for sale (%)<br>| **0.39** | 0.34 | 0.31 |

---

Target basis operating expenses

---

| | | |
|:---|:---|:---|
| Target basis operating expenses | Target basis operating expenses | Target basis operating expenses |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Reported operating expenses | **36428** | 33043 |
| **Notable items** | **(2964)** | (233) |
| – disposals, wind-downs, acquisitions and related costs | **(502)** | (199) |
| – restructuring and other related costs | **(1030)** | (34) |
| – legal provisions<sup>1,2</sup> | **(1432)** |  |
| Currency translation<sup>3</sup> | **—** | 121 |
| Excluding the constant currency impact of the sale of our business in Argentina and banking business in Canada<sup>4</sup> | **—** | (509) |
| Excluding the impact of retranslating prior year costs of hyperinflationary economies at a constant currency foreign exchange rate | **—** | 56 |
| **Target basis operating expenses** | **33464** | 32478 |

---

1During 2025, a $0.3bn provision was recognised in connection with certain historical trading activities in HSBC Bank plc.

2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard

L. Madoff Investment Securities LLC fraud.

3Currency translation on reported operating expenses, excluding currency translation on notable items.

4This represents the business as usual costs which are not classified as notable items relating to our business in Argentina and banking business in Canada, on a

constant currency basis. This does not include the disposal costs which relate to these transactions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **110** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Alternative performance measures | Alternative performance measures | Alternative performance measures |  |  |

---

Basic earnings per share excluding material notable items and related impacts

---

| | | |
|:---|:---|:---|
| Basic earnings per share excluding material notable items and related impacts | Basic earnings per share excluding material notable items and related impacts | Basic earnings per share excluding material notable items and related impacts |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Profit attributable to shareholders of company** | **22285** | 23979 |
| Coupon payable on capital securities classified as equity | **(1183)** | (1062) |
| **Profit attributable to ordinary shareholders of company** | **21102** | 22917 |
| Dilution and impairment losses of interest in associate | **1956** |  |
| Legal provisions<sup>2</sup> | **1110** |  |
| Impact of disposals, wind-downs, acquisitions and related costs | **2077** | 1137 |
| – of which: impact of the sale of our banking business in Canada<sup>1</sup> | **1** | (4963) |
| – of which: impact of the sale of our business in Argentina | **98** | 6161 |
| – of which: other strategic transactions<sup>3</sup> | **1978** | (61) |
| **Profit attributable to ordinary shareholders of company excluding material notable items and related impacts** | **26245** | 24054 |
| **Number of shares** |  |  |
| Weighted average basic number of ordinary shares (millions) after deducting own shares held | **17427** | 18357 |
| Basic earnings per share ($) | **1.21** | 1.25 |
| Basic earnings per share excluding material notable items and related impacts ($) | **1.51** | 1.31 |
| Dividend per ordinary share (in respect of the period) ($)<sup>4</sup> | **0.75** | 0.87 |
| Dividend payout ratio (%) (dividend per ordinary share divided by basic earnings per share excluding material notable items and <br>related impacts)<br>| **50%** | 50% |

---

1Represents gain on sale of our banking business in Canada recognised on completion, inclusive of the earnings recognised by the banking business from 30 June

2022, the recycling of losses in foreign currency translation reserves and other reserves, and gain on the foreign exchange hedging of the sale proceeds.

2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard

L. Madoff Investment Securities LLC fraud.

3For the year ended 31 December 2025, this includes a loss of $1.5bn from the recycling of other reserves associated with the sale of retained home loan

portfolio, after the sale of our retail banking operations in France. Additionally, it also includes the loss of $0.3bn recognised from the sale of our French and UK

life insurance businesses.

4In 2024, dividend per share includes the special dividend of $0.21 per ordinary share arising from the proceeds of the sale of our banking business in Canada to

Royal Bank of Canada.

Multi-jurisdictional client revenue

Multi-jurisdictional client revenue is a financial metric we use to assess

our ability to drive value from our international network.

In our wholesale businesses, we identify a client as multi-jurisdictional if

they hold a relationship with us that generates revenue in any market

outside of where the primary relationship is managed. A client is

defined as a master group (HSBC's own client groupings) that includes

both the parent and, where relevant, any subsidiaries.

Multi-jurisdictional client revenue is a component of wholesale client

revenue and represents the total client revenue we generate from

multi-jurisdictional clients. Wholesale client revenue is derived by

excluding from wholesale revenue the revenue we generate from Fixed

Income, Equities, Commodities, and non-cash foreign exchange, as

well as other non-client revenue.

---

| | | |
|:---|:---|:---|
| Wholesale multi-jurisdictional client revenue | Wholesale multi-jurisdictional client revenue | Wholesale multi-jurisdictional client revenue |
|  | **2025** | 2024 |
|  | **$bn** | $bn |
| **Wholesale revenue** | **40.3** | 39.1 |
| Allocated revenue and other<sup>1</sup> | **(2.2)** | (1.3) |
| Fixed Income, Equities, Commodities, and non-Cash FX | **(6.4)** | (5.6) |
| **Wholesale client revenue** | **31.7** | 32.3 |
| – clients banked in multiple jurisdictions ('multi-jurisdictional') | **20.0** | 20.0 |
| – domestic only clients<sup>2</sup> | **11.7** | 12.3 |

---

1Including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital

held in the business segment.

2The fall in wholesale client revenue from domestic only clients primarily reflected the sale of our businesses in Canada and Argentina in 2024, as well as the

impact of lower interest rates.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **111** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Other information

---

| | |
|:---|:---|
| **[111](#i866499906cd64e0199d2c5a630a09ec1_310)** | Disclosure controls |
| **[111](#i866499906cd64e0199d2c5a630a09ec1_310)** | Management's assessment of internal controls over financial <br>reporting<br>|
| **[111](#i866499906cd64e0199d2c5a630a09ec1_316)** | Regulation and supervision |
| **[116](#i866499906cd64e0199d2c5a630a09ec1_3410)** | Disclosures pursuant to Section 13(r) of the Securities Exchange <br>Act<br>|

---

Disclosure controls

The Group CEO and Group CFO, with the assistance of other members

of management, carried out an evaluation of the effectiveness of the

design and operation of HSBC Holdings' disclosure controls

and procedures as at 31 December 2025. Based upon that evaluation,

the Group CEO and Group CFO concluded that the disclosure controls

and procedures at 31 December 2025 were effective to provide

reasonable assurance that information required to be disclosed in the

reports that the company files and submits under the US Securities

Exchange Act of 1934, as amended, is recorded, processed,

summarised and reported as and when required. There are inherent

limitations to the effectiveness of any system of disclosure controls

and procedures, including the possibility of human error and the

circumvention or overriding of the controls and procedures.

Accordingly, even effective disclosure controls and procedures can only

provide reasonable assurance of achieving their control objectives.

Management's assessment of internal

controls over financial reporting

Management is responsible for establishing and maintaining an

adequate internal control structure and procedures for financial

reporting, and has completed an assessment of the effectiveness of

the Group's internal controls over financial reporting for the year ended

31 December 2025. In making the assessment, management used the

framework for internal control evaluation contained in the Financial

Reporting Council's Guidance on Risk Management, Internal Control

and Related Financial and Business Reporting (September 2014), as

well as the criteria established by the Committee of Sponsoring

Organizations of the Treadway Commission ('COSO') in 'Internal

Control-Integrated Framework (2013)'.

There have been no changes in HSBC Holdings' internal control over

financial reporting during the year ended 31 December 2025 that have

materially affected, or are reasonably likely to materially affect, HSBC

Holdings' internal control over financial reporting.

Based on the assessment performed, management concluded that for

the year ended 31 December 2025, the Group's internal controls over

financial reporting were effective.

PricewaterhouseCoopers LLP, which has audited the consolidated

financial statements of the Group for the year ended 31 December

2025, has also audited the effectiveness of the Group's internal control

over financial reporting as stated in their report on page 286.

Regulation and supervision

The ordinary shares of HSBC Holdings are listed in London, Hong Kong,

New York and Bermuda. As a result of the listing in London, HSBC

Holdings is subject to the UK Listing Rules of the FCA. As a result of

the listing in Hong Kong, HSBC Holdings is subject to The Rules

Governing the Listing of Securities on The Stock Exchange of Hong

Kong Limited ('HKEX'). In the US, where the listing is through an

American Depositary Receipt Programme, shares are traded in the

form of American Depositary Shares ('ADS'), which are registered with

the US Securities and Exchange Commission ('SEC'). As a

consequence of its US listing, HSBC Holdings is also subject to the

reporting and other requirements of: the US Securities Act of 1933, as

amended; the Securities Exchange Act of 1934, as amended; and the

New York Stock Exchange's ('NYSE') Listed Company Manual, in each

case as applied to foreign private issuers. In Bermuda, HSBC Holdings

is subject to the listing rules of the Bermuda Stock Exchange applicable

to companies with secondary listings.

A statement of our compliance with the provisions of the UK Corporate

Governance Code issued by the Financial Reporting Council and with

the Hong Kong Corporate Governance Code set out in Appendix 14 to

the Rules Governing the Listing of Securities on HKEX can be found in

the 'Corporate Governance Report: Statement of Compliance' on page

284. Our operations throughout the world are regulated and supervised

globally by a large number of different regulatory authorities, central

banks and other bodies in those jurisdictions in which we have offices,

branches or subsidiaries. These authorities impose a variety of

requirements and controls designed to provide financial stability,

transparency in financial markets and a contribution to economic

growth. The requirements to which our operations must adhere include

those relating to capital and liquidity, disclosure standards and

restrictions on certain types of products or transaction structures,

recovery and resolution, governance standards, conduct of business

and financial crime.

The UK's Prudential Regulation Authority ('PRA') is the HSBC Group's

consolidated lead regulator. HSBC Holdings is approved by, and directly

responsible to the PRA for ensuring the HSBC Group meets

consolidated prudential requirements. The Group's other lead UK

regulator, the FCA, supervises 11 of HSBC's entities in the UK,

including six where the PRA is responsible for those entities' prudential

supervision. The FCA maintains global oversight of the Group's

management of financial crime risk in the exercise of its wider powers

under the Financial Services and Markets Act 2000, and through the

exercise of direct supervisory powers over HSBC Holdings. In addition,

and as required under relevant local laws, each operating bank, finance

company and insurance operation within HSBC is regulated by relevant

local regulatory authorities.

UK regulation and supervision

The UK's financial services regulatory structure is chiefly comprised of

three regulatory bodies: the Bank of England ('BoE'); the PRA; and the

FCA.

The BoE is responsible for macro-prudential supervision, focusing on

systemic risks that may affect the UK's financial stability. This is largely

affected through the Financial Policy Committee, a statutory body.

The BoE conducts micro-prudential regulation and supervision of

financial services firms through the PRA (also a statutory body), and in

addition to its wider role as the UK's central bank, the BoE is the UK

resolution authority responsible for taking action to manage the failure

of certain types of financial institutions in the UK, if necessary. The

latter involves a set of responsibilities and powers that apply outside of

an actual bank failure and relate to general resolution planning, including

an assessment of any barriers to the resolution of banks, the exercise

of powers to require the removal of impediments to resolvability and

the setting of minimum requirements for own funds and eligible

liabilities ('MREL'), through the Banking Act and the Bank Recovery and

Resolution (Amendment) Regulations 2025.

These include own funds and liabilities that can be written down or

converted into equity capital to absorb losses or recapitalise a bank in

the event of its failure. These requirements are based on the resolution

strategy for the Group, as agreed by the BoE in consultation with our

local regulators.

The PRA and the FCA are micro-prudential supervisors. The Group's

banking subsidiaries in the UK, such as HSBC Bank plc and HSBC UK,

are 'dual-regulated' firms, subject to prudential regulation by the PRA

and to conduct regulation by the FCA. Other (generally smaller, non-

bank) UK-based subsidiaries are 'solo regulated' by the FCA (i.e. the

FCA is responsible for both prudential and conduct regulation of those

subsidiaries). HSBC Group is subject to consolidated supervision by the

PRA.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **112** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Other information | Other information | Other information |  |  |

---

UK banking and financial services institutions are subject to numerous

laws and regulations, plus related regulatory rules, guidance and

expectations. The primary UK statute in this context is the Financial

Services and Markets Act 2000, as amended and supplemented by

subsequent legislation and statutory instruments, in addition to EU

financial services legislation that has been assimilated into UK law

pursuant to the European Union (Withdrawal) Act 2018, as amended

('EUWA'). In 2023, the Financial Services and Markets Act 2023

('FSMA 2023') was passed creating a new set of regulatory

frameworks, providing powers to HM Treasury and the UK's financial

services regulators to revoke and replace EU 'assimilated' law and to

establish new objectives, and accountability frameworks.

The PRA and FCA are together responsible for authorising and

supervising all our operating businesses in the UK that require

authorisation under the Financial Services and Markets Act 2000.

These include deposit-taking, retail banking, consumer credit, life and

general insurance, pensions, investments, mortgages, custody and

share-dealing businesses, and treasury and capital markets activity.

The FCA is also responsible for promoting effective competition in the

interests of consumers, and an independent subsidiary of the FCA, the

Payment Systems Regulator, is the economic regulator of payment

systems in the UK. Additionally, the Competition and Markets Authority

(CMA) is responsible for promoting competitive markets in the UK. It

can investigate aspects of the financial services sector where HSBC

operates, and take action against firms where it sees fit. The CMA and

FCA have established a Memorandum of Understanding for regulatory

coordination between the authorities.

The PRA and FCA set the minimum standards for authorising banks

and financial institutions engaged in regulated activities. In the UK, both

regulators may object—on prudential grounds—to any individual or

entity seeking to acquire, or holding, 10% or more of the voting rights

or shares in a regulated institution or its parent. The PRA supervises

HSBC on a consolidated basis, receiving capital adequacy information

and establishing group-wide requirements. It also conducts stress tests

across HSBC's UK entities and the broader Group. Meanwhile, each

banking subsidiary within the Group is overseen by its respective local

regulator, which sets and monitors its capital adequacy standards.

The Group complies with capital requirements under the UK Capital

Requirements Legislative Package, which includes on-shored EU

Regulation No. 575/2013 (as amended), the PRA Rulebook, and UK law

implementing the Capital Requirements Directive.

The UK introduced the initial set of Basel 3.1 reforms in January 2022,

targeting risk-weighted assets ('RWAs') for counterparty risk, equity

investments in funds and market risk, and the leverage ratio. The PRA

subsequently released two near-final rule packages for the second

tranche: the first in December 2023, covering market risk, credit

valuation adjustment, and operational risk; and the second in

September 2024, addressing credit risk, the output floor and

requirements for reporting and disclosures. Additionally, the PRA also

published the first of two proposals to modify the Pillar 2A capital

framework and capital communications.

The PRA initially planned to implement the second tranche of Basel 3.1

on 1 January 2026, with a four-year phase-in for the output floor. In

January 2025, this was deferred to 1 January 2027 to align with US

timelines, and the output floor phase-in was reduced to three years.

Following the UK Government's announcement of its 10-year Financial

Services Growth and Competitiveness Strategy in July 2025, the 1

January 2027 implementation date was confirmed for credit risk,

operational risk, credit valuation adjustment, and non-modelled market

risk. A further one-year extension was proposed for the internal model

approach to market risk, moving its implementation to 1 January 2028.

The Group is also subject to liquidity requirements, namely the Liquidity

Coverage Ratio ('LCR') and the Net Stable Funding Ratio ('NSFR') as set

out in the Liquidity Coverage Ratio (CRR) and Liquidity (CRR) Parts of

the PRA Rulebook respectively.

The PRA and FCA monitor authorised institutions through ongoing

supervision and the review of routine and ad hoc reports relating to

financial, prudential, conduct of business and financial crime matters.

They may also obtain independent reports from a Skilled Person on the

adequacy of procedures and systems covering internal controls and

governing records and accounting. The PRA meets the Group's senior

executives regularly to discuss our adherence to its prudential

requirements. In addition, both the PRA and FCA regularly discuss with

relevant management fundamental matters relating to our business in

the UK and internationally, including areas such as strategic and

operating plans, risk control, loan portfolio composition, organisational

changes, succession planning and recovery and resolution

arrangements.

Hong Kong regulation and supervision

The Banking Ordinance provides the legal framework for banking

supervision in Hong Kong. Section 7(1) of the Ordinance provides that

the principal function of the Hong Kong Monetary Authority ('HKMA') is

to 'promote the general stability and effective working of the banking

system'. The HKMA seeks to establish a regulatory framework in line

with international standards, in particular those issued by the Basel

Committee on Banking Supervision ('Basel') and the Financial Stability

Board ('FSB'). The objective is to maintain a prudential supervisory

system that underpins the general stability and effective working of the

banking system, while at the same time providing sufficient flexibility

for authorised institutions to take commercial decisions. Under the

Banking Ordinance, the HKMA is the licensing authority responsible for

the authorisation, suspension, and revocation of authorised institutions.

To provide checks and balances, the HKMA is required under the

Ordinance to consult with the Financial Secretary on important

authorisation decisions, such as suspension and involuntary revocation.

The Hongkong and Shanghai Banking Corporation Limited and its

overseas branches and subsidiaries are licensed under the Banking

Ordinance and hence subject to the supervision, regulation, and

examination of the HKMA.

The HKMA follows international practices as recommended by Basel to

supervise authorised institutions. Under the Banking Ordinance, the

HKMA imposes capital requirements on authorised institutions through

the Banking (Capital) Rules, liquidity requirements through the Banking

(Liquidity) Rules and large exposure limits through the Banking

(Exposure Limits) Rules. These rules take into account the latest

standards set by Basel. In December 2023, the HKMA published final

rules for the implementation of the Basel 3.1 standards, which became

effective on 1 January 2025.

The Banking Ordinance empowers the HKMA to collect prudential data

from authorised institutions on a routine or ad hoc basis and to require

any holding company or subsidiary or sister company of an authorised

institution to submit such information as may be required for the

exercise of the HKMA's functions under the Ordinance. The HKMA has

the power to serve a notice of objection on persons if they are no

longer deemed to be fit and proper to be controllers of the authorised

institution, if they may otherwise threaten the interests of depositors or

potential depositors, or if they have contravened any conditions

specified by the HKMA. The HKMA may revoke authorisation in the

event of an institution's non-compliance with the provisions of the

Banking Ordinance. These provisions require, among other things, the

furnishing of accurate reports.

To enhance the exchange of supervisory information and cooperation,

the HKMA has entered into Memoranda of Understanding ('MoU') or

other formal arrangements with a number of banking supervisory

authorities within and outside Hong Kong, including Singapore. The

marketing of, dealing in, and provision of advice and asset management

services in relation to securities and futures in Hong Kong are subject

to the provisions of the Securities and Futures Ordinance of Hong

Kong. Entities engaging in activities regulated by the Ordinance

(including HSBC) are required to be licensed or registered with the

Securities and Futures Commission ('SFC'). The HKMA is the front-line

regulator for banks involved in the securities and futures business.

The HKMA and the SFC work very closely to ensure that there is an

open market with a level playing field for all intermediaries in the

securities industry of Hong Kong.

Among other functions, the Securities and Futures Ordinance vests the

SFC with powers to set and enforce market regulations, including

investigating breaches of rules and market misconduct and taking

appropriate enforcement action.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **113** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | **Financial review** | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  | Other information | Other information | Other information |  |  |

---

The SFC is responsible for licensing and supervising intermediaries

conducting SFC-regulated activities, such as investment advisers, fund

managers, brokers, trustees and custodians. Additionally, the SFC sets

standards for the authorisation and regulation of investment products,

and it reviews and authorises offering documents of retail investment

products to be marketed to the public.

To promote proper conduct and increase awareness of individual

responsibility and accountability, the SFC introduced and implemented

the Manager-In-Charge ('MIC') regime in Hong Kong. The MIC regime

applies to senior individuals of licensed corporations responsible for

managing core functions within financial services businesses

supervised by the SFC. The regime required SFC-licensed corporations

to review their organisational structure and the roles of senior

management and their responsible officers in light of the SFC's

classification of core functions within licensed corporations and its

guidelines on identifying MIC of core functions. The regime also

imposes reporting requirements on SFC-licensed corporations.

Similar to the SFC, the HKMA launched its Management Accountability

Initiative, which is aimed at increasing the accountability of the senior

management of Hong Kong registered institutions ('RIs') i.e. Hong

Kong banks registered to carry on one or more regulated activities

under the SFO. The Management Accountability Initiative clarified the

HKMA's expectations on the responsibility and accountability of RIs'

senior management, and enhanced its information-gathering on RIs'

regulated activities, while requiring RIs to better identify lines of

responsibility and accountability for their regulated activities.

To support capacity building and talent development, the HKMA has

been working with the banking industry and relevant professional

bodies to implement an industry-wide enhanced competency

framework for banking practitioners. Currently, the enhanced

competency framework for banking practitioners covers ten

professional work streams: anti-money laundering and counter-

financing of terrorism; cybersecurity; treasury management; retail

wealth management; credit risk management; operational risk

management; fintech; private wealth management; green and

sustainable finance; and compliance.

Relevant to the Group's insurance business in Hong Kong, the HKMA

and the Hong Kong Insurance Authority ('IA') have signed an 'MoU' to

enhance the cooperation, exchange of information and mutual

assistance between the two authorities. This MoU sets out the

framework between the HKMA and the IA for strengthening co-

operation in respect of regulation and supervision of entities or financial

groups in which the two authorities have a common regulatory interest.

Pursuant to the statutory regulatory regime for insurance intermediaries

under the Insurance Ordinance, the IA has delegated its inspection and

investigation powers to the HKMA in relation to the insurance-related

businesses of authorised institutions in Hong Kong, which aims to

minimise possible regulatory overlap.

Under the statutory regime for the regulation of Mandatory Provident

Fund ('MPF') intermediaries, the Mandatory Provident Fund Schemes

Authority is the lead regulator in respect of regulation of MPF

intermediaries whereas the HKMA, the IA and the SFC are the front-

line regulators of the MPF intermediaries.

The Financial Institutions (Resolution) Ordinance ('FIRO') established

the legal basis for a cross-sector resolution regime in Hong Kong under

which the HKMA is the resolution authority for banking sector entities,

including all authorised institutions. The HKMA is also designated as

the lead resolution authority for the cross-sectoral groups in Hong Kong

that include banking sector entities within the scope of the FIRO. The

HKMA's function as a resolution authority is undertaken by the

Resolution Office within the HKMA. The Resolution Office is

operationally independent and has a direct reporting line to the chief

executive of the HKMA.

For resolution to be both feasible and credible, the HKMA requires

authorised institutions to be organised and managed at all times in a

way that facilitates the effective use of its resolution powers in the

event of their failure or likely failure. Institutions must comply with

HKMA resolution standards, which support resolution planning and

address barriers to resolvability. Key requirements include regular

submission of core data to the Resolution Office, maintaining adequate

loss-absorbing capacity, ensuring liquidity and funding during resolution,

operational continuity, contractual recognition of suspension of

termination rights, and continuity of access to financial market

infrastructure services.

US regulation and supervision

The Group is subject to federal and state supervision and regulation in

the US. Banking laws and regulations of the Federal Reserve Board (the

'FRB'), the Office of the Comptroller of the Currency (the 'OCC') and

the Federal Deposit Insurance Corporation (the 'FDIC') (collectively, the

'US banking regulators') govern various aspects of our US business.

HSBC Bank USA, N.A. ('HSBC Bank USA') is subject to direct

supervision and regulation by the Consumer Financial Protection

Bureau ('CFPB'), which has the authority to examine and take

enforcement action related to compliance with US federal consumer

financial laws and regulations. HSBC Bank USA's derivative activities

are subject to supervision and regulation by the Securities and

Exchange Commission ('SEC') and Commodity Futures Trading

Commission ('CFTC'). The Group's US securities broker/dealer and

investment banking operations are also subject to ongoing supervision

and regulation by SEC, the Financial Industry Regulatory Authority and

other government agencies and self-regulatory organisations under US

federal and state securities laws. Similarly, the Group's US commodity

futures, commodity options and swaps-related and client clearing

operations are subject to ongoing supervision and regulation by the

CFTC, the National Futures Association and other self-regulatory

organisations under US federal commodities laws. Furthermore, since

we have substantial operations outside the US that conduct many of

their day-to-day transactions with the US, HSBC entities' operations

outside the US are also subject to the extraterritorial effects of US

regulation in many respects.

HSBC Holdings and its US operations are subject to supervision,

regulation and examination by the FRB because HSBC Holdings is a

'bank holding company' ('BHC') under the US Bank Holding Company

Act of 1956, as a result of its control of HSBC Bank USA and HSBC

Trust Company (Delaware), N.A., Wilmington, Delaware ('HTCD').

HSBC North America Holdings ('HNAH') and HSBC USA Inc., are each

a 'bank holding company' and HNAH is also an intermediate holding

company ('IHC') regulated by the FRB. HSBC Holdings, HNAH and

HSBC USA Inc. have elected to be financial holding companies

pursuant to the provisions of the Gramm-Leach-Bliley Act and,

accordingly, may affiliate with securities firms and insurance

companies, and engage in other activities that are financial in nature or

incidental or complementary to activities that are financial in nature.

Under regulations implemented by the FRB, if any financial holding

company, or any depository institution controlled by a financial holding

company, ceases to meet certain capital or management standards, the

FRB may impose corrective capital and/or managerial requirements on

the financial holding company and place limitations on its ability to

conduct the broader financial activities permissible for financial holding

companies. In addition, the FRB may require divestiture of the holding

company's depository institutions, or its affiliates engaged in broader

financial activities in reliance on the Gramm-Leach-Bliley Act if the

deficiencies persist.

The regulations also provide that if any depository institution controlled

by a financial holding company fails to maintain a satisfactory rating

under the Community Reinvestment Act of 1977, the FRB must

prohibit the financial holding company and its subsidiaries from

engaging in any additional activities other than those permissible for

bank holding companies that are not financial holding companies.

The two US banks, HSBC Bank USA and HTCD, are subject to

regulation and examination primarily by the OCC. HSBC Bank USA and

HTCD are subject to additional regulation and supervision by the FDIC,

the CFPB and the FRB. Banking laws and regulations restrict many

aspects of their operations and administration, including the

establishment and maintenance of branch offices, capital and reserve

requirements, deposits and borrowings, investment and lending

activities, payment of dividends and numerous other matters.

In 2019, the FRB and other US banking regulators introduced the

Tailoring Rules, which refine the application of enhanced prudential

standards for large US banking organisations and the US operations of

certain foreign banks. Under these rules, institutions with $50 billion or

more in total US assets are categorised into five groups (Categories I–

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IV and 'Other Firms') according to factors such as asset size, cross-

jurisdictional activity, short-term wholesale funding reliance, non-bank

asset size, and off-balance sheet exposures.

As of 1 January 2026, HNAH remains classified as a Category IV firm,

subject to the specific enhanced prudential standards for this category.

HSBC Bank USA is also required to comply with the regulatory capital

and liquidity requirements applicable to Category IV firms.

HNAH, HSBC USA Inc. ('HUSI') and HSBC Bank USA ('HBUS') are

required to maintain minimum capital ratios (exclusive of any capital

buffers), including a minimum Tier 1 leverage ratio of 4%, and a

minimum total risk-based capital ratio of at least 8%. HNAH, HUSI and

HBUS each calculate their risk-based capital requirements as Non-

Advanced Approaches banks in accordance with the Basel III rules as

adopted by US banking regulators. Over and above the minimum risk-

based requirements, HNAH is subject to a Stress Capital Buffer ('SCB'),

which is floored at 2.5% and is recalibrated every other year unless

HNAH opts to be subject to supervisory stress testing by the FRB

during an 'off year'. HUSI and HBUS continue to be subject to the static

2.5% capital conservation buffer ('CCB'). Compliance with the SCB/

CCB does not represent minimum requirements, but rather a

necessary condition to allow capital distributions and discretionary

bonus payments.

In 2023, US banking regulators proposed changes to the regulatory

capital rules applicable to US banks, BHCs and IHCs, including HNAH,

HSBC USA Inc. and HSBC Bank USA. The 2023 proposal has not yet

been finalised, and as of December 2025, a re-proposal of the rule

changes, rather than a finalised version of the 2023 proposal, is

expected to be issued, likely sometime in early 2026.

Under FRB regulations, HNAH is subject to supervisory stress testing

requirements (on an every other year basis, with the next FRB

supervisory stress test expected to take place in 2026) that are

designed to evaluate whether a BHC has sufficient capital on a total

consolidated basis to absorb losses and support operations under

severely adverse economic conditions. As part of the Comprehensive

Capital Analysis and Review ('CCAR'), the FRB uses pro-forma capital

positions and ratios under such stress scenarios to determine the size

of the SCB for each CCAR participating firm.

As part of CCAR, HNAH is required to submit an annual capital plan to

the FRB on or before 5 April of each year. Category IV firms may opt

into CCAR supervisory stress testing in an 'off year' in order to

recalibrate their SCB, based on their most recent supervisory stress

test. The SCB equals (i) a firm's projected decline in common equity tier

1 under the supervisory severely adverse stress testing scenario plus

(ii) one year of planned common stock dividends. HNAH's SCB

requirement effective from 1 October 2025 is 5.1%, unchanged from

2024. HNAH already utilises an internal capital assessment approach that is

analogous to the SCB and continues to review the composition of its

capital structures and capital buffers in light of these developments.

Under the Tailoring Rules, certain US banking organisations are subject

to heightened liquidity and risk management requirements, including

the US LCR and NSFR. Category IV firms whose weighted short term

wholesale funding equals or exceeds $50bn, including HNAH, are

subject to a less stringent US LCR and NSFR modified regulatory

requirement. As a result, under the modified US LCR requirement, a

LCR of 100% or higher reflects an unencumbered HQLA balance that is

equal to or exceeds 70% of the firm's liquidity needs (net cash

outflows) for a 30-calendar day liquidity stress scenario.

Under the modified US NSFR requirement as applied to HNAH, a NSFR

of 100% or more reflects an available stable funding balance from

liabilities and capital over the next 12 months that is equal to or

exceeds 70% of the firm's required stable funding amount for assets

and off-balance sheet exposures. As a Category IV firm, HNAH is also

subject to tailored liquidity risk management and liquidity buffer

requirements, as well as liquidity stress testing on a quarterly basis.

Section 165(d) of the Dodd-Frank Act requires designated financial

institutions, including foreign bank holding companies such as HSBC

Holdings plc (HSBC Group), to periodically submit a resolution plan to

the FDIC and Federal Reserve. This plan outlines the strategy for the

rapid and orderly resolution of their U.S. operations under the U.S.

Bankruptcy Code in the event of material financial distress or failure.

Following the transition of HSBC Group's US Operations from Category

III to Category IV, HSBC Holdings now qualifies for triennial reduced

filings. The last reduced resolution plan was submitted in July 2025,

with the next submission due 1 July, 2028. In July 2024, the FDIC

finalised a rule requiring insured depository institutions (IDIs) with total

assets of $100 billion or more to submit resolution plans (the 'IDI plan').

The rule revises existing requirements concerning the content and

timing of full resolution submissions and interim supplements, in the

off years and enhancing the FDIC's preparedness for potential distress

or failure of large IDIs. It also strengthens the assessment of

submission credibility, broadens expectations for engagement and

capabilities testing, and clarifies the FDIC's approach to review,

feedback, and enforcement of compliance. HSBC Bank USA continues

to be required to submit an IDI Plan every three years and would

become subject to increased content requirements and an emphasis

on capabilities testing and engagement with the FDIC. In April 2025,

the FDIC waived several of the substantive requirements associated

with all IDI Plan submissions due in July 2025, and, in December 2025,

extended that waiver for certain IDI Plan submissions due in 2026,

including HSBC Bank USA's full IDI Plan. In December 2025, the FDIC

indicated that it intends to consider further changes to its resolution

plan requirements in 2026. As a result, the future of these

requirements is uncertain. HSBC Bank USA submitted an interim

supplement on 1 July 2025, while its next full IDI Plan submission is

due by 1 July 2026.

In Q4 2024, the Office of the Comptroller of the Currency (OCC) issued

guidelines establishing recovery planning standards for certain financial

institutions, effective 1 January 2025. These requirements apply to

insured national banks, Federal savings associations, and Federal

branches with average total consolidated assets of $100 billion or more.

HSBC Bank USA became subject to these standards, with compliance

deadlines set for 1 January 2026 (overall recovery plan) and 1 January

2027 (scenario testing). HSBC Bank USA submitted its recovery plan in

December 2025, in line with the Guideline. In October 2025, the OCC

proposed rescinding the recovery planning guidelines; however, as no

final rule has been issued, the requirement for the 1 January 2027

submission remains uncertain.

The FRB has separately established a framework for recovery plans,

although HSBC is not currently required to submit a recovery plan to US

regulators unless specifically requested to do so. The FRB limits credit

exposures to single counterparties for large BHCs and IHCs. HNAH is

not directly subject to these single counterparty credit limits.

Independent of HNAH's classification as a Category IV firm, HNAH,

together with its subsidiaries, could become subject to limits on its

exposures to unaffiliated counterparties if its parent, HSBC, cannot

certify its compliance with a large exposure regime in the UK that is

consistent with the Basel large exposure framework.

Pursuant to Title VII of the Dodd-Frank ('Title VII'), the SEC and CFTC

have adopted extensive requirements to regulate over-the-counter

('OTC') derivatives, including, among other requirements, registration

for swap dealers, major swap participants, security-based swap ('SBS')

dealer and major SBS participants, mandatory clearing and trade

execution of certain OTC derivatives, position limits for certain physical

positions and economically equivalent swaps, real-time public and

regulatory trade reporting, business conduct, enhanced documentation,

supervision, recordkeeping, and financial reporting requirements.

HSBC Bank USA and HSBC Bank plc are registered as swap dealers

with the CFTC and registered as SBS dealers with the SEC. Because it

is a non-US dealer, HSBC Bank plc is only subject to certain of the

CFTC's requirements in respect of swap transactions with US persons

and certain persons guaranteed by or affiliated with US persons, and

only subject to certain of the SEC's requirements in respect of SBS

transactions with US persons or which are arranged, negotiated, or

executed by US personnel. HSBC Bank plc is also permitted to satisfy

certain CFTC requirements and SEC requirements through 'substituted

compliance' pursuant to relevant determinations and related relief

issued by the SEC and the CFTC.

Pursuant to Title VII, the US prudential regulators adopted margin

requirements for non-cleared swaps and SBS for prudentially regulated

swap dealers and SBS dealers, such as HSBC Bank USA and HSBC

Bank plc. Subject to certain exceptions, the margin rules require HSBC

Bank USA and HSBC Bank plc to collect and post initial and variation

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margin for non-cleared swaps and SBS entered into with other swap

dealers and certain financial end-users. The prudential regulators'

margin requirements, the parallel margin rules adopted by the CFTC

and the SEC and certain non-US regulators, as well as other regulations

of OTC derivatives under Title VII, have increased the costs associated

with trading OTC derivatives and may adversely affect our business in

such products.

Dodd-Frank also expanded the extra-territorial jurisdiction of US courts

over actions brought by the SEC or the US with respect to violations of

the anti-fraud provisions in the Securities Act, the Securities Exchange

Act of 1934 and the Investment Advisers Act of 1940.

In addition, regulations could affect the nature of the activities that our

FDIC-insured depository institution subsidiaries may conduct, and may

impose restrictions and limitations on the conduct of such activities.

The implementation of the remaining Dodd-Frank provisions could

result in additional costs, or limit or restrict the way we conduct our

business in the US.

EU Regulation and supervision

HSBC Continental Europe ('HBCE'), headquartered in France, is the

parent company of all HSBC European subsidiaries. In accordance with

provisions of the Capital Requirements Directive ('CRD'), HBCE is an

Intermediate Parent Undertaking ('IPU') for HSBC's European

subgroup, centralising all coordination and requests to the unique Joint

Supervisory Team ('JST') and the unique Internal Resolution Team

('IRT'), made up respectively of the European Central Bank ('ECB') and

the national supervisory authorities on the one hand, and the Single

Resolution Board ('SRB') and the national resolution authorities on the

other. In particular, HBCE will have to submit consolidated reports

directly onto the portal of the French resolution authority (ACPR), as the

host authority of HBCE.

At the end of 2025, HBCE operated ten branches in the following

jurisdictions: Belgium, Czech Republic, Germany, Ireland, Italy,

Luxembourg, Netherlands, Poland, Spain and Sweden with two

principal subsidiaries, HSBC Bank Malta plc ('HBMT') and HSBC Private

Bank (Luxembourg) SA ('PBLU') following further transformation in

2022 and 2023 to support HBCE's role as the Group's EU IPU.

The revised Capital Requirements Regulation ('CRR3') implementing

EU's Basel 3.1 package entered into force on 1 January 2025; however,

the market risk framework was delayed. In June 2025, the European

Commission ('EC') announced a further one-year delay to market risk

implementation to 1 January 2027. The one-year delay aims to ensure

that implementation in Europe is aligned to other major jurisdictions.

Furthermore, the European Banking Authority ('EBA') continues to

publish technical standards in line with its mandate to develop 140

technical standards.

In June 2024, the EU adopted amendments to the Capital

Requirements Directive ('CRD6') which EU member states are in the

process of transposing. While CRR3 and most CRD6 provisions apply

solely to HSBC's European subsidiaries, CRD6 Article 21c introduces

restrictions on cross-border services offered by non-EU banking entities

to EU clients, with certain exemptions. Such cross-border restrictions

will generally come into effect in January 2027, although precise

effective dates will vary across EU member states.

Global and regional prudential and other

regulatory developments

The Group operates under the oversight of numerous regulatory

authorities and agencies. Regulatory changes are introduced both at the

national level and by global organisations such as Basel, FSB and the

G20. These global standards are subsequently adopted by individual

countries.

We are subject to regulatory stress testing across multiple jurisdictions,

with increasing frequency and more detailed data requirements from

supervisors. These include programmes from the BoE, FRB (see 'US

regulation and supervision'), OCC, EBA, ECB, HKMA, and other

authorities. For further information, refer to 'Stress testing' on page

120. Details on prudential changes are available in the 'Regulatory

developments' section on page 7 of the Pillar 3 Disclosures as at 31

December 2025.

Recovery and resolution

The HSBC Group is subject to recovery and resolution requirements in

many of the jurisdictions in which it operates. In Europe, the Bank

Recovery and Resolution Directive (BRRD) establishes a framework for

the recovery and resolution of EU credit institutions and investment

firms. This framework applies to HSBC's operating banks in the

European region. In Hong Kong, the Banking Ordinance and Financial

Institutions (Resolution) Ordinance sets out requirements for recovery

and resolution planning. In general, each respective part of the HSBC

Group is responsible for ensuring that it meets local recovery and

resolution requirements where they exist, which are mainly applicable

only to those regulated entities in a particular jurisdiction. The PRA and

BoE, however, are the lead regulators from a recovery and resolution

perspective respectively for the consolidated HSBC Group.

HSBC maintains recovery plans designed to outline credible

management actions that the HSBC Group could implement in the

event of severe stress in order to restore its business to a stable and

sustainable condition. The HSBC Group submits a Group recovery plan

to the PRA, the latest plan being submitted to the PRA in June 2024. In

addition, certain HSBC entities also submit local recovery plans to host

regulators, where local recovery planning requirements are in place.

HSBC's recovery plans are frequently re-appraised to reflect HSBC's

Group structure as well as meet regulatory and internal feedback,

including through regular stress testing and 'fire drill' simulations.

In general terms, resolution refers to the exercise of statutory powers

where a financial institution and/or its parent or other group company is

deemed by its regulators to be failing, or likely to fail and it is not

reasonably likely that any action taken would result in the institution

recovering.

In view of the HSBC Group's corporate structure, which comprises a

group of locally regulated operating banks, the preferred resolution

strategy for the HSBC Group, as confirmed by its regulators, is a

multiple point of entry ('MPE') bail-in strategy. This provides flexibility

for HSBC to be resolved either (i) through a bail-in at the HSBC

Holdings level, which enables the recapitalisation of operating bank

subsidiaries in the HSBC Group (as required) while restructuring actions

are undertaken, with the HSBC Group remaining together; or (ii) at a

local subsidiary level pursuant to the application of statutory resolution

powers by local resolution authorities.

In the event of a resolution of the HSBC Group, it is anticipated that the

MREL eligible debt issued externally by HSBC Holdings plc would be

written down or converted to equity by the BoE using its statutory

powers. This would enable subsidiaries of the HSBC Group to be

recapitalised, as needed, to support the resolution objectives and

maintain the provision of critical functions locally. Recapitalisation of

operating bank subsidiaries could be achieved through the write-down,

or conversion to equity, of internally issued MREL, Total Loss

Absorbing Capacity ('TLAC') or Loss Absorbing Capacity ('LAC'). It is

anticipated that this approach to recapitalising the HSBC Group's

operating bank subsidiaries would allow the Group to stay together in

order to ensure an effective stabilisation of the whole Group whilst also

facilitating an orderly restructuring process post resolution. Any

resolution of HSBC as a group would be coordinated by the BoE.

Given the geographical footprint of the HSBC Group, resolution

authorities have determined that HSBC has three resolution groups that

together account for over 92% ($817bn) of the Group's consolidated

RWAs ($889bn): The Asia resolution group ('ARG'), the European

resolution group ('ERG') and the US resolution group ('USRG'). As a

result, HSBC is overseen by various regulators and resolution

authorities including its lead global regulators and resolution authority,

the BoE and the PRA and a number of host regulators and resolution

authorities. Examples include the European SRB, the HKMA, FRB,

FDIC and OCC. These host resolution authorities have statutory

resolution group powers which could be applied to subsidiaries of the

HSBC Group in their jurisdictions. The application of these local

statutory resolution powers may result in one or more individual

resolution authorities leading to a local resolution of the subsidiaries

within their jurisdiction.

This may or may not result in such subsidiaries ceasing to be part of the

HSBC Group, depending on the drivers of failure and the resolution

powers exercised by the relevant resolution authority.

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HSBC considers that a bail-in at the HSBC Holdings plc level that

enables subsidiaries in the HSBC Group to be recapitalised, (as

required), and the subsequent implementation of restructuring actions

while the HSBC Group remains together, is the strategy most likely to

deliver the optimal resolution outcome for all of HSBC's stakeholders.

In July 2019, the BoE and PRA published final policies on the

Resolvability Assessment Framework ('RAF'), which places the onus

on firms to demonstrate their own resolvability and is designed to

increase transparency and accountability for resolution planning. In

order to be considered resolvable, HSBC must meet three outcomes:

(i) have adequate resources in resolution; (ii) be able to continue

business through resolution and restructuring; and (iii) be able to co-

ordinate its resolution and communicate effectively with stakeholders.

The RAF requires HSBC to prepare a report on the HSBC Group's

assessment of its resolvability, which must be submitted to the BoE on

a periodic basis as requested by the BoE. HSBC Group submitted its

second report to the BoE in October 2023. In August 2024, HSBC

made its second public disclosure on its resolvability, which

summarised the key findings from the second RAF Self-assessment. In

line with the previous BoE RAF cycle, alongside HSBC's disclosure, the

BoE also disclosed its own assessment of UK banks' resolvability,

including HSBC, against expectations set out in the RAF.

Regular engagement with the BoE and PRA is maintained on Recovery

and Resolution Planning topics. HSBC continues to engage with the

BoE, PRA and its global regulators in other jurisdictions to help ensure

that it meets current and future recovery and resolution requirements.

Financial crime regulation

HSBC is committed to preventing our products and services from being

exploited for criminal activity. We do this because it is the right thing to

do to protect our customers, shareholders, staff, the communities in

which we operate and the integrity of the financial system on which we

all rely. We recognise that financial institutions are inherently exposed

to financial crime risk, which cannot be mitigated in its entirety. We

employ a risk-based approach to managing our exposure by focusing

our resources in a manner that is proportionate to the level of financial

crime risk inherent in our business strategy and operating model. We

remain committed to conducting our activities in accordance with all

applicable financial crime laws and regulations in the markets in which

we operate, the expectations of our regulators, measures associated

with corporate criminal liability, and our own risk appetite.

HSBC has an established financial crime risk management programme

that is applicable across all global businesses and functions, and all

countries and territories in which we operate. This enables the bank

and its staff to detect, analyse, investigate, report and mitigate the risk

of HSBC facilitating or being used to facilitate financial crime, including

bribery and corruption, fraud, money laundering, terrorist financing and

proliferation financing, tax evasion, sanctions and export control

violations and evasion.

HSBC could be subject to heightened commercial, operational,

regulatory, reputational and market risks resulting from sanctions, trade

restrictions and other regulatory changes related to foreign policy or

national security concerns, as well as shifts in the geopolitical

landscape. These risks may increase or evolve due to changing

geopolitical dynamics, economic uncertainties, strategic competition in

technology, and political instability and conflicts. HSBC has developed a

comprehensive compliance framework to seek to manage sanctions

and other financial crime risks. It is designed to identify and respond to

changes in financial crime laws and regulations affecting the Group, to

identify and address exposure that may arise from the activities of the

Group, while fostering a strong compliance culture. This is supported

through an extensive training programme aimed at equipping HSBC

employees with the knowledge and skills necessary to maintain high

standards of compliance.

Technical and digital innovation in how we engage with customers and

the services we provide to them continue at pace. Considering the

dynamic and changing environment, including the increasing use of

alternative (including digitised) payment methods and technologies,

HSBC continues to shape its risk appetite and enhance its control

framework to detect, deter and disrupt financial crime more effectively,

increasing its use of intelligence-led technologies and artificial

intelligence to monitor customers for unusual or suspicious activity.

HSBC also maintains clear whistleblowing policies and processes, to

enable individuals to report concerns confidentially.

Disclosures pursuant to Section 13(r)

of the Securities Exchange Act

Section 13(r) of the Securities Exchange Act requires each issuer

registered with the SEC to disclose in its annual or quarterly reports

whether it or any of its affiliates have knowingly engaged in specified

activities or transactions with persons or entities targeted by U.S.

sanctions programmes relating to Iran, terrorism, or the proliferation of

weapons of mass destruction, even if those activities are not prohibited

by U.S. law, are conducted outside the U.S. by non-U.S. affiliates in

compliance with local laws and regulations, and are not material to the

business of the issuer or any of its affiliates.

To comply with this requirement, HSBC Holdings plc (together with its

affiliates, "HSBC") has requested relevant information from its affiliates

globally. The following activities conducted by HSBC are disclosed in

response to Section 13(r) and are not material to the business of HSBC:

Legacy contractual obligations related to

guarantees

Between 1996 and 2007, we provided guarantees to a number of our

non-Iranian customers in Europe and the Middle East for various

business activities in Iran. In a number of cases, we issued counter

indemnities involving Iranian banks as the Iranian beneficiaries of the

guarantees required that they be backed directly by Iranian banks. The

Iranian banks to which we provided counter indemnities included Bank

Tejarat, Bank Melli, and the Bank of Industry and Mine.

There was no measurable gross revenue in 2025 under those

guarantees and counter indemnities. We do not allocate direct costs to

fees and commissions and, therefore, have not disclosed a separate

net profit measure. We are seeking to cancel all relevant guarantees

and counter indemnities, and do not currently intend to provide any

new guarantees or counter indemnities involving Iran. No guarantees

were cancelled in 2025, and approximately 14 remain outstanding.

Other relationships with Iranian banks

Activity related to U.S.-sanctioned Iranian banks not covered elsewhere

in this disclosure includes the following:

We act as the trustee and administrator for a pension scheme involving

employees of a U.S.-sanctioned Iranian bank in Asia. Under the rules of

this scheme, we accept contributions from the Iranian bank each

month and allocate the funds into the pension accounts of the Iranian

bank's employees. We run and operate this pension scheme in

accordance with applicable laws and regulations. Estimated gross

revenue, which includes fees and/or commissions, generated by this

pension scheme during 2025, was approximately $2,224.

For the Iranian bank-related activity discussed above, we do not allocate

direct costs to fees and commissions and, therefore, have not

disclosed a separate net profit measure.

We currently intend to continue to wind down the above activities, to

the extent legally permissible, and not enter into any new such activity.

Activity related to U.S. Executive Order

13224

We have a corporate customer in Asia that was designated under

Executive Order 13224 in 2025. Immediately following the designation,

and prior to the accounts being restricted, we processed two low-value

local currency domestic payments for the customer.

We had an individual customer in Europe that was designated under

Executive Order 13224 in 2021. The relationship was exited in 2025

and, as part of the exit process, we wrote off a de minimis local

currency balance owed by the customer.

We had an individual customer in Latin America that was designated

under Executive Order 13224 in 2025. Shortly following the designation

and before the account was restricted, we processed three small local

currency domestic payments for our customer.

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We had an individual customer in the Middle East that was designated

under Executive Order 13224 in 2021. The customer's accounts were

restricted at the time of designation and the relationship was exited

during 2025. As part of the exit process, we returned the customer's

funds to the customer.

During 2025, as part of the settlement of the estate of a deceased

customer in the Middle East, we processed a local currency domestic

payment from the deceased customer's account to an individual

designated under Executive Order 13224 who acted as representative

for the deceased customer's heirs.

We have individual and corporate customers in the Middle East that,

during 2025, made local currency cheque payments for the rental of

property to a corporate entity designated under Executive Order 13224.

We processed these cheques on behalf of our customers.

During 2025, pursuant to general licences issued by the U.S.

Department of the Treasury's Office of Foreign Assets Control, we

processed a small number of low-value U.S. dollar payments to the

account of a non-designated non-governmental organisation held at a

financial institution designated under Executive Order 13224 and one

U.S. dollar payment from an entity designated pursuant to Executive

Order 13224 to a non-designated corporate customer of HSBC.

For these activities, there was no measurable gross revenue or net

profit to HSBC during 2025.

Activity related to U.S. Executive Order

13382

We had a corporate customer in Asia that was designated under

Executive Order 13382 in 2025. Immediately following the designation,

and prior to the accounts being restricted, we processed two payments

for the customer. The relationship was exited in 2025 and, as part of

the exit process, we returned the customer's funds to the customer.

For this activity, there was no measurable gross revenue or net profit to

HSBC during 2025.

Other activity

We have a non-Iranian insurance company customer in the Middle East

that, during 2025, made local currency domestic payments for the

reimbursement of medical treatment to a hospital located outside Iran

that is owned by the Government of Iran. We processed these

payments from our customer to the hospital.

We have three customers in the Middle East that, during 2025, made

local currency domestic payments for medical treatment to a hospital

located outside Iran that is owned by the Government of Iran. We

processed these payments from our customers to the hospital.

We have three corporate customers in the Middle East that, during

2025, received local currency cheques from a hospital located outside

Iran that is owned by the Government of Iran. We processed the

cheques from the hospital to our customers.

We have individual and corporate customers in the Middle East that,

during 2025, received local currency cheques from an insurance

company located outside Iran that is owned by the Government of Iran.

We processed these cheques from the insurance company to our

customers.

We have individual and corporate customers in Europe that, during

2025, made local currency domestic payments to, or received such

payments from, an Iranian embassy. Generally, these customers

appear to receive consular or other services provided by the embassy

or provide goods and services that support the conduct of the official

business of the embassy. We processed these payments between our

customers and the Iranian embassy.

We have an individual customer in Europe that is employed by a bank

located outside Iran that is owned by the Government of Iran. During

2025, we processed local currency salary payments received via a bank

that is not owned by the Government of Iran to our customer. We are

in the process of exiting the customer.

During 2025, we processed two low value local currency payments to a

pension fund in Europe from an account held at a non-designated

financial institution by an insurance company located outside Iran that is

owned by the Government of Iran.

For these activities, there was no measurable gross revenue or net

profit to HSBC during 2025.

Frozen accounts and transactions

We maintain several accounts that are frozen as a result of relevant

sanctions programmes, and safekeeping boxes and other similar

custodial relationships, for which no activity, except as licensed,

authorised, or otherwise related to the maintenance of such accounts

as consistent with applicable law, took place during 2025. There was no

measurable gross revenue or net profit to HSBC during 2025 relating to

these frozen accounts.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **118** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Risk

review

Our risk review outlines our approach to risk

management, how we identify and monitor top

and emerging risks, and the actions we take to

mitigate them. In addition, it explains our

material banking risks, including how we

manage capital.

---

| | |
|:---|:---|
| **[119](#ie4edc76213cf40e9ae3dd93b36f88427_7)** | Our approach to risk |
| **[121](#ie4edc76213cf40e9ae3dd93b36f88427_40)** | Top and emerging risks |
| **[126](#ie4edc76213cf40e9ae3dd93b36f88427_49)** | Risk factors |
| **[138](#ie4edc76213cf40e9ae3dd93b36f88427_64)** | Our material banking risks |
| **[140](#ie4edc76213cf40e9ae3dd93b36f88427_6561)** | Credit risk |
| **[189](#ie4edc76213cf40e9ae3dd93b36f88427_6569)** | Treasury risk |
| **[200](#ie4edc76213cf40e9ae3dd93b36f88427_6577)** | Market risk |
| **[203](#ie4edc76213cf40e9ae3dd93b36f88427_6584)** | Climate risk |
| **[213](#ie4edc76213cf40e9ae3dd93b36f88427_364)** | Resilience risk |
| **[213](#ie4edc76213cf40e9ae3dd93b36f88427_367)** | Regulatory compliance risk |
| **[214](#ie4edc76213cf40e9ae3dd93b36f88427_370)** | Financial crime risk |
| **[214](#ie4edc76213cf40e9ae3dd93b36f88427_373)** | Model risk |
| **[215](#ie4edc76213cf40e9ae3dd93b36f88427_6623)** | Insurance manufacturing operations risk |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **119** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Our approach to risk

We recognise that the primary role of risk management is to help

protect our customers, business, colleagues, shareholders and the

communities that we serve, while ensuring we are able to support our

strategy and provide sustainable growth.

In addition, we recognise the importance of a strong culture, which

refers to our shared attitudes, beliefs, values and standards that shape

behaviours including those related to risk awareness, risk taking and

risk management. All our people are responsible for the management

of risk, with ultimate supervisory oversight residing with the Board.

The implementation of our business strategy remains a key focus. As

we deliver change initiatives, we seek to actively manage the execution

risks. We also perform periodic risk assessments, including against

strategies, to help ensure retention of key personnel for our continued

safe operation.

Our risk management framework

We aim to use a comprehensive risk management approach across the

organisation and across all risk types, underpinned by our culture and

values. This is outlined in our Risk Management Framework ('RMF'),

including the key principles and practices that we employ in managing

material risks, both financial and non-financial.

The RMF sets out in a consistent way how we identify, assess and

manage the risks that matter the most with respect to our ability to

operate, grow, and meet external commitments. It translates our

strategy, values and commitments into practical actions and risk-based

decisions.

Our Group Risk and Compliance function is responsible for the Group's

RMF. Independent from the business segments, including our sales

and trading functions, it provides challenge, oversight and appropriate

balance of risk and reward in decision-making. Its responsibility includes

establishing global policy, monitoring risk profiles, and identifying and

managing forward-looking risk.

Our people are responsible for managing both financial and non-

financial risk, including regulatory compliance and financial crime risks.

They are required to manage the risks of the business and operational

activities for which they are responsible. We maintain adequate

oversight of our risks through our various specialist risk stewards and

the collective accountability held by our chief risk officers ('CROs') and

chief risk and compliance officers ('CRCOs'). We seek to maintain a

sound control environment and regularly test and monitor our

controls, which aim to prevent risks from materialising, detect when

they do, and recover and learn from issues in a timely manner within

our risk appetite.

Our risk appetite

Our risk appetite defines the level and types of risk that we are willing

to take to achieve our strategic objectives.

The Board approves the Group's risk appetite and reviews it regularly to

help ensure it remains fit for purpose.

Our enterprise-wide risk appetite is expressed holistically through

various risk management mechanisms and activities, in both

quantitative and qualitative terms and is formally articulated through our

Risk Appetite Statement ('RAS').

The Group's risk appetite is established considering:

–alignment with our strategy, purpose, values, external risk

environment, reputational and customer needs;

–compliance with applicable laws, regulations and regulatory

priorities;

–forward-looking insights into future risk exposure;

–sufficiency of available capital, liquidity and balance sheet leverage

to absorb the risks;

–capacity and capabilities of people to manage the risk landscape;

–functionality, capacity and resilience of available systems to manage

the risk landscape;

–effectiveness of the applicable control environment to mitigate risk;

and

–internally and externally disclosed commitments.

Performance against the Group's RAS is reported to the Group Risk

Management Meeting to support targeted insight and discussion of

breaches of risk appetite and any associated mitigating actions. This

reporting helps risks to be promptly identified and mitigated and

informs risk-adjusted remuneration to drive a strong risk culture.

Each principal subsidiary and material operating entity is covered by a

RAS, and their alignment with the Group's RAS is monitored.

Our risk governance

The Board has ultimate supervisory responsibility for the effective

management of risk.

The Group Chief Risk and Compliance Officer ('GCRCO'), supported by

members of the Group Risk Management Meeting, holds executive

accountability for the ongoing monitoring, assessment and

management of the risk environment and the effectiveness of the risk

management framework.

The GCRCO is also responsible for the oversight of reputational risk,

with the support of the Group Reputational Risk Committee. Further

details can be found under the 'Reputational risk' section of

www.hsbc.com/who-we-are/esg-and-responsible-business/managing-

risk.

Day-to-day responsibility for risk management is delegated to senior

managers with individual accountability for decision making.

We use a defined executive risk governance structure to help enable

appropriate oversight and accountability of risk, which facilitates

reporting and escalation to the Group Risk Management Meeting. This

structure is summarised in the following table.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **120** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Our approach to risk |  |  |  |

---

---

| | | |
|:---|:---|:---|
| Governance structure for the management of risk and compliance | Governance structure for the management of risk and compliance | Governance structure for the management of risk and compliance |
| **Authority** | **Membership** | **Responsibilities include:** |
| Group Risk Management <br>Meeting <br>| GCRCO<br>Group Chief Legal Officer<br>Group CEO<br>Group CFO<br>All other Group Operating Committee <br>members<br>| –Supporting the GCRCO in exercising Board-delegated risk management authority<br>–Overseeing the implementation of risk appetite and the risk management framework<br>–Forward-looking assessment of the risk environment, analysing possible risk impacts <br>and taking appropriate action<br>–Monitoring all categories of risk and determining appropriate mitigating action <br>–Promoting a supportive Group culture in relation to risk management and conduct<br>|
| Group Risk and Compliance <br>Leadership Meeting<br>| GCRCO<br>CRCOs of HSBC's business segments<br>Regional CRCOs and CROs<br>Heads of Global Risk and Compliance <br>sub-functions <br>| –Supporting the GCRCO in providing strategic direction for the Group Risk and <br>Compliance function, setting priorities and providing oversight<br>–Overseeing a consistent approach to accountability for, and mitigation of, risk and <br>compliance across the Group<br>|
| Global business/regional risk <br>management meetings<br>| Global business/regional CRCOs and <br>CROs<br>Global business/regional CEOs<br>Global business/regional CFOs<br>Global business/regional heads of global <br>functions<br>| –Supporting the GCRCO in exercising Board-delegated risk management authority<br>–Forward-looking assessment of the risk environment<br>–Implementation of risk appetite and the risk management framework<br>–Monitoring all categories of risk and overseeing appropriate mitigating actions<br>–Embedding a supportive culture in relation to risk management and controls<br>|

---

🡠The Board committees with responsibility for oversight of risk-related matters are set out on page 228.

🡠Treasury risks, excluding pension and insurance risks, are the responsibility of the Group Finance Management Meeting and the Group Risk Committee. Global

Treasury actively manages these risks, supported by the Holdings Asset and Liability Management Committee ('ALCO') and local ALCOs, overseen by Treasury

Risk Management and Risk Management Meetings. Further details on treasury risk management are set out on page <u>[189](#ie4edc76213cf40e9ae3dd93b36f88427_238)</u>.

Our responsibilities

All our people are responsible for identifying and managing risk within

the scope of their roles. Roles are defined using the three lines of

defence model, which takes into account our business and functional

structures as described below.

Three lines of defence

To create a robust control environment to manage risks, we use an

activity-based three lines of defence model. This model delineates

management accountabilities and responsibilities for risk management

and the control environment.

The model underpins our approach to risk management by clarifying

responsibility and encouraging collaboration, as well as enabling

effective coordination of risk and control activities. The three lines of

defence are summarised below:

–The first line of defence owns the risks and is responsible

for identifying, recording, reporting and managing these risks in line

with risk appetite, including that the right controls and assessments

are in place to mitigate them.

–The second line of defence challenges the first line of defence on

effective risk management, and provides advice, guidance and

assurance of the first line of defence to help ensure it is managing

risk effectively.

–The third line of defence is our Global Internal Audit function,

which provides independent assurance as to whether our risk

management approach and processes are designed and operating

effectively.

Stress testing

Our stress testing programme assesses potential financial risks to our

business model, and forms part of our risk management and capital and

liquidity planning. As well as undertaking regulatory-driven stress tests,

we conduct our own internally defined stress tests to understand the

nature of our potential vulnerabilities, quantify their impact, and develop

plausible mitigating actions. The outcome of a stress test provides

management with key insights into the impact of severely adverse

events on the Group and provides an indication to regulators of the

Group's resilience to shocks and any consequences for financial

stability.

Our internal capital assessment uses a range of stress scenarios that

explore systemic risks, as well as other potential events that are

idiosyncratic to HSBC.

During 2025, we completed a Group-wide internal stress test of the

Group's strategy and corporate plan. The stress scenario assessed the

impact of the ongoing trade policy uncertainty, including tariffs and

geopolitical conflicts which remain key risks for the global economy.

In addition to the Group-wide stress testing scenarios, each principal

subsidiary conducts regular macroeconomic and event-driven scenario

analysis specific to its region. They also participate, as required, in the

regulatory stress testing programmes of the jurisdictions in which they

operate, including stress tests required by the Bank of England ('BoE')

in the UK, the Federal Reserve Board ('FRB') in the US, and the Hong

Kong Monetary Authority ('HKMA') in Hong Kong.

We also conduct reverse stress tests each year at the Group level and,

where required, at a subsidiary entity level to understand potential

extreme conditions that would make our business model non-viable.

Reverse stress testing identifies potential stresses and vulnerabilities

we might face, and helps inform early warning triggers, management

actions and contingency plans designed to mitigate risks.

🡠For further details of our stress testing and recovery and resolution planning,

see 'Stress testing and recovery and resolution planning' on page 190.

Key developments in 2025

In 2025, we continued to manage risks related to macroeconomic and

geopolitical uncertainties and develop risk management capabilities

through the continued enhancement of our risk management

framework. We work to maintain and build stronger relationships with

regulators and other external stakeholders to support our business and

customer objectives. We retained our focus on risk transformation and

financial crime and continued to assess the Group's operational

resilience capability while prioritising the most significant enterprise

risks. More specifically, we sought to enhance our risk management in

the following areas:

–We have been advancing our programme aimed at strengthening

our global regulatory reporting processes and making them more

sustainable, including enhancing data, consistency and controls.

While this programme continues, there may be further impacts on

some of our regulatory ratios as we implement recommended

changes and continue to enhance our controls across the process.

–We strengthened our control environment through the continued

embedding of our Group Chief Control Oversight Office which

established a centralised approach to controls oversight across the

first line of defence business and process owners, including a

consistent approach to control standards, aggregated reporting and

testing.

–We enhanced our technology and cybersecurity controls to help

improve the resilience and security of our technology services in

response to the heightened external threat environment.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **121** |

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---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Our approach to risk |  |  |  |

---

–We responded to new innovations in the financial system, including

growing adoption of digital assets and currencies, as well as the

evolving use of AI through reviewing and enhancing controls across

risk areas to help us and our customers safely benefit from

innovation.

–We continue to enhance our processes, framework and controls to

improve the oversight of our third parties. We have strengthened

our due diligence and monitoring capabilities, with respect to the

financial stability of our third parties to better manage our supply

chain and we continue to assess and seek to manage our

operational resilience.

–We have further enhanced the way we identify and manage HSBC

Group climate-related risks, which have also been embedded

across the wider organisation. This has been achieved through risk

policy and guideline updates, including updates to our HSBC Group

climate risk approach document, and further development of our

risk metrics and assessments to help monitor and manage

exposures across our organisation. We have also reviewed a

number of climate models and have sought to enhance our internal

climate scenario analysis capabilities.

–We deployed advanced technology and analytics capabilities into

new markets to improve our ability to identify suspicious activities

and prevent financial crime. We will continue to evaluate

technological solutions to improve our capabilities in the detection

and prevention of financial crime.

–We continued to promote our whistleblowing service, HSBC

Confidential, ensuring it is embedded in our speak-up culture.

Continual enhancement is being undertaken to help ensure optimal

effectiveness of the service, while maintaining adherence to

regulation and legislation.

–We have refreshed our conduct approach to ensure it remains clear,

accessible and aligned with how we work today, while maintaining

the same strong standards and enhancing our capability to drive

positive outcomes for our customers and protect the integrity of

financial markets.

Top and emerging risks

We use a top and emerging risks process to provide a forward-looking

view of issues with the potential to threaten our operations or the

execution of our strategy over the medium to long term.

We proactively assess the internal and external risk environment, and

review the themes identified across our regions and business

segments, for any risks that may require global escalation. We update

our top and emerging risks as necessary.

Our current top and emerging risks are as follows.

Externally driven

Geopolitical and macroeconomic risks

Key economic and financial risks are monitored closely. The Group

remains exposed to these risks through its operations, investments and

business activity.

The global economy proved resilient to trade policy changes and

geopolitical shocks through 2025 and growth was stronger than

expected. Economic activity was supported by a decline in policy

interest rates and deficit spending across major economies. At the

same time, oil prices remained broadly stable despite heightened

geopolitical tensions over Venezuela and the Middle East. Asset prices

also rose on account of strong corporate earnings and investor

enthusiasm for technology stocks and investment in AI.

A key source of ongoing uncertainty is the volatility of US trade and

tariff policies. Changes to tariff rates, including sector-specific levies,

may deter capital investment and consumer spending, disrupt supply

chains and reduce global trade growth. Policy uncertainty and trade

disruption may also deter businesses from hiring. During 2025,

unemployment rose across many of our major markets, and there

remains a risk of further increases if layoffs begin to increase more

significantly, employment growth continues to be constrained by

uncertainty, or if investment in AI starts to yield productivity gains that

reduce demand for labour.

A broader escalation of tariffs and a trade war remain a risk. Strategic

competition between countries is reshaping trading relationships and

increasing the focus on long-term economic and supply chain security,

which could adversely affect the Group and our customers.

Tariffs are a particular challenge to China and other export-led

economies. While China has responded by diversifying trade to other

markets, it faces cyclical and structural challenges in the short to

medium term, including reviving the property sector. In contrast, the

effect of tariffs on the UK has been smaller, given the less significant

role of trade with the US. The UK benefited from securing an early

trade agreement with the US on relatively preferential terms, however

it now faces the possibility that the deal is replaced by alternative US

tariffs on different terms.

The disruption of key supply routes caused by geopolitical conflicts has

continued to impact global supply chains. The Russia-Ukraine war and

further conflict or military action, in the Middle East, Venezuela or

elsewhere, could impact economic activity regionally or globally which,

if continued for a prolonged period, could have a material adverse effect

on the Group's business, financial condition, results of operations,

prospects, liquidity, capital position and credit ratings. The financial

impact on the Group of geopolitical risks in Asia is heightened due to

the region's relatively high contribution to the Group's profitability.

The monetary policy outlook remains uncertain across major

economies. During 2025, major central banks cut policy interest rates,

but several, including the US Federal Reserve, have had to balance

inflation – that has persisted above target – against weaker

employment growth. The Group's financial performance could be

affected by changes to interest rate expectations. Policy interest rates

could be reduced further if inflation continues to moderate. However,

that trajectory could be disrupted if wage growth, tariffs or key

commodity prices keep inflation higher for longer.

The US dollar depreciated in 2025 driven by changing interest rates and

tariff policy uncertainty. The decline marked the end of a long period of

sustained appreciation against major currencies. Although the US dollar

remains the primary trade invoicing and reserve asset currency,

elevated volatility is expected to persist, reflecting concern over fiscal

sustainability and an increasingly complex fiscal and monetary policy

environment.

Equity markets rose strongly during 2025, led by significant gains for

the technology sector and AI company valuations in particular. While

high asset prices may create a tailwind from positive wealth effects,

current high valuations also raise the risk of a material fall in the

markets if the expected gains to productivity fail to materialise. In

addition, the Group remains exposed to the market risk and any

potential impact on economic growth of an abrupt revaluation of asset

prices.

Fiscal policy and high levels of government debt are monitored closely.

Debt levels in many of our major markets have continued to rise due to

higher social welfare costs and increased expenditures on defence and

climate transition. Rising government debt and high interest payments

could adversely impact the fiscal capacity and debt sustainability of

highly-indebted sovereign issuers. Emerging markets with substantial

debt and weak fiscal positions may also face increased repayment

costs, heightened refinancing risks, a greater likelihood of sovereign

rating downgrades, and a higher tax burden. This could prove negative

for short and long-term growth prospects. Uncertainty about future

taxation could undermine confidence, business investment and

consumer spending, which would be negative for the Group's retail and

corporate operations in various markets.

Demographic shifts, including population ageing and migration patterns,

may alter savings and investment behaviours and result in reduced

demand for bank borrowing.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **122** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Top and emerging risks | Top and emerging risks |  |  |

---

We continue to closely monitor market conditions in the Hong Kong

and mainland China commercial real estate ('CRE') markets. In Hong

Kong, market sentiment and the economic outlook continue to show

signs of improvement, supported by interest rate cuts, the positive

wealth effect from a buoyant equities market and improving economic

conditions. Nevertheless, recovery is likely to take time, with liquidity

and valuation pressures expected to continue in the near term,

particularly for mid-sized and sub-investment grade corporates. In

mainland China, market fundamentals remain weak and refinancing

risks continue.

🡠For further details of market conditions, see page 177.

Sanctions and restrictions on trade and investment are continually

evolving in response to geopolitical events, and may adversely affect

the Group, its customers and the markets in which the Group operates.

These factors may result in increased legal, regulatory, reputational and

market risks, and a more complex operating environment. HSBC

actively monitors and responds to financial sanctions and restrictions on

trade and investment.

Global tensions over trade and technology are resulting in divergent

regulatory standards and compliance regimes, presenting long-term

strategic challenges for multinational businesses such as HSBC. As the

geopolitical landscape evolves, compliance by multinational

corporations with their legal or regulatory obligations or other initiatives

in one jurisdiction may be seen as supporting the law or policy

objectives of that jurisdiction over another, creating additional legal,

regulatory, reputational and political risks for the Group. We maintain

dialogue with our regulators in various jurisdictions on the impact of

legal and regulatory obligations on our business and customers.

While it is the Group's policy to comply with all applicable laws and

regulations of all jurisdictions in which it operates, geopolitical tensions

and potential ambiguities in the Group's compliance obligations

continue to present challenges and risks for the Group, and could have

a material adverse impact on the Group's strategy, business,

customers, operations, financial results and reputation.

Expanding data privacy, national security and cybersecurity laws in a

number of markets could pose potential challenges to intra-group data

sharing. These developments may affect our ability to manage financial

crime risks across markets due to limitations on cross-border transfers

of personal information.

Provisioning against credit loss is conducted under the IFRS 9 'Financial

Instruments' ('IFRS 9') calculations of ECL, which use forward-looking

scenarios that incorporate the economic and financial risks detailed

above. There remains uncertainty regarding the adequacy of our

models in capturing credit losses under emerging risks which are not

captured by the historical loss experience of our models, or to

effectively distinguish risks for specific sectors and portfolios.

The above risks could also have an impact on our customers, and we

continue to closely monitor the potential impacts and offer support to

our customers in line with regulatory, government and wider

stakeholder expectations.

🡠For further details of our Central and other scenarios, see 'Measurement

uncertainty and sensitivity analysis of ECL estimates' on page <u>[148](#ie4edc76213cf40e9ae3dd93b36f88427_121)</u>.

Mitigating actions

–We closely monitor geopolitical and economic developments in key

markets and sectors. We may undertake scenario analysis, including

stress testing portfolios of particular concern to identify sensitivity to

loss under a range of scenarios. This helps us to take actions to

manage our portfolios where necessary, including through

enhanced monitoring, amending our risk appetite and/or reducing

limits and exposures.

–We regularly review key portfolios, including our commercial real

estate portfolio, to help ensure that individual customer or portfolio

risks are understood and that our ability to manage the level of

facilities offered through any downturn is appropriate.

–We apply management judgemental adjustments where modelled

ECL does not fully reflect the identified risks and related uncertainty,

or to capture significant late-breaking events.

–We continue to seek to manage the impact of sanctions and

restrictions on trade and investment through the use of reasonably

designed policies, procedures and controls, which are subject to

ongoing testing and enhancements.

–We have taken steps, where necessary, to enhance physical

security in geographical areas deemed to be at high risk from

terrorism and military conflicts.

Technology and cybersecurity risk

We operate in an extensive and complex technology landscape. We

need to remain resilient to support customers, our colleagues and

financial markets globally. Risks arise where, for example, technology –

including rapidly advancing AI – is not understood, maintained or

developed appropriately. We also continue to operate in an increasingly

complex cyber threat environment globally. These threats include

potential unauthorised access to systems, whether ours or those of our

third-party suppliers, including access to and potential exfiltration of

customer data. These threats require ongoing investment in business

and technical controls to defend against them.

Mitigating actions

–We continue to upgrade many of our technology systems and are

transforming how software solutions are developed, delivered,

maintained and tested as part of our investment in the Group's

operational resilience to seek to meet the expectations of our

customers and regulators, and to help prevent disruptions to our

services and recover when they occur.

–Our cyber intelligence and threat analysis team continually evaluate

threat levels for the most prevalent cyber-attack types and their

potential outcomes (see page 63), and we continue to seek to

strengthen our controls to help reduce the likelihood and impact of

attacks including advanced malware, data leakage, exposure

through third parties and security vulnerabilities.

–We continue to seek to enhance our cybersecurity capabilities,

including infrastructure and network security, cloud security, identity

and access management, metrics and data analytics, and third-party

security assurance, and to invest in mitigating the potential threats

of emerging technologies.

–We regularly report and review cyber risk and control effectiveness

at executive level across business segments, functions and regions,

as well as at non-executive Board level to help enable appropriate

visibility and governance of the risk and its mitigating actions.

–We participate globally in industry bodies and working groups,

working together to seek to protect against, detect, respond to and

recover from cyber-attacks on financial organisations globally.

–We respond to attempts to compromise our cybersecurity in

accordance with our cybersecurity framework. To date, none of

these attacks have had a material impact on our business or

operations.

Environmental, social and governance

('ESG') risks

We are subject to financial and non-financial risks associated with ESG-

related matters, such as climate change, nature-related and human

rights issues. These matters can impact us both directly and indirectly

through our business activities and relationships. For details of how we

govern ESG, see page 57.

We may face credit and trading losses, liquidity impacts and/or impacts

to our real estate portfolios if climate-related regulatory, legislative or

technological developments impact customers' business models or if

extreme weather events disrupt or interrupt customers' operations,

resulting in financial difficulty for customers and/or stranded assets, and

impacting their ability to repay their debts or secure insurance. Our

customers may find that their business models fail to align to a net zero

economy or face disruption to their operations or deterioration to their

assets as a result of extreme weather. Operational risk may also

increase if extreme weather events impact critical operations and

premises.

We may face regulatory compliance, legal, conduct and reputational

risks resulting from the increasing pace, breadth and depth of climate-

related regulatory expectations, including on the management of

climate risk, and variations in external ESG-related reporting standards

and taxonomies, requiring implementation in short timeframes across

multiple jurisdictions. Such risks may also arise from how we decide to

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **123** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Top and emerging risks | Top and emerging risks |  |  |

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support our customers in high-emitting sectors in their transition to net

zero, the preferences of different stakeholders in relation to our

approach to the transition to net zero, and if we make insufficient

progress in achieving our ESG-related ambitions, targets and

commitments.

We may face additional risks if we knowingly or unknowingly make

inaccurate, unclear, misleading, or unsubstantiated claims regarding

sustainability to our stakeholders.

Requirements, policy objectives, expectations, views or market and

public perceptions and preferences in connection with the transition to

a net zero economy and ESG-related matters may vary by jurisdiction

and stakeholder, particularly in light of the differing perspectives and

responses to climate change of stakeholders in different markets, such

as the UK, the US, the EU, and others. We may be subject to

potentially conflicting approaches to ESG matters in certain

jurisdictions, which may impact our ability to conduct certain business

within those jurisdictions or result in additional regulatory compliance,

reputational, political or litigation risks.

For example, our reputation and client relationships may be damaged

as a result of our decision to participate, or not to participate, in certain

projects perceived to be associated with causing or exacerbating

climate change, as well as any decisions we make to continue to

conduct or change our activities in response to considerations relating

to climate change, including the transition to net zero. These risks may

also arise from divergence in the implementation of ESG, climate policy

and financial regulation in the many regions in which we operate,

including initiatives to apply and enforce policy and regulation with

extraterritorial effect.

Our strategy and business model, including our products, services, and

risk management processes, will need to continue to evolve to align

with evolving regulatory requirements, stakeholder expectations and to

manage ESG-related risks. This may involve adapting the way we

measure and manage both financial and non-financial risks associated

with ESG matters. Achieving our strategy with respect to ESG matters,

including any related ambitions, targets and commitments we may set,

depends on a number of factors beyond the Group's control, such as

technological advancements and supportive public policies in our

operating markets. If these external factors do not materialise or are

delayed, we may not meet our ESG-related ambitions, targets and

commitments.

We may encounter financial reporting risks concerning our climate and

ESG disclosures due to model limitations and the limited quality and

consistency of available data. As methodologies, data, scenarios, and

industry standards evolve with market practices, regulations, or

scientific advancements, our ability to collect and process required data

may be challenged, exposing us to financial reporting risk in relation to

our climate and ESG disclosures. This could result in the Group having

to re-evaluate its progress towards its ESG-related ambitions, targets

and commitments in the future, resulting in reputational, regulatory

compliance and legal risks.

We recognise the importance of nature-related risks, as well as the

complex interactions and compounding effects of climate and nature-

related risk drivers. Nature-related risks may emerge when

dependencies on natural capital – such as plants, soils and minerals and

ecosystem services – such as water availability and air quality – are

affected by key drivers of nature loss, or when there is a lack of

alignment between an organisation's impact on the natural

environment and actions to protect, restore or reduce negative impacts

on nature. Such risks can affect both HSBC and our customers through

various channels, including macroeconomic, market, credit,

reputational, regulatory compliance and legal risks.

Businesses are expected to be transparent about their efforts to

identify and respond to the risk of adverse human rights impacts arising

from their business activities and relationships. Failure to manage this

risk may negatively impact people and communities, which in turn may

result in reputational, regulatory compliance and legal risks for HSBC.

Mitigating actions

–We continue to develop our climate risk management capabilities

across four key pillars: governance and risk appetite, risk

management, stress testing and scenario analysis, and disclosures.

–We continue to enhance our approach to managing and mitigating

the risk of greenwashing.

–Our sustainability risk policies form part of our broader risk

management framework and are important mechanisms for

managing risks. Our sustainability risk policies focus on mitigating

reputational, credit, legal and other risks related to our customers'

environmental and social impacts. For further details of our

sustainability risk policies, see page 49.

–Sustainability execution risk has been defined as a new risk type to

help identify and manage the risks around the delivery and

execution of our sustainability strategy. For further details, see page

204. –We continue to develop our understanding of nature-related risks in

line with European and other emerging regulatory expectations.

–In 2025, we continued to focus on our approach to human rights risk

management relating to the goods and services we buy from third

parties and in respect of our business customers. For further details

of our approach to human rights risk management, see page 58.

–The scope of our financial reporting risk framework includes

oversight of the accuracy and completeness of climate and ESG-

related disclosures. Our risk appetite statement references our

climate and ESG-related disclosures. Our internal controls

incorporate requirements for addressing the risk of misstatement in

climate and ESG-related disclosures. We developed a framework to

support the implementation of controls for climate and ESG-related

disclosures, which includes areas such as process and data

governance, and risk assessment.

–We continue to engage with our customers, investors and

regulators on the management of climate and ESG risks. We also

engage with initiatives, including the Climate Financial Risk Forum,

to help with informing developing practice for climate risk

management.

🡠For further details of our approach to climate risk management, see 'Climate

risk' on page <u>[203](#ie4edc76213cf40e9ae3dd93b36f88427_6584)</u>.

🡠Our ESG review can be found on page 32.

Financial crime risk

Financial institutions remain under considerable regulatory scrutiny

regarding their ability to detect and prevent financial crime. In 2025,

these risks continued to be exacerbated by rising geopolitical tensions

and ongoing macroeconomic factors. These challenges require not only

the management of conflicting laws and approaches to legal and

regulatory regimes, but also the implementation of more complex and

less predictable sanctions and restrictions on trade and investment.

Amid growing cost of living pressures, we continue to face increasing

regulatory expectations with respect to managing internal and external

fraud and protecting customers. The accessibility and increasing

sophistication of Generative AI ('GenAI') can create additional financial

crime risks. While there is potential for the technology to support

financial crime detection, there is also a risk that criminals use GenAI to

perpetrate fraud, particularly scams.

The digitisation of financial services continues to have an impact on the

payments ecosystem, with an increasing number of new market

entrants and payment mechanisms, not all of which are subject to the

same level of regulatory scrutiny or regulations as banks.

Developments in digital assets and currencies have continued at pace,

with an increasing regulatory and enforcement focus on the financial

crimes linked to these types of assets.

We also continue to face increasing challenges presented by national

data privacy requirements, which may affect our ability to manage

financial crime risks across markets.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **124** |

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| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Top and emerging risks | Top and emerging risks |  |  |

---

Mitigating actions

–We continue to seek to manage sanctions and restrictions on trade

and investment through the use of reasonably designed policies,

procedures and controls, which are subject to ongoing testing and

enhancements.

–We continue to develop our fraud controls and invest in capabilities

to fight financial crime through the application of advanced analytics

and AI, while monitoring technological developments and engaging

with third parties.

–We continue to assess the impact of a rapidly changing payments

ecosystem, as well as risks associated with direct and indirect

exposure to digital assets and currencies, in an effort to maintain

appropriate financial crime controls.

–We engage with regulators, policymakers and relevant international

bodies, to improve the effectiveness of managing financial crime

risk through changes to international standards, guidance and

legislation, including seeking to address data privacy challenges.

Digitalisation and technological

advances risk

Developments in technology and changes to regulations are enabling

new entrants to the industry, particularly with respect to payments.

This challenges us to continue innovating, enhancing efficiency, and

adapting our products to attract and retain customers, which may

require increased investment to meet evolving customer needs. We

aim to ensure that new digital capabilities do not weaken our resilience

or wider risk management capabilities.

New technologies such as GenAI, large language models, blockchain,

and quantum computing not only offer business opportunities but also

pose potential risks for HSBC. As with the use of all technologies, we

aim to maximise their potential while seeking to ensure a robust control

environment is in place to help manage the inherent risks.

Mitigating actions

–We continue to monitor this emerging risk and advances in

technology, as well as changes in customer behaviours, to

understand how these may impact our business.

–We assess new technologies to help develop appropriate controls

and maintain resilience.

–We closely monitor and assess financial crime risk and the impact

on payment transparency and wider payment infrastructure.

–We conduct risk assessments and have governance in place (for

example on AI and digital assets and currencies) to help enable

Group-wide cross-risk focus on areas of emerging technology.

–We seek to be transparent as to how we are engaging with new

technology innovation, for example publishing HSBC's Principles for

the Ethical Use of Data and AI.

–We continue to make improvements to our related policies and to

our control framework to enhance the end-to-end management of

risks from new technology innovations.

Evolving regulatory environment risk

We operate across a range of highly regulated markets, designed to

protect customers, ensure the stability of the financial system and

prevent financial crime. Regulatory approvals and permissions are

required to operate in these markets. The approach to regulation is

increasingly fragmented, including in relation to AI and digital assets,

and a trend towards deregulation has emerged in some jurisdictions,

concurrently with regulatory actions to support business growth.

Mitigating actions

–We proactively manage relationships with regulators globally

covering a range of topics which include but are not limited to:

prudential requirements; operational resilience; resolvability; financial

reporting and data; ESG; conduct; sound risk and financial crime risk

management practices. We also engage with financial services

regulators to inform them of changes to the business and to

address their concerns, including meetings with them to discuss

strategic contingency plans, including those arising from geopolitical

issues.

–We monitor and track regulatory developments to understand the

evolving regulatory landscape and implement necessary changes

required by legislation and regulations.

–We engage with governments and regulators directly, and by

responding to formal consultations, to help shape legislation and

regulations to support our customers and strategic objectives.

Internally driven

Data risk

We use multiple systems and an increasing volume of data to support

our customers. Risk arises if data is incorrect, unavailable, misused or

unprotected. Like other banks and financial institutions, we must

comply with external regulatory obligations and laws governing data,

such as the Basel Committee on Banking Supervision's 239

('BCBS239') principles and the UK/EU General Data Protection

Regulation.

Mitigating actions

–We actively monitor the quality, availability and security of data that

supports our customers and internal processes, seeking to address

any identified issues.

–We continue to make regular improvements to our data policies and

control framework, including trusted sources, data flows and data

quality, to enhance comprehensive management of data risk.

–We seek to protect customer data through our data privacy

processes and controls, which set practices, design principles and

guidelines to help ensure compliance with data privacy laws and

regulations.

–We have established a comprehensive Risk Data Aggregation and

Risk Reporting framework, seeking to ensure compliance with

BCBS239 principles.

–We continue to modernise our data and analytics infrastructure

through investments in cloud technology, data visualisation,

machine learning and AI.

–We provide regular mandatory training globally to educate our

employees on data risk management, seeking to ensure they know

how to process and protect data effectively.

Risks arising from the receipt of services

from third parties

We use third parties to provide a range of goods and services. It is

critical that we seek to have appropriate risk management policies,

processes and practices over the selection, governance and oversight

of third parties and their supply chain, particularly for key activities that

could affect our operational resilience. Any deficiency in the

management of risks associated with our third parties could affect our

ability to support our customers and meet regulatory expectations.

Mitigating actions

We continue to:

–monitor the effectiveness of the controls operated by our third-party

providers and request third-party control reports, where required;

–develop the management of our intra-group arrangements using

equivalent control requirements as we apply to external third-party

arrangements;

–strengthen our due diligence and monitoring capabilities in respect

of the financial stability of our third parties;

–strengthen third-party risk oversight across all non-financial risks and

to enhance our processes and framework;

–enhance reporting capabilities to help improve the visibility of risk

and enable more robust management of our material third parties by

our business segments, functions and regions; and

–implement changes required by new regulations.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **125** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Top and emerging risks | Top and emerging risks |  |  |

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Model risk

Model risk remains a key area of focus given the regulatory scrutiny in

this area, with local regulatory exams taking place in many jurisdictions

and uplifted requirements from the PRA's supervisory statement 1/23

('SS1/23') being implemented.

We continued to prioritise the redevelopment of internal ratings-based

('IRB') and internal model methods ('IMM') models, in relation to

counterparty credit, as part of the IRB repair and Basel 3.1 and

Fundamental Review of the Trading Book programmes. We have a key

focus on enhancing the quality of data used as model inputs and

ensuring that models adhere to both the letter and spirit of the

regulation. Some models have been approved, and a number are

pending approval decisions from the UK's Prudential Regulation

Authority ('PRA') and other key regulators. We are a year into a major

project to redevelop our Wholesale IRB models which are expected to

be submitted for regulatory approval over the next two years. Should

the agreed timelines not be met, there is a potential risk of

requirements to hold additional capital or fines being applied by

regulators.

Focus remains on AI and machine learning models given the rapid pace

of technological advances, including the development of GenAI and

significant changes in modelling techniques, and regulators across the

globe are beginning to publish regulations and guidance.

Mitigating actions

–We are investing in the redevelopment of our IRB models used in

our wholesale businesses to enhance our modelling capability and

help ensure we meet regulatory expectations for the adoption of

Basel 3.1 requirements.

–We further enhanced our Model Risk Management ('MRM')

framework to meet the requirements of the PRA's SS1/23 with a

programme of work in progress to implement these changes across

our model landscape.

–We completed the identification of tools that meet the definition of

Deterministic Quantitative Methods ('DQMs'), which are complex

and material calculators, and although not technically models, they

present similar risks. We have now commenced a programme for

uplifting the controls for these DQMs.

–We made changes to our Model Risk Governance committees at

the Group, business and functional levels as part of our

organisational simplification, to help ensure they continue to provide

effective and efficient oversight of model risk.

–Model Risk Management works closely with businesses to support

the development of IRB/IMM/IMA/IFRS 9/stress testing models by

providing independent validation, review and challenge to help meet

risk management, pricing, capital management, and credit risk

measurement needs.

–Additional assurance work is performed by the model risk

governance teams, which act as second lines of defence. The

teams test whether controls implemented by model users comply

with model risk policy and if model risk procedures are adequate.

–Models using AI or GenAI techniques are reviewed by the relevant

risk teams and monitored by the business to help ensure that

identified risks have adequate oversight and review. A framework

has been developed to manage the range of risks that are generated

by these advanced techniques and to recognise the multidisciplinary

nature of these risks.

–We have enhanced our inventory control to apply heightened

scrutiny of agentic AI use cases before deployment.

Strategic execution risk

Effective management of strategic execution risk is essential to

delivering our strategy, fulfilling shareholder expectations, and

sustaining stakeholder confidence. To achieve the Group's strategic

commitments, it is essential to engage in effective financial resource

planning that helps ensure safe and sustainable delivery of strategic

outcomes. Strategic execution risk remains elevated due to the

complexity and scale of ongoing strategic, regulatory and technological

change. It is critical to uphold and enhance strategic execution risk

controls and monitoring.

Mitigating actions

–We have refreshed our Strategic Risk Policy to strengthen control

requirements.

–We have clarified strategic execution risk management

requirements and oversight accountabilities.

–The Group Finance Management Meeting oversees the prioritisation

and funding, strategic alignment, and management of strategic

execution risk for transformative initiatives. Additionally, the HSBC

Holdings Board provides enhanced oversight over the simplification

programme, directly supervising its mobilisation and delivery.

–We have updated our strategic execution risk metrics and reporting

to help support improved monitoring and oversight of performance.

Risks associated with workforce

capability, capacity and environmental

factors with potential impact on growth

Our business segments and functions in all of our markets are exposed

to risks associated with workforce capacity challenges, including

challenges to retain, develop and attract high-performing employees in

key labour markets, the evolving skills requirements of our workforce

and compliance with employment laws and regulations. Failure to

manage these risks may have an impact on the delivery of our strategic

objectives. It could also result in poor customer outcomes or a breach

of employment laws and regulations, which may lead to regulatory

sanctions or legal claims.

Mitigating actions

–We seek to promote an inclusive workforce and provide health and

wellbeing support. We continue to build our speak-up culture

through active campaigns.

–We monitor hiring activities and levels of employee attrition, with

each business and function putting in place plans to help ensure

they have effective workforce forecasting to meet business

demands.

–We monitor people risks that could arise due to the implementation

of organisational restructuring, seeking to ensure that we manage

redundancies sensitively and support impacted employees. We

encourage our people leaders to focus on talent retention at all

levels, with an empathetic mindset and approach, while ensuring

the whole proposition of working at HSBC is well understood.

–Our Future Skills curriculum aims to provide skills that enable

employees and HSBC to be successful in the future.

–We develop succession plans for key management roles, with

oversight from the Group Operating Committee.

–We have introduced 'How We Lead', a new Group-wide leadership

framework designed to shape the way we operate. This initiative

brings with it a new set of Leadership Principles, and we expect it to

drive meaningful changes in our ways of working across the

organisation.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **126** |

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| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

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Risk factors

We have identified a suite of risk factors that cover a broad range of

risks to which our businesses are exposed. These risks have the

potential to have a material adverse effect on our business, financial

condition, results of operations, prospects, capital position, strategy,

reputation and/or customers.

They may not necessarily be deemed as top or emerging risks;

however, they inform the ongoing assessment of our top and emerging

risks that may result in our risk appetite being revised. The risk factors

are set out below.

Macroeconomic and geopolitical risk

Economic and market conditions and

geopolitical developments may

adversely affect our financial condition

and results

Our earnings are affected by global and local economic, financial and

geopolitical changes. Uncertain economic conditions and volatile

markets can create a challenging operating environment for our

business operations.

HSBC has experience of financial and operational loss sustained as a

consequence of the economic cycle, financial crises and wars. Our

earnings, operations and operating model have been and could in future

be affected by the following factors:

–The economic cycle: Deteriorating business, consumer or investor

confidence and lower levels of investment and productivity growth,

may lead to economic recession and lower customer and client

activity. Rapid changes to the economic environment can also

create challenging operating conditions for financial institutions such

as HSBC and may affect our earnings and profits. The volatility of

US trade and tariff policies remains a key source of uncertainty.

Changes to tariff rates, including sector-specific levies, may deter

capital investment and consumer spending, disrupt supply chains

and reduce global trade growth. A broader escalation of tariffs, and a

potential trade war remain a risk. Policy uncertainty may also deter

businesses from hiring. During 2025, unemployment rose across

many of our major markets, and there remains a risk of further

increases if layoffs begin to increase more significantly, employment

growth continues to be constrained by uncertainty, or if investment

in artificial intelligence ('AI') starts to yield productivity gains that

reduce demand for labour. Slowing growth in China over the second

half of 2025 also suggests that additional economic policy support

may be needed to stimulate domestic growth. Weak growth, higher

unemployment and rising costs could affect the earnings and

activity of our customers, which could, in turn, reduce demand for

our products and services.

–Inflation and monetary policy: The future path for interest rates

remains uncertain and changes to interest rate expectations could

affect net interest income, the fair value of our assets and liabilities

and overall financial performance. The combined pressure of tariffs,

persistent inflation and restrictive interest rates could have material

impacts on our customers as these factors could erode real

purchasing power, increase debt service costs and weigh on real

estate and other asset prices. High interest rates may affect the

credit rating of our customers and their ability to repay debt. This

could negatively impact the Group's risk-weighted assets ('RWAs')

and capital position, resulting in increases in expected credit losses

and other impairment charges ('ECL') and potential liquidity stresses

due to, amongst other factors, increased customer drawdowns.

There could be further adverse impacts on the Group's income if

high rates were to result in lower lending volumes and weaker

wealth and insurance revenue. Alternatively, lowering interest rates,

while stimulating demand for new lending, could reduce revenue

from net interest margins and profitability. Major central banks,

including the US Federal Reserve, the European Central Bank and

the Bank of England ('BoE'), eased monetary policy during 2025 as

higher inflation risks were seen to diminish as unemployment rose.

However, that trajectory could be disrupted if wage growth, tariffs

or key commodity prices keep inflation higher for longer.

–Financial stability: Changing economic conditions and shifting policy

create a more uncertain and volatile environment for asset markets.

Financial markets have seen significant gains over 2025, including in

the AI and the technology sectors, supported by the decline in short-

term interest rates. The investment in these sectors may lead to

future gains to productivity, while high equity market valuations may

create a tailwind from positive wealth effects. However, current

high valuations also raise the risk of a material fall in the markets, if

the expected gains to productivity fail to materialise. This could

adversely affect economic growth, which may, in turn, have an

adverse impact on HSBC's risk profile and earnings by increasing

the financial vulnerability of customers and decreasing the value of

collateral and other claims. The depreciation of the US dollar through

2025 driven by changing interest rates and tariff policy uncertainty,

is also an area of focus due to the associated hedging and

revaluation risks. Elevated volatility is expected to persist,

reflecting concern over fiscal sustainability and an increasingly

complex fiscal and monetary policy environment. Exchange rate

volatility may affect our risk exposure through mark-to-market

changes in trading positions and the translation effects of currency

movements.

–Fiscal policy and high levels of government debt: Debt levels in

many of our major markets have continued to rise due to higher

social welfare costs and increased expenditures on defence and

climate transition. Rising government debt and high interest

payments could adversely affect the fiscal capacity and debt

sustainability of highly indebted sovereign issuers. Emerging

markets with substantial debt and weak fiscal positions may also

face increased repayment costs, heightened refinancing risks and

greater likelihood of sovereign rating downgrades. A fragmented

political landscape in many markets has diminished the political will

for fiscal tightening. These factors could drive higher refinancing

costs and could lead to tax increases that prove negative for growth.

Uncertainty about future taxation could undermine confidence,

business investment and consumer spending, which would be

negative for the Group's retail and corporate operations in various

markets. Additionally, where HSBC has exposure to such

sovereigns or related parties, it could incur losses. At the same

time, sovereign rating downgrades and/or a disorderly increase in

long-term government funding costs, could increase the cost of

funding for HSBC and/or limit access to market funding, resulting in

an adverse impact on interest margins and liquidity.

–Longer term trends: Strategic competition between countries is

reshaping trading relationships and increasing the focus on long-

term economic and supply chain security, which could adversely

affect the Group and our customers. Diversification in trade

invoicing currencies, payment systems and reserve holdings is also

increasing as a consequence of these trends, raising liquidity and

volatility risks, as well as increasing operational complexity.

Evolving demographics, including population ageing and changing

migration patterns, may also result in changes to long-term savings

and investment behaviours, including reduced demand for bank

borrowing.

–Geopolitical risks: Geopolitical risks remain high. The disruption of

key supply routes caused by geopolitical conflicts has continued to

impact global supply chains. The Russia-Ukraine war and further

conflict or military action, in the Middle East, Venezuela or

elsewhere, could impact economic activity regionally or globally

which, if continued for a prolonged period, could have a material

adverse effect on the Group's business, financial condition, results

of operations, prospects, liquidity, capital position and credit ratings.

(For further details see 'We are subject to political, social and other

risks in the countries in which we operate').

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **127** |

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| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

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Adverse changes to the current economic, financial and geopolitical

situation including in relation to any of the factors listed above, could

result in:

–Idiosyncratic losses: Impairment estimates attempt to capture the

effects of economic, financial and geopolitical risks in the aggregate,

but credit losses on specific exposures, with idiosyncratic features

that make them particularly susceptible to the risks described

above, may not be fully captured in our impairment estimates;

–Sector-wide impairment: Changing economic conditions, policies

and funding costs may give rise to a deterioration in specific

industries and sectors that may reduce the creditworthiness of our

customers. For example, in mainland China, excess supply

conditions continued to weigh on the property market, despite

various central government policies introduced to support the

property market and wider economy. In contrast, the Hong Kong

real estate market showed some signs of recovery in the second

half of 2025, particularly in the residential segment, supported by

lower interest rates. Nevertheless, valuation pressures and liquidity

constraints are expected to continue in the near term, particularly for

mid-sized and sub-investment grade corporates. In addition, certain

products, sectors and countries may be targeted by material

increases in trade tariffs, potentially driving a slowdown in export

demand;

–Reduced credit demand: The demand for borrowing from

creditworthy customers may diminish during periods of recession or

where economic activity slows or remains subdued;

–A tightening of financial market conditions: Our ability to borrow

from other financial institutions or to engage in funding transactions

may be adversely affected by market disruption; and

–Goodwill and intangibles: A changing economic and geopolitical

outlook may change the recoverable value of assets and necessitate

a write down in the value of intangible balance sheet items such as

goodwill.

Provisioning against credit loss is conducted under the IFRS 9 'Financial

Instruments' (IFRS 9) calculations of ECL, which use forward looking

scenarios that incorporate the economic and financial risks detailed

above. In the fourth quarter of 2025, HSBC's Central scenario, which

has the highest probability weighting, assumes that GDP growth in

many of our major markets will remain stable, or slow down in 2026,

relative to 2025. Slower growth is assumed to result from the higher

global tariffs and weaker labour market conditions across major

economies. The scenario also assumes that central banks will cut

policy interest rates further over 2026, as inflation is expected to

converge towards official target rates.

However, forecasts remain uncertain, and changing economic

conditions and the materialisation of key risks could reduce the

accuracy of our Central scenario. There remains uncertainty regarding

the adequacy of our models in capturing credit losses under emerging

risks which are not captured by the historical loss experience of our

models, or to effectively distinguish risks for specific sectors and

portfolios. Our financial model outputs (including retail and wholesale

credit models such as IFRS loss models) continue to be monitored and

management judgemental adjustments are used where modelled ECL

does not fully reflect the identified risks and related uncertainty, or to

capture significant late-breaking events. Nevertheless, our model

outputs may fail to accurately capture the effects of complex economic,

financial and geopolitical risks. See also 'We could incur losses or be

required to hold additional capital as a result of model limitations or

failure'.

The occurrence of any of these events or circumstances could have a

material adverse effect on our business, financial condition, results of

operations, prospects and customers.

We are subject to political, social and

other risks in the countries in which we

operate

We operate through an international network of subsidiaries and

affiliates across countries and territories around the world. Our global

operations are subject to potentially unfavourable political, social,

environmental and economic developments in such jurisdictions, which

may include:

–coups, armed conflict or acts of terrorism;

–political and/or social instability;

–geopolitical tensions;

–epidemics and pandemics (such as the Covid-19 pandemic);

–climate change, acts of God and natural disasters (such as floods

and hurricanes); and

–infrastructure issues, such as transportation and power failures.

Each of the above could impact RWAs, and the financial losses caused

by any of these risk events or developments could impair asset values

and the creditworthiness of customers.

These risk events or developments may also give rise to disruption to

the Group's services and some may result in physical damage to our

operations and/or risks to the safety of our personnel and customers.

Geopolitical tensions could have significant ramifications for the Group

and its customers. In particular:

–Throughout 2025, the US government announced far-reaching tariffs

against a broad spectrum of countries, including the UK, China, the

EU, Canada, India, and Mexico. Although subsequent bilateral and

multilateral negotiations have moderated certain tariff rates,

particularly in sectors deemed critical to domestic supply chains,

there is a possibility that these deals are replaced by alternative US

tariffs on different terms, and the overall trade policy environment

remains fluid and unpredictable;

–While globalisation appears to remain deeply embedded in the

international system, it is increasingly challenged by protectionism,

including trade tariffs. The broad geographic footprint and coverage

of HSBC may make us and our customers susceptible to

protectionist measures taken by national governments and

authorities, including imposition of trade tariffs, restrictions on

market access and investment, restrictions on the ability to transact

on a cross-border basis, expropriation, restrictions on international

ownership, interest rate caps, limits on dividend flows and increases

in taxation. There may be uncertainty as to the conflicting nature of

such measures, their duration, the potential for escalation, and their

potential impact on global economies;

–Following the US military operation in Venezuela, further action

elsewhere remains possible. Such developments, including the

actual or threatened use of force, could have regional or global

economic and political implications, leading to further trade

disruption. (For further details, see 'Economic and market conditions

and geopolitical developments may adversely affect our financial

conditions and results');

–Sanctions and restrictions on trade and investment are continually

evolving in response to geopolitical events and may adversely affect

the Group, its customers and the markets in which the Group

operates. These factors may result in increased legal, regulatory,

reputational and market risks, and a more complex operating

environment;

–The Russia-Ukraine war along with related financial sanctions, trade

restrictions and Russian countermeasures, has had global economic

and political implications. The US, the UK, and the EU, as well as

other countries, have continued to impose sanctions against Russia.

The US retains broad discretion to impose sanctions on non-US

financial institutions that knowingly or unknowingly engage in

transactions or provide services to sanctioned parties or otherwise

involve Russia's military-industrial base. The imposition of such

sanctions against any non-US HSBC entity could result in significant

adverse commercial, operational, and reputational consequences for

HSBC;

–Strategic competition between the US and China, including in the

form of escalation and de-escalation over tariffs, sanctions, export

controls, the trade of rare earth minerals and semiconductors, and

cross-border investment restrictions, have increased risk and

uncertainty. Diplomatic tensions between China and the US and

related actions, which may extend to and involve other countries,

and developments in Hong Kong and Taiwan and the surrounding

maritime region, may further adversely affect the Group.

Developments in alternative payment systems, such as projects to

explore how tokenised commercial and central bank money could be

used for cross-border payments, continue with implications for the

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **128** |

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|  |  |  | Risk factors | Risk factors |  |  |

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future architecture of global finance. Development of new payments

infrastructure and use of alternative currencies may present operational

and other challenges, if, for example, certain governments mandate the

use of payment channels that do not integrate with our payment

architecture and financial crime controls.

Global tensions over trade and technology are resulting in divergent

regulatory standards and compliance regimes, presenting long-term

strategic challenges for multinational businesses such as HSBC. As the

geopolitical landscape evolves, compliance by multinational

corporations with their legal or regulatory obligations or other initiatives

in one jurisdiction may be seen as supporting the law or policy

objectives of that jurisdiction over another, creating additional legal,

regulatory, reputational and political risks for the Group. The financial

impact on the Group of geopolitical risks in Asia is heightened due to

the region's relatively high contribution to the Group's profitability,

particularly in Hong Kong.

While it is the Group's policy to comply with all applicable laws and

regulations of all jurisdictions in which it operates, geopolitical tensions,

and potential ambiguities in the Group's compliance obligations,

continue to present challenges and risks for the Group and could have a

material adverse impact on the Group's strategy, business, customers,

operations, financial results and reputation.

We are subject to financial and non-

financial risks associated with

Environmental, Social and Governance

('ESG') related matters, such as climate

change, nature-related and human rights

issues

ESG-related matters such as climate change, society's impact on

nature and human rights issues bring risks to our business, our

customers and wider society. If we fail to meet evolving regulatory

expectations or requirements relating to these matters, this could have

regulatory compliance and reputational impacts.

Climate change could have both financial and non-financial impacts on

HSBC either directly or indirectly through our business activities and

relationships. Our climate risk approach identifies physical risk and

transition risk as primary drivers of climate risk. We continue to identify

the risk of greenwashing as a thematic risk issue related to climate risk,

which may arise if we knowingly or unknowingly make inaccurate,

unclear, misleading or unsubstantiated claims regarding sustainability to

our stakeholders.

Physical risk may arise from the increased frequency and severity of

extreme weather events, such as hurricanes and floods or chronic

gradual shifts in weather patterns or rises in sea level.

Transition risk may arise from the process of moving to a net zero

economy including changes in government policy and legislation,

technology, market demand and reputational implications triggered by a

change in stakeholder expectations in relation to our action or inaction.

We currently expect the following to be the most likely ways in which

climate risk may materialise for the Group:

–credit risk may increase if climate-related regulatory, legislative or

technological changes impact customers' business models or if

extreme weather events disrupt or interrupt operations, resulting in

financial difficulty for customers and/or stranded assets, or

impacting their ability to repay their debts. Clients may find that their

business models fail to align to a net zero economy or face

disruption to their operations or deterioration to their assets as a

result of extreme weather;

–trading losses if climate change results in changes to

macroeconomic and financial variables which negatively impact our

trading book exposures;

–liquidity impacts in the form of deposit outflows due to changes in

customer behaviours driven by impacts to profitability and wealth, or

from reputational concerns relating to the progress we make

towards our ESG-related ambitions, targets and commitments;

–our real estate portfolios may be impacted due to changes to the

climate, an increase in the frequency and severity of extreme

weather events and chronic gradual shifts in weather patterns,

which could impact both property values and the ability of borrowers

to afford their mortgage payments. This may lead to the reduced

availability or increased cost of insurance, including insurance that

protects property pledged as collateral for HSBC mortgages;

–operational risk may increase if extreme weather events impact

critical operations and premises;

–regulatory compliance risk may result from the increasing pace,

breadth and depth of climate-related regulatory expectations,

including on the management of climate risk, and variations in

climate-related external reporting standards and taxonomies,

requiring implementation in short timeframes across multiple

jurisdictions;

–conduct risk may arise in association with the increasing demand for

'green' or 'sustainable' products where there are differing and

developing standards or taxonomies;

–reputational risks may arise from how we decide to support our

customers in high-emitting sectors in their transition to net zero, the

preferences of different stakeholders in relation to our approach to

the transition to net zero, and if we make insufficient progress in

achieving our ESG-related ambitions, targets and commitments; and

–model risk may arise from the uncertain and evolving impacts of

climate change, as well as data and methodology limitations, which

present challenges to creating reliable and accurate model outputs.

We may face heightened reputational, regulatory compliance, and legal

risks as we advance towards our ESG-related ambitions, targets and

commitments. Stakeholders are likely to scrutinise our actions,

including the formulation of our ESG and sustainability risk policies, our

disclosures, and our financing and investment decisions in relation to

these ambitions, targets and commitments. Additional risks may arise if

we fail to:

–make sufficient progress towards our ESG-related ambitions,

targets and commitments;

–set adequate plans and execute, or adapt those plans as necessary,

in response to changes in the external environment;

–manage the risks associated both with meeting and not meeting our

ESG-related ambitions, targets and commitments; and

–meet evolving regulatory expectations and requirements on the

management of ESG risks.

We may also face risks related to climate and ESG-related litigation and

regulatory enforcement. This could occur directly if stakeholders

believe we are not effectively managing these risks, or indirectly if our

customers are involved in litigation, which might lead to a revaluation of

their assets.

Requirements, policy objectives, expectations, views or market and

public perceptions and preferences in connection with the transition to

a net zero economy and ESG-related matters may vary by jurisdiction

and stakeholder, particularly in light of the differing perspectives and

responses to climate change of stakeholders in different markets, such

as the UK, the US, the EU and others. We may be subject to potentially

conflicting approaches to ESG matters in certain jurisdictions, which

may impact our ability to conduct certain business within those

jurisdictions or result in additional regulatory compliance, reputational,

political or litigation risks.

For example, our reputation and client relationships may be damaged

as a result of our decision to participate, or not to participate, in certain

projects perceived to be associated with causing or exacerbating

climate change, as well as any decisions we make to continue to

conduct or change our activities in response to considerations relating

to climate change, including the transition to net zero. These risks may

also arise from divergence in the implementation of ESG, climate policy

and financial regulation in the many regions in which we operate,

including initiatives to apply and enforce policy and regulation with

extraterritorial effect.

We recognise the importance of nature-related risks, as well as the

complex interactions and compounding effects of climate and nature-

related risk drivers. Nature related-risks may emerge when

dependencies on natural capital - such as plants, soils and minerals -

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **129** |

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|  |  |  | Risk factors | Risk factors |  |  |

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and ecosystem services - such as water availability and air quality - are

affected by key drivers of nature loss, or when there is a lack of

alignment between an organisation's impact on the natural

environment and actions to protect, restore or reduce negative impacts

on nature. Such risks can affect both HSBC and our customers through

various channels, including macroeconomic, market, credit,

reputational, regulatory compliance, and legal risks.

Businesses are expected to be transparent about their efforts to

identify and respond to the risk of adverse human rights impacts arising

from their business activities and relationships. Failure to manage this

risk may negatively impact people and communities, which in turn may

result in reputational, regulatory compliance and legal risks for HSBC.

Our strategy and business model, including our products, services, and

risk management processes, will need to continue to evolve to align

with evolving regulatory requirements, stakeholder expectations and to

manage ESG-related risks. This may involve adapting the way we

measure and manage both financial and non-financial risks associated

with ESG matters. Achieving our strategy with respect to ESG matters,

including any related ambitions, targets and commitments we may set,

depends on a number of factors beyond the Group's control, such as

technological advancements and supportive public policies in our

operating markets. If these external factors do not materialise or are

delayed, we may not meet our ESG-related ambitions, targets and

commitments.

We may encounter financial reporting risks concerning our climate and

ESG disclosures due to the limited quality and consistency of available

data. Such uncertainty poses a risk of relying on incomplete or

inaccurate data and models, potentially leading to sub-optimal decision-

making. As methodologies, data, scenarios, and industry standards

evolve with market practices, regulations, or scientific advancements,

our ability to collect and process required data may be challenged,

exposing us to financial reporting risk in relation to our climate and ESG

disclosures. Such developments could also necessitate revisions to our

internal measurement frameworks and reported data, including on

financed emissions, making year-on-year comparisons difficult. This

could result in the Group having to re-evaluate its progress towards its

ESG-related ambitions, targets and commitments in the future,

resulting in reputational, regulatory compliance and legal risks.

If any of the above risks materialise, this could have financial and non-

financial impacts for HSBC which could, in turn, have a material adverse

effect on our business, financial condition, results of operations,

reputation, prospects and strategy.

The UK's trading relationship with the

EU, following the UK's withdrawal from

the EU, may adversely affect our

operating model and financial results

The uncertain outcome of potential developments relating to the

financial services trading relationship between the UK and EU, including

the rules under which financial services may be provided on a cross-

border basis into the EU and its member states, remains a source of

risk for the Group.

The EU Capital Requirements Directive ('CRDVI'), which EU member

states are in the process of transposing into national law, introduces a

new requirement ('the EU branch requirement') under which non-EU

banks and significant investment firms would have to establish a

branch in each EU member state in which they carry out 'core banking

activities', defined as deposit taking, lending and guarantees, and

commitments. The EU branch requirement, which will be subject to

certain exclusions and exemptions will generally come into effect on 11

January 2027, although precise effective dates vary across EU member

states. Grandfathering of cross border core banking contracts entered

into before 11 July 2026 is provided for under CRDVI, although the

availability of such grandfathering may vary subject to transposition by

EU member states.

The Financial Services and Markets Act ('FSMA') 2023 became law in

June 2023 and provides for a number of changes to the regulatory

architecture in the UK. It contains provisions that would allow for

specified 'onshored' EU legislation, also known as 'retained EU law' or

'REUL' (and known as 'assimilated law' after 1 January 2024), to be

revoked and replaced by legislation or rules made by HM Treasury or

the regulators. FSMA 2023 allows for the eventual repeal of assimilated

law related to financial services and enables the government and

regulators to replace it in line with the FSMA model. Each piece of

assimilated law related to financial services is now within a 'transitional

period', lasting until its repeal is individually commenced by HM

Treasury in a phased and sequenced manner. Furthermore, as of 1

January 2024, certain legal effects previously associated with REUL

(now referred to as assimilated law) no longer apply, including the

supremacy of REUL over other types of conflicting domestic UK law,

general principles of EU law (which informed REUL's interpretation and

application) and directly effective EU rights.

Uncertainty remains as to the extent to which EU and UK laws will

diverge in the future, as a result of the future repeal of assimilated law

under FSMA 2023 or further development of the EU's own regulatory

regime. In particular, the UK is in the process of revoking the remainder

of the assimilated version of the Capital Requirements Regulation and

replacing it with rules published and maintained by the Prudential

Regulation Authority ('PRA'), which will also reflect the UK's

implementation of the Basel Committee on Banking Supervision's

('BCBS') final reforms to the prudential framework ('Basel 3.1').

Any changes to the current EU and UK banking and financial services

rules, including as a result of the EU branch requirement, the UK's

revocation and replacement of EU-derived laws, the UK and EU

implementation of Basel 3.1 reforms and any further divergences

between the two legal regimes, could require modifications to our UK

and EU operating models, with resulting impacts to our customers and

employees. The precise impacts on our customers will depend on the

nature of any developments and their individual circumstances and

could include disruption to the provision of products and services, and

this could in turn increase operational complexity and/or costs for the

Group.

More generally, over the medium to long term, the UK's withdrawal

from the EU and the operation of the Trade and Cooperation

Agreement agreed between the EU and the UK (and any complexities

that may result therefrom), may lead to increased market volatility and

economic risk, particularly in the UK, which could adversely impact our

profitability and prospects for growth in this market.

In addition, the UK's future trading relationship with the EU and the rest

of the world will likely take a number of years to fully stabilise. This may

result in a prolonged period of uncertainty, unstable economic

conditions and market volatility. This could include reduced international

trade flows and loss of export market shares, as well as currency

fluctuations. If any of the above risks materialise, this could have a

material adverse effect on our business, financial condition, results of

operations, reputation, prospects and strategy.

We operate in markets that are highly

competitive

We compete with other financial institutions in a highly competitive

industry that continues to undergo significant change as a result of

financial regulatory reform, as well as increased public scrutiny and a

continued challenging macroeconomic environment.

We target internationally mobile customers who need sophisticated

global financial solutions. We generally compete on the basis of the

quality of our customer service, the variety of products and services

that we can offer our customers, the ability of our products and

services to satisfy our customers' needs, the extensive distribution

channels available for our customers, our innovation, and our

reputation. Continued and/or increased competition in any one or all of

these areas may negatively affect our market share and/or require

increased capital investment in our businesses in order to remain

competitive.

In the highly competitive markets in which we operate, our ability to

reposition or reprice our products and services from time to time may

be limited, and could be influenced significantly by the actions of our

customers or competitors. Any changes in the types of products and

services that we offer our customers, and/or the pricing for those

products and services, could result in a loss of customers and market

share.

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|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **130** |

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|  |  |  | Risk factors | Risk factors |  |  |

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Developments in technology and changes to regulations are enabling

new entrants to the industry. This challenges HSBC to continue

innovating and taking advantage of new digital capabilities so that we

improve how we serve our customers, drive efficiency and adapt our

products to attract and retain customers. As a result, we may need to

increase our investment in our business to adapt or develop products

and services to respond to evolving customer needs and regulatory

requirements. New digital capabilities have the potential to weaken our

resilience or wider risk management capabilities. If HSBC fails to

develop and adapt its products and services to take advantage of new

digital capabilities this could have an adverse impact on our business.

The digitisation of financial services continues to have an impact on the

payment services ecosystem, including new market entrants and

payment mechanisms, not all of which are subject to the same level of

regulatory scrutiny or regulations as financial institutions. This presents

ongoing challenges in terms of maintaining required levels of payment

transparency, notably where financial institutions serve as

intermediaries. Developments around digital assets and currencies

have continued at pace, with an increasing regulatory and enforcement

focus.

Any of these factors could have a material adverse effect on our

business, financial condition, results of operations, prospects and

reputation.

Changes in foreign currency exchange

rates may affect our results

We prepare our accounts in US dollars because the US dollar and

currencies linked to it form the major currency bloc in which we

transact and fund our business. However, a substantial portion of our

assets, liabilities, assets under management, revenues and expenses

are denominated in other currencies. Changes in foreign exchange

rates, including those that may result from a currency becoming de-

pegged from the US dollar, may have an effect on our accounting

standards, reported income, cash flows and shareholders' equity.

Unfavourable changes in foreign exchange rates could have a material

adverse effect on our business, financial condition, results of

operations, capital position and prospects.

Market fluctuations may reduce our

income or the value of our portfolios

Our businesses are inherently subject to risks in financial markets and

in the wider economy, including changes in, and increased volatility of,

interest rates, inflation rates, credit spreads, foreign exchange rates,

commodity, equity, bond and property prices, and the risk that our

customers act in a manner inconsistent with our business, pricing and

hedging assumptions.

Market pricing can be volatile and ongoing market movements could

significantly affect us in a number of key areas. For example, banking

and trading activities are subject to interest rate risk, foreign exchange

risk, inflation risk and credit spread risk. Changes in interest rate levels,

interbank spreads over official rates and yield curves affect the interest

rate spread realised between lending and borrowing costs. The

potential for future volatility and margin changes remains. See

'Economic and market conditions and geopolitical developments may

adversely affect our financial condition and results' above regarding the

impact of these on the interest rate environment. Competitive

pressures on fixed rates or product terms in existing loans and

deposits sometimes restrict our ability to change interest rates applying

to customers in response to changes in official and wholesale market

rates. Our pension scheme assets include equity and debt securities,

the cash flows of which change as equity prices and interest rates vary.

Our insurance businesses are exposed to the risk that market

fluctuations may cause mismatches to occur between product liabilities

and the investment assets that back them. Market risks can affect our

insurance products in a number of ways depending upon the product

and the associated contract. For example, mismatches between assets

and liability yields and maturities give rise to interest rate risk. Some of

these risks are borne directly by the customer and some are borne by

the insurance businesses, with their excess capital invested in the

markets. Some insurance contracts involve guarantees and options that

increase in value in adverse investment markets. There is a risk that the

insurance businesses could bear some of the cost of such guarantees

and options. The performance of the investment markets could thus

have a direct effect upon the value embedded in the insurance and

investment contracts and our operating results, financial condition and

prospects.

It is difficult to predict with any degree of accuracy changes in market

conditions, and such changes could have a material adverse effect on

our business, financial condition, results of operations, capital position

and prospects.

Liquidity, or ready access to funds, is

essential to our businesses

Our ability to borrow on a secured or unsecured basis, and the cost of

doing so, can be affected by increases in interest rates or credit

spreads, the availability of credit, regulatory requirements relating to

liquidity or the market perceptions of risk relating to the Group or the

banking sector, including our perceived or actual creditworthiness.

Current accounts and savings deposits payable on demand or at short

notice form a significant part of our funding, and we place considerable

importance on maintaining their stability. For deposits, stability depends

upon preserving investor confidence in our capital strength and liquidity,

and on comparable and transparent pricing.

We also access wholesale markets in order to provide funding for

entities that do not accept deposits, to align asset and liability

maturities and currencies, and to maintain a presence in local markets.

In 2025, we issued the equivalent of $28.1bn of senior debt securities

in the public capital markets in a range of currencies and maturities

from a number of Group entities, including $25.7bn of senior securities

issued by HSBC Holdings.

An inability to obtain financing in the unsecured long-term or short-term

debt capital markets, or to access the secured lending markets, could

have a material adverse effect on our liquidity.

Unfavourable macroeconomic developments, market disruptions or

regulatory developments may increase our funding costs or challenge

our ability to raise funds to support or expand our businesses.

If we are unable to raise funds through deposits and/or in the capital

markets, our liquidity position could be adversely affected, and we

might be unable to meet deposit withdrawals on demand or at their

contractual maturity, to repay borrowings as they mature, to meet our

obligations under committed financing facilities and insurance contracts

or to fund new loans, investments and businesses.

We may need to liquidate unencumbered assets to meet our liabilities.

In a time of reduced liquidity, we may be unable to sell some of our

assets, or we may need to sell assets at reduced prices, which in either

case could materially adversely affect our business, financial condition,

results of operations, capital position and prospects.

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **131** |

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|  |  |  | Risk factors | Risk factors |  |  |

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Macro-prudential, regulatory and

legal risks to our business model

We are subject to numerous new and

existing legislative and regulatory

requirements, and to the risk of failure to

comply with applicable regulations

Our businesses are subject to ongoing regulation, policies, voluntary

codes of practice and interpretations in the various markets in which

we operate. A number of regulatory changes affecting our business

have effects beyond the country in which they are enacted. Increased

fragmentation in regulatory requirements may limit our ability to

implement globally consistent standards in response to regulatory

change.

The areas where regulatory changes and increased supervisory

expectations could have a material adverse effect on our business,

financial condition, results of operations, prospects, capital position,

reputation and strategy include, but are not limited to, those listed

below, grouped around prudential and non-prudential themes.

Prudential and related issues

In recent years, regulators and governments have focused on

reforming both the prudential regulation of the financial services

industry and the ways in which the business of financial services is

conducted. The measures taken include enhanced capital, liquidity and

funding requirements, the separation or prohibition of certain activities

by banks, changes in the operation of capital markets activities, the

introduction of tax levies and transaction taxes and changes in

compensation practices. Specific examples of such measures and

initiatives include:

–the implementation of Basel 3.1, which includes changes to the

RWA approaches to credit risk, market risk, operational risk,

counterparty risk and credit valuation adjustments, and the

application of an RWA output floor. The majority of the rules in the

new framework will take effect from 1 January 2027, while the

Internal Model Approach for market risk rules has been delayed until

1 January 2028;

–the UK government's Financial Services Growth and

Competitiveness Strategy, which was published in July 2025 and

which re-iterated proposals to reform the UK capital framework for

banks, including reforms to the UK's bank ring fencing regime.

Finally, the BoE's Financial Policy Committee ('FPC') was asked to

undertake a review of capital levels for banks in the UK. While the

FPC published the initial findings of its review in December 2025,

there remain a number of areas subject to further review, including

the capital buffers, the leverage ratio and the application of the RWA

output floor to the ring-fenced bank;

–enhanced supervisory expectations regarding regulatory reporting,

including increased focus on data integrity, governance, and

controls. To seek to address these expectations, we have been

advancing a programme aimed at strengthening our global

regulatory reporting processes and making them more sustainable,

including enhancing data, consistency and controls and, while this

programme continues, there may be further impacts on some of our

regulatory ratios, such as the common equity tier 1 ('CET1') ratio,

the liquidity coverage ratio ('LCR'), and the net stable funding ratio

('NSFR');

–the financial effects of climate risk and other ESG-related changes

being incorporated within the global prudential framework, including

physical risks from climate change and the transition risks resulting

from a shift to a low carbon economy;

–heightened supervisory concern regarding the growth of private

markets and their interconnection with banks, as demonstrated by

the BoE's launch of a system-wide exploratory scenario in 2026 and

the PRA's 'Dear Chief Risk Officer' letter on private equity related

financing activities from the PRA in 2024; and

–BCBS's review of the cryptoassets RWA standard, following delays

in implementation reported by various jurisdictions, which attribute

the postponements to technological advancements in the

cryptoassets sector that have made parts of the Basel standards

outdated.

Non-prudential and related issues

With regard to the non-financial risk agenda, there is a focus on

business practices (including customers and markets), operational and

cyber resilience, AI, digital and technology changes, ESG, payments

and financial crime, including:

–continued focus by regulators, international bodies and policymakers

on banks' business practices. This includes ensuring fair outcomes

for customers, fostering effective competition and maintaining the

orderly and transparent functioning of global financial markets. We

also continue to focus on employee culture and behaviour,

whistleblowing, and inclusion;

–the EU's CRDVI Article 21c amendment requiring non-EU entities to

provide core banking services to EU clients through an EU branch or

subsidiary;

–the high regulatory expectations and requirements relating to

various aspects of operational and cyber resilience, and third-party

risks, including an ongoing focus on the response of institutions to

operational disruptions, including those arising out of the application

of the EU's Digital Operational Resilience Act ('DORA'), which came

into effect in January 2025;

–regulatory expectations and requirements around the use of AI,

including in connection with, the implementation of the EU's AI Act

and the US's AI Action Plan;

–the supervisory and regulatory focus on technology adoption and

digital delivery, underpinned by consumer protection, including in

respect of the use of digital assets and currencies and wider

financial technology risks. For example, the UK FCA and PRA

launched consultations in 2025 relating to stablecoin issuance,

custody of cryptoassets, associated requirements and the regulation

of systemic stablecoins. In the US, the Stablecoin (GENIUS) Act

was signed into law in July 2025. In Hong Kong, the HKMA

Stablecoin Ordinance came into effect in August 2025;

–the ongoing transition of a small number of legacy contracts tied to

benchmark rates that have been demised, which continues to

expose HSBC to regulatory compliance, legal and conduct risks. In

particular, if HSBC does not successfully transition its remaining

legacy contracts to the appropriate replacement benchmarks, this

could lead to reliance on fallback provisions which do not

contemplate the permanent cessation of the relevant demised

benchmark rate or on recently implemented legislative solutions the

operation and enforceability of which may, in certain circumstances,

remain uncertain, and this could result in unfavourable outcomes for

clients and investors;

–compliance with existing and future ESG-related risk management

and disclosure requirements applicable to banks and businesses

more generally, particularly those relating to climate change,

transition plans, greenwashing and supply chain due diligence (such

as requirements under the UK's Sustainability Disclosure

Requirements, proposed amendments to the EU's Sustainable

Finance Disclosure Regulation ('SFDR') and proposed changes to

the Corporate Sustainability Reporting Directive ('CSRD') and the

Corporate Sustainability Due Diligence Directive ('CSDDD') in the

EU). The US Agencies (the Federal Reserve Board, the Federal

Deposit Insurance Corporation, the Office of the Comptroller of the

Currency) have rescinded the interagency Principles for Climate-

Related Financial Risk Management for Large Financial Institutions

published in 2023, although various individual US states have issued

their own requirements, such as California's climate disclosure

rules;

–continuing supervisory and regulatory change globally on payment

services and related infrastructure, including future changes in the

EU as a result of the EU's Third Payment Services Directive ('PSD3')

and an accompanying Payment Services Regulation, which are

expected to come into force in 2026; and

–the ongoing expectations with respect to managing emerging

financial crime risks and their impact on customers, managing

conflicting laws and approaches to legal and regulatory regimes, and

implementing complex sanctions and restrictions on trade and

investment.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **132** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

---

We are subject to the risk of current and

future legal, regulatory or administrative

actions and investigations, the outcomes

of which are inherently difficult to

predict

We face significant risks in our business relating to legal, regulatory or

administrative actions and investigations. The amounts of damages

claimed in litigation, regulatory proceedings, investigations,

administrative actions and other adversarial proceedings against

financial institutions remain elevated for many reasons. These reasons

include a substantial increase in the number of regulatory changes

taking place globally, increasing focus from regulators, investors and

other stakeholders on ESG disclosures, including in relation to the

measurement and reporting of such matters as both local and

international standards in this area continue to significantly evolve and

develop, increased media attention, higher expectations from

regulators and the public, and the globalisation of class actions,

including in relation to competition matters and data breach litigation. In

addition, criminal prosecutions of, and civil proceedings involving,

financial institutions for, among other things, alleged conduct breaches,

breaches of anti-money laundering, anti-bribery and anti-corruption and

sanctions regulations, antitrust violations, market manipulation, aiding

and abetting tax evasion, and providing unlicensed cross-border banking

services, have become more commonplace and may increase in

frequency due to increased media attention and higher expectations

from regulators and the public.

Any such legal, regulatory or administrative action or investigation

against HSBC Holdings or one or more of our subsidiaries could result

in, among other things, substantial fines, civil penalties, criminal

penalties, cease and desist orders, forfeitures, the suspension or

revocation of key licences, requirements to exit certain businesses,

other disciplinary actions and/or withdrawal of funding from depositors

and other stakeholders. Any threatened or actual litigation, regulatory

proceeding, administrative action, investigation, or other adversarial

proceedings against HSBC Holdings or one or more of our subsidiaries

could have a material adverse effect on our business, financial

condition, results of operations, prospects and reputation. Additionally,

the Group's financial statements reflect provisioning for legal

proceedings, regulatory and customer remediation matters. Provisions

for legal proceedings, regulatory and customer remediation matters,

typically require a higher degree of judgement than other types of

provisions, and the actual costs resulting from such proceedings and

matters may exceed existing provisioning.

Additionally, as described in Note 35 to the Financial Statements, we

continue to be subject to a number of material legal proceedings,

regulatory actions and investigations, the outcomes of which are

inherently difficult to predict, particularly those cases in which the

matters are brought on behalf of various classes of claimants, seek

damages of unspecified or indeterminate amounts or involve novel

legal claims. Moreover, we may face additional legal proceedings,

investigations, or regulatory actions in the future, including in other

jurisdictions and/or with respect to matters similar to, or broader than,

the existing legal proceedings, investigations or regulatory actions. An

unfavourable result in one or more of these proceedings could have a

material adverse effect on our business, financial condition, results of

operations, prospects and reputation.

We may fail to meet the requirements of

regulatory stress tests

We are subject to supervisory stress tests in many jurisdictions, which

are described on page 190. These exercises are designed to assess the

resilience of banks to potential adverse economic developments or

operational failure to inform mitigation actions and ensure that they

have robust, forward looking capital planning processes that account for

the risks associated with their business profile. Assessment by

supervisors is both on a quantitative and qualitative basis, the latter

focusing on our data provision, stress testing capability and internal

management processes and controls.

Failure to meet quantitative or qualitative requirements of regulatory

stress tests, or the failure by supervisors to approve our stress test

results and capital plans, could result in the Group being required to

enhance its capital position, and this could, in turn, have a material

adverse effect on our business, financial returns, capital position,

operational capabilities and reputation.

HSBC and its UK subsidiaries may

become subject to stabilisation

provisions under the UK Banking Act

2009, in certain significant stress

situations

Under the Special Resolution Regime set out in the UK Banking Act

2009 (the 'SRR'), HM Treasury, the BoE, the PRA and the FCA

(together, the 'Authorities') are granted substantial powers to

implement the following stabilisation options: (i) transfer of all or part of

the business of a relevant entity or the shares of the relevant entity to a

private sector purchaser; (ii) transfer of all or part of the business of the

relevant entity to a 'bridge bank' wholly owned by the BoE temporarily,

to allow for preparation for an onward sale to a private sector purchaser

or an initial public offering; (iii) transfer of part of the assets, rights or

liabilities of the relevant entity to one or more asset management

vehicles for management of the transferor's assets, rights or liabilities;

(iv) the write-down, conversion, transfer, modification, or suspension of

the relevant entity's equity, capital instruments and liabilities (the so-

called 'bail-in power'); and (v) temporary public ownership of the

relevant entity.

The SRR also provides for modified insolvency and administration

procedures for relevant entities, and confers ancillary powers on the

Authorities, including the power to modify or override certain

contractual arrangements in certain circumstances. The UK Banking Act

2009 gives power to HM Treasury to make further amendments to the

law for the purpose of enabling it to use the SRR powers effectively,

potentially with retrospective effect.

These stabilisation options and powers may also be applied to a UK

bank or investment firm or to certain of their affiliates (which, in respect

of HSBC, could include HSBC Holdings) where certain conditions are

met.

In view of the HSBC Group's corporate structure, which comprises a

group of locally regulated operating banks, the preferred resolution

strategy for the HSBC Group, as confirmed by its lead home and host

regulators through the annual Crisis Management Group, is Multiple

Point of Entry bail-in strategy. This approach provides flexibility for

HSBC to be resolved either (i) through a bail-in at the HSBC Holdings

level (using the above-mentioned bail-in power), which enables the

recapitalisation of operating bank subsidiaries in the HSBC Group (as

required) while restructuring actions are undertaken, with the HSBC

Group remaining together; or (ii) at a local subsidiary level pursuant to

the application of statutory resolution powers by local resolution

authorities. Further details on HSBC's resolution strategy can be found

in the section entitled 'Recovery and resolution' on page 20.

In addition to the stabilisation options, the relevant Authority may, in

certain circumstances, require the permanent write-down or conversion

into equity of any outstanding tier 1 capital instruments and tier 2

capital instruments prior to the exercise of any stabilisation option

(including the bail-in power), which may lead to the cancellation,

transfer or dilution of HSBC Holdings' ordinary share capital.

In general, the UK Banking Act 2009 requires the Authorities to have

regard to specified objectives in exercising the powers provided for by

the Act. One of the objectives (which is required to be balanced as

appropriate with the other specified objectives) refers to the protection

and enhancement of the stability of the financial system of the UK. The

UK Banking Act 2009 includes, in certain circumstances, and with

respect to the exercise of certain powers provided for by the Act,

provisions related to compensation in respect of transfer instruments

and orders made under it. This includes a 'no creditor worse off'

safeguard, which requires that no shareholder or creditor must be left

worse off from the use of resolution powers than they would have

been had the entity entered insolvency rather than resolution.

However, if we are at or approaching the point where we may be

deemed by our regulators to be failing, or likely to fail, so as to require

regulatory intervention, any exercise of the above mentioned powers

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **133** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

---

by the Authorities may result in holders of our ordinary shares, or other

instruments that may fall within the scope of the 'bail in' or other write-

down and conversion powers granted under the UK Banking Act 2009,

being materially adversely affected, including by the cancellation of

shares, the write-down or conversion into shares of other instruments,

the transfer of shares to a third party appointed by the BoE, the loss of

rights associated with shares or other instruments (including rights to

dividends or interest payments), the dilution of their percentage

ownership of our share capital, and any corresponding material adverse

effect on the market price of our ordinary shares and other instruments.

We are subject to tax-related risks in the

countries in which we operate

We are subject to the substance and interpretation of tax laws in all

countries in which we operate and are subject to routine review and

audit by tax authorities in relation thereto. Our interpretation or

application of these tax laws may differ from those of the relevant tax

authorities and we provide for potential tax liabilities that may arise on

the basis of the amounts expected to be paid to the tax authorities. The

amounts ultimately paid may differ materially from the amounts

provided depending on the ultimate resolution of such matters.

In addition, potential changes to tax legislation, the approach taken by

tax authorities in audits, and tax rates in the countries and territories in

which we operate, in particular, those arising as a consequence of the

OECD's Base Erosion and Profit Shifting project, could increase our

effective tax rate in the future and have a material adverse effect on our

business, financial condition, results of operations, prospects and

capital position.

Risks related to our operations

Our operations are highly dependent on

our information technology systems

We operate in an extensive and complex technology landscape, which

must remain resilient to support customers, the Group and markets

globally. Risks can arise where technology is not understood,

maintained, or developed appropriately.

The reliability and security of the HSBC Group's information technology

infrastructure is crucial to the HSBC Group's provision of financial

services to our customers and protecting the HSBC brand.

The effective functioning of our payment systems, financial control, risk

management, credit analysis and reporting, accounting, customer

service and other information technology systems, as well as the

communication networks between our branches and main data

processing centres, are important to our operations.

Critical system failure, prolonged service unavailability or a material

breach of data security, particularly of customer data, could

compromise HSBC Group's ability to serve its customers. Rapid

advances in AI may further facilitate cyber-attacks or data compromise.

Such scenarios could breach regulations and could cause long-term

damage to HSBC Group's business and brand that could have a

material adverse effect on our financial condition, results of operations,

prospects and reputation.

We remain susceptible to a wide range

of cyber risks

The threat of cyber-attacks remains a concern for HSBC, as it does

across the global financial sector. As cyber-attacks continue to evolve,

failure to protect our operations may result in disruption for customers,

manipulation of data or financial loss. This could adversely impact our

customers and the Group.

Adversaries attempt to achieve their objectives by compromising HSBC

or our third-party suppliers. They use techniques that include malware

(such as ransomware), exploitation of both known and unpublished

(zero-day) software vulnerabilities, phishing emails, distributed denial of

service attacks, as well as physical compromise of premises, or

coercion of staff. Our customers may also be subject to these attack

techniques. The Group, like other financial institutions, has experienced

numerous common cyber-attacks, including for example, distributed

denial of service and phishing attacks. Some of our third-party service

providers have also experienced cyber-attacks. To date, we have not

been materially affected by cybersecurity threats. However, we expect

cyber-attacks to continue, and our business strategy, results of

operations and financial condition could be materially affected by

cybersecurity risks and any future material incidents.

Cybersecurity risks will continue to increase due to several factors,

including the growing delivery of services over the internet; increased

dependence on internet-based products, applications and data storage;

and the expanding use of AI, which could enable sophisticated cyber-

attacks. Additionally, the adoption of hybrid working models by HSBC's

employees, contractors, and third-party service providers and their sub-

contractors contributes to this trend.

Failure to adhere to HSBC's cybersecurity policies, procedures or

controls, employee or third-party wrongdoing, human error, or

governance or technological error could compromise HSBC's ability to

defend against cyber-attacks. Should any of these cybersecurity risks

materialise, they could have a material adverse effect on our

customers, business, financial condition, results of operations,

prospects and reputation.

We could incur losses or be required to

hold additional capital as a result of

model limitations or failure

HSBC uses models for a range of purposes in managing its business,

including regulatory capital calculations, stress testing, credit approvals,

calculation of ECLs on an IFRS 9 basis, financial crime and fraud risk

management and financial reporting.

HSBC could face adverse consequences as a result of decisions that

may lead to actions by management based on models that are poorly

developed, implemented or used, or as a result of the modelled

outcome being misunderstood, or the use of modelled information for

purposes which it was not designed for, or by inherent limitations

arising from the uncertainty inherent in predicting or estimating future

outcomes. Regulatory scrutiny and supervisory concerns over banks'

use of models are considerable, particularly the internal models and

assumptions used by banks in the calculation of regulatory capital. If

regulatory approval for key capital models is not achieved in a timely

manner or if those models are subject to negative feedback from

regulators HSBC could face fines or be required to hold additional

capital. Evolving regulatory requirements have resulted in changes to

HSBC's approach to model risk management, which poses execution

challenges. The adoption of more sophisticated modelling approaches

including AI and technology related developments by both HSBC and

the financial services industry could also lead to increased model risk.

HSBC's commitment to changes to business activities due to climate

and sustainability challenges will also have an impact on model risk

going forward. Models will play an important role in risk management

and financial reporting of climate-related risks. Uncertainty around the

long-dated impacts of climate change and lack of robust and high-

quality climate related data present challenges to creating reliable and

accurate model outputs for these models.

Model risk remains a key area of focus given the regulatory scrutiny in

this area with local regulatory examinations taking place in many

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **134** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

---

jurisdictions and revised principles on model risk published by the PRA

which came into force in 2024.

Risks arising from the use of models could have a material adverse

effect on our business, financial condition, results of operations,

prospects, capital position and reputation. See also 'Economic and

market conditions and geopolitical developments may adversely affect

our financial condition and results'.

Our operations use third-party suppliers

and service providers

HSBC relies on third parties to provide goods and services. The use of

third-party providers by financial institutions is of particular focus to

global regulators. This includes how outsourcing decisions are made,

how key relationships are managed, our understanding of third-party

dependencies, and the potential impacts of third parties on our

operational resilience.

The inadequate management of third-party risk could impact our ability

to meet strategic, regulatory and customer expectations.

This may lead to a range of impacts, including regulatory censure,

penalties or damage both to shareholder value and to our reputation.

This could have a material adverse effect on our business, financial

condition, results of operations, prospects, capital position and

reputation.

Risks related to our governance and

internal controls

Our data management and data privacy

controls must be sufficiently robust to

support the increasing data volumes and

evolving regulations

As the HSBC Group becomes more data-driven and our business

processes move to digital channels, the volume of data that we rely on

has increased. As a result, management of data (including data storage

and deletion, data quality, data privacy and data architecture) from

creation to destruction must be robust and designed to identify quality

and availability issues. Inadequate data management could result in

negative impacts to customer service, business processes, or require

manual intervention to reduce the risk of errors in reporting to senior

management, executives or regulators.

Expanding data privacy, national security and cybersecurity laws in a

number of markets could pose potential challenges to intra-group data

sharing. These developments could increase financial institutions'

compliance obligations in respect of cross-border transfers of personal

information, which may affect our ability to manage financial crime risks

across markets.

In addition, failure to comply with data privacy laws and other legislation

in the jurisdictions in which we operate may result in regulatory

sanctions. Any of these failures could have a material adverse effect on

our business, financial condition, results of operations, prospects, and

reputation.

Third parties may use us as a conduit for

illegal activities without our knowledge

We are required to comply with applicable financial crime laws and

regulations, and have adopted various policies, procedures and controls

aimed at preventing the exploitation of HSBC's products and services

for criminal activity. Financial crime includes fraud, bribery and

corruption, tax evasion and the facilitation of tax evasion, sanctions and

export control violations and evasion, money laundering, terrorist

financing and proliferation financing (see 'Regulation and supervision -

Financial crime regulation'). There are instances, as permitted by

regulation, where we may rely upon third parties to undertake certain

financial crime risk management activities on our behalf. Any controls

such reliance may not prevent third parties from using us (and our

relevant counterparties) as a conduit for financial crime, without our

knowledge (and that of those counterparties).

Becoming a party to, associated with, or accused of being associated

with, financial crime could damage our reputation and could make us

subject to fines, sanctions and / or legal or regulatory enforcement. Any

one of these outcomes could have a material adverse effect on our

strategy, business, customers, financial condition, results of operations,

prospects and reputation.

We are subject to the risk of financial

crime

We are exposed to financial crime risk from our customers, staff and

third parties engaging in criminal activity (see also 'Third parties may

use us as a conduit for illegal activities without our knowledge') and, as

such, we continue facing increasing regulatory expectations. In 2025,

financial crime risk continued to be exacerbated by increasingly

complex geopolitical challenges, the macroeconomic outlook, the

complex and dynamic nature of sanctions and export control

compliance, evolving financial crime regulations, rapid technological

developments, an increasing number of national data privacy

requirements and the increasing sophistication of fraud and other

criminal activities. Our ability to manage financial crime risk is

dependent on the use and effectiveness of our financial crime risk

assessments, systems and controls. Weak or ineffective financial crime

processes and controls may risk HSBC inadvertently facilitating financial

crime, which may result in regulatory investigation, sanction, litigation,

fines and reputational damage.

In addition, HSBC Bank USA, as the primary US dollar correspondent

bank for the Group, is subject to heightened financial crime risk arising

from business conducted on behalf of its non-US HSBC affiliates.

HSBC Bank USA has implemented policies, procedures and controls

reasonably designed to comply with financial crime legal and regulatory

requirements and mitigate financial crime risk from its affiliates.

Nevertheless, in the event that these controls are ineffective, this could

lead to a breach of these requirements resulting in a potential

enforcement action by the US Department of the Treasury or other US

agencies that may include substantial fines or penalties. Any such

action against HSBC Bank USA could have a material adverse effect on

our strategy, business, customers, financial condition, results of

operations, prospects and reputation.

We may suffer losses due to employee

misconduct

Our businesses are exposed to risk from potential non-compliance with

Group policies, including the HSBC Values, and associated behaviours

and employee misconduct such as fraud, negligence or non-financial

misconduct. These issues could lead to regulatory penalties and

damage to our reputation or finances. In recent years, several global

financial institutions have incurred significant losses due to rogue

employee actions. While we strive to prevent and detect such

misconduct, our measures may not always be effective, or a regulator

could find HSBC's efforts to deter such activities inadequate.

The risk of misconduct may be heightened if our prevent-and-detect

measures are less effective, particularly in remote and home working

environments.

If any of these risks materialise, this could have a material adverse

effect on our business, financial condition, results of operations,

prospects and reputation.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **135** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

---

The delivery of our strategic actions is

subject to execution risk and we may not

achieve all of the expected benefits of

our strategic initiatives

Management of strategic execution risk is required for us to be able to

deliver our strategy, meet shareholder expectations and maintain

stakeholder confidence.

Executing our strategy and meeting our targets necessitates effective

prioritisation, planning, and management. This process may be

influenced by operational capacity, the efficacy of key controls, and

structural challenges arising from any mergers or acquisitions.

Additionally, there is a possibility of unforeseen changes in the market

or regulatory environment in which we operate, while complex

technological changes are underway. The global economic outlook

remains uncertain, particularly concerning legislative changes and

geopolitical tensions. The scale, complexity, and concurrent demands

of such transformation initiatives can result in heightened execution

risk.

Our strategic actions seek to align with investor expectations, yet they

carry increased execution risk due to the emphasis on cost

management and funding capacity. Consequently, there is a risk that

our cost and investment measures may not fully realise the anticipated

benefits of our strategic initiatives.

The development and implementation of our strategy requires difficult

and complex judgements, including forecasts of economic conditions in

various parts of the world. We may fail to correctly identify the relevant

factors in making decisions as to capital deployment and cost

reduction. We may also encounter unpredictable changes in the

external environment that are disadvantageous to our strategy.

There is a risk that the Group's reorganisation announced in 2024 may

not achieve some or all of its goals and may fail to deliver or achieve

the expected benefits of the Group's strategic initiatives.

If any of these risks materialise, this could have a material adverse

effect on our customers, business, financial condition, prospects,

operational resilience and reputation.

Our risk management measures may not

be successful

The management of risk is a fundamental component of all our

activities, as outlined in our Risk Management Framework ('RMF'). Risk

represents our exposure to uncertainty and the potential variability in

outcomes. Specifically, risk encompasses the negative impact on

profitability or financial condition due to various sources of uncertainty,

including retail and wholesale credit risk, treasury risk, traded risk,

financial reporting and tax risk, resilience risk, strategic risk, legal risk,

regulatory compliance risk, financial crime risk, people risk and model

risk.

We employ a comprehensive and diversified set of risk monitoring and

mitigation techniques, supported by the Three Lines of Defence model,

which defines clear accountabilities across risk ownership, oversight,

and independent assurance. However, these methods and the

judgements involved cannot foresee every adverse event or the

specifics and timing of every outcome. Inadequate risk management

could have a material adverse effect on our business, financial

condition, results of operations, prospects, capital position, strategy and

reputation.

Risks related to our business

Our business has inherent reputational

risk

Reputational risk is the risk of failing to meet stakeholder expectations

as a result of any event, behaviour, action or inaction, either by HSBC,

our employees or those with whom we are associated. Any material

lapse in standards of integrity, compliance, customer service or

operating efficiency may represent a potential reputational risk.

Stakeholder expectations constantly evolve, and so reputational risk is

dynamic and varies between geographical regions, groups and

individuals. In addition, our business faces increasing scrutiny in respect

of ESG-related matters. If we fail to act responsibly, or to achieve our

announced targets, commitments, goals or ambitions, in a number of

areas, such as inclusion, climate, sustainability, workplace conduct,

human rights, and support for local communities, our reputation and the

value of our brand may be negatively affected.

Social media and other broadcasting channels that facilitate

communication with large audiences in short time frames and with

minimal costs, may significantly enhance and accelerate the distribution

and effect of damaging information and allegations. Reputational risk

could also arise from negative public opinion about the actual, or

perceived, manner in which we conduct our business activities, or our

financial performance, as well as actual or perceived practices in

banking and the financial services industry generally. Negative public

opinion may adversely affect our ability to retain and attract customers,

in particular, corporate and retail depositors, and to retain and motivate

staff, and could have a material adverse effect on our business,

financial condition, results of operations, prospects and reputation.

Non-Financial risks are inherent in our

business

We are exposed to many types of non-financial risks that are inherent in

our operations. Non-financial risk can be defined as the risk to HSBC of

not achieving its strategy or objectives because of inadequate or failed

internal processes, people and systems, or external events. It includes:

breakdowns in processes or procedures, breaches of regulations or

law, financial crime, financial reporting and tax errors, external events

and systems failure or non-availability. These risks are also present

when we rely on outside suppliers or vendors to provide services to us

and our customers.

These non-financial risks may result in financial losses to the Group and

our customers, an adverse customer experience, reputational damage

and potential litigation, regulatory proceedings, administrative action or

other adversarial proceedings in any jurisdiction in which we operate,

depending on the circumstances of the event.

These could have a material adverse effect on our business, financial

condition, results of operations, prospects, operational resilience,

strategy and reputation.

We rely on recruiting, retaining and

developing appropriate senior

management and skilled personnel

Our ongoing success and the successful execution of our strategy are

partly reliant on retaining key management team members and our

broader workforce, as well as ensuring the availability of skilled

management and personnel across our global businesses and

functions. The complexity of our talent supply challenge is heightened

by the shortage of talent and capabilities in our major markets,

especially where specialist skills require global mobility. This challenge

is further compounded by ongoing organisational changes, rapidly

evolving skill requirements, regulatory developments, and heightened

expectations for employing local nationals and fostering inclusion in

certain jurisdictions.

HSBC's ability to continue to attract, train, motivate and retain highly

qualified professionals may also depend on factors beyond our control,

including economic, market and regulatory conditions.

When acquiring or disposing of a Group operation, it is essential to

comply with employment requirements, support affected employees

and integrate new employees into HSBC's values, culture and working

practices.

Should global businesses or functions fail to adequately staff their

operations, lose key senior executives without timely and satisfactory

replacements, or fail to implement necessary organisational changes to

support the Group's strategy, this could have a material adverse effect

on our business performance, reputation, operational resilience and

overall control environment.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **136** |

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| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

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We have significant exposure to

counterparty risk

We are exposed to counterparties that are involved in virtually all major

industries, and we routinely execute transactions with counterparties in

financial services, including brokers and dealers, central clearing

counterparties, commercial banks, investment banks, mutual and

hedge funds, and other institutional clients.

Many of these transactions expose us to credit risk in the event of

default by our counterparty or client.

Our ability to engage in routine transactions to fund our operations and

manage our risks could be materially adversely affected by the actions

and commercial soundness of other financial services institutions.

Financial institutions are necessarily interdependent because of trading,

clearing, counterparty or other relationships. As a consequence, a

default by, or decline in market confidence in, individual institutions, or

anxiety about the financial services industry generally, can lead to

further individual and/or systemic difficulties, defaults and losses.

Mandatory central clearing of OTC derivatives poses risks to the Group.

As a clearing member, we are required to underwrite losses incurred at

a central counterparty by the default of other clearing members and

their clients. An increased move towards central clearing brings with it

a further element of interconnectedness between clearing members

and clients that we believe may increase rather than reduce our

exposure to systemic risk. At the same time, our ability to manage

such risk ourselves will be reduced because control has been largely

outsourced to central counterparties, and it is unclear at present how,

at a time of stress, regulators and resolution authorities will intervene.

Where bilateral counterparty risk has been mitigated by taking

collateral, our credit risk may remain high if the collateral we hold

cannot be realised or has to be liquidated at prices that are insufficient

to recover the full amount of our loan or derivative exposure.

There is a risk that collateral cannot be realised, including situations

where this arises by change of law or the imposition of sanctions, that

may influence our ability to foreclose on collateral or otherwise enforce

contractual rights.

The Group also has credit exposure arising from mitigants, such as

credit default swaps, and other credit derivatives, each of which is

carried at fair value. The risk of default by counterparties to credit

default swaps and other credit derivatives used as mitigants affects the

fair value of these instruments depending on the valuation and the

perceived credit risk of the underlying instrument against which

protection has been purchased. Any such adjustments or fair value

changes could have a material adverse effect on our business, financial

condition, results of operations, prospects, capital position and

reputation.

Any reduction in the credit rating

assigned to HSBC Holdings, any

subsidiaries of HSBC Holdings or any of

their respective debt securities could

increase the cost or decrease the

availability of our funding and materially

adversely affect our liquidity position

and/or net interest margin

Credit ratings affect the cost and other terms upon which we are able

to obtain market funding. Rating agencies regularly evaluate HSBC

Holdings and certain of its subsidiaries, as well as their respective debt

securities. Their ratings are based on a number of factors, including

their assessment of the relative financial strength of the Group or of the

relevant subsidiary, as well as conditions affecting the financial services

industry generally. There can be no assurance that the rating agencies

will maintain HSBC Holdings' or the relevant subsidiary's current

ratings, or outlook based on bank rating methodologies applied by

ratings agencies.

Any reductions in these current ratings or the outlook could increase

the cost of our funding, limit access to capital markets and require

additional collateral to be placed and, consequently, materially adversely

affect our interest margins and our liquidity position.

Risks concerning borrower credit quality

are inherent in our businesses

Risks arising from changes in credit quality and the recoverability of

loans and amounts due from borrowers and counterparties (for

example, reinsurers and counterparties in derivative transactions) are

inherent in a wide range of our businesses. Adverse changes in the

credit quality of our borrowers and counterparties or reduced

recoverability of our assets arising from a general deterioration in

economic conditions or systemic risks in the financial systems, could

require an increase in our ECLs (see 'Economic and market conditions

and geopolitical developments may adversely affect our financial

condition and results').

We estimate and recognise ECLs in our credit exposure. This process,

which is critical to our results and financial condition, requires difficult,

subjective and complex judgements, including forecasts of how the

macroeconomic and geopolitical conditions might impair the ability of

our borrowers to repay their loans and the ability of other

counterparties to meet their obligations. This assessment considers

multiple alternative forward-looking economic conditions (including GDP

estimates) and incorporates this into the ECL estimates to meet the

measurement objective of IFRS 9. As is the case with any such

assessments, we may fail to estimate accurately the effect of factors

that we identify or fail to identify relevant factors. Further, the

information we use to assess the creditworthiness of our

counterparties may be inaccurate or incorrect. Any failure by us to

accurately estimate the ability of our counterparties to meet their

obligations could have a material adverse effect on our business,

financial condition, results of operations and prospects.

Our insurance businesses are subject to

risks relating to insurance claim rates

and changes in insurance customer

behaviour

We provide various insurance products for customers, including several

types of life insurance products. The cost to support insurance claims

and benefits can be influenced by many factors, including mortality and

morbidity rates, lapse and surrender rates and the performance of

assets to support the liabilities. Adverse developments in any of these

factors could materially adversely affect our business, financial

condition, results of operations, capital position, prospects and

reputation.

HSBC Holdings is a holding company

and, as a result, is dependent on loan/

instrument payments and dividends

from its subsidiaries to meet its

obligations, including obligations with

respect to its debt securities, and to

provide profits for payment of future

dividends to shareholders

HSBC Holdings is a non-operating holding company and, as such, its

principal source of income is from operating subsidiaries that hold the

principal assets of the Group. As a separate legal entity, HSBC Holdings

relies on remittance of its subsidiaries' loan/instrument interest

payments and dividends in order to be able to pay obligations to debt

holders as they fall due, and to pay dividends to its shareholders. The

ability of HSBC Holdings' subsidiaries and affiliates to pay interest and

dividends to HSBC Holdings is subject to such subsidiaries' and

affiliates' financial performance and could also be restricted by

applicable laws, regulations, exchange controls and other requirements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **137** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Risk factors | Risk factors |  |  |

---

We may be required to make substantial

contributions to our pension plans

We operate a number of pension plans throughout the world for our

personnel, including defined benefit pension plans. Pension scheme

obligations fluctuate with changes in long-term interest rates, inflation,

salary levels and the longevity of scheme members. They can also be

affected by operational and legal risks. The level of contributions we

make to our pension plans has a direct effect on our cash flow. To the

extent plan assets are insufficient to cover existing liabilities, higher

levels of contributions may be required. As a result, deficits in those

pension plans could have a material adverse effect on our business,

financial condition, results of operations, prospects and reputation.

Risk related to our financial

statements and accounts

Our financial statements are based in

part on judgements, estimates and

assumptions that are subject to

uncertainty

The preparation of financial information requires management to make

judgements and use estimates and assumptions that affect the

reported amounts of assets, liabilities, income and expenses. Due to

the inherent uncertainty in making estimates, particularly those

involving the use of complex models, actual results reported in future

periods could differ from the expectations on which management's

estimates are based. Judgements, estimates, assumptions and models

are continually evaluated, and are based on historical experience and

other factors, including expectations of future events that are believed

to be reasonable under the prevailing circumstances. The impacts of

revisions to accounting estimates are recognised in the period in which

the estimates are revised and in any future periods affected.

Accounting policies deemed critical to our results and financial position

are those that involve a high degree of uncertainty and have a material

impact on the financial statements. In 2025, these included impairment

of amortised cost financial assets and financial assets measured at

FVOCI, impairment of goodwill and non-financial assets, valuation of

financial instruments, deferred tax assets, provisions, impairment of

interests in associates, post-employment benefit plans, and impairment

of investments in subsidiaries, which are discussed in detail in 'Critical

estimates and judgements' on page 66.

The measurement of ECLs requires the selection and calibration of

complex models and the use of estimates and assumptions to

incorporate relevant information about past events, current conditions

and forecasts of economic conditions. Additionally, significant

judgement is involved in determining what is considered to be

significant increases in credit risk and what the point of initial

recognition is for revolving facilities.

The assessment of whether goodwill and non-financial assets are

impaired, and the measurement of any impairment, involve the

application of judgement in determining key assumptions, including

discount rates, estimated cash flows for the periods for which detailed

cash flows are available and projecting the long-term pattern of

sustainable cash flows thereafter. The recognition and measurement of

deferred tax assets involve significant judgement regarding the

probability and sufficiency of future taxable profits, taking into account

the future reversal of existing taxable temporary differences and tax

planning strategies, including corporate reorganisations.

The recognition and measurement of provisions involve significant

judgements due to the high degree of uncertainty in determining

whether a present obligation exists, and in estimating the probability

and amount of any outflows that may arise. The valuation of financial

instruments measured at fair value can be subjective, in particular

where models are used that include unobservable inputs.

The assessment of interests in associates for impairment involves

significant judgements in determining the value in use, in particular

estimating the present values of cash flows expected to arise from

continuing to hold the investment, based on a number of management

assumptions.

The Group's impairment test on the carrying amount at 30 June 2025

resulted in an impairment of $1.0bn, as the recoverable amount as

determined by a value-in-use calculation was lower than the carrying

amount. No further impairment (or reversal) was required for the period

from 1 July 2025 to 31 December 2025. Impairment reviews are

complex and require significant judgments, such as the

appropriateness of projected future cash flows, discount rate, and

regulatory capital assumptions. There can be no assurance that no

additional impairment will be required in future financial periods. See

Note 18 to the Financial Statements for further details.

The calculation of the defined benefit pension obligation involves the

determination of key assumptions, including discount rate, inflation

rate, pay, pension payments and deferred pension, and mortality.

The assessment of interests in subsidiaries for impairment involves

significant judgements in determining the value in use, in particular

estimating the present values of cash flows expected to arise from

continuing to hold the investment, based on a number of management

assumptions.

Given the uncertainty and subjectivity associated with the above critical

accounting judgements and estimates, future outcomes may differ

materially from those assumed using information available at the

reporting date.

These judgements and estimates could have a material adverse effect

on the future financial position of the Group, results of operations,

capital position, prospects and reputation. For further details, see

'Critical estimates and judgements' on page 66.

Changes in accounting standards may

have a material impact on how we

report our financial results and financial

condition

We prepare our consolidated financial statements in conformity with

UK-adopted international accounting standards and with the

requirements of the UK Companies Act 2006, and have also applied

international financial reporting standards adopted pursuant to

Regulation (EC) No 1606/2002 as it applies in the European Union. Our

consolidated financial statements are also prepared in accordance with

International Financial Reporting Standards as issued by the

International Accounting Standards Board ('IASB') ('IFRS Accounting

Standards'), including interpretations issued by the IFRS Interpretations

Committee.

From time to time, the IASB or the IFRS Interpretations Committee

may issue new accounting standards or interpretations that could

materially impact how we calculate, report and disclose our financial

results and financial condition, and which may affect our capital ratios,

including the CET1 ratio. We could also be required to apply new or

revised standards retrospectively, resulting in our restating prior period

financial statements in material amounts. This could have a material

adverse effect on our business, financial condition, results of operations

and capital position.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **138** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Our material banking risks

The material risk types associated with our banking and insurance manufacturing operations are described in the following tables:

---

| | | |
|:---|:---|:---|
| Description of risks – banking operations | Description of risks – banking operations | Description of risks – banking operations |
| **Risks** | **Arising from** | **Measurement, monitoring and management of risk** |
| **Credit risk** ► See page <u>[140](#ie4edc76213cf40e9ae3dd93b36f88427_6561)</u> |  |  |
| Credit risk is the risk of financial loss <br>if a customer or counterparty fails to <br>meet an obligation under a contract. <br>| Credit risk arises principally from direct <br>lending, trade finance and leasing <br>business, but also from other products <br>such as guarantees and derivatives.<br>| Credit risk is:<br>–measured as the amount that could be lost if a customer or counterparty fails <br>to make repayments; <br>–monitored using various internal risk management measures and within limits <br>approved by individuals within a framework of delegated authorities; and<br>–managed through a risk control framework, which seeks to outline clear <br>and consistent policies, principles and guidance for risk managers; and by <br>setting limits and appetite across geographical markets, portfolios or sectors.<br>|
| **Treasury risk** ► See page <u>[189](#ie4edc76213cf40e9ae3dd93b36f88427_238)</u> |  |  |
| Treasury risk is the risk of having <br>insufficient capital, liquidity or funding <br>resources to meet financial obligations <br>and satisfy regulatory requirements, <br>including the risk of an adverse impact <br>on earnings or capital due to structural <br>and transactional foreign exchange <br>exposures and changes in market <br>interest rates, together with pension <br>and insurance risk.<br>| Treasury risk arises from changes to the <br>respective resources and risk profiles <br>driven by customer behaviour, <br>management decisions or the external <br>environment.<br>| Treasury risk is: <br>–measured through risk appetite and more granular limits, set to provide an <br>early warning of increasing risk, minimum ratios of relevant regulatory <br>metrics, and metrics to monitor the key risk drivers impacting treasury <br>resources;<br>–monitored and projected against appetites and by using operating plans <br>based on strategic objectives together with stress and scenario testing; and <br>–managed through control of resources in conjunction with risk profiles, <br>strategic objectives and cash flows.<br>|
| **Market risk** ► See page <u>[200](#ie4edc76213cf40e9ae3dd93b36f88427_6577)</u> |  |  |
| Market risk is the risk of an adverse <br>financial impact on trading activities <br>arising from changes in market <br>parameters such as interest rates, <br>foreign exchange rates, asset prices, <br>volatilities, correlations and credit <br>spreads.<br>| Market risk arises from both trading <br>portfolios and non-trading portfolios. <br>Market risk for trading portfolios is <br>discussed in the Market risk section on <br>page <u>[201](#ie4edc76213cf40e9ae3dd93b36f88427_304)</u>.<br>Market risk for non-trading portfolios is <br>discussed in the Treasury risk section on <br>page <u>[198](#ie4edc76213cf40e9ae3dd93b36f88427_313)</u>. Market risk exposures arising <br>from our insurance operations are <br>discussed on page <u>[217](#ie4edc76213cf40e9ae3dd93b36f88427_400)</u>.<br>| Market risk is:<br>–measured using sensitivities, value at risk ('VaR') and stress testing, giving a <br>detailed picture of potential gains and losses for a range of market <br>movements and scenarios, as well as tail risks over specified time horizons;<br>–monitored using VaR, stress testing and other measures; and<br>–managed using risk limits approved by the Group Risk Management Meeting <br>and the risk management meetings in various business segments. <br>|
| **Climate risk** ► See page <u>[203](#ie4edc76213cf40e9ae3dd93b36f88427_6584)</u> |  |  |
| Climate risk relates to the financial <br>and non-financial impacts that may <br>arise as a result of climate change <br>and the move to a net zero economy.<br>| Climate risk can materialise through: <br>–physical risk, which arises from the <br>increased frequency and severity of <br>extreme weather events, such as <br>hurricanes and floods, or chronic <br>gradual shifts in weather patterns or <br>rises in the sea level;<br>–transition risk, which arises from the <br>process of moving to a net zero <br>economy, including changes in <br>government policy and legislation, <br>technology, market demand, and <br>reputational implications triggered by <br>a change in stakeholder expectations, <br>action or inaction; and<br>–the risk of greenwashing, which <br>arises from the act of knowingly or <br>unknowingly making inaccurate, <br>unclear, misleading or <br>unsubstantiated claims regarding <br>sustainability to stakeholders.<br>| Climate risk is:<br>–measured using risk metrics and stress testing;<br>–monitored against risk appetite statements;<br>–managed through adherence to risk appetite thresholds, through specific <br>policies, and through enhancements to processes and development of tools; <br>and <br>–this includes the development of product controls to manage the risk of <br>greenwashing and the development of portfolio steering capabilities to <br>manage our net zero ambitions.<br>|
| **Sustainability execution risk** ► See page 206 | **Sustainability execution risk** ► See page 206 |  |
| Sustainability execution risk is the <br>risk of not meeting our sustainability <br>ambitions, targets and commitments <br>as set out in firm-level external <br>reporting, sustainability risk policies <br>and associated internal policies, and <br>other ESG commitments.<br>| Sustainability execution risk can arise <br>from:<br>–financing or engaging in business <br>activities with clients and/or <br>transactions that are not aligned or <br>that are inconsistent with our <br>sustainability risk appetite and <br>policies;<br>–incorrectly including products or <br>transactions as counting towards our <br>sustainable finance ambition; <br>–engaging in activities that do not <br>support our ambition to become a net <br>zero bank by 2050.<br>| Sustainability execution risk is:<br>–measured through progress against sustainability ambitions, targets and <br>commitments using risk metrics;<br>–monitored against targets to reduce emissions and risk appetite which <br>includes sectoral decarbonisation pathways; and<br>–managed through a risk control framework, appropriate policies and <br>continual monitoring.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **139** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Our material banking risks | Our material banking risks |  |  |

---

---

| | | |
|:---|:---|:---|
| Description of risks – banking operations (continued) | Description of risks – banking operations (continued) | Description of risks – banking operations (continued) |
| **Risks** | **Arising from** | **Measurement, monitoring and management of risk** |
| **Resilience risk** ► See page <u>[213](#ie4edc76213cf40e9ae3dd93b36f88427_364)</u> | **Resilience risk** ► See page <u>[213](#ie4edc76213cf40e9ae3dd93b36f88427_364)</u> |  |
| Resilience risk is the risk of sustained <br>and significant business disruption <br>causing the inability to provide critical <br>services to our customers, affiliates, <br>and counterparties.<br>| Resilience risk arises from failures or <br>inadequacies in processes, people, <br>systems or external events.<br>| Resilience risk is: <br>–measured using a range of metrics and against our agreed risk appetite;<br>–monitored through oversight of enterprise processes, risks, controls and <br>strategic change programmes; and<br>–managed by continual monitoring and thematic reviews.<br>|
| **Regulatory compliance risk** ► See page <u>[213](#ie4edc76213cf40e9ae3dd93b36f88427_6602)</u> | **Regulatory compliance risk** ► See page <u>[213](#ie4edc76213cf40e9ae3dd93b36f88427_6602)</u> |  |
| Regulatory compliance risk is the risk <br>associated with breaching our duty to <br>clients and other counterparties, <br>inappropriate market conduct <br>(including unauthorised trading) and <br>breaching related financial services <br>regulatory standards.<br>| Regulatory compliance risk arises from <br>the failure to observe relevant laws, <br>codes, rules and regulations, potentially <br>resulting in adverse market or conduct <br>outcomes, fines, penalties and <br>reputational harm. <br>| Regulatory compliance risk is:<br>–assessed and measured with reference to risk appetite, identified metrics, <br>incident assessments, regulatory feedback and the judgement of our <br>regulatory compliance teams;<br>–monitored against the first line of defence risk and control assessments and <br>testing, alongside the outcome of the second line of defence monitoring and <br>control assurance activities, as well as internal and external audits and <br>regulatory inspections; and<br>–managed by establishing and communicating appropriate policies and <br>procedures, training employees accordingly, and monitoring activities to help <br>ensure compliance.<br>|
| **Financial crime risk** ► See page <u>[214](#ie4edc76213cf40e9ae3dd93b36f88427_370)</u> | **Financial crime risk** ► See page <u>[214](#ie4edc76213cf40e9ae3dd93b36f88427_370)</u> |  |
| Financial crime risk is the risk that <br>HSBC's products and services will be <br>exploited for criminal activity. This <br>includes fraud, bribery and <br>corruption, tax evasion and the <br>facilitation of tax evasion, sanctions <br>and export control violations and <br>evasion, money laundering, terrorist <br>financing and proliferation financing.<br>| Financial crime risk arises from day-to-<br>day banking operations involving <br>customers, third parties and employees. <br>| Financial crime risk is: <br>–measured by reference to risk appetite, identified metrics, incident <br>assessments, regulatory feedback and the judgement of, and assessment <br>by, our financial crime teams;<br>–monitored against the first line of defence risk and control assessments, and <br>the results of the monitoring and control assurance activities of the second <br>line of defence functions; and<br>–managed by establishing and communicating appropriate policies and <br>procedures, training employees and monitoring activity to help embed them. <br>Proactive risk control and/or remediation work is undertaken where required.<br>|
| **Model risk** ► See page <u>[214](#ie4edc76213cf40e9ae3dd93b36f88427_373)</u> |  |  |
| Model risk is the risk of the potential <br>for adverse consequences from <br>model errors or the inappropriate use <br>of modelled outputs to inform <br>business decisions. <br>| Model risk arises in both financial and <br>non-financial contexts whenever <br>business decision making includes <br>reliance on models. <br>| Model risk is:<br>–measured by reference to model performance tracking and the output of <br>detailed technical reviews and regulatory feedback, with key metrics <br>including model validation outcomes and monitoring results; <br>–monitored against model risk appetite statements, insight from the <br>independent validations completed by the model risk management team; and<br>–managed by creating and communicating appropriate policies, procedures <br>and guidance, training colleagues in their application, supervising their <br>adoption to help ensure operational effectiveness, and ensuring models are <br>approved for use.<br>|

---

Our insurance manufacturing subsidiaries are regulated separately from our banking operations. Risks in our insurance entities are managed using

methodologies and processes that are subject to Group oversight. Our insurance operations are also subject to many of the same risks as our

banking operations, and these are covered by the Group's risk management processes. However, there are specific risks inherent to the insurance

operations as noted below.

---

| | | |
|:---|:---|:---|
| Description of risks – insurance manufacturing operations | Description of risks – insurance manufacturing operations | Description of risks – insurance manufacturing operations |
| **Risks** | **Arising from** | **Measurement, monitoring and management of risk** |
| **Financial risk** ► See page <u>[217](#ie4edc76213cf40e9ae3dd93b36f88427_400)</u> | **Financial risk** ► See page <u>[217](#ie4edc76213cf40e9ae3dd93b36f88427_400)</u> |  |
| For insurance entities, financial risk <br>includes the risk of not being able to <br>effectively match liabilities arising <br>under insurance contracts with <br>appropriate investments and that the <br>expected sharing of financial <br>performance with policyholders <br>under certain contracts is not <br>possible.<br>| Exposure to financial risk arises from: <br>–market risk affecting the fair values of <br>financial assets or their future cash <br>flows;<br>–credit risk; and<br>–liquidity risk of entities being unable to <br>make payments to policyholders as they <br>fall due.<br>| Financial risk is:<br>–measured for market risk, in terms of fluctuation in key financial reporting <br>metrics; for credit risk, in terms of the market value that could be lost if a <br>counterparty fails to make repayments; and for liquidity risk, in terms of <br>internal metrics including stressed operational cash flow projections;<br>–monitored through a framework of approved limits and delegated <br>authorities; and<br>–managed through a risk control framework, which seeks to outline clear and <br>consistent policies, principles and guidance. This includes using product <br>design, asset liability matching and bonus rates. <br>|
| **Insurance risk** ► See page <u>[218](#ie4edc76213cf40e9ae3dd93b36f88427_424)</u> | **Insurance risk** ► See page <u>[218](#ie4edc76213cf40e9ae3dd93b36f88427_424)</u> |  |
| Insurance risk is the risk that, over <br>time, the cost of insurance policies <br>written, including claims and <br>benefits, may exceed the total <br>amount of premiums and investment <br>income received.<br>| The cost of claims and benefits can be <br>influenced by many factors, including <br>mortality and morbidity experience, as well <br>as lapse and surrender rates.<br>| Insurance risk is:<br>–measured in terms of the variance between actual experience and <br>expected assumptions and impact on key financial reporting metrics;<br>–monitored through a framework of approved limits and delegated <br>authorities; and<br>–managed through a risk control framework, which seeks to outline clear and <br>consistent policies, principles and guidance. This includes using product <br>design, underwriting, reinsurance and claims-handling procedures.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **140** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Credit risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Credit risk.

Credit risk management

Key developments in 2025

There were no material changes to the policies and practices for the

management of credit risk in 2025. We continued to apply the

requirements of IFRS 9 'Financial Instruments' within the Credit Risk

sub-function.

We actively managed the risks related to macroeconomic uncertainties,

including interest rates, inflation, fiscal and monetary policy, broader

geopolitical uncertainties and conflicts.

🡠For further details, see 'Top and emerging risks' on page <u>[121](#ie4edc76213cf40e9ae3dd93b36f88427_40)</u>.

Governance and structure

We have established Group-wide credit risk management and related

IFRS 9 processes. We continue to assess the impact of economic

developments in key markets on specific customers, customer

segments or portfolios. As credit conditions change, we take mitigating

actions, including the revision of risk appetites or limits and tenors, as

appropriate. In addition, we continue to evaluate the terms under which

we provide credit facilities within the context of individual customer

requirements, the quality of the relationship, local regulatory

requirements, market practices and our local market position.

Credit Risk sub-function

(Audited)

The Credit Risk sub-function in Group Risk and Compliance is

responsible for the key policies and processes for managing credit risk,

which include formulating Group credit policies and risk rating

frameworks, guiding the Group's appetite for credit risk exposures,

undertaking independent reviews and objective assessment of credit

risk, and monitoring performance and management of portfolios while

fostering a culture of responsible lending.

Key risk management processes

IFRS 9 'Financial Instruments' process

The IFRS 9 'Financial Instruments' process focuses on three main

areas: modelling, data and forward economic guidance;

implementation; and governance.

**Modelling, data, and forward economic guidance**

This involves establishing IFRS 9 modelling and data processes across

various geographies, including internal model risk governance and

independent reviews. A centralised process generates unbiased global

economic scenarios, which are reviewed quarterly for consistency with

current economic conditions and risks. These scenarios are subject to

final review and approval by senior management in a forward economic

guidance global business impairment committee.

**Implementation**

A centralised impairment engine calculates expected credit losses

using data from various systems, which is subject to validation checks

and enhancements from a variety of client, finance and risk systems.

Where possible, these checks and processes are performed in a

globally consistent and centralised manner.

**Governance**

Regional management review forums, including representatives from

Credit Risk and Finance, review and approve impairment results. These

approvals are reviewed by retail and wholesale impairment committees

for final approval. Required committee members include the relevant

Chief Risk Officers, Chief Financial Officers and the Global Financial

Controller.

Concentration of exposure

(Audited)

Concentration of credit risk occurs when multiple counterparties share

similar economic traits or operate in the same sectors or regions,

making them collectively vulnerable to changes in economic or political

conditions. To mitigate this risk, the Group uses various controls such

as portfolio and counterparty limits, approval and review processes, and

stress testing across industries, countries and businesses.

Credit quality of financial instruments

(Audited)

Our risk rating system facilitates the internal ratings-based approach

under the Basel framework to support the calculation of our minimum

capital requirement. The five credit quality classifications encompass a

range of granular internal credit rating grades assigned to wholesale

and retail customers, and the external ratings attributed by external

agencies to debt securities.

For debt securities and certain other financial instruments, external

ratings have been aligned to the five quality classifications based upon

the mapping of related customer risk rating ('CRR') to external credit

rating.

Wholesale lending

The CRR 10-grade scale summarises a more granular underlying

23-grade scale of obligor probability of default ('PD'). All corporate

customers are rated using the 10- or 23-grade scale, depending on the

degree of sophistication of the Basel approach adopted for the

exposure.

Each CRR band is associated with an external rating grade by reference

to long-run default rates for that grade, represented by the average of

issuer-weighted historical default rates. This mapping between internal

and external ratings is indicative and may vary over time.

Retail lending

Retail lending credit quality is based on a 12-month point-in-time

probability-weighted PD.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **141** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Credit quality classification | Credit quality classification | Credit quality classification | Credit quality classification | Credit quality classification | Credit quality classification | Credit quality classification |
|  | **Sovereign** <br>**debt securities**<br>**and bills**<br>| **Other** <br>**debt securities**<br>**and bills**<br>| **Wholesale lending**<br>**and derivatives** | **Wholesale lending**<br>**and derivatives** | **Retail** <br>**lending** | **Retail** <br>**lending** |
|  | **External credit** <br>**rating**<br>| **External credit**<br> **rating**<br>| **Internal credit** <br>**rating**<sup>1</sup><br>| **12-month regulatory**<br> **probability of** <br>**default %**<br>| **Internal credit** <br>**rating**<br>| **12 month probability-** <br>**weighted** <br>**PD %**<sup>2</sup><br>|
| **Quality classification** |  |  |  |  |  |  |
| Strong | **BBB and above** | **A- and above** | **CRR 1 to CRR 2** | **0–0.169** | **Band 1 and 2** | **0 – <=0.5** |
| Good | **BBB- to BB** | **BBB+ to BBB-** | **CRR 3** | **0.170–0.740** | **Band 3** | **>0.5 – <=1.5** |
| Satisfactory | **BB- to B and unrated** | **BB+ to B and unrated** | **CRR 4 to CRR 5** | **0.741–4.914** | **Band 4 and 5** | **>1.5 – <=20** |
| Sub-standard | **B- to C** | **B- to C** | **CRR 6 to CRR 8** | **4.915–99.999** | **Band 6** | **>20 – <100** |
| Credit impaired | **Default** | **Default** | **CRR 9 to CRR 10** | **100** | **Band 7** | **100** |

---

1Customer risk rating ('CRR').

212-month point-in-time probability-weighted PD.

Quality classification definitions<br>–'Strong' exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of <br>expected loss.<br>–'Good' exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk.<br>–'Satisfactory' exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk.<br>–'Sub-standard' exposures require varying degrees of special attention and default risk is of greater concern.<br>–'Credit-impaired' exposures have been assessed as described in Note 1.2(j) to the financial statements.<br>

Forborne loans and advances

(Audited)

Forbearance measures consist of concessions towards an obligor that

is experiencing, or about to experience, difficulties in meeting its

financial commitments.

We continue to class loans as forborne when we modify the

contractual payment terms due to having concerns about the

borrowers' ability to meet contractual payments when they were due.

Our definition of forborne captures non-payment-related concessions,

such as covenant waivers.

🡠For details of our policy on forbearance, see Note 1.2(j) in the financial

statements.

Credit quality of forborne loans

For wholesale lending, where payment-related forbearance measures

result in a diminished financial obligation, or if there are other indicators

of impairment, the loan will be classified as credit impaired if it is not

already so classified. All facilities with a customer, including loans that

have not been modified, are considered credit impaired following the

identification of a payment-related forborne loan. For retail lending,

where a material payment-related concession has been granted, the

loan will be classified as credit impaired. In isolation, non-payment

related forbearance measures may not result in the loan being

classified as credit impaired unless combined with other indicators of

credit impairment. These are classed as performing forborne loans for

both wholesale and retail lending.

Wholesale and retail lending forborne loans are classified as credit

impaired until there is sufficient evidence to demonstrate a significant

reduction in the risk of non-payment of future cash flows, observed

over a minimum one-year period, and there are no other indicators of

impairment. Any forborne loans not considered credit impaired will

remain forborne for a minimum of two years from the date that credit

impairment no longer applies. For wholesale and retail lending, any

forbearance measures granted on a loan already classed as forborne

results in the customer being classed as credit impaired.

Forborne loans and recognition of expected

credit losses

(Audited)

Forborne loans expected credit loss assessments reflect the higher

rates of losses typically experienced with these types of loans; as such

they are categorised as stage 2 and stage 3. The higher rates are more

pronounced in unsecured retail lending requiring further segmentation.

For wholesale lending, forborne loans are typically assessed

individually. Credit risk ratings are intrinsic to the impairment

assessments. The individual impairment assessment takes into

account the higher risk of the future non-payment inherent in forborne

loans.

Impairment assessment

(Audited)

For details of our impairment policies on loans and advances and

financial investments, see Note 1.2(j) on the financial statements.

Write-off of loans and advances

(Audited)

Under IFRS 9, write-off should occur when there is no reasonable

expectation of recovering further cash flows from the financial asset.

This principle does not prohibit early write-off, which is defined in local

policies to ensure effectiveness in the management of customers in

the collections process.

Unsecured personal facilities, including credit cards, are generally

written off at between 150 and 210 days past due. The standard period

runs until the end of the month in which the account becomes 180

days contractually delinquent. However, in exceptional circumstances,

to avoid unfair customer outcomes, deliver customer duty or meet

regulatory expectations, the period may be extended further.

For secured facilities, write-off should occur upon repossession of

collateral, receipt of proceeds via settlement, or determination that

recovery of the collateral will not be pursued. Where these assets are

maintained on the balance sheet beyond 60 months of consecutive

delinquency-driven default, the prospect of recovery is reassessed.

Recovery activity, on both secured and unsecured assets, may

continue after write-off.

Any unsecured exposures that are not written off at 180 days past due,

and any secured exposures that are in 'default' status for 60 months or

greater but are not written off, are subject to additional monitoring via

the appropriate governance forums.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **142** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Credit risk in 2025

At 31 December 2025, gross loans and advances to banks and

customers of $1,108bn increased by $65.1bn on a reported basis

compared with 31 December 2024. Gross loans and advances to

customers increased by $58.7bn and gross loans and advances to

banks increased by $6.4bn. This included total favourable foreign

exchange movements of $44.1bn.

On a constant currency basis, the increase of $21.0bn was driven by an

$11.4bn rise in wholesale loans and advances to customers and a

$6.8bn rise in personal loans and advances to customers. There was a

further increase of $2.8bn in loans and advances to banks.

The rise in wholesale loans and advances to customers was driven by

an increase in balances in HSBC UK (up $8.4bn) and in Asia (up $3.8bn),

across multiple industry sectors.

The rise in personal loans and advances to customers was driven by

mortgage growth of $8.8bn, mainly in HSBC UK (up $8.5bn), and higher

other personal lending in our entities in Asia (up $4.8bn). This was

partly offset by the disposal of our retained portfolio of home and

certain other loans in France ($7.2bn).

There was a decrease in stage 2 loans and advances to banks and

customers of $17.1bn on a constant currency basis. This was mainly

driven by model recalibration for retail portfolios where the probability

of default ('PD') was aligned to the most recent observed performance.

This resulted in a shift of balances from stage 2 to stage 1, mainly in

HSBC UK mortgages. The balances transferred consisted of up-to-date

loans mainly in the 'Strong' and 'Good' credit quality buckets.

At 31 December 2025, the allowance for ECL of $11.2bn increased by

$0.9bn compared with 31 December 2024, including adverse foreign

exchange movements of $0.4bn, and write-offs of $3.6bn. The $11.2bn

allowance comprised $10.8bn in respect of assets held at amortised

cost and $0.4bn in respect of loan commitments and financial

guarantees.

On a constant currency basis, the allowance for ECL in relation to loans

and advances to customers increased by $0.6bn from 31 December

2024. This was attributable to:

–a $0.5bn increase in wholesale loans and advances to customers,

which included a $0.8bn increase in stage 3 and a $0.3bn decrease

in stages 1 and 2; and

–a $0.1bn increase in personal loans and advances to customers

driven by stages 1 and 2.

The ECL charge for 2025 was $3.9bn (2024: $3.4bn), inclusive of

recoveries. The ECL charge comprised: $2.4bn in respect of wholesale

lending, of which the stage 3 charge was $2.1bn; and $1.5bn in respect

of personal lending, of which $0.9bn was in stage 3.

Wholesale lending charges were recognised mainly in our legal entities

in Hong Kong ($1.2bn). This included charges related to the Hong Kong

CRE sector of $0.7bn. This reflected updates to our models used for

ECL calculations, an increase in allowances for new defaulted

exposures, as well as continued negative migration in the portfolio as

market conditions remained challenging. ECL charges in the mainland

China CRE sector of $0.2bn were mainly driven by a new default.

🡠Income statement movements are analysed further on page 68.

While credit risk arises across most of our balance sheet, ECL have

typically been recognised on loans and advances to customers and

banks, in addition to securitisation exposures and other structured

products. As a result, our disclosures focus primarily on these two

areas. For further details of:

–maximum exposure to credit risk, see page <u>[148](#ie4edc76213cf40e9ae3dd93b36f88427_115)</u>;

–measurement uncertainty and sensitivity analysis of ECL estimates,

see page <u>[148](#ie4edc76213cf40e9ae3dd93b36f88427_121)</u>;

–reconciliation of changes in gross carrying/nominal amount and

allowances for loans and advances to banks and customers

including loan commitments and financial guarantees, see page <u>[158](#ie4edc76213cf40e9ae3dd93b36f88427_154)</u>;

–credit quality, see page <u>[161](#ie4edc76213cf40e9ae3dd93b36f88427_157)</u>;

–total wholesale lending for loans and advances to banks and

customers by stage distribution, see page <u>[169](#ie4edc76213cf40e9ae3dd93b36f88427_175)</u>;

–wholesale and personal lending collateral, see page <u>[167](#ie4edc76213cf40e9ae3dd93b36f88427_10991)</u>; and

–total personal lending for loans and advances to customers at

amortised cost by stage distribution, see page <u>[179](#ie4edc76213cf40e9ae3dd93b36f88427_217)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **143** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Summary of credit risk

The following disclosure presents the gross carrying/nominal amount of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL.

---

| | | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Allowance for ECL**<sup>1</sup> | **Allowance for ECL**<sup>1</sup> | **Allowance for ECL**<sup>1</sup> | **Allowance for ECL**<sup>1</sup> | **Allowance for ECL**<sup>1</sup> | **Allowance for ECL**<sup>1</sup> | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Allowance for ECL<sup>1</sup> | Allowance for ECL<sup>1</sup> | Allowance for ECL<sup>1</sup> | Allowance for ECL<sup>1</sup> | Allowance for ECL<sup>1</sup> | Allowance for ECL<sup>1</sup> |
|  | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** | Hong <br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total | Hong <br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and <br>advances to <br>customers at <br>amortised cost<br>| **233389** | **305700** | **308169** | **151657** | **176** | **999091** | **(3898)** | **(2002)** | **(3146)** | **(1610)** | **(36)** | **(10692)** | 238416 | 269141 | 287842 | 137789 | 7185 | 940373 | (3208) | (1848) | (3141) | (1464) | (54) | (9715) |
| Loans and <br>advances to <br>banks at <br>amortised cost<br>| **11478** | **7696** | **67733** | **16630** | **4932** | **108469** | **—** | **—** | **(4)** | **(2)** | **(1)** | **(7)** | 13034 | 7505 | 63524 | 15713 | 2276 | 102052 | (1) | (2) | (7) | (1) | (2) | (13) |
| Other financial <br>assets <br>measured at <br>amortised cost<br>| **58210** | **106752** | **599580** | **59114** | **66670** | **890326** | **(28)** | **(10)** | **(65)** | **(25)** | **(1)** | **(129)** | 52869 | 100322 | 553664 | 58713 | 63012 | 828580 | (25) | (9) | (39) | (19) |  | (92) |
| – cash and <br>balances at <br>central banks<br>| **6717** | **52218** | **165027** | **18174** | **723** | **242859** | **—** | **—** | **—** | **—** | **—** | **—** | 5565 | 63981 | 177095 | 20260 | 773 | 267674 |  |  |  |  |  |  |
| – Hong Kong <br>Government <br>certificates of <br>indebtedness<br>| **—** | **—** | **—** | **—** | **44063** | **44063** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  | 42293 | 42293 |  |  |  |  |  |  |
| – reverse <br>repurchase <br>agreements – <br>non-trading<br>| **6076** | **26197** | **258424** | **6354** | **1341** | **298392** | **—** | **—** | **—** | **—** | **—** | **—** | 2896 | 13188 | 229672 | 5844 | 949 | 252549 |  |  |  |  |  |  |
| – financial <br>investments<br>| **38967** | **24871** | **72693** | **28344** | **17226** | **182101** | **(2)** | **(1)** | **(4)** | **(5)** | **—** | **(12)** | 40345 | 20072 | 56537 | 25059 | 11969 | 153982 | (1) | (1) | (4) | (3) |  | (9) |
| – assets held <br>for sale<sup>2</sup><br>| **—** | **14** | **3229** | **864** | **8** | **4115** | **—** | **—** | **(18)** | **(9)** | **—** | **(27)** |  | 5 | 670 | 2595 | 3 | 3273 |  |  | (4) |  |  | (4) |
| – prepayments, <br>accrued <br>income and <br>other assets<sup>3</sup><br>| **6450** | **3452** | **100207** | **5378** | **3309** | **118796** | **(26)** | **(9)** | **(43)** | **(11)** | **(1)** | **(90)** | 4063 | 3076 | 89690 | 4955 | 7025 | 108809 | (24) | (8) | (31) | (16) |  | (79) |
| **Total on-**<br>**balance sheet**<br>| **303077** | **420148** | **975482** | **227401** | **71778** | **1997886** | **(3926)** | **(2012)** | **(3215)** | **(1637)** | **(38)** | **(10828)** | 304319 | 376968 | 905030 | 212215 | 72473 | 1871005 | (3234) | (1859) | (3187) | (1484) | (56) | (9820) |
| Loan and other <br>credit-related <br>commitments<br>| **108011** | **103230** | **353721** | **125138** | **692** | **690792** | **(24)** | **(92)** | **(196)** | **(3)** | **—** | **(315)** | 109369 | 90848 | 307197 | 111762 | 191 | 619367 | (29) | (116) | (187) | (16) |  | (348) |
| Financial <br>guarantees<br>| **622** | **1199** | **13946** | **1709** | **—** | **17476** | **(1)** | **(16)** | **(33)** | **(1)** | **—** | **(51)** | 1171 | 939 | 13186 | 1702 |  | 16998 | (2) | (3) | (24) |  |  | (29) |
| **Total off-**<br>**balance sheet**<sup>4</sup><br>| **108633** | **104429** | **367667** | **126847** | **692** | **708268** | **(25)** | **(108)** | **(229)** | **(4)** | **—** | **(366)** | 110540 | 91787 | 320383 | 113464 | 191 | 636365 | (31) | (119) | (211) | (16) |  | (377) |
|  | **411710** | **524577** | **1343149** | **354248** | **72470** | **2706154** | **(3951)** | **(2120)** | **(3444)** | **(1641)** | **(38)** | **(11194)** | 414859 | 468755 | 1225413 | 325679 | 72664 | 2507370 | (3265) | (1978) | (3398) | (1500) | (56) | (10197) |

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **144** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

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| | | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Fair value** | **Fair value** | **Fair value** | **Fair value** | **Fair value** | **Fair value** | **Memorandum allowance for ECL**<sup>5</sup> | **Memorandum allowance for ECL**<sup>5</sup> | **Memorandum allowance for ECL**<sup>5</sup> | **Memorandum allowance for ECL**<sup>5</sup> | **Memorandum allowance for ECL**<sup>5</sup> | **Memorandum allowance for ECL**<sup>5</sup> | Fair value | Fair value | Fair value | Fair value | Fair value | Fair value | Memorandum allowance for ECL<sup>5</sup> | Memorandum allowance for ECL<sup>5</sup> | Memorandum allowance for ECL<sup>5</sup> | Memorandum allowance for ECL<sup>5</sup> | Memorandum allowance for ECL<sup>5</sup> | Memorandum allowance for ECL<sup>5</sup> |
|  | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** | Hong <br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total | Hong <br>Kong<br>| UK | CIB | IWPB | Corporate<br>Centre<br>| Total |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| **Debt** <br>**instruments** <br>**measured at** <br>**FVOCI**<br>| **133840** | **29306** | **170258** | **48939** | **1225** | **383568** | **(1)** | **—** | **(20)** | **(9)** | **—** | **(30)** | 128568 | 26405 | 137538 | 51516 | 2097 | 346124 | (1) | (1) | (18) | (14) | (20) | (54) |

---

1The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision.

2At 31 December 2025, the gross carrying amount comprised $3.6bn of loans and advances to customers and banks (31 December 2024: $1.1bn) and $0.5bn of other financial assets at amortised cost (31 December 2024: $2.1bn) including:

the planned sales of our business in Uruguay ($1.4bn), our private banking and custody businesses in Germany ($0.3bn, 31 December 2024: $2.2bn), our business in South Africa ($0.4bn, 31 December 2024: $0.4bn) and sale of individual

assets in the US ($1.3bn, 31 December 2024: $11m)). The corresponding allowance for ECL comprised $27m of loans and advances to customers and banks (31 December 2024: $4m) and nil of other financial assets at amortised cost

(31 December 2024: $0.3m).

3Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. 'Prepayments, accrued income and other assets' as presented within the consolidated balance sheet on page 73 comprises both financial

and non-financial assets, including cash collateral, settlement accounts and items in the course of collection from other banks.

4Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

5Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in 'Change in expected credit losses and other credit impairment charges' in the

income statement.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment | Change in expected credit losses and other credit impairment charges by business segment |
|  | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
| **Full-year to** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **31 Dec 2025** | **(1476)** | **(696)** | **(696)** | **(892)** | **(90)** | **(3850)** |
| 31 Dec 2024 | (1076) | (402) | (869) | (1038) | (29) | (3414) |

---

The following table provides an overview of the Group's credit risk by stage and industry, and the associated ECL coverage. The financial assets recorded in each stage have the following characteristics:

–Stage 1: These financial assets are unimpaired and without a significant increase in credit risk for which a 12-month allowance for ECL is recognised.

–Stage 2: A significant increase in credit risk has been experienced on these financial assets since initial recognition for which a lifetime ECL is recognised.

–Stage 3: There is objective evidence of impairment and the financial assets are therefore considered to be in default or otherwise credit impaired for which a lifetime ECL is recognised.

–Purchased or originated credit-impaired financial assets ('POCI'): Financial assets that are purchased or originated at a deep discount are seen to reflect the incurred credit losses on which a lifetime ECL is

recognised.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **145** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Gross carrying/nominal amount**<sup>1</sup> | **Gross carrying/nominal amount**<sup>1</sup> | **Gross carrying/nominal amount**<sup>1</sup> | **Gross carrying/nominal amount**<sup>1</sup> | **Gross carrying/nominal amount**<sup>1</sup> | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **ECL coverage %** | **ECL coverage %** | **ECL coverage %** | **ECL coverage %** | **ECL coverage %** |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **POCI**<sup>2</sup> | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI**<sup>2</sup> | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI**<sup>2</sup> | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** | **%** | **%** | **%** | **%** |
| Loans and advances to customers at <br>amortised cost<br>| **893433** | **80936** | **24389** | **333** | **999091** | **(1201)** | **(2318)** | **(7097)** | **(76)** | **(10692)** | **0.1** | **2.9** | **29.1** | **22.8** | **1.1** |
| – personal | **446696** | **23887** | **3945** | **—** | **474528** | **(667)** | **(1235)** | **(895)** | **—** | **(2797)** | **0.1** | **5.2** | **22.7** | **—** | **0.6** |
| – corporate and commercial | **349763** | **54636** | **19966** | **140** | **424505** | **(478)** | **(1064)** | **(5909)** | **(75)** | **(7526)** | **0.1** | **1.9** | **29.6** | **53.6** | **1.8** |
| – non-bank financial institutions | **96974** | **2413** | **478** | **193** | **100058** | **(56)** | **(19)** | **(293)** | **(1)** | **(369)** | **0.1** | **0.8** | **61.3** | **0.5** | **0.4** |
| Loans and advances to banks at <br>amortised cost<br>| **108336** | **132** | **1** | **—** | **108469** | **(4)** | **(2)** | **(1)** | **—** | **(7)** | **—** | **1.5** | **100.0** | **—** | **—** |
| Other financial assets measured at <br>amortised cost<br>| **888491** | **1651** | **184** | **—** | **890326** | **(76)** | **(11)** | **(42)** | **—** | **(129)** | **—** | **0.7** | **22.8** | **—** | **—** |
| Loan and other credit-related <br>commitments<br>| **669648** | **20488** | **652** | **4** | **690792** | **(149)** | **(97)** | **(69)** | **—** | **(315)** | **—** | **0.5** | **10.6** | **—** | **—** |
| – personal | **270494** | **1945** | **92** | **—** | **272531** | **(22)** | **(5)** | **—** | **—** | **(27)** | **—** | **0.3** | **—** | **—** | **—** |
| – corporate and commercial | **255740** | **14649** | **560** | **4** | **270953** | **(115)** | **(88)** | **(69)** | **—** | **(272)** | **—** | **0.6** | **12.3** | **—** | **0.1** |
| – financial | **143414** | **3894** | **—** | **—** | **147308** | **(12)** | **(4)** | **—** | **—** | **(16)** | **—** | **0.1** | **—** | **—** | **—** |
| Financial guarantees | **15913** | **1371** | **192** | **—** | **17476** | **(8)** | **(17)** | **(26)** | **—** | **(51)** | **0.1** | **1.2** | **13.5** | **—** | **0.3** |
| – personal | **1446** | **—** | **—** | **—** | **1446** | **(1)** | **—** | **—** | **—** | **(1)** | **0.1** | **—** | **—** | **—** | **0.1** |
| – corporate and commercial | **10071** | **1287** | **190** | **—** | **11548** | **(6)** | **(17)** | **(26)** | **—** | **(49)** | **0.1** | **1.3** | **13.7** | **—** | **0.4** |
| – financial | **4396** | **84** | **2** | **—** | **4482** | **(1)** | **—** | **—** | **—** | **(1)** | **—** | **—** | **—** | **—** | **—** |
| **At 31 Dec 2025** | **2575821** | **104578** | **25418** | **337** | **2706154** | **(1438)** | **(2445)** | **(7235)** | **(76)** | **(11194)** | **0.1** | **2.3** | **28.5** | **22.6** | **0.4** |
| Loans and advances to customers at <br>amortised cost<br>| 824420 | 93248 | 22615 | 90 | 940373 | (1078) | (2546) | (6040) | (51) | (9715) | 0.1 | 2.7 | 26.7 | 56.7 | 1.0 |
| – personal | 403746 | 39919 | 3560 |  | 447225 | (570) | (1158) | (796) |  | (2524) | 0.1 | 2.9 | 22.4 |  | 0.6 |
| –corporate and commercial | 340987 | 51231 | 18376 | 90 | 410684 | (463) | (1358) | (4883) | (51) | (6755) | 0.1 | 2.7 | 26.6 | 56.7 | 1.6 |
| – non-bank financial institutions | 79687 | 2098 | 679 |  | 82464 | (45) | (30) | (361) |  | (436) | 0.1 | 1.4 | 53.2 |  | 0.5 |
| Loans and advances to banks at <br>amortised cost<br>| 101852 | 198 | 2 |  | 102052 | (9) | (2) | (2) |  | (13) |  | 1.0 | 100.0 |  |  |
| Other financial assets measured at <br>amortised cost<br>| 826621 | 1806 | 153 |  | 828580 | (64) | (5) | (23) |  | (92) |  | 0.3 | 15.0 |  |  |
| Loan and other credit-related <br>commitments<br>| 597231 | 21175 | 958 | 3 | 619367 | (137) | (121) | (90) |  | (348) |  | 0.6 | 9.4 |  | 0.1 |
| – personal | 251489 | 1680 | 86 |  | 253255 | (17) |  | (5) |  | (22) |  |  | 5.8 |  |  |
| – corporate and commercial | 231201 | 17453 | 838 | 3 | 249495 | (111) | (116) | (83) |  | (310) |  | 0.7 | 9.9 |  | 0.1 |
| – financial | 114541 | 2042 | 34 |  | 116617 | (9) | (5) | (2) |  | (16) |  | 0.2 | 5.9 |  |  |
| Financial guarantees | 15353 | 1397 | 248 |  | 16998 | (8) | (5) | (16) |  | (29) | 0.1 | 0.4 | 6.5 |  | 0.2 |
| – personal | 1416 | 11 |  |  | 1427 |  |  |  |  |  |  |  |  |  |  |
| – corporate and commercial | 10048 | 1232 | 195 |  | 11475 | (7) | (5) | (15) |  | (27) | 0.1 | 0.4 | 7.7 |  | 0.2 |
| – financial | 3889 | 154 | 53 |  | 4096 | (1) |  | (1) |  | (2) |  |  | 1.9 |  |  |
| At 31 Dec 2024 | 2365477 | 117824 | 23976 | 93 | 2507370 | (1296) | (2679) | (6171) | (51) | (10197) | 0.1 | 2.3 | 25.7 | 54.8 | 0.4 |

---

1Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

2Purchased or originated credit-impaired ('POCI').

Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due ('DPD') and are transferred from stage 1 to stage 2. The following

disclosure presents the ageing of stage 2 financial assets by those less than 30 DPD and greater than 30 DPD and therefore presents those financial assets classified as stage 2 due to ageing (30 DPD) and those

identified at an earlier stage (less than 30 DPD).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **146** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis | Stage 2 days past due analysis |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **ECL coverage %** | **ECL coverage %** | **ECL coverage %** | **ECL coverage %** |
|  | **Stage 2** | **Up-to-**<br>**date**<br>| **1 to 29** <br>**DPD**<sup>1</sup><br>| **30 and >** <br>**DPD**<sup>1</sup><br>| **Stage 2** | **Up-to-**<br>**date**<br>| **1 to 29** <br>**DPD**<sup>1</sup><br>| **30 and >** <br>**DPD**<sup>1</sup><br>| **Stage 2** | **Up-to-**<br>**date**<br>| **1 to 29** <br>**DPD**<sup>1</sup><br>| **30 and >** <br>**DPD**<sup>1</sup><br>|
| **At 31 Dec 2025** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** | **%** | **%** | **%** |
| Loans and advances to <br>customers at amortised <br>cost<br>| **80936** | **77615** | **1894** | **1427** | **(2318)** | **(1837)** | **(211)** | **(270)** | **2.9** | **2.4** | **11.1** | **18.9** |
| – personal | **23887** | **21481** | **1483** | **923** | **(1235)** | **(797)** | **(188)** | **(250)** | **5.2** | **3.7** | **12.7** | **27.1** |
| – corporate and <br>commercial<br>| **54636** | **53898** | **400** | **338** | **(1064)** | **(1024)** | **(23)** | **(17)** | **1.9** | **1.9** | **5.8** | **5.0** |
| – non-bank financial <br>institutions<br>| **2413** | **2236** | **11** | **166** | **(19)** | **(16)** | **—** | **(3)** | **0.8** | **0.7** | **—** | **1.8** |
| Loans and advances to <br>banks at amortised cost<br>| **132** | **132** | **—** | **—** | **(2)** | **(2)** | **—** | **—** | **1.5** | **1.5** | **—** | **—** |
| Other financial assets <br>measured at amortised <br>cost<br>| **1651** | **1611** | **21** | **19** | **(11)** | **(10)** | **—** | **(1)** | **0.7** | **0.6** | **—** | **5.3** |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 Dec 2024 |  |  |  |  |  |  |  |  |  |  |  |  |
| Loans and advances to <br>customers at amortised <br>cost<br>| 93248 | 90157 | 1888 | 1203 | (2546) | (2147) | (192) | (207) | 2.7 | 2.4 | 10.2 | 17.2 |
| – personal | 39919 | 37676 | 1361 | 882 | (1158) | (799) | (169) | (190) | 2.9 | 2.1 | 12.4 | 21.5 |
| – corporate and <br>commercial<br>| 51231 | 50486 | 506 | 239 | (1358) | (1326) | (21) | (11) | 2.7 | 2.6 | 4.2 | 4.6 |
| – non-bank financial <br>institutions<br>| 2098 | 1995 | 21 | 82 | (30) | (22) | (2) | (6) | 1.4 | 1.1 | 9.5 | 7.3 |
| Loans and advances to <br>banks at amortised cost<br>| 198 | 198 |  |  | (2) | (2) |  |  | 1.0 | 1.0 |  |  |
| Other financial assets <br>measured at amortised <br>cost<br>| 1806 | 1794 | 3 | 9 | (5) | (5) |  |  | 0.3 | 0.3 |  |  |

---

1The days past due amounts presented above are on a contractual basis.

Stage 2 decomposition

The following table presents the stage 2 decomposition of gross

carrying amount and allowances for ECL for loans and advances to

customers and banks. It also sets out the reasons why an exposure is

classified as stage 2 and therefore presented as a significant increase

in credit risk at 31 December 2025.

The quantitative classification shows gross carrying amount and

allowances for ECL for which the applicable reporting date PD measure

exceeds defined quantitative thresholds for retail and wholesale

exposures, as set out in Note 1.2(j) 'Summary of material accounting

policies', on page 306.

The qualitative classification primarily accounts for CRR deterioration,

watch-and-worry and retail management judgemental adjustments.

🡠A summary of our current policies and practices for the significant increase

in credit risk is set out in 'Summary of material accounting policies' on

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> | Loans and advances to customers and banks<sup>1</sup> |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **Loans and advances to customers** | **Loans and advances to customers** | **Loans and advances to customers** | **Loans and advances to customers** | **Loans and advances to customers** | **Loans and advances to customers** | **Loans and** <br>**advances to** <br>**banks at** <br>**amortised** <br>**cost** | **Total**<br> **stage 2** |
|  | **Personal** | **of which:** | **of which:** | **of which:** | **Corporate** <br>**and** <br>**commercial** | **Non-bank** <br>**financial** <br>**institutions** | **Loans and** <br>**advances to** <br>**banks at** <br>**amortised** <br>**cost** | **Total**<br> **stage 2** |
|  | **Personal** | **first lien** <br>**mortgages**<br>| **credit** <br>**cards**<br>| **other** <br>**personal** <br>**lending**<br>| **Corporate** <br>**and** <br>**commercial** | **Non-bank** <br>**financial** <br>**institutions** | **Loans and** <br>**advances to** <br>**banks at** <br>**amortised** <br>**cost** | **Total**<br> **stage 2** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Quantitative | **21339** | **16111** | **3031** | **2197** | **40294** | **1153** | **102** | **62888** |
| Qualitative | **2442** | **1958** | **226** | **258** | **14160** | **1249** | **30** | **17881** |
| – of which: forbearance | **242** | **142** | **29** | **71** | **904** | **102** | **—** | **1248** |
| 30 DPD backstop<sup>2</sup> | **106** | **79** | **3** | **24** | **182** | **11** | **—** | **299** |
| **Total gross carrying amount** | **23887** | **18148** | **3260** | **2479** | **54636** | **2413** | **132** | **81068** |
| Quantitative | **(1128)** | **(81)** | **(690)** | **(357)** | **(830)** | **(10)** | **—** | **(1968)** |
| Qualitative | **(101)** | **(27)** | **(40)** | **(34)** | **(230)** | **(9)** | **(2)** | **(342)** |
| – of which: forbearance | **(34)** | **(16)** | **(5)** | **(13)** | **(17)** | **—** | **—** | **(51)** |
| 30 DPD backstop<sup>2</sup> | **(6)** | **(1)** | **(1)** | **(4)** | **(4)** | **—** | **—** | **(10)** |
| **Total allowance for ECL** | **(1235)** | **(109)** | **(731)** | **(395)** | **(1064)** | **(19)** | **(2)** | **(2320)** |
| **ECL coverage %** | **5.2** | **0.6** | **22.4** | **15.9** | **1.9** | **0.8** | **1.5** | **2.9** |
| **Residual average life**<sup>3</sup> **(in years)** | **15.0** | **19.2** | **<1.0** | **2.9** | **2.9** | **1.8** | **<1.0** |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **147** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) | Loans and advances to customers and banks<sup>1</sup> (continued) |
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and <br>advances to <br>banks at <br>amortised cost | Total<br> stage 2 |
|  | Personal | of which: | of which: | of which: | Corporate and <br>commercial | Non-bank <br>financial <br>institutions | Loans and <br>advances to <br>banks at <br>amortised cost | Total<br> stage 2 |
|  | Personal | first lien <br>mortgages<br>| credit <br>cards<br>| other <br>personal <br>lending<br>| Corporate and <br>commercial | Non-bank <br>financial <br>institutions | Loans and <br>advances to <br>banks at <br>amortised cost | Total<br> stage 2 |
|  | $m | $m | $m | $m | $m | $m | $m | $m |
| Quantitative | 36356 | 30992 | 2904 | 2460 | 37787 | 1658 | 176 | 75977 |
| Qualitative | 3452 | 3107 | 85 | 260 | 13327 | 438 | 22 | 17239 |
| – of which: forbearance | 175 | 70 | 40 | 65 | 1086 | 3 |  | 1264 |
| 30 DPD backstop<sup>2</sup> | 111 | 78 | 2 | 31 | 117 | 2 |  | 230 |
| Total gross carrying amount | 39919 | 34177 | 2991 | 2751 | 51231 | 2098 | 198 | 93446 |
| Quantitative | (1118) | (121) | (651) | (346) | (1124) | (28) |  | (2270) |
| Qualitative | (35) | (8) | (9) | (18) | (229) | (2) | (2) | (268) |
| – of which: forbearance | (5) |  | (1) | (4) | (12) |  |  | (17) |
| 30 DPD backstop<sup>2</sup> | (5) | (1) |  | (4) | (5) |  |  | (10) |
| Total allowance for ECL | (1158) | (130) | (660) | (368) | (1358) | (30) | (2) | (2548) |
| ECL coverage % | 2.9 | 0.4 | 22.1 | 13.4 | 2.7 | 1.4 | 1.0 | 2.7 |
| Residual average life<sup>3</sup> (in years) | 17.0 | 19.5 | <1.0 | 3.6 | 2.7 | 1.9 | <1.0 |  |

---

1Where balances satisfy more than one of the above three criteria for determining a significant increase in credit risk, the corresponding gross carrying amount

and allowance for ECL have been assigned in order of categories presented.

2Days past due ('DPD').

3Calculated as the difference between final contractual maturities and the reporting date, weighted based on the contribution of the instrument to the stage 2

total gross carrying amount of the corresponding product or sector.

Credit exposure

Maximum exposure to credit risk

(Audited)

This section provides information on balance sheet items and their

offsets as well as loan and other credit-related commitments.

Commentary on consolidated balance sheet movements in 2025

is provided on page 74.

Other credit risk mitigants

While not disclosed as an offset in the following 'Maximum exposure

to credit risk' table, other arrangements are in place that reduce our

maximum exposure to credit risk. These include a charge over

collateral on borrowers' specific assets, such as residential properties,

collateral held in the form of financial instruments that are not held on

the balance sheet and short positions in securities. In addition, for

financial assets held as part of linked insurance/investment contracts

the credit risk is predominantly borne by the policyholder. See page

305 and Note 31 on the financial statements for further details of

collateral in respect of certain loans and advances and derivatives.

Collateral available to mitigate credit risk is disclosed in the 'Collateral'

section on page 165.

The following table presents our maximum exposure before taking

account of any collateral held or other credit enhancements (unless

such enhancements meet accounting offsetting requirements).

The table excludes trading assets, financial assets designated and

otherwise mandatorily measured at fair value through profit or loss, and

financial investments measured at fair value through other

comprehensive income as their carrying amount best represents the

net exposure to credit risk. Equity securities are also excluded as they

are not subject to credit risk.

For the financial assets recognised on the balance sheet, the maximum

exposure to credit risk equals their carrying amount and is net of the

allowance for ECL. For financial guarantees and other guarantees

granted, it is the maximum amount that we would have to pay if the

guarantees were called upon. For loan commitments and other credit-

related commitments, it is generally the full amount of the committed

facilities.

The offset in the table relates to amounts where there is a legally

enforceable right of offset in the event of counterparty default and

where, as a result, there is a net exposure for credit risk purposes.

However, as there is no intention to settle these balances on a net

basis under normal circumstances, they do not qualify for net

presentation for accounting purposes. No offset has been applied to

off-balance sheet collateral. In the case of derivatives, the offset

column also includes collateral received in cash and other financial

assets.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **148** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Maximum exposure to credit risk | Maximum exposure to credit risk | Maximum exposure to credit risk | Maximum exposure to credit risk | Maximum exposure to credit risk | Maximum exposure to credit risk | Maximum exposure to credit risk |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Maximum exposure** | **Offset** | **Net** | Maximum exposure | Offset | Net |
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| Loans and advances to customers held at amortised cost | **988399** | **(25671)** | **962728** | 930658 | (22822) | 907836 |
| – personal | **471731** | **(3568)** | **468163** | 444701 | (2256) | 442445 |
| – corporate and commercial | **416979** | **(20636)** | **396343** | 403929 | (18897) | 385032 |
| – non-bank financial institutions | **99689** | **(1467)** | **98222** | 82028 | (1669) | 80359 |
| Loans and advances to banks at amortised cost | **108462** | **—** | **108462** | 102039 |  | 102039 |
| Other financial assets held at amortised cost | **888882** | **(5865)** | **883017** | 827193 | (4383) | 822810 |
| – cash and balances at central banks | **242859** | **—** | **242859** | 267674 |  | 267674 |
| – Hong Kong Government certificates of indebtedness | **44063** | **—** | **44063** | 42293 |  | 42293 |
| – reverse repurchase agreements – non-trading | **298392** | **(5865)** | **292527** | 252549 | (4383) | 248166 |
| – financial investments  | **182089** | **—** | **182089** | 153973 |  | 153973 |
| – prepayments, accrued income and other assets | **121479** | **—** | **121479** | 110704 |  | 110704 |
| Assets held for sale | **11115** | **—** | **11115** | 27234 |  | 27234 |
| Derivatives  | **237740** | **(229223)** | **8517** | 268637 | (254257) | 14380 |
| **Total on-balance sheet exposure to credit risk** | **2234598** | **(260759)** | **1973839** | 2155761 | (281462) | 1874299 |
| Total off-balance sheet | **1068162** | **—** | **1068162** | 970610 |  | 970610 |
| – financial and other guarantees | **119840** | **—** | **119840** | 109380 |  | 109380 |
| – loan and other credit-related commitments | **948322** | **—** | **948322** | 861230 |  | 861230 |
| **Total** | **3302760** | **(260759)** | **3042001** | 3126371 | (281462) | 2844909 |

---

Concentration of exposure

Our business segments offer a broad range of products, with the

majority of our exposures in Asia and Europe.

For an analysis of:

–financial investments, see Note 16 on the financial statements;

–trading assets, see Note 11 on the financial statements;

–derivatives, see page 178 and Note 15 on the financial statements;

and

–loans and advances by industry sector and by the location of the

principal operations of the lending subsidiary (or, in the case of the

operations of The Hongkong and Shanghai Banking Corporation

Limited, HSBC Bank plc, HSBC Bank Middle East Limited and

HSBC Bank USA, by the location of the lending branch), see page

<u>[169](#ie4edc76213cf40e9ae3dd93b36f88427_172)</u> for wholesale lending and page <u>[179](#ie4edc76213cf40e9ae3dd93b36f88427_214)</u> for personal lending.

Credit deterioration of financial

instruments

(Audited)

🡠A summary of our current policies and practices regarding the identification,

treatment and measurement of stage 1, stage 2, stage 3 (credit impaired)

and POCI financial instruments can be found in Note 1.2(j) on the financial

statements.

Measurement uncertainty and sensitivity analysis of ECL estimates

(Audited)

The recognition and measurement of ECL involves the use of

significant judgement and estimation. We form multiple scenarios

based on economic forecasts and distributional estimates and apply

these to credit risk models to estimate future credit losses. The results

are then probability-weighted to determine an unbiased ECL estimate.

Management assessed the current economic environment, reviewed

the latest economic forecasts and discussed key risks before selecting

economic scenarios and their weightings.

Management judgemental adjustments are used where modelled

allowance for ECL does not fully reflect the identified risks and related

uncertainty, or to capture significant late-breaking events.

Methodology

At 31 December 2025, four economic scenarios were used to capture

the latest economic expectations and to articulate management's view

of the range of risks and potential outcomes. Scenarios are created

using the latest economic forecasts and distributional estimates, each

quarter.

Three scenarios, the Upside, Central and Downside, are drawn from

external consensus forecasts, market data and distributional estimates

of the entire range of economic outcomes. These estimates are used

as conditioning assumptions in a modelled expansion of other

variables, to ensure scenarios that are economically coherent and

internally consistent. The fourth scenario, the Downside 2, represents

management's view of severe downside risks.

The consensus Central scenario is deemed the 'most likely' scenario,

and will attract the largest probability weighting.

The consensus outer scenarios represent short-term cyclical deviations

from the Central scenario, where variable paths converge back to long-

term trend expectations. They are calibrated to a 10% probability.

HSBC's Central scenario assumes that the effects of announced

climate measures, carbon pricing and green levies are incorporated into

economic forecasts where their short-term effects are known from

enacted legislation, or may be reasonably projected from current trends

and statutory targets. Variable paths and projections aligned to long-

term climate outcomes, but which are dependent on additional policy

adjustments, carry greater uncertainty. Further details about climate

scenarios may be found in the 'Insights from climate scenario analysis'

section of our Risk review on page 206.

The Downside 2 explores a more extreme economic outcome than

those captured by the consensus scenarios. In this scenario, variables

do not, by design, revert to long-term trend expectations and may

instead explore alternative states of equilibrium, where economic

variables move permanently away from past trends. It is calibrated to a

5% probability.

In most circumstances, the alignment of weightings with the calibrated

probability of scenarios is deemed appropriate for the unbiased

estimation of ECL. However, management may depart from this

probability-based scenario weighting approach when the economic

outlook and forecasts are determined to be particularly uncertain and

risks are elevated.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **149** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Description of economic scenarios

The economic assumptions presented in this section are formed by

HSBC with reference to external forecasts and estimates for the

purpose of calculating ECL.

Forecasts may change, and remain subject to uncertainty. Outer

scenarios are designed to capture the potential crystallisation of key

economic and financial risks and alternative paths for economic

variables. The scenarios used to calculate ECL are described below.

The consensus Central scenario

HSBC's Central scenario incorporates higher growth forecasts for 2026

relative to the fourth quarter of 2024, in most of our major markets.

The change in forecasts for 2027 is more mixed, reflecting differing

regional dynamics. The scenario is modelled consistent with a US tariff

rate, measured as an effective trade-weighted average, of 15% at the

start of 2026. That rate has fallen in recent months to reflect the

lowering of US tariff rates on imports from mainland China, the

conclusion of a trade agreement with Switzerland and targeted tariff

exemptions on key products.

Forecasts for mainland China and Hong Kong have improved relative to

the fourth quarter of 2024, when projections were weighed down by

expectations that the imposition of US tariffs would result in much

slower growth. Growth expectations have since been revised upwards,

supported by China's success in redirecting trade away from the US,

and further anticipated official policy support. In Hong Kong, further

increases in residential property sector transactions and domestic

consumption are expected to be driven by a lowering of interest rates.

Forecast US GDP growth has also improved relative to the fourth

quarter of 2024 despite trade policy uncertainty, the persistence of

higher inflation and a weaker labour market. The economy has proved

more resilient to tariffs than had been expected, and robust growth in

private sector investment, related to the technology sector, has further

supported growth. The key exception to the improved outlook is the

UK, where forecasts have deteriorated as unemployment has risen and

both household and business confidence has weakened.

Global GDP is expected to grow by 2.5% in 2026 in the Central

scenario, and the average rate of global GDP growth is forecast to be

2.6% over the five-year forecast period.

The key features of our Central scenario are:

–Forecast GDP growth has improved since the fourth quarter of

2024, although the outlook still envisages either a slowdown or

stabilisation in growth in 2026, relative to 2025, for most markets.

The exceptions are Mexico and the UAE, where growth is forecast

to improve in 2026.

–In most markets, unemployment is forecast to rise moderately in

2026 in line with slower economic activity and subdued hiring. It will

remain relatively low by historical standards.

–The evolution of inflation is mixed. In the US and UK, inflation is

expected to fall gradually but remain above central bank target rates

through 2026, reflecting higher tariffs in the US and the effects of

services price inflation in the UK. In mainland China, inflation is

expected to remain subdued due to soft consumer demand and

continued manufacturing growth.

–House prices in mainland China are expected to continue to fall. In

Hong Kong, prices are forecast to see further moderate

improvements due to a revival in buyer interest, spurred by lower

interest rates. House price growth is projected to remain positive,

but subdued, in the UK and the US.

–Challenging conditions are also forecast to continue in certain

segments of the commercial property sector in a number of our

major markets, including Hong Kong. Structural changes to demand

in the office segment in particular have driven lower valuations.

–Policy interest rates in major markets are forecast to gradually

decline further in 2026. In the longer term, they are expected to

remain at a higher level than in recent years.

–The Brent crude oil price is forecast to average around $65 per

barrel over the projection period.

The Central scenario was created with forecasts available in late

November 2025, and subsequently kept under review until the end of

December 2025.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **150** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

The following tables describe key macroeconomic variables in the consensus Central scenario.

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  | Consensus Central scenario  |  |  |  |  |  |  |  |
|  | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | **2026–2030 (as at 4Q25)** | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) | 2025–2029 (as at 4Q24) |
|  | **UK** | **US** | **Hong** <br>**Kong**<br>| **Mainland** <br>**China**<br>| **France** | **UAE** | **Mexico** | UK | US | Hong <br>Kong<br>| Mainland <br>China<br>| France | UAE | Mexico |
| **GDP (annual average growth rate, %)** | **GDP (annual average growth rate, %)** | **GDP (annual average growth rate, %)** |  |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  |  |  |  |  |  |  | 1.2 | 2.0 | 1.7 | 4.0 | 0.9 | 4.4 | 0.9 |
| 2026 | **1.1** | **1.9** | **2.3** | **4.4** | **0.9** | **4.7** | **1.3** | 1.3 | 1.6 | 1.8 | 3.7 | 0.9 | 4.2 | 1.2 |
| 2027 | **1.4** | **2.0** | **2.3** | **4.2** | **1.2** | **4.1** | **2.0** | 1.8 | 1.6 | 3.5 | 4.3 | 1.4 | 3.9 | 1.7 |
| 2028 | **1.5** | **2.1** | **2.3** | **4.0** | **1.3** | **3.8** | **2.2** | 1.6 | 1.8 | 3.1 | 3.9 | 1.5 | 3.6 | 1.9 |
| 2029 | **1.5** | **2.1** | **2.4** | **3.8** | **1.3** | **3.5** | **2.2** | 1.6 | 2.0 | 2.7 | 3.7 | 1.4 | 3.6 | 2.0 |
| 2030 | **1.5** | **2.0** | **2.4** | **3.8** | **1.3** | **3.5** | **2.2** |  |  |  |  |  |  |  |
| 5-year average<sup>1</sup> | **1.4** | **2.0** | **2.3** | **4.0** | **1.2** | **3.9** | **2.0** | 1.5 | 1.8 | 2.6 | 3.9 | 1.2 | 3.9 | 1.5 |
| **Unemployment rate (%)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  |  |  |  |  |  |  | 4.9 | 4.4 | 3.3 | 5.2 | 7.5 | 2.7 | 3.5 |
| 2026 | **4.9** | **4.4** | **3.6** | **5.2** | **7.6** | **2.5** | **3.2** | 4.7 | 4.3 | 3.7 | 5.4 | 7.3 | 2.6 | 3.5 |
| 2027 | **4.7** | **4.3** | **3.4** | **5.2** | **7.6** | **2.4** | **3.2** | 4.5 | 4.3 | 3.3 | 5.2 | 7.2 | 2.6 | 3.5 |
| 2028 | **4.7** | **4.1** | **3.1** | **5.1** | **7.5** | **2.4** | **3.2** | 4.3 | 4.2 | 3.0 | 5.0 | 7.0 | 2.5 | 3.5 |
| 2029 | **4.7** | **4.1** | **3.0** | **5.0** | **7.4** | **2.4** | **3.1** | 4.3 | 4.1 | 2.9 | 5.0 | 7.0 | 2.5 | 3.5 |
| 2030 | **4.7** | **4.1** | **3.0** | **5.0** | **7.4** | **2.4** | **3.1** |  |  |  |  |  |  |  |
| 5-year average<sup>1</sup> | **4.7** | **4.2** | **3.2** | **5.1** | **7.5** | **2.4** | **3.2** | 4.5 | 4.2 | 3.2 | 5.2 | 7.2 | 2.6 | 3.5 |
| **House prices (annual average growth rate, %)** | **House prices (annual average growth rate, %)** | **House prices (annual average growth rate, %)** |  |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  |  |  |  |  |  |  | 1.4 | 4.4 | (0.5) | (5.9) | 2.1 | 9.3 | 7.6 |
| 2026 | **1.2** | **1.1** | **0.5** | **(1.6)** | **4.3** | **5.8** | **4.8** | 3.8 | 3.2 | 2.4 | (0.7) | 4.4 | 5.1 | 4.5 |
| 2027 | **2.8** | **1.9** | **1.5** | **2.1** | **5.0** | **3.2** | **4.5** | 4.6 | 2.4 | 3.0 | 3.2 | 4.4 | 3.6 | 4.2 |
| 2028 | **3.3** | **2.7** | **2.5** | **3.5** | **4.1** | **2.3** | **4.4** | 3.5 | 2.5 | 2.7 | 4.1 | 3.8 | 1.8 | 4.0 |
| 2029 | **2.7** | **3.2** | **2.1** | **3.4** | **3.1** | **2.0** | **4.3** | 2.7 | 2.6 | 2.7 | 2.9 | 3.1 | 1.3 | 4.0 |
| 2030 | **2.4** | **3.2** | **2.1** | **2.3** | **2.2** | **2.1** | **4.2** |  |  |  |  |  |  |  |
| 5-year average<sup>1</sup> | **2.5** | **2.4** | **1.8** | **1.9** | **3.7** | **3.1** | **4.4** | 3.2 | 3.0 | 2.1 | 0.7 | 3.6 | 4.2 | 4.9 |
| **Inflation (annual average growth rate, %)** | **Inflation (annual average growth rate, %)** | **Inflation (annual average growth rate, %)** |  |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  |  |  |  |  |  |  | 2.4 | 2.4 | 1.4 | 0.3 | 1.2 | 2.1 | 5.0 |
| 2026 | **2.5** | **2.9** | **1.8** | **0.7** | **1.4** | **2.0** | **3.7** | 2.1 | 2.8 | 1.9 | 1.0 | 1.6 | 1.9 | 3.9 |
| 2027 | **2.1** | **2.3** | **1.9** | **1.2** | **1.7** | **1.9** | **3.6** | 2.1 | 2.5 | 2.2 | 1.5 | 2.0 | 1.8 | 3.4 |
| 2028 | **2.1** | **2.2** | **2.0** | **1.4** | **2.1** | **1.9** | **3.5** | 2.0 | 2.2 | 2.2 | 1.7 | 2.3 | 1.9 | 3.4 |
| 2029 | **2.0** | **2.2** | **2.2** | **1.5** | **2.1** | **2.0** | **3.4** | 2.0 | 2.1 | 2.3 | 1.6 | 2.2 | 1.8 | 3.4 |
| 2030 | **2.0** | **2.2** | **2.2** | **1.5** | **1.9** | **2.0** | **3.4** |  |  |  |  |  |  |  |
| 5-year average  | **2.2** | **2.4** | **2.0** | **1.3** | **1.9** | **1.9** | **3.5** | 2.1 | 2.4 | 2.0 | 1.2 | 1.9 | 1.9 | 3.8 |
| **Central bank policy rate (annual average, %)** | **Central bank policy rate (annual average, %)** | **Central bank policy rate (annual average, %)** |  |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  |  |  |  |  |  |  | 4.2 | 4.1 | 4.5 | 2.9 | 2.1 | 4.1 | 9.4 |
| 2026 | **3.5** | **3.4** | **3.8** | **3.0** | **1.9** | **3.5** | **7.0** | 3.9 | 3.7 | 4.1 | 2.9 | 1.8 | 3.8 | 8.8 |
| 2027 | **3.4** | **3.1** | **3.5** | **3.0** | **2.0** | **3.1** | **7.2** | 3.8 | 3.7 | 4.0 | 3.0 | 2.0 | 3.7 | 8.8 |
| 2028 | **3.5** | **3.2** | **3.6** | **3.1** | **2.1** | **3.3** | **7.5** | 3.7 | 3.6 | 4.0 | 3.2 | 2.0 | 3.6 | 8.9 |
| 2029 | **3.7** | **3.4** | **3.8** | **3.1** | **2.3** | **3.4** | **7.7** | 3.7 | 3.6 | 4.0 | 3.3 | 2.1 | 3.6 | 8.9 |
| 2030 | **3.8** | **3.6** | **3.9** | **3.2** | **2.5** | **3.6** | **7.9** |  |  |  |  |  |  |  |
| 5-year average<sup>1</sup> | **3.6** | **3.3** | **3.7** | **3.1** | **2.2** | **3.4** | **7.5** | 3.9 | 3.7 | 4.1 | 3.1 | 2.0 | 3.8 | 8.9 |

---

1The five-year average is calculated over a projected period of 20 quarters from 1Q26 to 4Q30 for the 4Q25 scenario and 1Q25 to 4Q29 for the 4Q24 scenario.

2For mainland China, the rate shown is the Loan Prime Rate.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **151** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

The consensus Upside scenario

Compared with the Central scenario, the consensus Upside scenario

features stronger economic activity in the near term, before converging

to long-run trend expectations. It also incorporates lower

unemployment and higher asset prices than incorporated in the Central

scenario. Inflation accelerates modestly, driven by increased

investment and higher consumption spending.

The scenario is consistent with a number of key upside risk themes.

These include a partial rollback of tariff measures, deregulation, an

improvement in the US-China relationship, and a de-escalation in

geopolitical tensions.

The following tables describe key macroeconomic variables in the

consensus Upside scenario.

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) | Consensus Upside scenario 2026–2030 (as at 4Q25) |
|  | **UK** | **UK** | **US** | **US** | **Hong** <br>**Kong** | **Hong** <br>**Kong** | **Mainland** <br>**China** | **Mainland** <br>**China** | **France** | **France** | **UAE** | **UAE** | **Mexico** | **Mexico** |
| GDP level (%, start-to-peak)<sup>1</sup> | **11.0** | **(4Q30)** | **15.2** | **(4Q30)** | **20.7** | **(4Q30)** | **28.6** | **(4Q30)** | **8.5** | **(4Q30)** | **29.0** | **(4Q30)** | **16.9** | **(4Q30)** |
| Unemployment rate (%, min)<sup>2</sup> | **3.2** | **(4Q27)** | **3.5** | **(4Q27)** | **2.8** | **(2Q28)** | **4.7** | **(4Q27)** | **6.6** | **(4Q27)** | **2.0** | **(4Q27)** | **2.8** | **(3Q26)** |
| House price index (%, start-to-peak)<sup>1</sup> | **20.0** | **(4Q30)** | **23.2** | **(4Q30)** | **19.4** | **(4Q30)** | **14.9** | **(4Q30)** | **22.6** | **(4Q30)** | **22.2** | **(4Q30)** | **29.5** | **(4Q30)** |
| Inflation rate (YoY % change, max)<sup>3</sup> | **3.5** | **(1Q26)** | **3.6** | **(3Q26)** | **2.9** | **(2Q26)** | **1.5** | **(4Q30)** | **2.4** | **(4Q27)** | **3.1** | **(2Q26)** | **4.2** | **(1Q26)** |
| Central bank policy rate (%, max)<sup>3</sup> | **3.9** | **(1Q26)** | **3.9** | **(1Q26)** | **4.2** | **(1Q26)** | **3.4** | **(1Q27)** | **2.5** | **(4Q30)** | **3.9** | **(1Q26)** | **8.1** | **(4Q30)** |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) | Consensus Upside scenario 2025–2029 (as at 4Q24) |
|  | UK | UK | US | US | Hong <br>Kong | Hong <br>Kong | Mainland<br> China | Mainland<br> China | France | France | UAE | UAE | Mexico | Mexico |
| GDP level (%, start-to-peak)<sup>1</sup> | 11.3 | (4Q29) | 13.6 | (4Q29) | 21.4 | (4Q29) | 27.5 | (4Q29) | 8.9 | (4Q29) | 28.9 | (4Q29) | 13.6 | (4Q29) |
| Unemployment rate (%, min)<sup>2</sup> | 3.5 | (3Q26) | 3.6 | (1Q26) | 2.9 | (4Q29) | 4.9 | (4Q26) | 6.4 | (4Q26) | 2.2 | (4Q26) | 3.0 | (1Q25) |
| House price index (%, start-to-peak)<sup>1</sup> | 24.2 | (4Q29) | 23.6 | (4Q29) | 25.3 | (4Q29) | 9.8 | (4Q29) | 22.8 | (4Q29) | 26.1 | (4Q29) | 31.7 | (4Q29) |
| Inflation rate (YoY % change, min)<sup>3</sup> | 1.4 | (1Q26) | 1.6 | (2Q26) | (0.1) | (4Q25) | (1.0) | (4Q25) | 0.1 | (4Q25) | 0.6 | (4Q25) | 3.1 | (2Q26) |
| Central bank policy rate (%, min)<sup>3</sup> | 3.6 | (4Q25) | 3.6 | (1Q29) | 4.0 | (1Q29) | 2.7 | (1Q26) | 1.4 | (3Q25) | 3.6 | (1Q29) | 7.6 | (1Q26) |

---

1Cumulative change to the highest level of the series during the 20-quarter projection.

2Lowest projected unemployment rate in the scenario.

3Highest/lowest projected policy rate and year-on-year percentage change in inflation in the scenario. For mainland China, the rate shown is the Loan Prime Rate.

Downside scenarios

Downside scenarios explore the intensification and crystallisation of

key risk themes and are modelled so that economic shocks drive

consumption and investment lower and commodity prices fall. For

most markets, inflation and interest rates are lower compared with the

Central scenario. That narrative is disrupted in the US and Mexico as

higher tariff rates and other countermeasures are assumed to drive a

broad increase in import prices.

Key downside risks include:

–an increase in protectionist policies. This lowers investment,

complicates international supply chains, and impedes trade flows;

–abrupt asset repricing given elevated valuations, particularly in the

tech sector, eroding wealth effects and ultimately increasing credit

risks;

–broader and more prolonged conflict in the Middle East and the

Russia-Ukraine war, which undermine confidence and investment;

and

–continued differences between the US and China, which affect

economic confidence and the global goods trade and supply chains

for critical technologies.

The consensus Downside scenario

In the consensus Downside scenario, the effects of tariffs on the

global economy are worse than expected, leading to weaker economic

activity compared with the Central scenario. The scenario is consistent

with the tariff rate, measured as an effective trade-weighted average,

rising to 19% in 2026, and remaining at that level in 2027. The key

driver of that increase is the application of sector-specific tariff rates.

In this scenario, GDP declines and unemployment rates rise, while

asset prices and commodity prices fall. The scenario features an

escalation in geopolitical tensions and an increase in tariffs over and

above those assumed in the Central scenario. Existing and recently

approved trade agreements are assumed to hold. In most markets,

inflation declines relative to the Central scenario, as tariffs are assumed

to drive a drop in export demand from the US. In the US and Mexico,

the scenario sees inflation rise as higher tariffs across a broad range of

imported goods pass through to consumer prices.

In the scenario, oil prices trough at $40 per barrel.

The following tables describe key macroeconomic variables in the

consensus Downside scenario.

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) | Consensus Downside scenario 2026–2030 (as at 4Q25) |
|  | **UK** | **UK** | **US** | **US** | **Hong Kong** | **Hong Kong** | **Mainland China** | **Mainland China** | **France** | **France** | **UAE** | **UAE** | **Mexico** | **Mexico** |
| GDP level (%, start-to-trough)<sup>1</sup> | **(0.2)** | **(2Q27)** | **(0.8)** | **(3Q26)** | **(1.7)** | **(4Q27)** | **(1.7)** | **(3Q26)** | **(0.4)** | **(3Q26)** | **0.4** | **(1Q26)** | **(1.0)** | **(1Q27)** |
| Unemployment rate (%, max)<sup>2</sup> | **6.2** | **(4Q26)** | **5.3** | **(3Q26)** | **4.8** | **(4Q26)** | **6.8** | **(4Q27)** | **8.6** | **(3Q26)** | **3.2** | **(3Q27)** | **3.8** | **(3Q26)** |
| House price index (%, start-to-trough)<sup>1</sup> | **(4.1)** | **(1Q27)** | **(3.1)** | **(1Q27)** | **(3.8)** | **(1Q27)** | **(5.6)** | **(1Q27)** | **0.7** | **(1Q26)** | **(3.4)** | **(2Q26)** | **0.6** | **(1Q26)** |
| Inflation rate (YoY % change)<sup>3</sup> | **1.3** | **(3Q26)** | **3.4** | **(1Q26)** | **0.1** | **(4Q26)** | **(2.9)** | **(4Q26)** | **0.4** | **(4Q26)** | **0.5** | **(4Q26)** | **4.7** | **(1Q26)** |
| Central bank policy rate (%)<sup>3</sup> | **2.2** | **(3Q28)** | **4.6** | **(2Q26)** | **5.0** | **(2Q26)** | **1.5** | **(4Q26)** | **0.6** | **(1Q27)** | **4.6** | **(2Q26)** | **9.5** | **(2Q26)** |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) | Consensus Downside scenario 2025–2029 (as at 4Q24) |
|  | UK | UK | US | US | Hong Kong | Hong Kong | Mainland China | Mainland China | France | France | UAE | UAE | Mexico | Mexico |
| GDP level (%, start-to-trough)<sup>1</sup> | (1.0) | (4Q26) | (0.6) | (3Q25) | (4.5) | (4Q25) | (2.5) | (3Q25) | (0.6) | (1Q26) | 0.3 | (1Q25) | (2.1) | (4Q26) |
| Unemployment rate (%, max)<sup>2</sup> | 6.1 | (4Q25) | 5.3 | (3Q25) | 5.1 | (2Q26) | 6.9 | (4Q26) | 8.3 | (3Q25) | 3.4 | (1Q26) | 4.1 | (4Q25) |
| House price index (%, start-to-trough)<sup>1</sup> | (4.5) | (1Q26) | (0.2) | (1Q25) | (1.9) | (2Q26) | (12.8) | (3Q26) | (0.3) | (1Q25) | (0.4) | (1Q25) | 2.1 | (1Q25) |
| Inflation rate (YoY % change, max)<sup>3</sup> | 3.4 | (4Q25) | 4.5 | (1Q26) | 3.1 | (1Q26) | 2.0 | (1Q26) | 2.6 | (3Q25) | 2.8 | (1Q26) | 7.4 | (4Q25) |
| Central bank policy rate (%, max)<sup>3</sup> | 5.0 | (1Q25) | 4.8 | (1Q25) | 5.2 | (1Q25) | 3.0 | (1Q25) | 3.2 | (1Q25) | 4.8 | (1Q25) | 11.5 | (3Q25) |

---

1Cumulative change to the lowest level of the series during the 20-quarter projection.

2The highest projected unemployment rate in the scenario.

3The table for 4Q25 shows highest year-on-year percentage change in inflation and projected policy rates for the US and Mexico, and lowest for other countries

and territories. For the UAE and Hong Kong, the policy rate is shown as the maximum, consistent with the operation of US-dollar-linked exchange rates. For

mainland China, the rate shown is the Loan Prime Rate.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **152** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Downside 2 scenario

The Downside 2 scenario reflects management's view of the tail of the

economic distribution. It incorporates the simultaneous crystallisation

of a number of risks that lead to a deep global recession. The

subsequent drop in demand leads to a steep fall in commodity prices,

and a rapid increase in unemployment.

The narrative features an escalation in tariff actions, resulting in a global

trade war, and further intensification of geopolitical crises. Asset prices

fall steeply, with technology-related stocks expected to experience the

most significant price adjustments. The scenario is consistent with the

US tariff rate, measured as an effective trade-weighted average, rising

to 25% in 2026, and remaining at that level in 2027.

In the scenario, oil prices trough at $30 per barrel.

The following tables describe key macroeconomic variables in the

Downside 2 scenario.

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) | Downside 2 scenario 2026–2030 (as at 4Q25) |
|  | **UK** | **UK** | **US** | **US** | **Hong Kong** | **Hong Kong** | **Mainland China** | **Mainland China** | **France** | **France** | **UAE** | **UAE** | **Mexico** | **Mexico** |
| GDP level (%, start-to-trough)<sup>1</sup> | **(5.3)** | **(2Q27)** | **(4.5)** | **(1Q27)** | **(9.3)** | **(3Q27)** | **(6.0)** | **(1Q27)** | **(6.2)** | **(2Q27)** | **(5.7)** | **(2Q27)** | **(10.0)** | **(1Q27)** |
| Unemployment rate (%, max)<sup>2</sup> | **8.9** | **(2Q27)** | **9.0** | **(1Q28)** | **7.0** | **(4Q26)** | **7.0** | **(4Q27)** | **10.7** | **(4Q27)** | **3.9** | **(3Q26)** | **5.2** | **(2Q27)** |
| House price index (%, start-to-trough)<sup>1</sup> | **(24.2)** | **(4Q27)** | **(17.1)** | **(4Q26)** | **(19.6)** | **(2Q29)** | **(23.1)** | **(4Q27)** | **(5.9)** | **(3Q27)** | **(30.5)** | **(1Q28)** | **0.6** | **(1Q26)** |
| Inflation rate (YoY % change)<sup>3</sup> | **(1.9)** | **(4Q26)** | **4.1** | **(2Q26)** | **(1.7)** | **(2Q27)** | **(6.5)** | **(4Q26)** | **(0.6)** | **(4Q26)** | **0.3** | **(4Q26)** | **4.8** | **(1Q26)** |
| Central bank policy rate (%)<sup>3</sup> | **1.4** | **(1Q27)** | **4.7** | **(2Q26)** | **5.0** | **(2Q26)** | **1.2** | **(2Q27)** | **0.1** | **(4Q26)** | **4.7** | **(2Q26)** | **9.9** | **(2Q26)** |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) | Downside 2 scenario 2025–2029 (as at 4Q24) |
|  | UK | UK | US | US | Hong Kong | Hong Kong | Mainland China | Mainland China | France | France | UAE | UAE | Mexico | Mexico |
| GDP level (%, start-to-trough)<sup>1</sup> | (9.1) | (2Q26) | (4.1) | (2Q26) | (10.1) | (4Q25) | (8.7) | (4Q25) | (7.9) | (2Q26) | (6.8) | (2Q26) | (10.5) | (3Q26) |
| Unemployment rate (%, max)<sup>2</sup> | 8.4 | (2Q26) | 9.3 | (2Q26) | 7.1 | (1Q26) | 7.1 | (4Q26) | 10.4 | (1Q27) | 5.0 | (3Q25) | 5.6 | (1Q26) |
| House price index (%, start-to-trough)<sup>1</sup> | (27.2) | (4Q26) | (15.8) | (4Q25) | (34.4) | (3Q27) | (30.5) | (4Q26) | (14.0) | (2Q27) | (13.2) | (2Q27) | 2.0 | (1Q25) |
| Inflation rate (YoY % change, max)<sup>3</sup> | 10.1 | (2Q25) | 4.9 | (4Q25) | 3.6 | (1Q26) | 3.8 | (4Q25) | 7.6 | (2Q25) | 3.7 | (2Q25) | 7.9 | (4Q25) |
| Central bank policy rate (%, max)<sup>3</sup> | 5.5 | (1Q25) | 5.5 | (1Q25) | 5.9 | (1Q25) | 3.5 | (3Q25) | 4.2 | (1Q25) | 5.6 | (1Q25) | 12.1 | (3Q25) |

---

1Cumulative change to the lowest level of the series during the 20-quarter projection.

2 The highest projected unemployment rate in the scenario.

3 The table for 4Q25 shows highest year-on-year percentage change in inflation and projected policy rates for the US and Mexico, and lowest for other countries

and territories. For the UAE and Hong Kong, the policy rate is shown as the maximum, consistent with the operation of US-dollar-linked exchange rates. For

mainland China, the rate shown is the Loan Prime Rate.

The following graphs show the historical and forecasted GDP growth rate for the various economic scenarios in our four largest markets.

Hong Kong<br>

![119846767543989](hsbc-20251231_g66.gif)

![](hsbc-20251231_g67.gif)

Mainland China<br>

![119846767543996](hsbc-20251231_g68.gif)

UK<br>

![119846767544001](hsbc-20251231_g69.gif)

![](hsbc-20251231_g70.gif)

US<br>

![119846767544006](hsbc-20251231_g71.gif)

![](hsbc-20251231_g70.gif)

![](hsbc-20251231_g70.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **153** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Scenario weighting

Scenario weightings are calibrated to probabilities that are determined

with reference to consensus forecast probability distributions.

Management may then choose to vary weights if they assess that the

calibration lags more recent events, or does not reflect their view of

the distribution of economic and geopolitical risk. Management's view

of the scenarios and the probability distribution takes into consideration

the relationship of the consensus scenario to both internal and external

assessments of risk.

For the fourth quarter of 2025, forecast and distributional estimates

were assessed to have incorporated available information around tariffs

and policy uncertainties and no major events had occurred since

scenario production that changed the outlook materially. Forecast

dispersion, financial market volatility and other measures of uncertainty

remained close to their long-term average.

Consequently, there was no variation in scenario weights and they

were aligned to the calibrated probabilities of the scenarios. The

consensus Central scenario was assigned a 75% probability weighting

in our major markets. The consensus Upside scenario was assigned a

10% weighting, and the consensus Downside scenario was given

10%. The Downside 2 was assigned a 5% weighting.

In light of the US intervention in the political leadership and energy

assets of Venezuela during early January 2026, management assessed

the potential implications, including to oil prices, and concluded that

expected spillovers remain within the scope of existing scenarios,

including potentially significantly lower oil prices. Subsequent tariff

developments in relation to Greenland were also assessed on the

same basis and no additional action was deemed necessary for

economic scenarios or weights.

The following tables describe the probabilities assigned in each

scenario.

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % | Scenario weightings, % |  |  |  |  |  |  |  |  |
|  | **4Q25** | **4Q25** | **4Q25** | **4Q25** | **4Q25** | **4Q25** | **4Q25** | **4Q25** | 4Q24 | 4Q24 | 4Q24 | 4Q24 | 4Q24 | 4Q24 | 4Q24 | 4Q24 |
|  | **Standard** <br>**weights**<br>| **UK** | **US** | **Hong** <br>**Kong**<br>| **Mainland** <br>**China**<br>| **France** | **UAE** | **Mexico** | Standard <br>weights<br>| UK | US | Hong <br>Kong<br>| Mainland <br>China<br>| France | UAE | Mexico |
| Upside scenario | **10** | **10** | **10** | **10** | **10** | **10** | **10** | **10** | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Central scenario | **75** | **75** | **75** | **75** | **75** | **75** | **75** | **75** | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 |
| Downside scenario  | **10** | **10** | **10** | **10** | **10** | **10** | **10** | **10** | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Downside 2 scenario | **5** | **5** | **5** | **5** | **5** | **5** | **5** | **5** | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |

---

At 31 December 2025, the consensus Upside and Central scenarios for

all markets had a combined weighting of 85%, unchanged from the

weightings at 31 December 2024. Weightings assigned to downside

scenarios also remained unchanged.

Critical estimates and judgements

The IFRS 9 Expected Credit Losses ('ECL') calculation involved

significant judgements, assumptions and estimates. These included

selecting and configuring economic scenarios amid changing

economic conditions and risks and estimating their effects on ECL,

especially when historical conditions are not fully captured by credit

risk models.

How economic scenarios are reflected in

ECL calculations

Models are used to reflect economic scenarios for the ECL estimates.

We have developed globally consistent methodologies for the

application of forward economic guidance into the calculation of ECL

for wholesale and retail credit risk.

For wholesale portfolios, a global methodology is used for the

estimation of the term structure of probability of default ('PD') and loss

given default ('LGD'). PDs use the correlation of forward economic

guidance with default rates for a particular industry within a country,

and LGDs use the correlation of forward economic guidance with

collateral values and realisation rates for a particular country and

industry. PDs and LGDs are estimated for the entire term structure of

each instrument.

For impaired loans, allowances for ECL estimates are based on

discounted cash flow ('DCF') calculations for internal forward-looking

scenarios specific to individual borrower circumstances. Probability-

weighted outcomes are applied and, depending on materiality and the

status of the borrower, the number of scenarios considered will

change. Where relevant for the case being assessed, forward

economic guidance is considered as part of these scenarios. LGD-

driven ECL estimates are used for certain less material cases.

For our retail portfolios, the models are predominantly based on

historical observations and correlations with default rates and collateral

values.

For PD, the impact of economic scenarios is modelled for each

portfolio, using historical relationships between default rates and

macroeconomic variables. These are included within IFRS 9 ECL

estimates using either economic response models or models that

contain internal, external and macroeconomic variables. The

macroeconomic impact on PD is modelled over the period equal to the

remaining maturity of the assets.

For LGD, the impact is modelled for mortgage portfolios by forecasting

future loan-to-value profiles for the remaining maturity of the asset,

using national level house price index forecasts and applying the

corresponding LGD expectation relative to the updated forecast

collateral values.

For unsecured retail portfolios, historically observed recovery rates are

leveraged to measure loss. For both mortgages and unsecured loans, a

limited number of portfolios utilise a stressed LGD applied to the

Downside 2 scenario.

Management judgemental adjustments

IFRS 9 management judgemental adjustments are typically short-term

increases or decreases to the modelled allowance for ECL at a

customer, segment or portfolio level where management believes

allowances do not sufficiently reflect the ECL at the reporting date.

These relate to risks or uncertainties that are not reflected in the

models or to any late-breaking events with significant uncertainty,

subject to management review and challenge.

Management judgemental adjustments impacts are considered for

both gross balances and allowances for ECL when determining

whether a significant increase in credit risk has occurred, and is

allocated to an appropriate stage in accordance with the internal

adjustments framework.

Management judgemental adjustments are reviewed under the IFRS 9

governance process see page 107. Management's review and

challenge focuses on the rationale and adjustment amounts and,

where significant, is subject to a further review by the second line of

defence. Internal frameworks establish the conditions where some

management judgemental adjustments should no longer be required

and as such are considered as part of the governance process.

The internal governance process regularly reviews management

judgemental adjustments and, where possible, mitigates these through

a model recalibration or redevelopment.

Management judgemental adjustment drivers evolve as the economic

environment changes and new risks emerge. In addition to

management judgemental adjustments there are also 'Other

adjustments', which are made to address process limitations and data/

model deficiencies and can also include, where appropriate, the impact

of new models where governance has sufficiently progressed to allow

an accurate estimate of ECL allowance to be incorporated into the total

reported ECL.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **154** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

For the wholesale portfolio, management judgemental adjustments

apply to the performing portfolio only as defaulted exposures are

individually assessed.

At 31 December 2025, there was a $0.1bn increase in management

judgemental adjustments compared with 31 December 2024.

Management judgemental adjustments made in estimating the

scenario-weighted reported allowance for ECL at 31 December 2025

are set out in the following table.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Management judgemental adjustments to ECL  | Management judgemental adjustments to ECL  | Management judgemental adjustments to ECL  | Management judgemental adjustments to ECL  |  |  |  |
|  | **At 31 December 2025**<sup>1</sup> | **At 31 December 2025**<sup>1</sup> | **At 31 December 2025**<sup>1</sup> | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> |
|  | **Retail** | **Wholesale**<sup>2</sup> | **Total** | Retail | Wholesale<sup>2</sup> | Total |
|  | **$bn** | **$bn** | **$bn** | $bn | $bn | $bn |
| **Modelled ECL (A)**<sup>3</sup> | **2.8** | **1.8** | **4.6** | 2.6 | 2.0 | 4.6 |
| Banks, sovereigns, government entities and low-risk <br>counterparties<br>|  |  |  |  | 0.0 | 0.0 |
| Corporate lending adjustments |  | **0.1** | **0.1** |  | 0.1 | 0.1 |
| Other credit judgements | **0.1** |  | **0.1** | 0.0 |  | 0.0 |
| **Total management judgemental adjustments (B)**<sup>4</sup> | **0.1** | **0.1** | **0.2** | 0.0 | 0.1 | 0.1 |
| **Other adjustments (C)**<sup>5</sup> | **(0.0)** | **0.1** | **0.1** | (0.0) | 0.1 | 0.1 |
| **Final ECL (A + B + C)**<sup>6</sup> | **2.9** | **2.0** | **4.9** | 2.6 | 2.2 | 4.8 |

---

1Management judgemental adjustments presented in the table reflect increases or (decreases) to allowance for ECL, respectively.

2The wholesale portfolio corresponds to adjustments to the performing portfolio (stage 1 and stage 2).

3(A) refers to probability-weighted allowance for ECL before any adjustments are applied.

4(B) refers to adjustments that are applied where management believes allowance for ECL does not sufficiently reflect the credit risk/ECL of any given portfolio at

the reporting date. These can relate to risks or uncertainties that are not reflected in the model and/or to any late-breaking events.

5(C) refers to adjustments to allowance for ECL made to address process limitations and data/model deficiencies and can also include where appropriate, the impact of

new models where governance has sufficiently progressed to allow an accurate estimate of ECL allowance to be incorporated into the total reported ECL.

6As presented within our internal credit risk governance (see page <u>[140](#ie4edc76213cf40e9ae3dd93b36f88427_82)</u>).

Management judgemental adjustments at 31 December 2025 were an

increase to allowance for ECL of $0.1bn for the wholesale portfolio,

and $0.1bn for the retail portfolio.

At 31 December 2025, wholesale management judgemental

adjustments to the allowance for ECL remained stable at $0.1bn,

consistent with the position at 31 December 2024. These were mainly

to corporate exposures to reflect heightened uncertainty in specific

sectors and geographies, including offsetting adjustments to the real

estate sector in mainland China, Hong Kong and the US, and

adjustments to exposures to the automotive and industrial sectors in

Germany.

At 31 December 2025, retail management judgemental adjustments

were an increase to allowance for ECL of $0.1bn (31 December 2024:

$0.0bn). The marginal increase in 'Other credit judgements' compared

with 31 December 2024 was in relation to a number of market-specific

adjustments that were not individually significant.

Economic scenarios sensitivity analysis

of ECL estimates

Management considered the sensitivity of the ECL outcome against

the economic forecasts as part of the ECL governance process by

recalculating the allowance for ECL under each scenario described

above for selected portfolios, applying a 100% weighting to each

scenario in turn. The weighting is reflected in both the determination of

a significant increase in credit risk and the measurement of the

resulting allowances.

The allowance for ECL calculated for the Upside and Downside

scenarios should not be taken to represent the upper and lower limits

of possible ECL outcomes. The impact of defaults that might occur in

the future under different economic scenarios is captured by

recalculating allowances for loans at the balance sheet date.

There is a particularly high degree of estimation uncertainty in numbers

representing tail risk scenarios when assigned a 100% weighting.

For wholesale credit risk exposures, the sensitivity analysis excludes

allowance for ECL and financial instruments related to defaulted (stage

3) obligors. The measurement of stage 3 ECL is relatively more

sensitive to credit factors specific to the obligor than future economic

scenarios, and therefore the effects of macroeconomic factors are not

necessarily the key consideration when performing individual

assessments of allowances for obligors in default. Loans to defaulted

obligors are a small portion of the overall wholesale lending exposure,

even if representing the majority of the allowance for ECL. Due to the

range and specificity of the credit factors to which the ECL is sensitive,

it is not possible to provide a meaningful alternative sensitivity analysis

for a consistent set of risks across all defaulted obligors.

For retail mortgage exposures the sensitivity analysis includes

allowance for ECL for defaulted obligors of loans and advances. This is

because the retail ECL for secured mortgage portfolios, including loans

in all stages, is sensitive to macroeconomic variables.

Wholesale and retail sensitivity

The wholesale and retail sensitivity tables present the 100% weighted

results for each of our scenarios. These exclude portfolios held by the

insurance business and small portfolios, and as such cannot be directly

compared with personal and wholesale lending presented in other

credit risk tables. In both the wholesale and retail analysis, the

comparative period results for Downside 2 scenarios are also not

directly comparable with the current period, because they reflect

different risks relative to the consensus scenarios for the period end.

The wholesale and retail sensitivity analysis is stated inclusive of

management judgemental adjustments, as appropriate to each

scenario.

For both retail and wholesale portfolios, the gross carrying amount of

financial instruments are the same under each scenario. For exposures

with similar risk profile and product characteristics, the sensitivity

impact is therefore largely the result of changes in macroeconomic

assumptions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **155** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Wholesale analysis

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1,2,3</sup> |
|  | **Reported Gross** <br>**carrying amount**<sup>4</sup><br>| **Reported** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Central scenario** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Upside scenario** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Downside scenario** <br>**allowance** <br>**for ECL**<br>| **Downside 2** <br>**scenario** <br>**allowance** <br>**for ECL**<br>|
| **By geography at 31 Dec 2025** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| UK | **465228** | **598** | **571** | **513** | **680** | **1119** |
| US | **208425** | **210** | **194** | **166** | **264** | **563** |
| Hong Kong | **472454** | **439** | **401** | **305** | **570** | **1143** |
| Mainland China | **133814** | **188** | **176** | **137** | **256** | **397** |
| Mexico | **38076** | **62** | **58** | **47** | **76** | **202** |
| UAE | **62827** | **52** | **51** | **47** | **56** | **82** |
| France | **196137** | **121** | **117** | **103** | **139** | **188** |
| Other geographies<sup>5</sup> | **487987** | **234** | **208** | **158** | **358** | **790** |
| **Total** | **2064949** | **1905** | **1778** | **1477** | **2399** | **4485** |
| of which: |  |  |  |  |  |  |
| Stage 1 | **1940746** | **690** | **638** | **522** | **830** | **971** |
| Stage 2 | **124203** | **1214** | **1139** | **955** | **1569** | **3514** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| By geography at 31 Dec 2024 |  |  |  |  |  |  |
| UK | 432160 | 717 | 667 | 526 | 850 | 2389 |
| US | 202888 | 216 | 201 | 205 | 247 | 461 |
| Hong Kong | 450966 | 659 | 616 | 465 | 906 | 1496 |
| Mainland China | 137960 | 178 | 141 | 84 | 329 | 886 |
| Mexico | 34713 | 69 | 61 | 46 | 86 | 302 |
| UAE | 58909 | 51 | 49 | 40 | 58 | 120 |
| France | 184591 | 82 | 80 | 69 | 97 | 125 |
| Other geographies<sup>5,6</sup> | 455823 | 234 | 216 | 176 | 304 | 774 |
| Total | 1958010 | 2205 | 2031 | 1612 | 2877 | 6555 |
| of which: |  |  |  |  |  |  |
| Stage 1 | 1830264 | 689 | 632 | 494 | 797 | 803 |
| Stage 2 | 127746 | 1516 | 1399 | 1118 | 2080 | 5751 |

---

1Allowance for ECL sensitivity includes off-balance sheet financial instruments. These are subject to significant measurement uncertainty.

2Includes low credit-risk financial instruments such as debt instruments at FVOCI, which have high carrying amounts but low ECL under all the above scenarios.

3Excludes defaulted obligors. For a detailed breakdown of performing and non-performing wholesale portfolio exposures, see page <u>[169](#ie4edc76213cf40e9ae3dd93b36f88427_172)</u>.

4Staging refers only to probability-weighted/reported gross carrying amount. Stage allocation of gross exposures varies by scenario, with higher allocation to

stage 2 under the Downside 2 scenario.

5Includes small portfolios that use less complex modelling approaches and are not sensitive to macroeconomic changes.

6Includes the Argentina and Armenia businesses, which were sold in 2024.

At 31 December 2025, the highest level of 100% scenario-weighted

allowance for ECL was observed in the UK and Hong Kong under the

Downside 2 scenario, driven primarily by a larger exposure to those

geographies, namely in the real estate sector. In relation to the

underlying exposure, mainland China and Mexico have the higher

Downside 2 ECL coverage, mostly due to the relatively larger

proportion of higher risk exposures in those geographies.

Compared with 31 December 2024, the ECL impact on all consensus

scenarios has decreased due to the effects of enhanced credit risk

models and updates to our forward economic scenarios.

In the wholesale portfolio, off-balance sheet financial instruments have

a lower likelihood to be fully converted to a funded exposure at the

point of default, and consequently the sensitivity of the allowance for

ECL is lower in relation to its nominal amount, when compared with an

on-balance sheet exposure with a similar risk profile.

Retail analysis

At 31 December 2025, the most significant level of allowance for ECL

sensitivity was observed in the UK, Mexico and Hong Kong. Mortgages

reflected the lowest level of allowance for ECL sensitivity across most

markets given the significant levels of collateral relative to the exposure

values. Credit cards and other unsecured lending across stages 1 and 2

are more sensitive to economic forecasts and therefore reflected the

highest level of allowance for ECL sensitivity during 2025.

The ECL allowance in all consensus scenarios compared with

31 December 2024 was stable. There was a decrease in the

Downside 2 scenario, which was primarily due to improvements in the

House Price Index forecasts in Hong Kong.

There was limited sensitivity in credit cards and other unsecured

lending in stage 3 as levels of loss on defaulted exposures remained

consistent through various economic conditions. The Downside 2

scenario reflects the tail of the economic distribution where allowance

for ECL is more sensitive based on historical experience and includes a

stressed LGD for a limited number of portfolios.

The reported gross carrying amount by stage is representative of the

weighted scenario allowance for ECL. The allowance for ECL

sensitivity to the other scenarios includes changes in allowance for

ECL due to the levels of loss and the migration of additional lending

balances in, or out, of stage 2.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **156** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> | IFRS 9 ECL sensitivity to future economic conditions<sup>1</sup> |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Reported** <br>**gross** <br>**carrying** <br>**amount**<br>| **Reported** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Central** <br>**scenario** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Upside** <br>**scenario** <br>**allowance** <br>**for ECL**<br>| **Consensus** <br>**Downside** <br>**scenario** <br>**allowance** <br>**for ECL**<br>| **Downside 2** <br>**scenario** <br>**allowance** <br>**for ECL**<br>| Reported <br>gross carrying <br>amount<br>| Reported <br>allowance <br>for ECL<br>| Consensus <br>Central <br>scenario <br>allowance <br>for ECL<br>| Consensus <br>Upside <br>scenario <br>allowance <br>for ECL<br>| Consensus <br>Downside <br>scenario <br>allowance <br>for ECL<br>| Downside 2 <br>scenario <br>allowance <br>for ECL<br>|
| **By geography**  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m |
| **UK** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **183128** | **132** | **124** | **117** | **138** | **274** | 163541 | 126 | 117 | 107 | 132 | 288 |
| Credit cards | **8317** | **356** | **354** | **338** | **355** | **419** | 7415 | 280 | 275 | 265 | 276 | 447 |
| Other | **9513** | **265** | **261** | **238** | **276** | **370** | 8249 | 241 | 233 | 217 | 243 | 351 |
| **Mexico** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **8430** | **190** | **188** | **180** | **193** | **237** | 7482 | 165 | 162 | 155 | 168 | 215 |
| Credit cards | **2322** | **407** | **403** | **398** | **409** | **514** | 2227 | 337 | 333 | 330 | 338 | 423 |
| Other | **3727** | **437** | **437** | **435** | **442** | **589** | 3722 | 419 | 416 | 413 | 422 | 593 |
| **Hong Kong** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **106736** | **5** | **4** | **3** | **6** | **13** | 106866 | 5 | 5 | 4 | 5 | 10 |
| Credit cards | **9739** | **313** | **306** | **300** | **324** | **496** | 9419 | 293 | 275 | 268 | 300 | 770 |
| Other | **6085** | **146** | **137** | **136** | **144** | **173** | 6210 | 106 | 102 | 101 | 105 | 249 |
| **UAE** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **2306** | **6** | **6** | **6** | **6** | **7** | 1993 | 8 | 8 | 8 | 8 | 8 |
| Credit cards | **591** | **39** | **39** | **38** | **40** | **46** | 536 | 31 | 31 | 31 | 31 | 35 |
| Other | **620** | **12** | **11** | **11** | **12** | **13** | 688 | 17 | 17 | 17 | 17 | 19 |
| **US** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **17797** | **4** | **4** | **4** | **5** | **8** | 16965 | 6 | 6 | 6 | 6 | 8 |
| Credit cards | **187** | **14** | **14** | **14** | **14** | **16** | 193 | 15 | 14 | 14 | 15 | 17 |
| **Other geographies** |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgages | **56067** | **109** | **106** | **102** | **114** | **175** | 51064 | 131 | 127 | 124 | 136 | 180 |
| Credit cards | **3834** | **175** | **174** | **173** | **179** | **202** | 3500 | 162 | 159 | 156 | 164 | 223 |
| Other | **2313** | **78** | **78** | **77** | **78** | **85** | 2292 | 72 | 72 | 69 | 73 | 93 |
| **Total** | **421712** | **2688** | **2646** | **2570** | **2735** | **3637** | 392361 | 2413 | 2351 | 2285 | 2440 | 3928 |
| **of which: mortgages** | **374464** | **446** | **432** | **412** | **462** | **714** | 347910 | 440 | 425 | 405 | 456 | 708 |
| Stage 1 | **353960** | **54** | **53** | **50** | **61** | **161** | 311875 | 51 | 47 | 43 | 58 | 129 |
| Stage 2 | **18056** | **106** | **97** | **88** | **108** | **216** | 33761 | 126 | 117 | 107 | 129 | 275 |
| Stage 3 | **2448** | **286** | **282** | **274** | **293** | **337** | 2274 | 263 | 261 | 255 | 269 | 304 |
| **of which: credit cards**  | **24990** | **1304** | **1290** | **1261** | **1321** | **1693** | 23290 | 1116 | 1086 | 1064 | 1124 | 1915 |
| Stage 1 | **21258** | **353** | **347** | **335** | **366** | **553** | 19915 | 276 | 267 | 258 | 284 | 701 |
| Stage 2 | **3450** | **731** | **723** | **706** | **735** | **913** | 3107 | 655 | 634 | 621 | 656 | 1027 |
| Stage 3 | **282** | **220** | **220** | **220** | **220** | **227** | 267 | 185 | 185 | 185 | 185 | 188 |
| **of which: others** | **22258** | **938** | **924** | **897** | **952** | **1230** | 21161 | 856 | 839 | 816 | 860 | 1305 |
| Stage 1 | **19494** | **253** | **249** | **233** | **265** | **444** | 18574 | 216 | 204 | 193 | 217 | 532 |
| Stage 2 | **2177** | **403** | **393** | **382** | **405** | **494** | 2005 | 360 | 355 | 343 | 363 | 483 |
| Stage 3 | **587** | **282** | **282** | **282** | **282** | **292** | 583 | 279 | 279 | 279 | 279 | 290 |

---

1Allowance for ECL sensitivities exclude portfolios utilising less complex modelling approaches.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **157** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Group ECL sensitivity results

The allowance for ECL of the scenarios and management judgemental

adjustments is highly sensitive to movements in economic forecasts.

Based upon the sensitivity tables presented above, if the Group

allowance for ECL balance was estimated solely on the basis of the

Central scenario, Downside scenario or the Downside 2 scenario at

31 December 2025, it would increase/(decrease) as presented in the

below table.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Total Group ECL at 31 December 2025 | Total Group ECL at 31 December 2025 | Total Group ECL at 31 December 2025 |  |  |
|  | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 |
|  | **Retail**<sup>1</sup> | **Wholesale**<sup>1</sup> | Retail<sup>1</sup> | Wholesale<sup>1</sup> |
|  | **$bn**  | **$bn** | $bn | $bn |
| Reported allowance for ECL | **2.7** | **1.9** | 2.4 | 2.2 |
| **Scenarios** |  |  |  |  |
| 100% Consensus Central scenario | **(0.0)** | **0.0** | (0.1) | (0.2) |
| 100% Consensus Upside scenario | **(0.1)** | **(0.3)** | (0.1) | (0.6) |
| 100% Consensus Downside scenario | **0.0** | **0.6** | 0.0 | 0.7 |
| 100% Downside 2 scenario  | **0.9** | **2.7** | 1.5 | 4.3 |

---

1On the same basis as retail and wholesale sensitivity analysis.

At 31 December 2025, the Group allowance for ECL increased in the retail portfolio by $0.3bn and decreased by $0.3bn in the wholesale portfolio,

compared with 31 December 2024.

Compared with 31 December 2024, both the retail and wholesale portfolio Group ECL sensitivity across all consensus scenarios decreased due

to an improving economic outlook. For the retail portfolios the ECL sensitivity decrease across the Downside 2 scenario was primarily due to

improvements in Hong Kong and UK unsecured portfolios. For the wholesale portfolios, the decrease was largely driven by crystallisation of

defaults in certain sectors and an improving economic outlook.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL | Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL | Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL | Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL | Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL |  |  |
|  | **Wholesale** | **Wholesale** | **Retail** | **Retail** | **Total** | **Total** |
|  | **Gross carrying/** <br>**nominal amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross carrying/**<br>**nominal amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross carrying/**<br>**nominal amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Included in sensitivity analysis** | **2064949** | **(1905)** | **421712** | **(2688)** | **2486661** | **(4593)** |
| – Exclusions from sensitivity as described in the section above<sup>1</sup> | **21336** | **(6394)** | **330144** | **(147)** | **351480** | **(6541)** |
| – Debt instruments measured at fair value through other <br>comprehensive income<sup>2</sup><br>| **(383568)** | **30** | **—** | **—** | **(383568)** | **30** |
| – Performance guarantees<sup>2</sup> | **(102684)** | **269** | **—** | **—** | **(102684)** | **269** |
| – Other financial assets at amortised cost not presented as <br>wholesale or personal lending, including held for sale<sup>2</sup><br>| **(539467)** | **102** | **(616)** | **9** | **(540083)** | **111** |
| – Other<sup>3</sup> | **6757** | **(342)** | **(2735)** | **1** | **4022** | **(341)** |
| **As reported in the Summary of credit risk (excluding debt** <br>**instruments measured at FVOCI) by stage distribution** <br>**and ECL coverage by industry sector at 31 Dec 2025**<br>| **1067323** | **(8240)** | **748505** | **(2825)** | **1815828** | **(11065)** |
| Other financial assets at amortised cost |  |  |  |  | **890326** | **(129)** |
| **Total reported in the Summary of credit risk (excluding debt** <br>**instruments measured at FVOCI) by stage distribution and** <br>**ECL coverage by industry sector at 31 Dec 2025**<br>|  |  |  |  | **2706154** | **(11194)** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Included in sensitivity analysis | 1958010 | (2205) | 392361 | (2413) | 2350371 | (4618) |
| – Exclusions from sensitivity as described in the section above<sup>1</sup> | 20409 | (5419) | 309178 | (124) | 329587 | (5543) |
| – Debt instruments measured at fair value through other <br>comprehensive income<sup>2</sup><br>| (346124) | 54 |  |  | (346124) | 54 |
| – Performance guarantees<sup>2</sup> | (92722) | 311 |  |  | (92722) | 311 |
| – Other financial assets at amortised cost not presented as <br>wholesale or personal lending, including held for sale<sup>2</sup><br>| (568668) | 141 | (130) |  | (568798) | 141 |
| – Other<sup>3</sup> | 5978 | (441) | 498 | (9) | 6476 | (450) |
| As reported in the Summary of credit risk (excluding debt <br>instruments measured at FVOCI) by stage distribution and <br>ECL coverage by industry sector at 31 Dec 2024<br>| 976883 | (7559) | 701907 | (2546) | 1678790 | (10105) |
| Other financial assets at amortised cost |  |  |  |  | 828580 | (92) |
| Total reported in the Summary of credit risk (excluding debt <br>instruments measured at FVOCI) by stage distribution and <br>ECL coverage by industry sector at 31 Dec 2024<br>|  |  |  |  | 2507370 | (10197) |

---

1Comprises wholesale defaulted obligors, retail portfolios utilising less complex modelling approaches, private banking and insurance.

2The sensitivity analysis includes certain items reported in 'Other assets at amortised cost', which are not allocated to an industry in the credit tables. It also

includes debt instruments measured at FVOCI and performance guarantees, which are presented separately in the credit tables.

3Includes FX and other operational variances.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **158** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Reconciliations of changes in gross carrying/nominal amount and allowances

The following disclosure provides a reconciliation by stage of the

Group's gross carrying/nominal amount and allowances for loans and

advances to banks and customers, including loan commitments and

financial guarantees.

In addition, a reconciliation by stage of the Group's gross carrying

amount and allowances for loans and advances to banks and

customers and a reconciliation by stage of the Group's nominal amount

and allowances for loan commitments and financial guarantees, were

included in this section following adoption of the recommendations of

the third report from The Taskforce on Disclosures about Expected

Credit Losses ('DECL').

Movements are calculated on a quarterly basis and therefore fully

capture stage movements between quarters. If movements were

calculated on a year-to-date basis they would only reflect the opening

and closing position of the financial instrument.

The transfers of financial instruments represents the impact of stage

transfers upon the gross carrying/nominal amount and associated

allowance for ECL.

The net remeasurement of ECL arising from transfer of stage

represents the increase or decrease due to these transfers, for

example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL

measurement basis. Net remeasurement excludes the underlying

CRR/PD movements of the financial instruments transferring stage.

This is captured, along with other credit quality movements in the

'changes to risk parameters – credit quality' line item.

Changes in 'Net new and further lending/repayments' represents the

impact from volume movements within the Group's lending portfolio

and includes new financial assets originated or purchased, further

lending and repayments (including final repayments).

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **POCI** | **POCI** | **Total** | **Total** |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **1489687** | **(1232)** | **115898** | **(2674)** | **23823** | **(6148)** | **93** | **(51)** | **1629501** | **(10105)** |
| Transfers of financial <br>instruments:<br>| **(28196)** | **(931)** | **18327** | **2101** | **9869** | **(1170)** | **—** | **—** | **—** | **—** |
| –transfers from stage 1 to <br>stage 2<br>| **(134309)** | **368** | **134309** | **(368)** | **—** | **—** | **—** | **—** | **—** | **—** |
| –transfers from stage 2 to <br>stage 1<br>| **107223** | **(1233)** | **(107223)** | **1233** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(1873)** | **15** | **(10260)** | **1434** | **12133** | **(1449)** | **—** | **—** | **—** | **—** |
| – transfers from stage 3 | **763** | **(81)** | **1501** | **(198)** | **(2264)** | **279** | **—** | **—** | **—** | **—** |
| Net remeasurement of ECL <br>arising from transfer of <br>stage<br>| **—** | **664** | **—** | **(604)** | **—** | **(58)** | **—** | **—** | **—** | **2** |
| Changes due to <br>modifications not <br>derecognised<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Net new and further <br>lending/repayments<br>| **107733** | **(178)** | **(35843)** | **614** | **(6060)** | **768** | **238** | **2** | **66068** | **1206** |
| Changes to risk parameters <br>– credit quality<br>| **—** | **390** | **—** | **(1991)** | **—** | **(3737)** | **—** | **(24)** | **—** | **(5362)** |
| Changes to models used <br>for ECL calculation<br>| **—** | **(59)** | **—** | **272** | **—** | **(16)** | **—** | **—** | **—** | **197** |
| Assets written off | **—** | **—** | **—** | **—** | **(3569)** | **3569** | **—** | **—** | **(3569)** | **3569** |
| Credit-related modifications <br>that resulted in <br>derecognition<br>| **—** | **—** | **—** | **—** | **(88)** | **9** | **—** | **—** | **(88)** | **9** |
| Foreign exchange and <br>others<sup>1,2</sup><br>| **42772** | **(16)** | **4507** | **(152)** | **1259** | **(410)** | **6** | **(3)** | **48544** | **(581)** |
| **At 31 Dec 2025** | **1611996** | **(1362)** | **102889** | **(2434)** | **25234** | **(7193)** | **337** | **(76)** | **1740456** | **(11065)** |
| ECL income statement <br>change for the period<br>|  | **817** |  | **(1709)** |  | **(3043)** |  | **(22)** |  | **(3957)** |
| Recoveries |  |  |  |  |  |  |  |  |  | **320** |
| Others  |  |  |  |  |  |  |  |  |  | **(248)** |
| **Total ECL income** <br>**statement change for the** <br>**period**<br>|  |  |  |  |  |  |  |  |  | **(3885)** |

---

1Total includes $6.0bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding

allowance for ECL of $27m, including business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page

355. 2This includes $7.2bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $7m in relation to disposal of our retained

home and other retail loans in France as disclosed in Note 23 on page 355.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **159** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees (continued) | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees (continued) | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees (continued) | Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including <br>loan commitments and financial guarantees (continued) |
| (Audited) | (Audited) | (Audited) | (Audited) |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **12 months ended 31 Dec 2025** |
|  | **Gross carrying/**<br>**nominal amount**<br>| **Allowance** <br>**for ECL**<br>| **ECL** <br>**charge**<br>|
|  | **$m** | **$m** | **$m** |
| **As above** | **1740456** | **(11065)** | **(3885)** |
| Other financial assets measured at amortised cost | **890326** | **(129)** | **(29)** |
| Non-trading reverse purchase agreement commitments | **75372** | **—** | **—** |
| Performance and other guarantees not considered for IFRS 9 | **—** | **—** | **46** |
| **Summary of financial instruments to which the impairment requirements** <br>**in IFRS 9 are applied/Summary consolidated income statement**<br>| **2706154** | **(11194)** | **(3868)** |
| Debt instruments measured at FVOCI | **383568** | **(30)** | **18** |
| **Total allowance for ECL/total income statement ECL change for the period** | **n/a** | **(11224)** | **(3850)** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired | Credit impaired | Credit impaired |  |  |
|  | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | POCI | POCI | Total | Total |
|  | Gross <br>exposure<br>| Allowance/ <br>provision <br>for ECL<br>| Gross <br>exposure<br>| Allowance/ <br>provision <br>for ECL<br>| Gross <br>exposure<br>| Allowance/ <br>provision <br>for ECL<br>| Gross <br>exposure<br>| Allowance/ <br>provision <br>for ECL<br>| Gross <br>exposure<br>| Allowance/ <br>provision <br>for ECL<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 1496805 | (1300) | 153084 | (3102) | 20799 | (7063) | 85 | (30) | 1670773 | (11495) |
| Transfers of financial instruments: | (19629) | (1259) | 6652 | 2302 | 12977 | (1043) |  |  |  |  |
| – transfers from stage 1 to <br>stage 2<br>| (116211) | 419 | 116211 | (419) |  |  |  |  |  |  |
| – transfers from stage 2 to <br>stage 1<br>| 98731 | (1627) | (98731) | 1627 |  |  |  |  |  |  |
| – transfers to stage 3 | (2799) | 16 | (12230) | 1321 | 15029 | (1337) |  |  |  |  |
| – transfers from stage 3 | 650 | (67) | 1402 | (227) | (2052) | 294 |  |  |  |  |
| Net remeasurement of ECL <br>arising from transfer of stage<br>|  | 959 |  | (831) |  | (144) |  |  |  | (16) |
| Changes due to modifications not <br>derecognised<br>|  |  |  |  | (25) |  |  |  | (25) |  |
| Net new and further lending/<br>repayments<br>| 87833 | (168) | (37731) | 589 | (5246) | 1689 | 7 | (7) | 44863 | 2103 |
| Changes to risk parameters – <br>credit quality<br>|  | 363 |  | (1773) |  | (3945) |  | (11) |  | (5366) |
| Changes to models used for ECL <br>calculation<br>|  | 68 |  | (4) |  | (20) |  |  |  | 44 |
| Assets written off |  |  |  |  | (4459) | 4459 |  |  | (4459) | 4459 |
| Credit-related modifications that <br>resulted in derecognition<br>|  |  |  |  |  |  |  |  |  |  |
| Foreign exchange and others<sup>1,2,3</sup> | (75322) | 105 | (6107) | 145 | (223) | (81) | 1 | (3) | (81651) | 166 |
| At 31 Dec 2024 | 1489687 | (1232) | 115898 | (2674) | 23823 | (6148) | 93 | (51) | 1629501 | (10105) |
| ECL income statement change for <br>the period<br>|  | 1222 |  | (2019) |  | (2420) |  | (18) |  | (3235) |
| Recoveries |  |  |  |  |  |  |  |  |  | 260 |
| Others |  |  |  |  |  |  |  |  |  | (158) |
| Total ECL income statement <br>change for the period<br>|  |  |  |  |  |  |  |  |  | (3133) |

---

1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding

allowance for ECL of $46m, reflecting business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page

355. 2Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees

following the sale of our banking business in Canada during 2024.

3Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina

during 2024.

---

| | | | |
|:---|:---|:---|:---|
|  | At 31 Dec 2024 | At 31 Dec 2024 | 12 months ended 31 Dec 2024 |
|  | Gross carrying/<br>nominal amount<br>| Allowance <br>for ECL<br>| ECL <br>charge<br>|
|  | $m | $m | $m |
| As above | 1629501 | (10105) | (3133) |
| Other financial assets measured at amortised cost | 828580 | (92) | (114) |
| Non-trading reverse purchase agreement commitments | 49289 |  |  |
| Performance and other guarantees not considered for IFRS 9 |  |  | (173) |
| Summary of financial instruments to which the impairment requirements in IFRS 9 are <br>applied/Summary consolidated income statement<br>| 2507370 | (10197) | (3420) |
| Debt instruments measured at FVOCI | 346124 | (54) | 6 |
| Total allowance for ECL/total income statement ECL change for the period | n/a | (10251) | (3414) |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **160** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  | Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers  |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **POCI** | **POCI** | **Total** | **Total** |
|  | **Gross** <br>**carrying** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **926272** | **(1087)** | **93446** | **(2548)** | **22617** | **(6042)** | **90** | **(51)** | **1042425** | **(9728)** |
| Transfers of financial instruments: | **(19240)** | **(873)** | **9888** | **2039** | **9352** | **(1166)** | **—** | **—** | **—** | **—** |
| – transfers from stage 1 to stage 2 | **(96905)** | **350** | **96905** | **(350)** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers from stage 2 to stage 1 | **78715** | **(1158)** | **(78715)** | **1158** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(1522)** | **15** | **(9650)** | **1428** | **11172** | **(1443)** | **—** | **—** | **—** | **—** |
| – transfers from stage 3 | **472** | **(80)** | **1348** | **(197)** | **(1820)** | **277** | **—** | **—** | **—** | **—** |
| Net remeasurement of ECL arising <br>from transfer of stage<br>| **—** | **613** | **—** | **(570)** | **—** | **(58)** | **—** | **—** | **—** | **(15)** |
| Changes due to modifications not <br>derecognised<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Net new and further lending/<br>repayments<br>| **69338** | **(169)** | **(26413)** | **579** | **(5119)** | **705** | **238** | **2** | **38044** | **1117** |
| Changes to risk parameters – credit <br>quality<br>| **—** | **382** | **—** | **(1945)** | **—** | **(3693)** | **—** | **(24)** | **—** | **(5280)** |
| Changes to models used for ECL <br>calculation<br>| **—** | **(60)** | **—** | **269** | **—** | **(16)** | **—** | **—** | **—** | **193** |
| Assets written off | **—** | **—** | **—** | **—** | **(3569)** | **3569** | **—** | **—** | **(3569)** | **3569** |
| Credit-related modifications that <br>resulted in derecognition<br>| **—** | **—** | **—** | **—** | **(88)** | **9** | **—** | **—** | **(88)** | **9** |
| Foreign exchange and others<sup>1,2</sup> | **25399** | **(11)** | **4147** | **(144)** | **1197** | **(406)** | **5** | **(3)** | **30748** | **(564)** |
| **At 31 Dec 2025** | **1001769** | **(1205)** | **81068** | **(2320)** | **24390** | **(7098)** | **333** | **(76)** | **1107560** | **(10699)** |
| ECL income statement change for <br>the period<br>|  | **766** |  | **(1667)** |  | **(3062)** |  | **(22)** |  | **(3985)** |
| Recoveries |  |  |  |  |  |  |  |  |  | **320** |
| Others  |  |  |  |  |  |  |  |  |  | **(264)** |
| **Total ECL income statement** <br>**change for the period**<br>|  |  |  |  |  |  |  |  |  | **(3929)** |

---

1Total includes $6.0bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding

allowance for ECL of $27m, reflecting business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page

355. 2This includes $7.2bn of gross carrying loans and advances to customers and a corresponding allowance for ECL of $7m in relation to the disposal of our retained

portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired | Credit impaired | Credit impaired | | |
|  | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | POCI | POCI | Total | Total |
|  | Gross <br>carrying <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying <br>amount<br>| Allowance <br>for ECL<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 920863 | (1140) | 122307 | (2967) | 19275 | (6952) | 81 | (30) | 1062526 | (11089) |
| Transfers of financial instruments: | (19794) | (1227) | 7344 | 2259 | 12450 | (1032) |  |  |  |  |
| – transfers from stage 1 to stage 2 | (90611) | 404 | 90611 | (404) |  |  |  |  |  |  |
| – transfers from stage 2 to stage 1 | 72935 | (1580) | (72935) | 1580 |  |  |  |  |  |  |
| – transfers to stage 3 | (2559) | 16 | (11512) | 1310 | 14071 | (1326) |  |  |  |  |
| – transfers from stage 3 | 441 | (67) | 1180 | (227) | (1621) | 294 |  |  |  |  |
| Net remeasurement of ECL arising <br>from transfer of stage<br>|  | 932 |  | (801) |  | (144) |  |  |  | (13) |
| Changes due to modifications not <br>derecognised<br>|  |  |  |  | (25) |  |  |  | (25) |  |
| Net new and further lending/<br>repayments<br>| 52439 | (161) | (33154) | 570 | (4535) | 1606 | 7 | (7) | 14757 | 2008 |
| Changes to risk parameters – credit <br>quality<br>|  | 361 |  | (1724) |  | (3873) |  | (11) |  | (5247) |
| Changes to models used for ECL <br>calculation<br>|  | 66 |  | (18) |  | (20) |  |  |  | 28 |
| Assets written off |  |  |  |  | (4459) | 4459 |  |  | (4459) | 4459 |
| Credit-related modifications that <br>resulted in derecognition<br>|  |  |  |  |  |  |  |  |  |  |
| Foreign exchange and others<sup>1</sup> | (27236) | 82 | (3051) | 133 | (89) | (86) | 2 | (3) | (30374) | 126 |
| At 31 Dec 2024 | 926272 | (1087) | 93446 | (2548) | 22617 | (6042) | 90 | (51) | 1042425 | (9728) |
| ECL income statement change for <br>the period<br>|  | 1198 |  | (1973) |  | (2431) |  | (18) |  | (3224) |
| Recoveries |  |  |  |  |  |  |  |  |  | 260 |
| Others |  |  |  |  |  |  |  |  |  | (161) |
| Total ECL income statement <br>change for the period<br>|  |  |  |  |  |  |  |  |  | (3125) |

---

1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding

allowance for ECL of $46m, reflecting business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page

355. ---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **161** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **POCI** | **POCI** | **Total** | **Total** |
|  | **Nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **563415** | **(145)** | **22452** | **(126)** | **1206** | **(106)** | **3** | **—** | **587076** | **(377)** |
| Transfers of financial instruments: | **(8956)** | **(58)** | **8439** | **62** | **517** | **(4)** | **—** | **—** | **—** | **—** |
| – transfers from stage 1 to stage 2 | **(37404)** | **18** | **37404** | **(18)** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers from stage 2 to stage 1 | **28508** | **(75)** | **(28508)** | **75** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(351)** | **—** | **(610)** | **6** | **961** | **(6)** | **—** | **—** | **—** | **—** |
| – transfers from stage 3 | **291** | **(1)** | **153** | **(1)** | **(444)** | **2** | **—** | **—** | **—** | **—** |
| Net remeasurement of ECL arising <br>from transfer of stage<br>| **—** | **51** | **—** | **(34)** | **—** | **—** | **—** | **—** | **—** | **17** |
| Net new and further lending/<br>repayments<br>| **38395** | **(9)** | **(9430)** | **35** | **(941)** | **63** | **—** | **—** | **28024** | **89** |
| Changes to risk parameters – credit <br>quality<br>| **—** | **8** | **—** | **(46)** | **—** | **(44)** | **—** | **—** | **—** | **(82)** |
| Changes to models used for ECL <br>calculation<br>| **—** | **1** | **—** | **3** | **—** | **—** | **—** | **—** | **—** | **4** |
| Foreign exchange and others | **17373** | **(5)** | **360** | **(8)** | **62** | **(4)** | **1** | **—** | **17796** | **(17)** |
| **At 31 Dec 2025** | **610227** | **(157)** | **21821** | **(114)** | **844** | **(95)** | **4** | **—** | **632896** | **(366)** |
| ECL income statement change for <br>the period<br>|  | **51** |  | **(42)** |  | **19** |  | **—** |  | **28** |
| Others  |  |  |  |  |  |  |  |  |  | **16** |
| **Total ECL income statement** <br>**change for the period**<br>|  |  |  |  |  |  |  |  |  | **44** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 1 Jan 2024 | 575942 | (160) | 30777 | (135) | 1524 | (111) | 4 | 608247 | (406) |
| Transfers of financial instruments: | 165 | (32) | (692) | 43 | 527 | (11) |  |  |  |
| – transfers from stage 1 to stage 2 | (25600) | 15 | 25600 | (15) |  |  |  |  |  |
| – transfers from stage 2 to stage 1 | 25796 | (47) | (25796) | 47 |  |  |  |  |  |
| – transfers to stage 3 | (240) |  | (718) | 11 | 958 | (11) |  |  |  |
| – transfers from stage 3 | 209 |  | 222 |  | (431) |  |  |  |  |
| Net remeasurement of ECL arising <br>from transfer of stage<br>|  | 27 |  | (30) |  |  |  |  | (3) |
| Net new and further lending/<br>repayments<br>| 35394 | (7) | (4577) | 19 | (711) | 83 |  | 30106 | 95 |
| Changes to risk parameters – credit <br>quality<br>|  | 2 |  | (49) |  | (72) |  |  | (119) |
| Changes to models used for ECL <br>calculation<br>|  | 2 |  | 14 |  |  |  |  | 16 |
| Foreign exchange and others<sup>1,2</sup> | (48086) | 23 | (3056) | 12 | (134) | 5 | (1) | (51277) | 40 |
| At 31 Dec 2024 | 563415 | (145) | 22452 | (126) | 1206 | (106) | 3 | 587076 | (377) |
| ECL income statement change for <br>the period<br>|  | 24 |  | (46) |  | 11 |  |  | (11) |
| Others |  |  |  |  |  |  |  |  | 3 |
| Total ECL income statement change <br>for the period<br>|  |  |  |  |  |  |  |  | (8) |

---

1Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees

following the sale of our banking business in Canada during 2024.

2Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina

during 2024.

Credit quality

Credit quality of financial instruments

(Audited)

We assess the credit quality of all financial instruments that are subject to credit risk. The credit quality of financial instruments is a point-in-time

assessment of PD, whereas stages 1 and 2 are determined based on relative deterioration of credit quality since initial recognition for the majority

of portfolios. Accordingly, for non-credit-impaired financial instruments, there is no direct relationship between the credit quality assessment and

stages 1 and 2, although typically the lower credit quality bands exhibit a higher proportion in stage 2. The five credit quality classifications provided

below each encompass a range of granular internal credit rating grades assigned to wholesale and personal lending businesses and the external

ratings attributed by external agencies to debt securities, as shown in the table on page 172.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **162** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality | Distribution of financial instruments by credit quality |  |  |  |  |  |  |  |  |
| (Audited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Allowance** <br>**for ECL/**<br>**other credit** <br>**provisions** | **Net** | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Allowance <br>for ECL/<br>other credit <br>provisions | Net |
|  | **Strong** | **Good** | **Satisfactory** | **Sub-**<br>**standard**<br>| **Credit** <br>**impaired**<br>| **Total** | **Allowance** <br>**for ECL/**<br>**other credit** <br>**provisions** | **Net** | Strong | Good | Satisfactory | Sub- <br>standard<br>| Credit <br>impaired<br>| Total | Allowance <br>for ECL/<br>other credit <br>provisions | Net |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m |
| **In-scope for IFRS 9 ECL** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Loans and advances to customers held <br>at amortised cost<br>| **545487** | **215781** | **191839** | **21455** | **24529** | **999091** | **(10692)** | **988399** | 515266 | 193080 | 186416 | 22906 | 22705 | 940373 | (9715) | 930658 |
| – personal | **380030** | **57064** | **30688** | **2801** | **3945** | **474528** | **(2797)** | **471731** | 360317 | 53595 | 27774 | 1979 | 3560 | 447225 | (2524) | 444701 |
| – corporate and commercial | **113787** | **132972** | **139599** | **18041** | **20106** | **424505** | **(7526)** | **416979** | 114504 | 118785 | 138705 | 20224 | 18466 | 410684 | (6755) | 403929 |
| – non-bank financial institutions | **51670** | **25745** | **21552** | **613** | **478** | **100058** | **(369)** | **99689** | 40445 | 20700 | 19937 | 703 | 679 | 82464 | (436) | 82028 |
| Loans and advances to banks held at <br>amortised cost <br>| **97524** | **6222** | **4613** | **109** | **1** | **108469** | **(7)** | **108462** | 92621 | 4255 | 5040 | 134 | 2 | 102052 | (13) | 102039 |
| Cash and balances at central banks  | **242187** | **590** | **82** | **—** | **—** | **242859** | **—** | **242859** | 266713 | 949 | 12 |  |  | 267674 |  | 267674 |
| Hong Kong Government certificates of <br>indebtedness <br>| **44063** | **—** | **—** | **—** | **—** | **44063** | **—** | **44063** | 42293 |  |  |  |  | 42293 |  | 42293 |
| Reverse repurchase agreements – non-<br>trading<br>| **193352** | **78296** | **26740** | **4** | **—** | **298392** | **—** | **298392** | 155831 | 70877 | 25799 | 42 |  | 252549 |  | 252549 |
| Financial investments | **171057** | **654** | **10390** | **—** | **—** | **182101** | **(12)** | **182089** | 146970 | 3681 | 3331 |  |  | 153982 | (9) | 153973 |
| Assets held for sale | **449** | **2751** | **864** | **—** | **51** | **4115** | **(27)** | **4088** | 2425 | 458 | 367 | 1 | 22 | 3273 | (4) | 3269 |
| Other assets | **95589** | **11950** | **10789** | **335** | **133** | **118796** | **(90)** | **118706** | 88338 | 9735 | 10151 | 454 | 131 | 108809 | (79) | 108730 |
| – endorsements and acceptances | **1504** | **3331** | **3624** | **236** | **11** | **8706** | **(11)** | **8695** | 2101 | 2663 | 3090 | 243 | 10 | 8107 | (14) | 8093 |
| – accrued income and other | **94085** | **8619** | **7165** | **99** | **122** | **110090** | **(79)** | **110011** | 86237 | 7072 | 7061 | 211 | 121 | 100702 | (65) | 100637 |
| Debt instruments measured at FVOCI<sup>1</sup> | **375950** | **2592** | **7572** | **286** | **—** | **386400** | **(30)** | **386370** | 336313 | 9448 | 7768 | 380 |  | 353909 | (54) | 353855 |
| **Out-of-scope for IFRS 9 ECL** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Trading assets | **143943** | **22187** | **22943** | **603** | **165** | **189841** | **—** | **189841** | 119546 | 21951 | 15804 | 2300 | 47 | 159648 |  | 159648 |
| Other financial assets designated and <br>otherwise mandatorily measured at fair <br>value through profit or loss <br>| **61509** | **13037** | **5014** | **351** | **19** | **79930** | **—** | **79930** | 53282 | 11862 | 4390 | 231 | 11 | 69776 |  | 69776 |
| Derivatives | **194320** | **33752** | **9382** | **283** | **3** | **237740** | **—** | **237740** | 224870 | 34124 | 9373 | 258 | 12 | 268637 |  | 268637 |
| Assets held for sale | **10** | **103** | **—** | **—** | **148** | **261** | **—** | **261** | 3019 |  |  |  |  | 3019 |  | 3019 |
| **Total gross carrying amount on** <br>**balance sheet**<br>| **2165440** | **387915** | **290228** | **23426** | **25049** | **2892058** | **(10858)** | **2881200** | 2047487 | 360420 | 268451 | 26706 | 22930 | 2725994 | (9874) | 2716120 |
| Percentage of total credit quality (%) | **74.9** | **13.4** | **10.0** | **0.8** | **0.9** | **100** |  |  | 75.1 | 13.2 | 9.9 | 1.0 | 0.8 | 100 |  |  |
| Loan and other credit-related <br>commitments<br>| **441740** | **146923** | **91400** | **10073** | **656** | **690792** | **(315)** | **690477** | 400120 | 131396 | 77220 | 9670 | 961 | 619367 | (348) | 619019 |
| Financial guarantees | **7436** | **4145** | **5144** | **559** | **192** | **17476** | **(51)** | **17425** | 7365 | 4263 | 4399 | 723 | 248 | 16998 | (29) | 16969 |
| **In-scope for IFRS 9 ECL** | **449176** | **151068** | **96544** | **10632** | **848** | **708268** | **(366)** | **707902** | 407485 | 135659 | 81619 | 10393 | 1209 | 636365 | (377) | 635988 |
| Loan and other credit-related <br>commitments<br>| **105985** | **81431** | **67475** | **2702** | **252** | **257845** | **—** | **257845** | 96952 | 76340 | 65619 | 2847 | 453 | 242211 |  | 242211 |
| Performance and other guarantees | **47441** | **33190** | **19857** | **1351** | **845** | **102684** | **(269)** | **102415** | 39940 | 32956 | 17339 | 1671 | 817 | 92723 | (312) | 92411 |
| **Out-of-scope for IFRS 9 ECL** | **153426** | **114621** | **87332** | **4053** | **1097** | **360529** | **(269)** | **360260** | 136892 | 109296 | 82958 | 4518 | 1270 | 334934 | (312) | 334622 |

---

1For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset before adjusting for any loss allowance. As such, the gross carrying amount of debt instruments at FVOCI as presented above

will not reconcile to the balance sheet as it excludes fair value gains and losses.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **163** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |  |  |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Gross carrying/notional amount** | **Allowance** <br>**for ECL** | **Net** | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Gross carrying/notional amount | Allowance <br>for ECL | Net |
|  | **Strong** | **Good** | **Satisfactory** | **Sub-**<br>**standard**<br>| **Credit** <br>**impaired**<br>| **Total** | **Allowance** <br>**for ECL** | **Net** | Strong | Good | Satisfactory | Sub-<br>standard<br>| Credit <br>impaired<br>| Total | Allowance <br>for ECL | Net |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to <br>customers at amortised cost<br>| **545487** | **215781** | **191839** | **21455** | **24529** | **999091** | **(10692)** | **988399** | 515266 | 193080 | 186416 | 22906 | 22705 | 940373 | (9715) | 930658 |
| – stage 1 | **540253** | **194680** | **152578** | **5922** | **—** | **893433** | **(1201)** | **892232** | 498415 | 170420 | 150818 | 4767 |  | 824420 | (1078) | 823342 |
| – stage 2 | **5234** | **21101** | **39068** | **15533** | **—** | **80936** | **(2318)** | **78618** | 16851 | 22660 | 35598 | 18139 |  | 93248 | (2546) | 90702 |
| – stage 3 | **—** | **—** | **—** | **—** | **24389** | **24389** | **(7097)** | **17292** |  |  |  |  | 22615 | 22615 | (6040) | 16575 |
| – POCI | **—** | **—** | **193** | **—** | **140** | **333** | **(76)** | **257** |  |  |  |  | 90 | 90 | (51) | 39 |
| Loans and advances to banks <br>at amortised cost<br>| **97524** | **6222** | **4613** | **109** | **1** | **108469** | **(7)** | **108462** | 92621 | 4255 | 5040 | 134 | 2 | 102052 | (13) | 102039 |
| – stage 1 | **97426** | **6215** | **4608** | **87** | **—** | **108336** | **(4)** | **108332** | 92528 | 4226 | 4981 | 117 |  | 101852 | (9) | 101843 |
| – stage 2 | **98** | **7** | **5** | **22** | **—** | **132** | **(2)** | **130** | 93 | 29 | 59 | 17 |  | 198 | (2) | 196 |
| – stage 3 | **—** | **—** | **—** | **—** | **1** | **1** | **(1)** | **—** |  |  |  |  | 2 | 2 | (2) |  |
| – POCI | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  |  |  |  |  |
| Other financial assets <br>measured at amortised cost<br>| **746697** | **94241** | **48865** | **339** | **184** | **890326** | **(129)** | **890197** | 702570 | 85700 | 39660 | 497 | 153 | 828580 | (92) | 828488 |
| – stage 1 | **746536** | **93759** | **48121** | **75** | **—** | **888491** | **(76)** | **888415** | 702373 | 85032 | 38977 | 239 |  | 826621 | (64) | 826557 |
| – stage 2 | **161** | **482** | **744** | **264** | **—** | **1651** | **(11)** | **1640** | 197 | 668 | 683 | 258 |  | 1806 | (5) | 1801 |
| – stage 3 | **—** | **—** | **—** | **—** | **184** | **184** | **(42)** | **142** |  |  |  |  | 153 | 153 | (23) | 130 |
| – POCI | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  |  |  |  |  |
| Loan and other credit-related <br>commitments <br>| **441740** | **146923** | **91400** | **10073** | **656** | **690792** | **(315)** | **690477** | 400120 | 131396 | 77220 | 9670 | 961 | 619367 | (348) | 619019 |
| – stage 1 | **437973** | **143849** | **82145** | **5681** | **—** | **669648** | **(149)** | **669499** | 398779 | 125956 | 67949 | 4547 |  | 597231 | (137) | 597094 |
| – stage 2 | **3767** | **3074** | **9255** | **4392** | **—** | **20488** | **(97)** | **20391** | 1341 | 5440 | 9271 | 5123 |  | 21175 | (121) | 21054 |
| – stage 3 | **—** | **—** | **—** | **—** | **652** | **652** | **(69)** | **583** |  |  |  |  | 958 | 958 | (90) | 868 |
| – POCI | **—** | **—** | **—** | **—** | **4** | **4** | **—** | **4** |  |  |  |  | 3 | 3 |  | 3 |
| Financial guarantees | **7436** | **4145** | **5144** | **559** | **192** | **17476** | **(51)** | **17425** | 7365 | 4263 | 4399 | 723 | 248 | 16998 | (29) | 16969 |
| – stage 1 | **7430** | **4040** | **4351** | **92** | **—** | **15913** | **(8)** | **15905** | 7352 | 4192 | 3625 | 184 |  | 15353 | (8) | 15345 |
| – stage 2 | **6** | **105** | **793** | **467** | **—** | **1371** | **(17)** | **1354** | 13 | 71 | 774 | 539 |  | 1397 | (5) | 1392 |
| – stage 3 | **—** | **—** | **—** | **—** | **192** | **192** | **(26)** | **166** |  |  |  |  | 248 | 248 | (16) | 232 |
| – POCI | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  |  |  |  |  |
| **Total** | **1838884** | **467312** | **341861** | **32535** | **25562** | **2706154** | **(11194)** | **2694960** | 1717942 | 418694 | 312735 | 33930 | 24069 | 2507370 | (10197) | 2497173 |
| Debt instruments at FVOCI<sup>1</sup> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| – stage 1 | **375894** | **2592** | **7015** | **3** | **—** | **385504** | **(28)** | **385476** | 336264 | 9448 | 7290 |  |  | 353002 | (31) | 352971 |
| – stage 2 | **56** | **—** | **557** | **283** | **—** | **896** | **(2)** | **894** | 49 |  | 478 | 380 |  | 907 | (23) | 884 |
| – stage 3 | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  |  |  |  |  |
| – POCI | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  |  |  |  |  |
| **Total** | **375950** | **2592** | **7572** | **286** | **—** | **386400** | **(30)** | **386370** | 336313 | 9448 | 7768 | 380 |  | 353909 | (54) | 353855 |

---

1For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset before adjusting for any loss allowance. As such, the gross carrying amount of debt instruments at FVOCI as presented above

will not reconcile to the balance sheet as it excludes fair value gains and losses.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **164** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Credit-impaired loans

(Audited)

We determine that a financial instrument is credit impaired and in stage

3 by considering relevant objective evidence, primarily whether:

–contractual payments of either principal or interest are past due for

more than 90 days;

–there are other indications that the borrower is unlikely to pay, such

as when a concession has been granted to the borrower for

economic or legal reasons relating to the borrower's financial

condition; and

–the loan is otherwise considered to be in default. If such unlikeliness

to pay is not identified at an earlier stage, it is deemed to occur

when an exposure is 90 days past due. Therefore, the definitions of

credit impaired and default are aligned as far as possible so that

stage 3 represents all loans that are considered defaulted or

otherwise credit impaired.

Forbearance

The following table shows the gross carrying amount and allowance for

ECL of the Group's holdings of forborne loans and advances to

customers by industry sector and by stages.

🡠A summary of our current policies and practices for forbearance is set out in

'Credit risk management' on page <u>[140](#ie4edc76213cf40e9ae3dd93b36f88427_82)</u>.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Forborne loans and advances to customers at amortised cost by stage allocation | Forborne loans and advances to customers at amortised cost by stage allocation | Forborne loans and advances to customers at amortised cost by stage allocation | Forborne loans and advances to customers at amortised cost by stage allocation | Forborne loans and advances to customers at amortised cost by stage allocation |
| **Performing forborne**  |  | **Non-performing forborne** | **Non-performing forborne** | **Total forborne** |
|  | **Stage 2** | **Stage 3** | **POCI** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** |
| **Gross carrying amount** |  |  |  |  |
| Personal | **619** | **1658** | **—** | **2277** |
| – first lien residential mortgages | **332** | **1162** | **—** | **1494** |
| – credit cards | **81** | **110** | **—** | **191** |
| – other personal lending | **206** | **386** | **—** | **592** |
| – other personal lending which is secured<sup>1</sup> | **47** | **99** | **—** | **146** |
| – other personal lending which is unsecured | **159** | **287** | **—** | **446** |
| Wholesale | **4116** | **8201** | **139** | **12456** |
| – corporate and commercial | **3951** | **8193** | **139** | **12283** |
| – non-bank financial institutions | **165** | **8** | **—** | **173** |
| **At 31 Dec 2025** | **4735** | **9859** | **139** | **14733** |
| **Allowance for ECL** |  |  |  |  |
| Personal | **(65)** | **(328)** | **—** | **(393)** |
| – first lien residential mortgages | **(21)** | **(147)** | **—** | **(168)** |
| – credit cards | **(14)** | **(70)** | **—** | **(84)** |
| – other personal lending | **(30)** | **(111)** | **—** | **(141)** |
| – other personal lending which is secured<sup>1</sup> | **(1)** | **(8)** | **—** | **(9)** |
| – other personal lending which is unsecured | **(29)** | **(103)** | **—** | **(132)** |
| Wholesale | **(307)** | **(2298)** | **(75)** | **(2680)** |
| – corporate and commercial | **(303)** | **(2295)** | **(75)** | **(2673)** |
| – non-bank financial institutions | **(4)** | **(3)** | **—** | **(7)** |
| **At 31 Dec 2025** | **(372)** | **(2626)** | **(75)** | **(3073)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Gross carrying amount |  |  |  |  |
| Personal | 545 | 1424 |  | 1969 |
| – first lien residential mortgages | 266 | 1040 |  | 1306 |
| – credit cards | 86 | 87 |  | 173 |
| – other personal lending | 193 | 297 |  | 490 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– other personal lending which is secured<sup>1</sup> | 46 | 17 |  | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– other personal lending which is unsecured | 147 | 280 |  | 427 |
| Wholesale | 4325 | 7542 | 85 | 11952 |
| – corporate and commercial | 4247 | 7351 | 85 | 11683 |
| – non-bank financial institutions | 78 | 191 |  | 269 |
| At 31 Dec 2024 | 4870 | 8966 | 85 | 13921 |
| Allowance for ECL |  |  |  |  |
| Personal | (73) | (305) |  | (378) |
| – first lien residential mortgages | (12) | (148) |  | (160) |
| – credit cards | (17) | (45) |  | (62) |
| – other personal lending | (44) | (112) |  | (156) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– other personal lending which is secured<sup>1</sup> | (6) | (3) |  | (9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;– other personal lending which is unsecured | (38) | (109) |  | (147) |
| Wholesale | (461) | (2008) | (51) | (2520) |
| – corporate and commercial | (460) | (1972) | (51) | (2483) |
| – non-bank financial institutions | (1) | (36) |  | (37) |
| At 31 Dec 2024 | (534) | (2313) | (51) | (2898) |

---

1'Other personal lending which is secured' has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to

residential property, which were previously reported as separate line items.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **165** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities | Forborne loans and advances to customers by legal entities |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC Bank** <br>**plc**<br>| **The Hongkong** <br>**and Shanghai** <br>**Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC Bank** <br>**Middle East** <br>**Limited** <br>| **HSBC** <br>**North** <br>**America** <br>**Holdings** <br>**Inc.** <br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A.** <br>**de C.V.** <br>| **Other** <br>**trading** <br>**entities**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Gross carrying amount**  |  |  |  |  |  |  |  |  |
| Performing forborne | **1298** | **1172** | **1079** | **78** | **804** | **276** | **28** | **4735** |
| Non-performing forborne | **2032** | **1196** | **4975** | **571** | **403** | **560** | **261** | **9998** |
| **At 31 Dec 2025** | **3330** | **2368** | **6054** | **649** | **1207** | **836** | **289** | **14733** |
| **Allowance for ECL** |  |  |  |  |  |  |  |  |
| Performing forborne | **(94)** | **(35)** | **(129)** | **(25)** | **(50)** | **(38)** | **(1)** | **(372)** |
| Non-performing forborne | **(379)** | **(358)** | **(1285)** | **(246)** | **(84)** | **(173)** | **(176)** | **(2701)** |
| **At 31 Dec 2025** | **(473)** | **(393)** | **(1414)** | **(271)** | **(134)** | **(211)** | **(177)** | **(3073)** |
| Gross carrying amount |  |  |  |  |  |  |  |  |
| Performing forborne | 1251 | 1506 | 1073 | 10 | 787 | 201 | 42 | 4870 |
| Non-performing forborne | 2231 | 1578 | 3698 | 460 | 464 | 355 | 265 | 9051 |
| At 31 Dec 2024 | 3482 | 3084 | 4771 | 470 | 1251 | 556 | 307 | 13921 |
| Allowance for ECL |  |  |  |  |  |  |  |  |
| Performing forborne | (101) | (36) | (296) | (1) | (52) | (48) |  | (534) |
| Non-performing forborne | (393) | (464) | (943) | (196) | (71) | (127) | (170) | (2364) |
| At 31 Dec 2024 | (494) | (500) | (1239) | (197) | (123) | (175) | (170) | (2898) |

---

Collateral and other credit enhancements

(Audited)

Although collateral can be an important mitigant of credit risk, it is the

Group's practice to typically lend on the basis of the customer's ability

to meet their obligations out of cash flow resources rather than placing

primary reliance on collateral and other credit risk enhancements.

Depending on the customer's standing and the type of product,

facilities may be provided without any collateral or other credit

enhancements. For other lending, a charge over collateral is obtained

and considered in determining the credit decision and pricing. In the

event of default, the Group may utilise the collateral as a source of

repayment.

Depending on its form, collateral can have a significant financial effect

in mitigating our exposure to credit risk. Where there is sufficient

collateral, an expected credit loss is not recognised. This is the case for

reverse repurchase agreements and for certain loans and advances to

customers where the loan to value ('LTV') is very low.

Mitigants may include a charge on borrowers' specific assets, such as

real estate or financial instruments. Other credit risk mitigants include

short positions in securities and financial assets held as part of linked

insurance/investment contracts where the risk is predominantly borne

by the policyholder. Additionally, risk may be managed by employing

other types of collateral and credit risk enhancements, such as second

charges, other liens and unsupported guarantees. Guarantees are

normally taken from corporates and export credit agencies. Corporates

would normally provide guarantees as part of a parent/subsidiary

relationship and span a number of credit grades. The export credit

agencies will normally be investment grade.

Certain credit mitigants are used strategically in portfolio management

activities. Across Corporate and Institutional Banking, risk limits and

utilisations, maturity profiles and risk quality are monitored and

managed proactively. This process is key to the setting of risk appetite

for these larger, more complex, geographically distributed customer

groups. While the principal form of risk management continues to be at

the point of exposure origination, through the lending decision-making

process, Corporate and Institutional Banking also utilises loan sales and

credit default swap ('CDS') hedges to manage concentrations and

reduce risk.

These transactions are the responsibility of a dedicated Corporate and

Institutional Banking portfolio management team. Hedging activity is

carried out within agreed credit parameters, and is subject to market

risk limits and a robust governance structure. Where applicable, CDSs

are entered into directly with a central clearing house counterparty.

Otherwise, the Group's exposure to CDS protection providers is

diversified among mainly banking counterparties with strong credit

ratings.

CDS mitigants are held at portfolio level and are not included in the

expected credit loss calculations. CDS mitigants are not reported in the

following tables.

**Collateral on loans and advances**

Collateral held is analysed separately for CRE and for other corporate,

commercial and financial (non-bank) lending. The following tables

include off-balance sheet loan commitments, primarily undrawn credit

lines.

The collateral measured in the following tables consists of fixed first

charges on real estate, and charges over cash and marketable financial

instruments. The values in the tables represent the expected market

value on an open market basis, actual values realised are a function of

market conditions. No adjustment has been made to the collateral for

any expected costs of recovery. Marketable securities are measured at

their fair value.

Other types of collateral, such as unsupported guarantees and floating

charges over the assets of a customer's business, are not measured in

the following tables. While such mitigants have value, often providing

rights in insolvency, their assignable value is not sufficiently certain and

they are therefore assigned no value for disclosure purposes.

The LTV ratios presented are calculated by directly associating loans

and advances with the collateral that individually and uniquely supports

each facility. When collateral assets are shared by multiple loans and

advances, whether specifically or, more generally, by way of an all

monies charge, the collateral value is pro-rated across the loans and

advances protected by the collateral.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **166** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

For credit-impaired loans, the collateral values cannot be directly

compared with impairment allowances recognised. The LTV figures use

open market values with no adjustments, actual values realised are a

function of market conditions. Impairment allowances are calculated on

a different basis, by considering other cash flows and adjusting

collateral values for costs of realising collateral as explained further on

**Mortgage loans** 

The following table provides a quantification of the value of fixed

charges we hold over specific assets where we have a history

of enforcing, and are able to enforce, collateral in satisfying a debt in

the event of the borrower failing to meet its contractual obligations, and

where the collateral is cash or can be realised by sale in an established

market. The collateral valuation excludes any adjustments for obtaining

and selling the collateral and, in particular, loans shown as not

collateralised or partially collateralised may also benefit from other

forms of credit mitigants.

The quality of both our Hong Kong and UK mortgage books remained

strong, with low levels of impairment allowances. The average LTV

ratio on new mortgage lending in Hong Kong was 70%, compared

with an estimated 60% for the overall mortgage portfolio. The

average LTV ratio on new lending in the UK was 69%, compared with

an estimated 55% for the overall mortgage portfolio.

**Commercial real estate loans and advances**

The value of CRE collateral is determined by using a combination of

external and internal valuations and physical inspections. For CRE,

where the facility exceeds regulatory threshold requirements, Group

policy requires an independent review of the valuation at least every

three years, or more frequently as the need arises.

In Hong Kong, unsecured lending is typically limited to major property

companies. In Europe, facilities of a working capital nature are generally

not secured by a first fixed charge, and are therefore disclosed as not

collateralised.

**Other corporate, commercial and financial (non-bank) loans and** 

**advances**

Other corporate, commercial and financial (non-bank) loans are

analysed separately in the following table. For financing activities in

other corporate and commercial lending, collateral value is not strongly

correlated to principal repayment performance. Collateral values are

generally refreshed when an obligor's general credit performance

deteriorates and we have to assess the likely performance of

secondary sources of repayment should it prove necessary to rely on

them.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **167** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **Gross carrying/nominal amount** | **ECL coverage** | **ECL coverage** | **ECL coverage** | **ECL coverage** | **ECL coverage** |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **%** | **%** | **%** | **%** | **%** |
| **Residential mortgages** |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | **383401** | **18150** | **2573** |  | **404124** | **—** | **0.6** | **10.5** |  | **0.1** |
| – less than 50% | **159089** | **9161** | **1336** |  | **169586** | **—** | **0.4** | **8.3** |  | **0.1** |
| – 51% to 70% | **125204** | **5484** | **751** |  | **131439** | **—** | **0.6** | **11.2** |  | **0.1** |
| – 71% to 80% | **46175** | **1934** | **258** |  | **48367** | **—** | **0.7** | **13.8** |  | **0.1** |
| – 81% to 90% | **37415** | **971** | **167** |  | **38553** | **—** | **0.9** | **15.9** |  | **0.1** |
| – 91% to 100% | **15518** | **600** | **61** |  | **16179** | **—** | **1.5** | **20.2** |  | **0.1** |
| Partially collateralised (A): LTV > 100% | **4924** | **138** | **97** |  | **5159** | **—** | **2.2** | **44.3** |  | **0.9** |
| – collateral value on A | **4707** | **129** | **66** |  | **4902** |  |  |  |  |  |
| **of which: UK** |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | **190214** | **13257** | **816** |  | **204287** | **—** | **0.3** | **9.7** |  | **0.1** |
| – less than 50% | **77859** | **7260** | **421** |  | **85540** | **—** | **0.1** | **8.2** |  | **0.1** |
| – 51% to 70% | **61605** | **4183** | **254** |  | **66042** | **—** | **0.3** | **8.7** |  | **0.1** |
| – 71% to 80% | **25237** | **1226** | **85** |  | **26548** | **—** | **0.5** | **14.0** |  | **0.1** |
| – 81% to 90% | **22218** | **548** | **46** |  | **22812** | **—** | **0.7** | **16.1** |  | **0.1** |
| – 91% to 100% | **3295** | **40** | **10** |  | **3345** | **—** | **1.0** | **27.0** |  | **0.1** |
| Partially collateralised (B): LTV > 100% | **58** | **2** | **8** |  | **68** | **—** | **0.6** | **32.5** |  | **3.8** |
| – collateral value on B | **29** | **1** | **7** |  | **37** |  |  |  |  |  |
| **of which: Hong Kong** |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | **102801** | **1503** | **165** |  | **104469** | **—** | **—** | **0.7** |  | **—** |
| – less than 50% | **40518** | **762** | **83** |  | **41363** | **—** | **—** | **0.2** |  | **—** |
| – 51% to 70% | **31015** | **345** | **41** |  | **31401** | **—** | **—** | **0.5** |  | **—** |
| – 71% to 80% | **6698** | **83** | **17** |  | **6798** | **—** | **0.1** | **1.8** |  | **—** |
| – 81% to 90% | **12906** | **132** | **12** |  | **13050** | **—** | **0.2** | **0.8** |  | **—** |
| – 91% to 100% | **11664** | **181** | **12** |  | **11857** | **—** | **0.2** | **2.5** |  | **—** |
| Partially collateralised (C): LTV > 100% | **4781** | **87** | **18** |  | **4886** | **—** | **0.2** | **8.3** |  | **—** |
| – collateral value on C | **4593** | **85** | **16** |  | **4694** |  |  |  |  |  |
| **Commercial real estate** |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | **36879** | **3792** | **1310** | **6** | **41987** | **0.1** | **2.7** | **64.6** | **—** | **2.3** |
| Fully collateralised by LTV ratio | **26814** | **16633** | **6942** | **13** | **50402** | **0.1** | **1.7** | **13.3** | **—** | **2.4** |
| – less than 50% | **13415** | **10682** | **2563** | **13** | **26673** | **0.1** | **1.4** | **11.0** | **—** | **1.7** |
| – 51% to 75% | **9168** | **4770** | **2755** | **—** | **16693** | **0.2** | **2.2** | **13.5** | **—** | **2.9** |
| – 76% to 90% | **2232** | **915** | **1055** | **—** | **4202** | **0.1** | **1.9** | **13.6** | **—** | **3.9** |
| – 91% to 100% | **1999** | **266** | **569** | **—** | **2834** | **0.1** | **2.3** | **21.6** | **—** | **4.6** |
| Partially collateralised (A): LTV > 100% | **3635** | **350** | **1093** | **80** | **5158** | **0.1** | **3.1** | **35.4** | **57.5** | **8.7** |
| – collateral value on A | **2317** | **240** | **780** | **33** | **3370** |  |  |  |  |  |
| **of which: UK** |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | **8633** | **389** | **56** | **—** | **9078** | **0.2** | **8.2** | **19.6** | **—** | **0.7** |
| Fully collateralised by LTV ratio | **12426** | **1661** | **354** | **—** | **14441** | **0.2** | **2.6** | **21.8** | **—** | **1.0** |
| – less than 50% | **4606** | **430** | **36** | **—** | **5072** | **0.2** | **1.4** | **38.9** | **—** | **0.6** |
| – 51% to 75% | **5772** | **914** | **209** | **—** | **6895** | **0.2** | **3.8** | **24.9** | **—** | **1.4** |
| – 76% to 90% | **1511** | **308** | **107** | **—** | **1926** | **0.1** | **1.0** | **9.3** | **—** | **0.7** |
| – 91% to 100% | **537** | **9** | **2** | **—** | **548** | **0.2** | **5.1** | **61.2** | **—** | **0.4** |
| Partially collateralised (B): LTV > 100% | **2111** | **115** | **67** | **61** | **2354** | **0.1** | **0.9** | **17.9** | **47.5** | **1.9** |
| – collateral value on B | **1381** | **109** | **42** | **30** | **1562** |  |  |  |  |  |
| **of which: Hong Kong** |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | **14360** | **2691** | **1088** | **6** | **18145** | **—** | **2.4** | **66.5** | **—** | **4.4** |
| Fully collateralised by LTV ratio | **5588** | **12969** | **5467** | **—** | **24024** | **0.1** | **0.8** | **10.6** | **—** | **2.9** |
| – less than 50% | **4008** | **9705** | **2284** | **—** | **15997** | **0.1** | **0.9** | **8.2** | **—** | **1.8** |
| – 51% to 75% | **1167** | **2927** | **2033** | **—** | **6127** | **0.2** | **0.5** | **10.9** | **—** | **3.9** |
| – 76% to 90% | **59** | **294** | **705** | **—** | **1058** | **—** | **1.7** | **8.4** | **—** | **6.0** |
| – 91% to 100% | **354** | **43** | **445** | **—** | **842** | **—** | **2.3** | **25.2** | **—** | **13.4** |
| Partially collateralised (C): LTV > 100% | **198** | **110** | **1022** | **19** | **1349** | **—** | **0.3** | **36.7** | **84.2** | **29.0** |
| – collateral value on C | **149** | **11** | **734** | **3** | **897** |  |  |  |  |  |
| **Other corporate, commercial and financial** <br>**(non-bank)**<br>|  |  |  |  |  |  |  |  |  |  |
| Not collateralised | **797344** | **60899** | **6186** | **215** | **864644** | **0.1** | **0.9** | **43.5** | **6.5** | **0.4** |
| Fully collateralised by LTV ratio | **88647** | **13101** | **3611** | **29** | **105388** | **0.1** | **1.6** | **14.5** | **55.2** | **0.8** |
| – less than 50% | **37949** | **5009** | **1446** | **—** | **44404** | **0.1** | **1.2** | **12.3** | **—** | **0.6** |
| – 51% to 75% | **21397** | **4855** | **1249** | **29** | **27530** | **0.1** | **2.4** | **16.7** | **55.2** | **1.3** |
| – 76% to 90% | **8253** | **1318** | **677** | **—** | **10248** | **0.1** | **1.5** | **14.0** | **—** | **1.2** |
| – 91% to 100% | **21048** | **1919** | **239** | **—** | **23206** | **—** | **0.6** | **16.7** | **—** | **0.3** |
| Partially collateralised (A): LTV > 100% | **53980** | **6337** | **2130** | **—** | **62447** | **0.1** | **0.7** | **45.6** | **—** | **1.7** |
| – collateral value on A | **24763** | **2942** | **1199** | **—** | **28904** |  |  |  |  |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **168** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | Gross carrying/nominal amount | ECL coverage | ECL coverage | ECL coverage | ECL coverage | ECL coverage |
|  | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
|  | $m | $m | $m | $m | $m | % | % | % | % | % |
| Residential mortgages |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | 332641 | 34203 | 2371 |  | 369215 |  | 0.4 | 10.0 |  | 0.1 |
| – less than 50% | 141331 | 18076 | 1238 |  | 160645 |  | 0.2 | 7.6 |  | 0.1 |
| – 51% to 70% | 111963 | 11507 | 698 |  | 124168 |  | 0.4 | 11.2 |  | 0.1 |
| – 71% to 80% | 39374 | 3040 | 242 |  | 42656 |  | 0.7 | 13.1 |  | 0.1 |
| – 81% to 90% | 25514 | 1264 | 131 |  | 26909 |  | 0.9 | 15.0 |  | 0.1 |
| – 91% to 100% | 14459 | 316 | 62 |  | 14837 |  | 1.8 | 22.4 |  | 0.1 |
| Partially collateralised (A): LTV > 100% | 12031 | 139 | 103 |  | 12273 |  | 3.2 | 46.2 |  | 0.4 |
| – collateral value on A | 11274 | 126 | 70 |  | 11470 |  |  |  |  |  |
| of which: UK |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | 151264 | 30574 | 747 |  | 182585 |  | 0.2 | 8.5 |  | 0.1 |
| – less than 50% | 62753 | 16689 | 445 |  | 79887 |  | 0.1 | 6.9 |  | 0.1 |
| – 51% to 70% | 50374 | 10456 | 206 |  | 61036 |  | 0.2 | 9.7 |  | 0.1 |
| – 71% to 80% | 20552 | 2423 | 64 |  | 23039 |  | 0.4 | 12.1 |  | 0.1 |
| – 81% to 90% | 15965 | 939 | 23 |  | 16927 |  | 0.6 | 13.0 |  | 0.1 |
| – 91% to 100% | 1620 | 67 | 9 |  | 1696 |  | 0.7 | 16.7 |  | 0.1 |
| Partially collateralised (B): LTV > 100% | 146 | 15 | 5 |  | 166 |  | 1.0 | 27.7 |  | 0.9 |
| – collateral value on B | 109 | 12 | 4 |  | 125 |  |  |  |  |  |
| of which: Hong Kong |  |  |  |  |  |  |  |  |  |  |
| Fully collateralised by LTV ratio | 95751 | 756 | 138 |  | 96645 |  |  | 1.3 |  |  |
| – less than 50% | 38894 | 372 | 79 |  | 39345 |  |  | 0.4 |  |  |
| – 51% to 70% | 30088 | 227 | 31 |  | 30346 |  |  | 0.4 |  |  |
| – 71% to 80% | 6783 | 47 | 11 |  | 6841 |  |  | 5.1 |  |  |
| – 81% to 90% | 7602 | 42 | 9 |  | 7653 |  | 0.2 | 1.1 |  |  |
| – 91% to 100% | 12384 | 68 | 8 |  | 12460 |  | 0.1 | 8.8 |  |  |
| Partially collateralised (C): LTV > 100% | 11744 | 103 | 14 |  | 11861 |  | 0.2 | 19.1 |  |  |
| – collateral value on C | 11034 | 96 | 12 |  | 11142 |  |  |  |  |  |
| Commercial real estate |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | 36168 | 4709 | 1704 |  | 42581 | 0.1 | 9.0 | 47.5 |  | 3.0 |
| Fully collateralised by LTV ratio | 37090 | 11909 | 5254 |  | 54253 | 0.1 | 1.7 | 7.8 |  | 1.2 |
| – less than 50% | 20522 | 5154 | 2413 |  | 28089 | 0.1 | 1.7 | 5.7 |  | 0.9 |
| – 51% to 75% | 11392 | 3840 | 1691 |  | 16923 | 0.1 | 2.2 | 7.6 |  | 1.3 |
| – 76% to 90% | 2554 | 2277 | 767 |  | 5598 | 0.1 | 0.9 | 12.5 |  | 2.1 |
| – 91% to 100% | 2622 | 638 | 383 |  | 3643 | 0.2 | 2.3 | 12.3 |  | 1.8 |
| Partially collateralised (A): LTV > 100% | 2119 | 698 | 815 | 64 | 3696 | 0.2 | 2.8 | 19.7 | 45.8 | 5.8 |
| – collateral value on A | 1255 | 457 | 570 | 29 | 2311 |  |  |  |  |  |
| of which: UK |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | 4487 | 1890 | 127 |  | 6504 | 0.4 | 3.8 | 27.8 |  | 1.9 |
| Fully collateralised by LTV ratio | 9139 | 3194 | 305 |  | 12638 | 0.2 | 1.1 | 8.2 |  | 0.6 |
| – less than 50% | 2903 | 761 | 160 |  | 3824 | 0.2 | 1.5 | 8.0 |  | 0.8 |
| – 51% to 75% | 4202 | 1693 | 69 |  | 5964 | 0.2 | 1.2 | 12.0 |  | 0.6 |
| – 76% to 90% | 1173 | 732 | 24 |  | 1929 | 0.1 | 0.4 | 10.2 |  | 0.3 |
| – 91% to 100% | 861 | 8 | 52 |  | 921 | 0.1 | 7.7 | 2.7 |  | 0.3 |
| Partially collateralised (B): LTV > 100% | 503 | 565 | 119 | 46 | 1233 | 0.2 | 2.9 | 21.1 | 48.6 | 5.3 |
| – collateral value on B | 296 | 350 | 69 | 26 | 741 |  |  |  |  |  |
| of which: Hong Kong |  |  |  |  |  |  |  |  |  |  |
| Not collateralised | 16380 | 2312 | 1404 |  | 20096 |  | 14.3 | 47.9 |  | 5.0 |
| Fully collateralised by LTV ratio | 17115 | 6045 | 4127 |  | 27287 | 0.1 | 1.4 | 5.8 |  | 1.2 |
| – less than 50% | 12935 | 3589 | 2102 |  | 18626 | 0.1 | 1.3 | 3.8 |  | 0.7 |
| – 51% to 75% | 3534 | 1059 | 1243 |  | 5836 | 0.1 | 2.2 | 6.2 |  | 1.8 |
| – 76% to 90% | 336 | 1050 | 654 |  | 2040 | 0.1 | 1.1 | 11.8 |  | 4.4 |
| – 91% to 100% | 310 | 347 | 128 |  | 785 |  | 0.5 | 2.4 |  | 0.6 |
| Partially collateralised (C): LTV > 100% | 185 | 62 | 562 | 18 | 827 |  | 1.9 | 17.6 | 38.1 | 12.9 |
| – collateral value on C | 119 | 41 | 397 | 3 | 560 |  |  |  |  |  |
| Other corporate, commercial and financial (non-<br>bank)<br>|  |  |  |  |  |  |  |  |  |  |
| Not collateralised | 713028 | 62844 | 6870 | 5 | 782747 | 0.1 | 0.9 | 41.5 | 14.2 | 0.5 |
| Fully collateralised by LTV ratio | 87488 | 11992 | 3394 | 21 | 102895 | 0.1 | 2.0 | 8.0 | 98.1 | 0.6 |
| – less than 50% | 39432 | 4360 | 1703 |  | 45495 | 0.1 | 1.6 | 6.9 |  | 0.5 |
| – 51% to 75% | 20169 | 4643 | 778 | 21 | 25611 | 0.1 | 2.8 | 12.0 | 98.1 | 1.0 |
| – 76% to 90% | 9016 | 1515 | 512 |  | 11043 | 0.1 | 1.6 | 7.1 |  | 0.6 |
| – 91% to 100% | 18871 | 1474 | 401 |  | 20746 |  | 0.8 | 6.3 |  | 0.2 |
| Partially collateralised (A): LTV > 100% | 51536 | 5772 | 2411 | 3 | 59722 | 0.1 | 0.8 | 34.3 | 7.0 | 1.5 |
| – collateral value on A | 22800 | 2519 | 1162 | 1 | 26482 |  |  |  |  |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **169** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Wholesale lending

The table below provides a breakdown by industry sector and stage of the Group's gross carrying amount and allowances for ECL for wholesale

loans and advances to banks and customers. Counterparties or exposures are classified when presenting comparable economic characteristics, or

engaged in similar activities so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political or

other conditions. Therefore, the industry classification does not adhere to Nomenclature des Activités Économiques dans la Communauté

Européenne, which is applicable to other financial regulatory reporting.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  | Total wholesale lending for loans and advances to banks and customers by stage distribution  |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Corporate and commercial | **349763** | **54636** | **19966** | **140** | **424505** | **(478)** | **(1064)** | **(5909)** | **(75)** | **(7526)** |
| – agriculture, forestry and fishing | **6179** | **1058** | **355** | **—** | **7592** | **(11)** | **(26)** | **(60)** | **—** | **(97)** |
| – mining and quarrying | **6109** | **747** | **126** | **—** | **6982** | **(6)** | **(10)** | **(70)** | **—** | **(86)** |
| – manufacturing | **74321** | **9785** | **2229** | **37** | **86372** | **(87)** | **(132)** | **(720)** | **(21)** | **(960)** |
| – electricity, gas, steam and air-<br>conditioning supply<br>| **18020** | **1096** | **206** | **—** | **19322** | **(19)** | **(22)** | **(85)** | **—** | **(126)** |
| – water supply, sewerage, waste <br>management and remediation<br>| **2319** | **132** | **112** | **—** | **2563** | **(3)** | **(2)** | **(36)** | **—** | **(41)** |
| – real estate and construction | **56041** | **21222** | **10497** | **92** | **87852** | **(84)** | **(449)** | **(2679)** | **(51)** | **(3263)** |
| – of which: commercial real estate | **41893** | **18183** | **9175** | **87** | **69338** | **(65)** | **(384)** | **(2116)** | **(45)** | **(2610)** |
| – wholesale and retail trade, repair of <br>motor vehicles and motorcycles<br>| **74621** | **7387** | **2538** | **11** | **84557** | **(69)** | **(92)** | **(1123)** | **(3)** | **(1287)** |
| – transportation and storage | **16594** | **3818** | **307** | **—** | **20719** | **(17)** | **(82)** | **(75)** | **—** | **(174)** |
| – accommodation and food | **10881** | **2072** | **1436** | **—** | **14389** | **(31)** | **(65)** | **(303)** | **—** | **(399)** |
| – publishing, audiovisual and <br>broadcasting<br>| **22860** | **2110** | **377** | **—** | **25347** | **(52)** | **(38)** | **(108)** | **—** | **(198)** |
| – professional, scientific and technical <br>activities<br>| **22580** | **1923** | **520** | **—** | **25023** | **(29)** | **(36)** | **(153)** | **—** | **(218)** |
| – administrative and support services | **16962** | **1993** | **570** | **—** | **19525** | **(21)** | **(53)** | **(321)** | **—** | **(395)** |
| – public administration and defence, <br>compulsory social security<br>| **64** | **—** | **—** | **—** | **64** | **—** | **—** | **—** | **—** | **—** |
| – education | **1975** | **244** | **40** | **—** | **2259** | **(5)** | **(10)** | **(11)** | **—** | **(26)** |
| – health and care | **3982** | **323** | **98** | **—** | **4403** | **(7)** | **(11)** | **(14)** | **—** | **(32)** |
| – arts, entertainment and recreation | **2074** | **116** | **123** | **—** | **2313** | **(4)** | **(5)** | **(42)** | **—** | **(51)** |
| – other services | **5764** | **524** | **311** | **—** | **6599** | **(31)** | **(31)** | **(106)** | **—** | **(168)** |
| – activities of households | **835** | **6** | **—** | **—** | **841** | **—** | **—** | **—** | **—** | **—** |
| – extra-territorial organisations and <br>bodies activities<br>| **164** | **—** | **—** | **—** | **164** | **—** | **—** | **—** | **—** | **—** |
| – government | **7418** | **80** | **121** | **—** | **7619** | **(2)** | **—** | **(3)** | **—** | **(5)** |
| – asset-backed securities | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Non-bank financial institutions | **96974** | **2413** | **478** | **193** | **100058** | **(56)** | **(19)** | **(293)** | **(1)** | **(369)** |
| Loans and advances to banks | **108336** | **132** | **1** | **—** | **108469** | **(4)** | **(2)** | **(1)** | **—** | **(7)** |
| **At 31 Dec 2025** | **555073** | **57181** | **20445** | **333** | **633032** | **(538)** | **(1085)** | **(6203)** | **(76)** | **(7902)** |
| **By legal entity** |  |  |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | **98719** | **10488** | **3430** | **—** | **112637** | **(180)** | **(325)** | **(753)** | **—** | **(1258)** |
| HSBC Bank plc | **98175** | **5582** | **1756** | **58** | **105571** | **(68)** | **(96)** | **(611)** | **(29)** | **(804)** |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| **283206** | **33990** | **12837** | **77** | **330110** | **(171)** | **(480)** | **(3694)** | **(41)** | **(4386)** |
| HSBC Bank Middle East Limited | **26643** | **1171** | **1242** | **5** | **29061** | **(19)** | **(31)** | **(630)** | **(5)** | **(685)** |
| HSBC North America Holdings Inc. | **28456** | **3518** | **517** | **193** | **32684** | **(41)** | **(100)** | **(145)** | **(1)** | **(287)** |
| Grupo Financiero HSBC, S.A. de C.V. | **12057** | **2268** | **378** | **—** | **14703** | **(47)** | **(49)** | **(190)** | **—** | **(286)** |
| Other trading entities | **7727** | **164** | **285** | **—** | **8176** | **(12)** | **(4)** | **(180)** | **—** | **(196)** |
| Holding companies, shared service <br>centres and intra-Group eliminations<br>| **90** | **—** | **—** | **—** | **90** | **—** | **—** | **—** | **—** | **—** |
| **At 31 Dec 2025** | **555073** | **57181** | **20445** | **333** | **633032** | **(538)** | **(1085)** | **(6203)** | **(76)** | **(7902)** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **170** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) |
|  | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL |
|  | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Corporate and commercial | 340987 | 51231 | 18376 | 90 | 410684 | (463) | (1358) | (4883) | (51) | (6755) |
| – agriculture, forestry and fishing | 5437 | 1314 | 282 |  | 7033 | (14) | (34) | (46) |  | (94) |
| – mining and quarrying | 6811 | 463 | 318 |  | 7592 | (6) | (7) | (32) |  | (45) |
| – manufacturing | 70987 | 10250 | 1466 | 21 | 82724 | (83) | (172) | (618) | (20) | (893) |
| – electricity, gas, steam and air-<br>conditioning supply<br>| 15277 | 971 | 209 |  | 16457 | (14) | (23) | (85) |  | (122) |
| – water supply, sewerage, waste <br>management and remediation<br>| 2530 | 388 | 43 |  | 2961 | (4) | (4) | (16) |  | (24) |
| – real estate and construction | 63794 | 17320 | 8887 | 62 | 90063 | (90) | (666) | (1811) | (31) | (2598) |
| – of which: commercial real estate | 49994 | 14720 | 7558 | 61 | 72333 | (67) | (604) | (1355) | (29) | (2055) |
| – wholesale and retail trade, repair of <br>motor vehicles and motorcycles<br>| 66977 | 8125 | 2725 | 3 | 77830 | (67) | (117) | (1188) |  | (1372) |
| – transportation and storage | 18589 | 3637 | 417 |  | 22643 | (15) | (74) | (232) |  | (321) |
| – accommodation and food  | 11406 | 1718 | 1610 |  | 14734 | (30) | (55) | (214) |  | (299) |
| – publishing, audiovisual and <br>broadcasting<br>| 18181 | 1416 | 229 |  | 19826 | (42) | (55) | (61) |  | (158) |
| – professional, scientific and technical <br>activities<br>| 23044 | 2436 | 644 | 4 | 26128 | (29) | (49) | (188) |  | (266) |
| – administrative and support services | 17671 | 1707 | 739 |  | 20117 | (26) | (40) | (254) |  | (320) |
| – public administration and defence, <br>compulsory social security<br>| 64 |  |  |  | 64 |  |  |  |  |  |
| – education | 1361 | 192 | 43 |  | 1596 | (4) | (7) | (16) |  | (27) |
| – health and care | 3357 | 489 | 184 |  | 4030 | (8) | (18) | (25) |  | (51) |
| – arts, entertainment and recreation | 1817 | 171 | 78 |  | 2066 | (5) | (4) | (26) |  | (35) |
| – other services | 6470 | 491 | 327 |  | 7288 | (24) | (20) | (66) |  | (110) |
| – activities of households | 582 | 7 |  |  | 589 |  |  |  |  |  |
| – extra-territorial organisations and <br>bodies activities<br>| 118 |  |  |  | 118 |  |  |  |  |  |
| – government | 6495 | 123 | 175 |  | 6793 | (2) |  | (5) |  | (7) |
| – asset-backed securities | 19 | 13 |  |  | 32 |  | (13) |  |  | (13) |
| Non-bank financial institutions | 79687 | 2098 | 679 |  | 82464 | (45) | (30) | (361) |  | (436) |
| Loans and advances to banks | 101852 | 198 | 2 |  | 102052 | (9) | (2) | (2) |  | (13) |
| At 31 Dec 2024 | 522526 | 53527 | 19057 | 90 | 595200 | (517) | (1390) | (5246) | (51) | (7204) |
| By legal entity |  |  |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | 81630 | 12772 | 3356 |  | 97758 | (197) | (403) | (603) |  | (1203) |
| HSBC Bank plc | 85022 | 5843 | 2305 | 47 | 93217 | (54) | (111) | (752) | (22) | (939) |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| 279535 | 27078 | 11483 | 39 | 318135 | (170) | (677) | (2999) | (28) | (3874) |
| HSBC Bank Middle East Limited | 26359 | 951 | 848 | 4 | 28162 | (20) | (6) | (463) | (1) | (490) |
| HSBC North America Holdings Inc. | 30107 | 4665 | 503 |  | 35275 | (31) | (141) | (121) |  | (293) |
| Grupo Financiero HSBC, S.A. de C.V. | 11957 | 1703 | 230 |  | 13890 | (35) | (48) | (128) |  | (211) |
| Other trading entities | 7840 | 515 | 332 |  | 8687 | (10) | (4) | (180) |  | (194) |
| Holding companies, shared service <br>centres and intra-Group eliminations<br>| 76 |  |  |  | 76 |  |  |  |  |  |
| At 31 Dec 2024 | 522526 | 53527 | 19057 | 90 | 595200 | (517) | (1390) | (5246) | (51) | (7204) |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> | Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution<sup>1</sup> |
|  | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Corporate and commercial | **265811** | **15936** | **750** | **4** | **282501** | **(121)** | **(105)** | **(95)** | **—** | **(321)** |
| Financial  | **147810** | **3978** | **2** | **—** | **151790** | **(13)** | **(4)** | **—** | **—** | **(17)** |
| **At 31 Dec 2025** | **413621** | **19914** | **752** | **4** | **434291** | **(134)** | **(109)** | **(95)** | **—** | **(338)** |
| **By legal entity** |  |  |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | **49287** | **2566** | **278** | **—** | **52131** | **(30)** | **(17)** | **(42)** | **—** | **(89)** |
| HSBC Bank plc | **183897** | **5118** | **188** | **4** | **189207** | **(30)** | **(23)** | **(17)** | **—** | **(70)** |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| **70937** | **4425** | **41** | **—** | **75403** | **(44)** | **(29)** | **(6)** | **—** | **(79)** |
| HSBC Bank Middle East Limited | **9294** | **417** | **29** | **—** | **9740** | **(3)** | **(2)** | **(11)** | **—** | **(16)** |
| HSBC North America Holdings Inc. | **95560** | **7259** | **179** | **—** | **102998** | **(25)** | **(37)** | **(18)** | **—** | **(80)** |
| Grupo Financiero HSBC, S.A. de C.V. | **2585** | **41** | **—** | **—** | **2626** | **(2)** | **—** | **—** | **—** | **(2)** |
| Other trading entities | **2061** | **88** | **37** | **—** | **2186** | **—** | **(1)** | **(1)** | **—** | **(2)** |
| **At 31 Dec 2025** | **413621** | **19914** | **752** | **4** | **434291** | **(134)** | **(109)** | **(95)** | **—** | **(338)** |

---

1Included in loan and other credit-related commitments and financial guarantees is $75.4bn relating to unsettled reverse repurchase agreements, which once

drawn are classified as 'Reverse repurchase agreements – non-trading'.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **171** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) | Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution<sup>1</sup>(continued) |
|  | Nominal amount | Nominal amount | Nominal amount | Nominal amount | Nominal amount | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL |
|  | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Corporate and commercial | 241249 | 18685 | 1033 | 3 | 260970 | (118) | (121) | (98) |  | (337) |
| Financial  | 118430 | 2196 | 87 |  | 120713 | (10) | (5) | (3) |  | (18) |
| At 31 Dec 2024 | 359679 | 20881 | 1120 | 3 | 381683 | (128) | (126) | (101) |  | (355) |
| By legal entity |  |  |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | 37848 | 4540 | 445 |  | 42833 | (27) | (36) | (57) |  | (120) |
| HSBC Bank plc | 144941 | 6118 | 256 | 3 | 151318 | (21) | (30) | (21) |  | (72) |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| 72860 | 3973 | 99 |  | 76932 | (54) | (32) | (6) |  | (92) |
| HSBC Bank Middle East Limited | 8879 | 329 | 35 |  | 9243 | (5) | (1) | (10) |  | (16) |
| HSBC North America Holdings Inc. | 91314 | 5723 | 226 |  | 97263 | (20) | (26) | (5) |  | (51) |
| Grupo Financiero HSBC, S.A. de C.V. | 2334 | 53 |  |  | 2387 | (1) | (1) |  |  | (2) |
| Other trading entities | 1503 | 145 | 59 |  | 1707 |  |  | (2) |  | (2) |
| At 31 Dec 2024 | 359679 | 20881 | 1120 | 3 | 381683 | (128) | (126) | (101) |  | (355) |

---

1Included in loan and other credit-related commitments and financial guarantees is $49bn relating to unsettled reverse repurchase agreements, which once drawn

are classified as 'Reverse repurchase agreements – non-trading'.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and <br>customers including loan commitments and financial guarantees |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **POCI** | **POCI** | **Total** | **Total** |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **833036** | **(645)** | **74288** | **(1516)** | **20177** | **(5347)** | **93** | **(51)** | **927594** | **(7559)** |
| Transfers of financial instruments: | **(35399)** | **(267)** | **27793** | **859** | **7606** | **(592)** | **—** | **—** | **—** | **—** |
| –transfers from stage 1 to stage 2 | **(93205)** | **143** | **93205** | **(143)** | **—** | **—** | **—** | **—** | **—** | **—** |
| –transfers from stage 2 to stage 1 | **58517** | **(372)** | **(58517)** | **372** | **—** | **—** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(1210)** | **4** | **(7605)** | **678** | **8815** | **(682)** | **—** | **—** | **—** | **—** |
| – transfers from stage 3 | **499** | **(42)** | **710** | **(48)** | **(1209)** | **90** | **—** | **—** | **—** | **—** |
| Net remeasurement of ECL arising <br>from transfer of stage<br>| **—** | **253** | **—** | **(226)** | **—** | **(49)** | **—** | **—** | **—** | **(22)** |
| Net new and further lending/<br>repayments<br>| **66354** | **(171)** | **(27221)** | **304** | **(5593)** | **690** | **238** | **2** | **33778** | **825** |
| Change to risk parameters – credit <br>quality <br>| **—** | **181** | **—** | **(826)** | **—** | **(2596)** | **—** | **(24)** | **—** | **(3265)** |
| Changes to models used for ECL <br>calculation<br>| **—** | **(30)** | **—** | **277** | **—** | **—** | **—** | **—** | **—** | **247** |
| Assets written off | **—** | **—** | **—** | **—** | **(1928)** | **1928** | **—** | **—** | **(1928)** | **1928** |
| Credit-related modifications that <br>resulted in derecognition<br>| **—** | **—** | **—** | **—** | **(88)** | **9** | **—** | **—** | **(88)** | **9** |
| Foreign exchange and others<sup>1</sup> | **29369** | **7** | **2197** | **(66)** | **1023** | **(341)** | **6** | **(3)** | **32595** | **(403)** |
| **At 31 Dec 2025** | **893360** | **(672)** | **77057** | **(1194)** | **21197** | **(6298)** | **337** | **(76)** | **991951** | **(8240)** |
| ECL income statement change for <br>the period<br>|  | **233** |  | **(471)** |  | **(1955)** |  | **(22)** |  | **(2215)** |
| Recoveries |  |  |  |  |  |  |  |  |  | **77** |
| Others |  |  |  |  |  |  |  |  |  | **(267)** |
| **Total ECL income statement** <br>**change for the period**<br>|  |  |  |  |  |  |  |  |  | **(2405)** |

---

1Total includes $3.3bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a

corresponding allowance for ECL of $11m, reflecting business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for

sale' on page 355.

During the year, there was a net transfer between stage 1 and stage 2 of $34,688m gross carrying/nominal amounts. It was primarily driven by our

entities in Asia ($31,809m) due to credit deterioration and updates to our models used for ECL calculations, in the US ($1,652m) and in Mexico

($1,069m).

🡠A summary of basis of preparation is available on page 158.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **172** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) | Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br>customers including loan commitments and financial guarantees (continued) |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired | Credit impaired | Credit impaired |  |  |
|  | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | POCI | POCI | Total | Total |
|  | Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 845982 | (698) | 102129 | (1668) | 16939 | (6207) | 85 | (30) | 965135 | (8603) |
| Transfers of financial instruments: | (17606) | (214) | 6997 | 825 | 10609 | (611) |  |  |  |  |
| – transfers from stage 1 to stage 2 | (70991) | 173 | 70991 | (173) |  |  |  |  |  |  |
| – transfers from stage 2 to stage 1 | 55182 | (380) | (55182) | 380 |  |  |  |  |  |  |
| – transfers to stage 3 | (2056) | 7 | (9515) | 636 | 11571 | (643) |  |  |  |  |
| – transfers from stage 3 | 259 | (14) | 703 | (18) | (962) | 32 |  |  |  |  |
| Net remeasurement of ECL arising <br>from transfer of stage<br>|  | 214 |  | (226) |  | (12) |  |  |  | (24) |
| Net new and further lending/<br>repayments<br>| 58044 | (151) | (29842) | 311 | (4450) | 1219 | 7 | (7) | 23759 | 1372 |
| Changes to risk parameters – credit <br>quality<br>|  | 112 |  | (899) |  | (2508) |  | (11) |  | (3306) |
| Changes to models used for ECL <br>calculation<br>|  | 39 |  | 105 |  |  |  |  |  | 144 |
| Assets written off |  |  |  |  | (2925) | 2925 |  |  | (2925) | 2925 |
| Credit-related modifications that <br>resulted in derecognition<br>|  |  |  |  |  |  |  |  |  |  |
| Foreign exchange and others<sup>1,2,3</sup> | (53384) | 53 | (4996) | 36 | 4 | (153) | 1 | (3) | (58375) | (67) |
| At 31 Dec 2024 | 833036 | (645) | 74288 | (1516) | 20177 | (5347) | 93 | (51) | 927594 | (7559) |
| ECL income statement change for <br>the period<br>|  | 214 |  | (709) |  | (1301) |  | (18) |  | (1814) |
| Recoveries |  |  |  |  |  |  |  |  |  | 40 |
| Others  |  |  |  |  |  |  |  |  |  | (126) |
| Total ECL income statement <br>change for the period<br>|  |  |  |  |  |  |  |  |  | (1900) |

---

1Total includes $2.9bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a

corresponding allowance for ECL of $23m, reflecting business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for

sale' on page 355.

2Total includes $28.9bn of nominal amount and $20m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees

following the sale of our banking business in Canada during 2024.

3Total includes $0.3bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina

during 2024.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  | Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality  |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance** <br>**for ECL** | **Net** |
|  | **Strong** | **Good** | **Satisfactory** | **Sub-**<br>**standard**<br>| **Credit** <br>**impaired**<br>| **Total** | **Allowance** <br>**for ECL** | **Net** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **By legal entity** |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | **22638** | **39864** | **41093** | **5612** | **3430** | **112637** | **(1258)** | **111379** |
| HSBC Bank plc | **48153** | **23369** | **28238** | **3997** | **1814** | **105571** | **(804)** | **104767** |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| **163599** | **80183** | **67919** | **5495** | **12914** | **330110** | **(4386)** | **325724** |
| HSBC Bank Middle East Limited | **17724** | **3587** | **6195** | **308** | **1247** | **29061** | **(685)** | **28376** |
| HSBC North America Holdings Inc. | **6966** | **11025** | **11727** | **2449** | **517** | **32684** | **(287)** | **32397** |
| Grupo Financiero HSBC, S.A. de C.V. | **1764** | **5833** | **6090** | **638** | **378** | **14703** | **(286)** | **14417** |
| Other trading entities | **2047** | **1078** | **4502** | **264** | **285** | **8176** | **(196)** | **7980** |
| Holding companies, shared service centres <br>and intra-Group eliminations<br>| **90** | **—** | **—** | **—** | **—** | **90** | **—** | **90** |
| **At 31 Dec 2025** | **262981** | **164939** | **165764** | **18763** | **20585** | **633032** | **(7902)** | **625130** |
| **Percentage of total credit quality (%)** | **41.4** | **26.1** | **26.2** | **3.0** | **3.3** | **100.0** |  |  |

---

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| By legal entity |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | 21548 | 30317 | 36450 | 6087 | 3356 | 97758 | (1203) | 96555 |
| HSBC Bank plc | 42189 | 21755 | 24150 | 2771 | 2352 | 93217 | (939) | 92278 |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| 157900 | 69084 | 71651 | 7978 | 11522 | 318135 | (3874) | 314261 |
| HSBC Bank Middle East Limited | 15854 | 4263 | 6927 | 266 | 852 | 28162 | (490) | 27672 |
| HSBC North America Holdings Inc. | 6095 | 11726 | 13967 | 2984 | 503 | 35275 | (293) | 34982 |
| Grupo Financiero HSBC, S.A. de C.V. | 1476 | 5523 | 5974 | 687 | 230 | 13890 | (211) | 13679 |
| Other trading entities | 2432 | 1072 | 4563 | 288 | 332 | 8687 | (194) | 8493 |
| Holding companies, shared service centres <br>and intra-Group eliminations<br>| 76 |  |  |  |  | 76 |  | 76 |
| At 31 Dec 2024 | 247570 | 143740 | 163682 | 21061 | 19147 | 595200 | (7204) | 587996 |
| Percentage of total credit quality (%) | 41.6 | 24.2 | 27.5 | 3.5 | 3.2 | 100.0 |  |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **173** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Our risk rating system facilitates the internal ratings-based approach under the Basel framework adopted by the Group to support calculation of our

minimum credit regulatory capital requirement. The credit quality classifications can be found on page <u>[141](#ia4de77d561b247c5a4fe2f73d6ba3dc0_0-0-1-7-10756088)</u>.

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost |
|  | **Basel one-year** <br>**PD range** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **ECL** <br>**coverage** | **Mapped** <br>**external rating** |
|  | **Basel one-year** <br>**PD range** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **ECL** <br>**coverage** | **Mapped** <br>**external rating** |
|  | **%** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** |  |
| **Corporate and** <br>**commercial**<br>|  | **349763** | **54636** | **19966** | **140** | **424505** | **(478)** | **(1064)** | **(5909)** | **(75)** | **(7526)** | **1.8** |  |
| – CRR 1 | **0.000 to 0.053** | **32672** | **824** | **—** | **—** | **33496** | **(5)** | **(2)** | **—** | **—** | **(7)** | **—** | **AA- and above** |
| – CRR 2 | **0.054 to 0.169** | **79233** | **1058** | **—** | **—** | **80291** | **(28)** | **(2)** | **—** | **—** | **(30)** | **—** | **A+ to A-** |
| – CRR 3 | **0.170 to 0.740** | **122351** | **10621** | **—** | **—** | **132972** | **(113)** | **(57)** | **—** | **—** | **(170)** | **0.1** | **BBB+ to BBB-** |
| – CRR 4 | **0.741 to 1.927** | **71923** | **14821** | **—** | **—** | **86744** | **(151)** | **(98)** | **—** | **—** | **(249)** | **0.3** | **BB+ to BB-** |
| – CRR 5 | **1.928 to 4.914** | **38615** | **14240** | **—** | **—** | **52855** | **(144)** | **(158)** | **—** | **—** | **(302)** | **0.6** | **BB- to B** |
| – CRR 6 | **4.915 to 8.860** | **2479** | **4679** | **—** | **—** | **7158** | **(17)** | **(111)** | **—** | **—** | **(128)** | **1.8** | **B-** |
| – CRR 7 | **8.861 to 15.000** | **1733** | **4712** | **—** | **—** | **6445** | **(5)** | **(166)** | **—** | **—** | **(171)** | **2.7** | **CCC+** |
| – CRR 8 | **15.001 to 99.999** | **757** | **3681** | **—** | **—** | **4438** | **(15)** | **(470)** | **—** | **—** | **(485)** | **10.9** | **CCC to C** |
| – CRR 9/10 | **100.000** | **—** | **—** | **19966** | **140** | **20106** | **—** | **—** | **(5909)** | **(75)** | **(5984)** | **29.8** | **D** |
| **Non-bank** <br>**financial** <br>**institutions**<br>|  | **96974** | **2413** | **478** | **193** | **100058** | **(56)** | **(19)** | **(293)** | **(1)** | **(369)** | **0.4** |  |
| – CRR 1 | **0.000 to 0.053** | **24948** | **—** | **—** | **—** | **24948** | **(2)** | **—** | **—** | **—** | **(2)** | **—** | **AA- and above** |
| – CRR 2 | **0.054 to 0.169** | **26457** | **265** | **—** | **—** | **26722** | **(8)** | **—** | **—** | **—** | **(8)** | **—** | **A+ to A-** |
| – CRR 3 | **0.170 to 0.740** | **25468** | **277** | **—** | **—** | **25745** | **(14)** | **(2)** | **—** | **—** | **(16)** | **0.1** | **BBB+ to BBB-** |
| – CRR 4 | **0.741 to 1.927** | **13733** | **747** | **—** | **—** | **14480** | **(20)** | **(2)** | **—** | **—** | **(22)** | **0.2** | **BB+ to BB-** |
| – CRR 5 | **1.928 to 4.914** | **6099** | **780** | **—** | **193** | **7072** | **(9)** | **(9)** | **—** | **(1)** | **(19)** | **0.3** | **BB- to B** |
| – CRR 6 | **4.915 to 8.860** | **97** | **194** | **—** | **—** | **291** | **(1)** | **(4)** | **—** | **—** | **(5)** | **1.7** | **B-** |
| – CRR 7 | **8.861 to 15.000** | **136** | **128** | **—** | **—** | **264** | **(1)** | **(2)** | **—** | **—** | **(3)** | **1.1** | **CCC+** |
| – CRR 8 | **15.001 to 99.999** | **36** | **22** | **—** | **—** | **58** | **(1)** | **—** | **—** | **—** | **(1)** | **1.7** | **CCC to C** |
| – CRR 9/10 | **100.000** | **—** | **—** | **478** | **—** | **478** | **—** | **—** | **(293)** | **—** | **(293)** | **61.3** | **D** |
| **Banks** |  | **108336** | **132** | **1** | **—** | **108469** | **(4)** | **(2)** | **(1)** | **—** | **(7)** | **—** |  |
| – CRR 1 | **0.000 to 0.053** | **86254** | **34** | **—** | **—** | **86288** | **(1)** | **—** | **—** | **—** | **(1)** | **—** | **AA- and above** |
| – CRR 2 | **0.054 to 0.169** | **11172** | **64** | **—** | **—** | **11236** | **(1)** | **—** | **—** | **—** | **(1)** | **—** | **A+ to A-** |
| – CRR 3 | **0.170 to 0.740** | **6215** | **7** | **—** | **—** | **6222** | **(1)** | **—** | **—** | **—** | **(1)** | **—** | **BBB+ to BBB-** |
| – CRR 4 | **0.741 to 1.927** | **2552** | **4** | **—** | **—** | **2556** | **—** | **—** | **—** | **—** | **—** | **—** | **BB+ to BB-** |
| – CRR 5 | **1.928 to 4.914** | **2056** | **1** | **—** | **—** | **2057** | **(1)** | **—** | **—** | **—** | **(1)** | **—** | **BB- to B** |
| – CRR 6 | **4.915 to 8.860** | **86** | **20** | **—** | **—** | **106** | **—** | **—** | **—** | **—** | **—** | **—** | **B-** |
| – CRR 7 | **8.861 to 15.000** | **1** | **—** | **—** | **—** | **1** | **—** | **—** | **—** | **—** | **—** | **—** | **CCC+** |
| – CRR 8 | **15.001 to 99.999** | **—** | **2** | **—** | **—** | **2** | **—** | **(2)** | **—** | **—** | **(2)** | **100.0** | **CCC to C** |
| – CRR 9/10 | **100.000** | **—** | **—** | **1** | **—** | **1** | **—** | **—** | **(1)** | **—** | **(1)** | **100.0** | **D** |
| **At 31 Dec 2025** |  | **555073** | **57181** | **20445** | **333** | **633032** | **(538)** | **(1085)** | **(6203)** | **(76)** | **(7902)** | **1.2** |  |

---

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Corporate and<br>commercial<br>|  | 340987 | 51231 | 18376 | 90 | 410684 | (463) | (1358) | (4883) | (51) | (6755) | 1.6 |  |
| – CRR 1 | 0.000 to 0.053 | 32564 | 121 |  |  | 32685 | (3) | (5) |  |  | (8) |  | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 79350 | 2469 |  |  | 81819 | (25) | (15) |  |  | (40) |  | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 111229 | 7556 |  |  | 118785 | (103) | (72) |  |  | (175) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 73050 | 12591 |  |  | 85641 | (144) | (99) |  |  | (243) | 0.3 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 40391 | 12673 |  |  | 53064 | (158) | (159) |  |  | (317) | 0.6 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 2491 | 7436 |  |  | 9927 | (16) | (190) |  |  | (206) | 2.1 | B- |
| – CRR 7 | 8.861 to 15.000 | 1370 | 3735 |  |  | 5105 | (7) | (172) |  |  | (179) | 3.5 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 542 | 4650 |  |  | 5192 | (7) | (646) |  |  | (653) | 12.6 | CCC to C |
| – CRR 9/10 | 100.000 |  |  | 18376 | 90 | 18466 |  |  | (4883) | (51) | (4934) | 26.7 | D |
| Non-bank <br>financial <br>institutions<br>|  | 79687 | 2098 | 679 |  | 82464 | (45) | (30) | (361) |  | (436) | 0.5 |  |
| – CRR 1 | 0.000 to 0.053 | 19516 | 191 |  |  | 19707 | (1) | (1) |  |  | (2) |  | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 20572 | 166 |  |  | 20738 | (5) |  |  |  | (5) |  | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 20370 | 330 |  |  | 20700 | (12) | (3) |  |  | (15) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 12987 | 502 |  |  | 13489 | (16) | (2) |  |  | (18) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 6058 | 390 |  |  | 6448 | (11) | (6) |  |  | (17) | 0.3 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 48 | 319 |  |  | 367 |  | (8) |  |  | (8) | 2.2 | B- |
| – CRR 7 | 8.861 to 15.000 | 63 | 79 |  |  | 142 |  | (1) |  |  | (1) | 0.7 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 73 | 121 |  |  | 194 |  | (9) |  |  | (9) | 4.6 | CCC to C |
| – CRR 9/10 | 100.000 |  |  | 679 |  | 679 |  |  | (361) |  | (361) | 53.2 | D |
| Banks |  | 101852 | 198 | 2 |  | 102052 | (9) | (2) | (2) |  | (13) |  |  |
| – CRR 1 | 0.000 to 0.053 | 79213 | 53 |  |  | 79266 | (3) |  |  |  | (3) |  | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 13315 | 40 |  |  | 13355 | (2) |  |  |  | (2) |  | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 4226 | 29 |  |  | 4255 | (2) |  |  |  | (2) |  | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 3275 | 12 |  |  | 3287 | (1) |  |  |  | (1) |  | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 1706 | 47 |  |  | 1753 | (1) | (1) |  |  | (2) | 0.1 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 10 | 1 |  |  | 11 |  |  |  |  |  |  | B- |
| – CRR 7 | 8.861 to 15.000 | 107 | 13 |  |  | 120 |  |  |  |  |  |  | CCC+ |
| – CRR 8 | 15.001 to 99.999 |  | 3 |  |  | 3 |  | (1) |  |  | (1) | 33.3 | CCC to C |
| – CRR 9/10 | 100.000 |  |  | 2 |  | 2 |  |  | (2) |  | (2) | 100.0 | D |
| At 31 Dec 2024 |  | 522526 | 53527 | 19057 | 90 | 595200 | (517) | (1390) | (5246) | (51) | (7204) | 1.2 |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **174** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees |
|  |  | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |  |  |
|  | **Basel one-year** <br>**PD range**<br>| **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **POCI** | **Total** | **ECL** <br>**coverage**<br>| **Mapped** <br>**external rating**<br>|
|  | **%** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** |  |
| **Loan and** <br>**other credit-**<br>**related** <br>**commitments**<br>|  | **399154** | **18543** | **560** | **4** | **418261** | **(127)** | **(92)** | **(69)** | **—** | **(288)** | **0.1** |  |
| – CRR 1 | **0.000 to 0.053** | **109371** | **2013** | **—** | **—** | **111384** | **(4)** | **—** | **—** | **—** | **(4)** | **—** | **AA- and above** |
| – CRR 2 | **0.054 to 0.169** | **99018** | **1578** | **—** | **—** | **100596** | **(12)** | **(3)** | **—** | **—** | **(15)** | **—** | **A+ to A-** |
| – CRR 3 | **0.170 to 0.740** | **110555** | **2651** | **—** | **—** | **113206** | **(33)** | **(11)** | **—** | **—** | **(44)** | **—** | **BBB+ to BBB-** |
| – CRR 4 | **0.741 to 1.927** | **47586** | **4197** | **—** | **—** | **51783** | **(30)** | **(15)** | **—** | **—** | **(45)** | **0.1** | **BB+ to BB-** |
| – CRR 5 | **1.928 to 4.914** | **27073** | **3858** | **—** | **—** | **30931** | **(25)** | **(12)** | **—** | **—** | **(37)** | **0.1** | **BB- to B** |
| – CRR 6 | **4.915 to 8.860** | **1747** | **1754** | **—** | **—** | **3501** | **(4)** | **(13)** | **—** | **—** | **(17)** | **0.5** | **B-** |
| – CRR 7 | **8.861 to 15.000** | **2757** | **847** | **—** | **—** | **3604** | **(7)** | **(9)** | **—** | **—** | **(16)** | **0.4** | **CCC+** |
| – CRR 8 | **15.001 to 99.999** | **1047** | **1645** | **—** | **—** | **2692** | **(12)** | **(29)** | **—** | **—** | **(41)** | **1.5** | **CCC to C** |
| – CRR 9/10 | **100.000** | **—** | **—** | **560** | **4** | **564** | **—** | **—** | **(69)** | **—** | **(69)** | **12.2** | **D** |
| **Financial** <br>**guarantees**<br>|  | **14467** | **1371** | **192** | **—** | **16030** | **(7)** | **(17)** | **(26)** | **—** | **(50)** | **0.3** |  |
| – CRR 1 | **0.000 to 0.053** | **2151** | **—** | **—** | **—** | **2151** | **—** | **—** | **—** | **—** | **—** | **—** | **AA- and above** |
| – CRR 2 | **0.054 to 0.169** | **3897** | **6** | **—** | **—** | **3903** | **(2)** | **—** | **—** | **—** | **(2)** | **0.1** | **A+ to A-** |
| – CRR 3 | **0.170 to 0.740** | **3995** | **105** | **—** | **—** | **4100** | **(3)** | **—** | **—** | **—** | **(3)** | **0.1** | **BBB+ to BBB-** |
| – CRR 4 | **0.741 to 1.927** | **2888** | **139** | **—** | **—** | **3027** | **(1)** | **(1)** | **—** | **—** | **(2)** | **0.1** | **BB+ to BB-** |
| – CRR 5 | **1.928 to 4.914** | **1445** | **654** | **—** | **—** | **2099** | **(1)** | **(4)** | **—** | **—** | **(5)** | **0.2** | **BB- to B** |
| – CRR 6 | **4.915 to 8.860** | **64** | **259** | **—** | **—** | **323** | **—** | **(3)** | **—** | **—** | **(3)** | **0.9** | **B-** |
| – CRR 7 | **8.861 to 15.000** | **17** | **73** | **—** | **—** | **90** | **—** | **(5)** | **—** | **—** | **(5)** | **5.6** | **CCC+** |
| – CRR 8 | **15.001 to 99.999** | **10** | **135** | **—** | **—** | **145** | **—** | **(4)** | **—** | **—** | **(4)** | **2.8** | **CCC to C** |
| – CRR 9/10 | **100.000** | **—** | **—** | **192** | **—** | **192** | **—** | **—** | **(26)** | **—** | **(26)** | **13.5** | **D** |
| **At 31 Dec 2025** |  | **413621** | **19914** | **752** | **4** | **434291** | **(134)** | **(109)** | **(95)** | **—** | **(338)** | **0.1** |  |

---

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loan and other <br>credit-related <br>commitments<br>|  | 345742 | 19495 | 872 | 3 | 366112 | (120) | (121) | (85) | (326) | 0.1 |  |
| – CRR 1 | 0.000 to 0.053 | 92090 | 89 |  |  | 92179 | (3) |  |  | (3) |  | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 92967 | 1009 |  |  | 93976 | (12) | (2) |  | (14) |  | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 97876 | 5051 |  |  | 102927 | (38) | (15) |  | (53) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 40135 | 4349 |  |  | 44484 | (28) | (22) |  | (50) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 18581 | 3976 |  |  | 22557 | (26) | (22) |  | (48) | 0.2 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 1828 | 2297 |  |  | 4125 | (4) | (22) |  | (26) | 0.6 | B- |
| – CRR 7 | 8.861 to 15.000 | 1378 | 678 |  |  | 2056 | (1) | (12) |  | (13) | 0.6 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 887 | 2046 |  |  | 2933 | (8) | (26) |  | (34) | 1.2 | CCC to C |
| – CRR 9/10 | 100.000 |  |  | 872 | 3 | 875 |  |  | (85) | (85) | 9.7 | D |
| Financial <br>guarantees<br>|  | 13937 | 1386 | 248 |  | 15571 | (8) | (5) | (16) | (29) | 0.2 |  |
| – CRR 1 | 0.000 to 0.053 | 1895 | 1 |  |  | 1896 |  |  |  |  |  | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 4326 | 12 |  |  | 4338 | (1) |  |  | (1) |  | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 4137 | 71 |  |  | 4208 | (2) |  |  | (2) |  | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 2106 | 286 |  |  | 2392 | (3) |  |  | (3) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 1295 | 478 |  |  | 1773 | (2) | (1) |  | (3) | 0.2 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 162 | 232 |  |  | 394 |  | (1) |  | (1) | 0.3 | B- |
| – CRR 7 | 8.861 to 15.000 | 5 | 128 |  |  | 133 |  | (2) |  | (2) | 1.5 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 11 | 178 |  |  | 189 |  | (1) |  | (1) | 0.5 | CCC to C |
| – CRR 9/10 | 100.000 |  |  | 248 |  | 248 |  |  | (16) | (16) | 6.5 | D |
| At 31 Dec 2024 |  | 359679 | 20881 | 1120 | 3 | 381683 | (128) | (126) | (101) | (355) | 0.1 |  |

---

Commercial real estate

CRE lending includes the financing of corporate, institutional and high

net worth customers who are investing primarily in income-producing

assets and, to a lesser extent, in their construction and development.

The portfolio has larger concentrations in Hong Kong, the UK and

mainland China.

Our global exposure is centred largely on cities with economic, political

or cultural significance. In more developed markets, our exposure

mainly comprises the financing of investment assets, the

redevelopment of existing stock and the augmentation of both

commercial and residential markets to support economic and

population growth. In less developed CRE markets, our exposures

comprise lending for development assets on relatively short tenors with

a particular focus on supporting larger, better-capitalised developers

involved in residential construction or assets supporting economic

expansion.

Excluding adverse foreign exchange movements of $2.0bn, CRE

lending decreased by $5.0bn, mainly from $5.3bn in our entities in Asia

due to loan repayments and write-offs.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **175** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers | Commercial real estate lending to customers |
|  |  |  |  |  |  |  |  |  | **of which:** | **of which:** |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The Hongkong and** <br>**Shanghai Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC Bank** <br>**Middle East** <br>**Limited**<br>| **HSBC North** <br>**America** <br>**Holdings Inc.**<br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A. de** <br>**C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Total** | **UK** | **Hong** <br>**Kong**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Gross loans** <br>**and advances**<br>|  |  |  |  |  |  |  |  |  |  |
| Stage 1 | **14864** | **3482** | **21777** | **1071** | **237** | **406** | **56** | **41893** | **15654** | **11007** |
| Stage 2 | **1956** | **151** | **15245** | **59** | **678** | **94** | **—** | **18183** | **1956** | **13927** |
| Stage 3 | **355** | **390** | **8052** | **89** | **238** | **25** | **26** | **9175** | **355** | **7568** |
| POCI | **—** | **57** | **30** | **—** | **—** | **—** | **—** | **87** | **58** | **25** |
| **At 31 Dec 2025** | **17175** | **4080** | **45104** | **1219** | **1153** | **525** | **82** | **69338** | **18023** | **32527** |
| – of which: <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;forborne <br>loans<br>| **410** | **65** | **3477** | **89** | **314** | **73** | **26** | **4454** | **468** | **2941** |
| Allowance for <br>ECL<br>| **(199)** | **(124)** | **(2150)** | **(26)** | **(77)** | **(10)** | **(24)** | **(2610)** | **(230)** | **(1876)** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Gross loans and <br>advances<br>|  |  |  |  |  |  |  |  |  |  |
| Stage 1 | 9394 | 3285 | 34337 | 1136 | 1420 | 380 | 42 | 49994 | 9758 | 22643 |
| Stage 2 | 4052 | 313 | 9103 |  | 1184 | 67 | 1 | 14720 | 4112 | 7619 |
| Stage 3 | 492 | 213 | 6451 | 117 | 240 | 22 | 23 | 7558 | 492 | 5967 |
| POCI |  | 43 | 18 |  |  |  |  | 61 | 43 | 18 |
| At 31 Dec 2024 | 13938 | 3854 | 49909 | 1253 | 2844 | 469 | 66 | 72333 | 14405 | 36247 |
| – of which: <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;forborne <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;loans<br>| 502 | 54 | 3087 | 116 | 273 | 19 | 23 | 4074 | 545 | 2729 |
| Allowance for <br>ECL<br>| (203) | (72) | (1627) | (23) | (103) | (8) | (19) | (2055) | (227) | (1418) |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality | Commercial real estate gross loans and advances to customers by credit quality |
|  |  |  |  |  |  |  |  |  | **of which:** | **of which:** |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The** <br>**Hongkong and** <br>**Shanghai Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC Bank** <br>**Middle East** <br>**Limited**<br>| **HSBC North** <br>**America** <br>**Holdings Inc.**<br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A. de** <br>**C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Total** | **UK** | **Hong** <br>**Kong**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Strong | **4102** | **1055** | **7818** | **327** | **—** | **8** | **56** | **13366** | **4342** | **3501** |
| Good | **7636** | **1195** | **13998** | **473** | **—** | **127** | **—** | **23429** | **7773** | **8438** |
| Satisfactory | **4482** | **1289** | **12330** | **307** | **559** | **326** | **—** | **19293** | **4895** | **10481** |
| Sub-standard | **600** | **94** | **2876** | **23** | **356** | **39** | **—** | **3988** | **600** | **2514** |
| Credit impaired | **355** | **447** | **8082** | **89** | **238** | **25** | **26** | **9262** | **413** | **7593** |
| **At 31 Dec 2025** | **17175** | **4080** | **45104** | **1219** | **1153** | **525** | **82** | **69338** | **18023** | **32527** |
| Strong | 4663 | 739 | 9106 | 137 |  | 18 | 42 | 14705 | 4875 | 4522 |
| Good | 2098 | 1430 | 16113 | 407 | 566 | 111 |  | 20725 | 2107 | 10421 |
| Satisfactory | 5770 | 1312 | 13556 | 592 | 1423 | 283 |  | 22936 | 5948 | 10850 |
| Sub-standard | 915 | 117 | 4665 |  | 615 | 35 | 1 | 6348 | 940 | 4469 |
| Credit impaired | 492 | 256 | 6469 | 117 | 240 | 22 | 23 | 7619 | 535 | 5985 |
| At 31 Dec 2024 | 13938 | 3854 | 49909 | 1253 | 2844 | 469 | 66 | 72333 | 14405 | 36247 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers | Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers | Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers | Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers | Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Total** | **of which: Hang Seng Bank** | Total | of which: Hang Seng Bank |
|  | **$m** | **$m** | $m | $m |
| **Gross loans and advances** |  |  |  |  |
| **By stage** |  |  |  |  |
| Stage 1 | **10666** | **5079** | 22132 | 10465 |
| Stage 2 | **13652** | **6416** | 6515 | 3791 |
| Stage 3 | **6306** | **3467** | 4554 | 2550 |
| POCI | **—** | **—** |  |  |
| **By credit quality** |  |  |  |  |
| Strong | **3314** | **1662** | 4484 | 2596 |
| Good | **8225** | **3449** | 9754 | 4367 |
| Satisfactory | **10352** | **4637** | 10716 | 5135 |
| Sub-standard | **2427** | **1747** | 3693 | 2158 |
| Credit impaired | **6306** | **3467** | 4554 | 2550 |
| **Total** | **30624** | **14962** | 33201 | 16806 |
| Allowance for ECL | **(1077)** | **(652)** | (405) | (213) |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **176** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

The Hong Kong CRE portfolio (excluding exposure to mainland China

borrowers) saw an increase in allowances for ECL in 2025, driven by a

combination of negative credit migration and pressure on collateral

values. Negative credit migration was mainly driven by the secured

portfolio, which accounts for 57% of the total portfolio (31 December

2024: 54%), although the pace of migration slowed in the fourth

quarter.

'Sub-standard' and 'credit-impaired' exposures increased to $8.7bn

(31 December 2024: $8.2bn), of which 95% was secured

(31 December 2024: 92%). As at 31 December 2025, the weighted

average loan to value ('LTV'):

–of performing exposures rated 'sub-standard' was 42%

(31 December 2024: 46%). There was immaterial exposure with an

LTV of greater than 70% (31 December 2024: $0.1bn); and

–of 'credit impaired' exposures was 71% (31 December 2024: 58%).

Within this portfolio, $1.9bn had an LTV of greater than 70%

(31 December 2024: $1.2bn).

Within which, for Hang Seng Bank, the weighted average LTV:

–of performing exposures rated 'sub-standard' was 42%

(31 December 2024: 49%). There was nil exposure with an LTV of

greater than 70% (31 December 2024: $0.1bn); and

–of 'credit-impaired' exposures was 74% (31 December 2024: 60%).

Within this portfolio, $1.1bn had an LTV of greater than 70%

(31 December 2024: $0.7bn).

Collateral information and LTV calculations were based on total limits,

inclusive of off-balance sheet commitments of $42.8bn as of

31 December 2025 (31 December 2024: $49.2bn).

The unsecured portfolio remains largely stable, with some migration

between performing credit grades and 89% rated 'strong' or

'good' (31 December 2024: 91%). 'Credit impaired' levels are limited.

Unsecured exposures are typically granted to strong, listed Hong Kong

CRE developers, which are commonly members of conglomerate

groups with diverse cash flows.

Market conditions remain challenging, with valuation pressures and

liquidity constraints likely to continue in the near term, particularly for

mid-sized and sub-investment grade corporates. The recent

improvement in sentiment is nevertheless expected to gradually

translate into improved cash flows and liquidity, with signs of a

recovery beginning to emerge. In particular, the residential property

sector showed positive momentum in 2025 driven by government

support measures and lower interest rates. This, together with the

associated positive wealth effect from a buoyant equities market, has

supported a rebound in retail sales and improved leasing activity in the

second half of 2025. However, a full recovery in the retail property

sector will take time as landlords adapt to changing consumer

behaviours, while oversupply in the office property sector is expected

to keep pressure on rents and capital values in 2026. The broader Hong

Kong economy nevertheless remains resilient, providing a supportive

backdrop for stabilisation in the property market.

We continue to closely assess and manage the risk in the portfolio,

including through portfolio reviews and stress testing. Vulnerable

borrowers, including those with debt serviceability challenges and

higher LTV levels, are subject to heightened monitoring and

management.

Refinance risk in commercial real estate

CRE lending tends to require the repayment of a significant proportion

of the principal at maturity. Typically, a customer will arrange

repayment through the acquisition of a new loan to settle the existing

debt. Refinance risk is the risk that a customer, being unable to repay

the debt on maturity, fails to refinance it at commercial terms. We

monitor our CRE portfolio closely, assessing indicators for signs of

potential issues with refinancing.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers | Maturity analysis commercial real estate gross loans and advances to customers |
|  |  |  |  |  |  |  |  |  | **of which:** | **of which:** |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The** <br>**Hongkong and** <br>**Shanghai** <br>**Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC Bank** <br>**Middle East** <br>**Limited**<br>| **HSBC North** <br>**America** <br>**Holdings Inc.**<br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A.** <br>**de C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Total** | **UK**  | **Hong** <br>**Kong**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| < 1 year | **3892** | **1213** | **18961** | **435** | **335** | **209** | **36** | **25081** | **4438** | **14667** |
| 1–2 years | **3800** | **822** | **11251** | **78** | **442** | **74** | **20** | **16487** | **4090** | **7939** |
| 2–5 years | **8776** | **1575** | **12735** | **518** | **373** | **183** | **25** | **24185** | **8784** | **8475** |
| > 5 years | **707** | **470** | **2157** | **188** | **3** | **59** | **1** | **3585** | **711** | **1446** |
| **At 31 Dec 2025** | **17175** | **4080** | **45104** | **1219** | **1153** | **525** | **82** | **69338** | **18023** | **32527** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| < 1 year | 3488 | 846 | 22244 | 455 | 1084 | 111 | 20 | 28248 | 3826 | 18204 |
| 1–2 years | 3303 | 876 | 11213 | 162 | 603 | 142 | 6 | 16305 | 3373 | 7196 |
| 2–5 years | 6634 | 1600 | 14079 | 447 | 1145 | 143 | 40 | 24088 | 6685 | 9254 |
| > 5 years | 513 | 532 | 2373 | 189 | 12 | 73 |  | 3692 | 521 | 1593 |
| At 31 Dec 2024 | 13938 | 3854 | 49909 | 1253 | 2844 | 469 | 66 | 72333 | 14405 | 36247 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **177** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

The following table presents the Group's exposure to borrowers

classified in the CRE sector where the ultimate parent is based in

mainland China, as well as all CRE exposures booked on mainland

China balance sheets. In addition to CRE as defined in our primary CRE

disclosure above, this table includes financing provided to a corporate

or financial entity for the purchase or financing of a property which

supports the overall operations of the business. This provides a more

comprehensive view of our mainland China CRE exposures. The

exposures at 31 December 2025 are split by country/territory and credit

quality including allowances for ECL by stage.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Mainland China commercial real estate | Mainland China commercial real estate | Mainland China commercial real estate | Mainland China commercial real estate | Mainland China commercial real estate |  |  |  |  |
| (Audited) | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Hong Kong** | **Mainland** <br>**China**<br>| **Rest of the** <br>**Group**<br>| **Total** | Hong Kong | Mainland <br>China<br>| Rest of the <br>Group<br>| Total |
|  | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| Loans and advances to customers<sup>1</sup> | **2079** | **3474** | **118** | **5671** | 3161 | 3694 | 303 | 7158 |
| Guarantees issued and others<sup>2</sup> | **105** | **14** | **12** | **131** | 80 | 16 | 5 | 101 |
| **Total mainland China commercial real** <br>**estate exposure**<br>| **2184** | **3488** | **130** | **5802** | 3241 | 3710 | 308 | 7259 |
| **Distribution of mainland China** <br>**commercial real estate exposure by** <br>**credit quality**<br>|  |  |  |  |  |  |  |  |
| Strong | **293** | **1818** | **64** | **2175** | 118 | 1817 | 109 | 2044 |
| Good | **240** | **583** | **—** | **823** | 578 | 595 | 1 | 1174 |
| Satisfactory | **154** | **511** | **8** | **673** | 196 | 899 | 49 | 1144 |
| Sub-standard | **87** | **334** | **57** | **478** | 777 | 136 | 149 | 1062 |
| Credit impaired | **1410** | **242** | **1** | **1653** | 1572 | 263 |  | 1835 |
| **Total** | **2184** | **3488** | **130** | **5802** | 3241 | 3710 | 308 | 7259 |
| **Allowance for ECL by credit quality** |  |  |  |  |  |  |  |  |
| Strong | **—** | **(2)** | **—** | **(2)** |  | (4) |  | (4) |
| Good | **—** | **(4)** | **—** | **(4)** |  | (3) |  | (3) |
| Satisfactory | **—** | **(5)** | **—** | **(5)** |  | (13) |  | (13) |
| Sub-standard | **(9)** | **(99)** | **(1)** | **(109)** | (261) | (30) | (17) | (308) |
| Credit impaired | **(799)** | **(99)** | **—** | **(898)** | (749) | (81) |  | (830) |
| **Total** | **(808)** | **(209)** | **(1)** | **(1018)** | (1010) | (131) | (17) | (1158) |
| **Allowance for ECL by stage distribution** |  |  |  |  |  |  |  |  |
| Stage 1 | **—** | **(4)** | **—** | **(4)** |  | (9) |  | (9) |
| Stage 2 | **(9)** | **(106)** | **(1)** | **(116)** | (261) | (41) | (17) | (319) |
| Stage 3 | **(783)** | **(99)** | **—** | **(882)** | (743) | (81) |  | (824) |
| POCI | **(16)** | **—** | **—** | **(16)** | (6) |  |  | (6) |
| **Total** | **(808)** | **(209)** | **(1)** | **(1018)** | (1010) | (131) | (17) | (1158) |
| **ECL coverage %** | **37.0** | **6.0** | **0.8** | **17.6** | 31.2 | 3.5 | 5.5 | 16.0 |

---

1Amounts represent gross carrying amount.

2Amounts represent nominal amount for guarantees and other contingent liabilities.

(Unaudited)

We continue to closely monitor the mainland China CRE market. The

portfolio of loans booked in Hong Kong continues to be impacted by

the challenges in this sector, with further migration seen in the fourth

quarter of 2025. This portfolio nevertheless continues to reduce due to

repayments and write-offs, driving an overall reduction in allowances

for ECL to $1.0bn as of 31 December 2025 (31 December 2024:

$1.2bn), mainly held against unsecured exposures.

Of the residual portfolio of mainland China CRE loans booked in Hong

Kong, the large majority of performing exposure is lending to state-

owned enterprises and relatively strong privately-owned enterprises.

This is reflected in the relatively low allowances for ECL in this part of

the portfolio.

The onshore portfolio booked in mainland China remains of higher

credit quality, with lower ECL allowances reflecting collateral held. The

portfolio continues to rebalance in favour of strong-rated borrowers.

Market fundamentals in the mainland China property sector remain

weak. Despite some stabilisation in certain cities, property values

continued to decline in 2025 and are expected to remain under

pressure in 2026 reflecting ongoing weakness in demand. Liquidity

constraints are therefore likely to continue, with ongoing polarisation in

the operating performance of corporates operating in this sector, as

state-owned enterprises continue to benefit from better access to

funding and liquidity. A full recovery remains dependent on further

government support as well as a sustained improvement in underlying

sentiment.

The Group has additional exposures to mainland China CRE as a result

of lending to multinational corporates booked outside of mainland

China, which is not incorporated in the table above.

Other credit risk exposures

In addition to collateralised lending, other credit enhancements are

employed and methods used to mitigate credit risk arising from

financial assets. These are summarised below:

–Some securities issued by governments, banks and other financial

institutions benefit from additional credit enhancements provided by

government guarantees that cover the assets.

–Debt securities issued by banks and financial institutions include

asset-backed securities ('ABSs') and similar instruments, which are

supported by underlying pools of financial assets. Credit risk

associated with ABSs is reduced through the purchase of credit

default swap ('CDS') protection.

–Trading loans and advances mainly consist of reverse repos and

stock borrowing, which are by their nature collateralised.

–Cash collateral is posted to satisfy margin requirements. There is

limited credit risk on cash collateral posted since in the event of

default of the counterparty this would be set off against the related

liability.

🡠Collateral accepted as security that the Group is permitted to sell or

repledge under these arrangements is described on page 344 of the

financial statements.

The Group's maximum exposure to credit risk includes financial

guarantees and similar contracts granted, as well as loan and other

credit-related commitments. Depending on the terms of the

arrangement, we may use additional credit mitigation if a guarantee is

called upon or a loan commitment is drawn and subsequently defaults.

🡠For further information on these arrangements, see Note 33 on the financial

statements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **178** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial statements | Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Derivatives

We participate in transactions exposing us to counterparty credit risk.

Counterparty credit risk is the risk of financial loss if the counterparty to

a transaction defaults before satisfactorily settling it. It arises principally

from over-the-counter ('OTC') derivatives and securities financing

transactions and is calculated in both the trading and non-trading books.

Transactions vary in value by reference to a market factor such as an

interest rate, exchange rate or asset price.

The counterparty risk from derivative transactions is taken into account

when reporting the fair value of derivative positions. The adjustment to

the fair value is known as the credit valuation adjustment ('CVA').

The following table reflects the fair values and gross notional contract

amounts of derivatives cleared through an exchange, central

counterparty or non-central counterparty.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  | Notional contract amounts and fair values of derivatives  |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Notional** <br>**amount** | **Fair value** | **Fair value** | Notional <br>amount | Fair value | Fair value |
|  | **Notional** <br>**amount** | **Assets** | **Liabilities** | Notional <br>amount | Assets | Liabilities |
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| **Total OTC derivatives** | **31083167** | **324708** | **325401** | 29273397 | 368938 | 367759 |
| – total OTC derivatives cleared by central counterparties | **13448210** | **98779** | **99109** | 13484581 | 111974 | 113091 |
| – total OTC derivatives not cleared by central counterparties | **17634957** | **225929** | **226292** | 15788816 | 256964 | 254668 |
| Total exchange traded derivatives | **1625677** | **10275** | **9696** | 1267685 | 12445 | 9435 |
| **Gross** | **32708844** | **334983** | **335097** | 30541082 | 381383 | 377194 |
| Offset |  | **(97243)** | **(97243)** |  | (112746) | (112746) |
| **At 31 Dec** |  | **237740** | **237854** |  | 268637 | 264448 |

---

🡠The purposes for which HSBC uses derivatives are described in Note 15 on the financial statements.

The International Swaps and Derivatives Association ('ISDA') master

agreement is our preferred agreement for documenting derivatives

activity. It is common, and our preferred practice, for the parties

involved in a derivative transaction to execute a credit support annex

('CSA') in conjunction with the ISDA master agreement. Under a CSA,

collateral is passed between the parties to mitigate the counterparty

risk inherent in outstanding positions. The majority of our CSAs are with

financial institutional clients.

We manage the counterparty exposure on our OTC derivative contracts

by using collateral agreements with counterparties and netting

agreements. Currently, we do not actively manage our general OTC

derivative counterparty exposure in the credit markets, although we

may manage individual exposures in certain circumstances.

We place strict policy restrictions on collateral types and as a

consequence the types of collateral received and pledged are, by value,

highly liquid and of a strong quality, being predominantly cash.

Where a collateral type is required to be approved outside the collateral

policy, approval is required from a committee of senior representatives

from Markets, Legal and Risk.

🡠See Note 31 on the financial statements for details regarding legally

enforceable right of offset in the event of counterparty default and collateral

received in respect of derivatives.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **179** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Personal lending

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution | Total personal lending for loans and advances to customers at amortised cost by stage distribution |  |  |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m |
| **By portfolio** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| First lien residential mortgages | **365498** | **18148** | **2655** | **386301** | **(58)** | **(109)** | **(313)** | **(480)** | 324703 | 34177 | 2450 | 361330 | (59) | (130) | (284) | (473) |
| Credit cards | **22781** | **3260** | **373** | **26414** | **(339)** | **(731)** | **(231)** | **(1301)** | 21611 | 2991 | 313 | 24915 | (268) | (660) | (199) | (1127) |
| Other personal lending  | **58417** | **2479** | **917** | **61813** | **(270)** | **(395)** | **(351)** | **(1016)** | 57432 | 2751 | 797 | 60980 | (243) | (368) | (313) | (924) |
| – other personal lending which is secured<sup>1</sup> | **39906** | **517** | **270** | **40693** | **(24)** | **(19)** | **(65)** | **(108)** | 39234 | 887 | 199 | 40320 | (29) | (23) | (34) | (86) |
| – other personal lending which is unsecured | **18511** | **1962** | **647** | **21120** | **(246)** | **(376)** | **(286)** | **(908)** | 18198 | 1864 | 598 | 20660 | (214) | (345) | (279) | (838) |
| **Total** | **446696** | **23887** | **3945** | **474528** | **(667)** | **(1235)** | **(895)** | **(2797)** | 403746 | 39919 | 3560 | 447225 | (570) | (1158) | (796) | (2524) |
| **By legal entity** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| HSBC UK Bank plc | **191726** | **14515** | **1200** | **207441** | **(201)** | **(315)** | **(256)** | **(772)** | 152338 | 31325 | 1075 | 184738 | (148) | (307) | (211) | (666) |
| HSBC Bank plc | **17416** | **1076** | **365** | **18857** | **(16)** | **(14)** | **(107)** | **(137)** | 23501 | 1198 | 324 | 25023 | (17) | (24) | (99) | (140) |
| The Hongkong and Shanghai Banking Corporation Limited | **201779** | **6407** | **1108** | **209294** | **(199)** | **(432)** | **(170)** | **(801)** | 191614 | 5519 | 1170 | 198303 | (174) | (385) | (164) | (723) |
| HSBC Bank Middle East Limited | **4061** | **134** | **47** | **4242** | **(18)** | **(23)** | **(29)** | **(70)** | 3678 | 158 | 40 | 3876 | (14) | (29) | (30) | (73) |
| HSBC North America Holdings Inc. | **19607** | **512** | **404** | **20523** | **(4)** | **(12)** | **(14)** | **(30)** | 20851 | 497 | 327 | 21675 | (4) | (12) | (11) | (27) |
| Grupo Financiero HSBC, S.A. de C.V. | **11705** | **1212** | **817** | **13734** | **(229)** | **(438)** | **(316)** | **(983)** | 11016 | 1172 | 620 | 12808 | (207) | (400) | (279) | (886) |
| Other trading entities | **402** | **31** | **4** | **437** | **—** | **(1)** | **(3)** | **(4)** | 748 | 50 | 4 | 802 | (6) | (1) | (2) | (9) |
| **Total** | **446696** | **23887** | **3945** | **474528** | **(667)** | **(1235)** | **(895)** | **(2797)** | 403746 | 39919 | 3560 | 447225 | (570) | (1158) | (796) | (2524) |

---

1'Other personal lending which is secured' has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to residential property, which were previously reported as separate line items.

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution |  |  |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | Nominal amount | Nominal amount | Nominal amount | Nominal amount | Allowance for ECL | Allowance for ECL | Allowance for ECL | Allowance for ECL |
|  | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m |
| HSBC UK Bank plc | **55615** | **803** | **43** | **56461** | **(15)** | **(5)** | **—** | **(20)** | 51078 | 442 | 47 | 51567 | (6) |  | (3) | (9) |
| HSBC Bank plc | **1819** | **28** | **—** | **1847** | **(1)** | **—** | **—** | **(1)** | 1605 | 7 | 2 | 1614 |  |  |  |  |
| The Hongkong and Shanghai Banking Corporation <br>Limited<br>| **204293** | **1025** | **47** | **205365** | **(5)** | **—** | **—** | **(5)** | 189737 | 1165 | 35 | 190937 | (4) |  | (2) | (6) |
| HSBC Bank Middle East Limited | **2542** | **10** | **—** | **2552** | **—** | **—** | **—** | **—** | 2452 | 7 |  | 2459 |  |  |  |  |
| HSBC North America Holdings Inc. | **2172** | **75** | **1** | **2248** | **—** | **—** | **—** | **—** | 3707 | 68 | 2 | 3777 |  |  |  |  |
| Grupo Financiero HSBC, S.A. de C.V. | **4970** | **—** | **—** | **4970** | **(2)** | **—** | **—** | **(2)** | 3892 |  |  | 3892 | (7) |  |  | (7) |
| Other trading entities | **529** | **4** | **1** | **534** | **—** | **—** | **—** | **—** | 434 | 2 |  | 436 |  |  |  |  |
| **Total** | **271940** | **1945** | **92** | **273977** | **(23)** | **(5)** | **—** | **(28)** | 252905 | 1691 | 86 | 254682 | (17) |  | (5) | (22) |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **180** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

The following disclosure provides a reconciliation by stage of the Group's personal lending gross carrying/nominal amount and allowances for loans and advances to customers, including loan commitments and financial

guarantees.

In addition, three reconciliations by stage of the Group's gross carrying/nominal amount and allowances for first lien mortgages, credit cards and other personal lending, including loan commitments and financial

guarantees, have been included following the adoption of the recommendations of the DECL Taskforce's third report in 2023.

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees |
| (Audited) | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** |  |  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **Total** | **Total** | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | Total | Total |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m | $m |
| **At 1 Jan**  | **656651** | **(587)** | **41610** | **(1158)** | **3646** | **(801)** | **701907** | **(2546)** | 650823 | (602) | 50955 | (1434) | 3860 | (856) | 705638 | (2892) |
| Transfers of financial instruments: | **7203** | **(664)** | **(9466)** | **1242** | **2263** | **(578)** | **—** | **—** | (2023) | (1045) | (345) | 1477 | 2368 | (432) |  |  |
| – transfers from stage 1 to stage 2 | **(41104)** | **225** | **41104** | **(225)** | **—** | **—** | **—** | **—** | (45220) | 246 | 45220 | (246) |  |  |  |  |
| – transfers from stage 2 to stage 1 | **48706** | **(861)** | **(48706)** | **861** | **—** | **—** | **—** | **—** | 43549 | (1247) | (43549) | 1247 |  |  |  |  |
| – transfers to stage 3 | **(663)** | **11** | **(2655)** | **756** | **3318** | **(767)** | **—** | **—** | (743) | 9 | (2715) | 685 | 3458 | (694) |  |  |
| – transfers from stage 3 | **264** | **(39)** | **791** | **(150)** | **(1055)** | **189** | **—** | **—** | 391 | (53) | 699 | (209) | (1090) | 262 |  |  |
| Net remeasurement of ECL arising from <br>transfer of stage<br>| **—** | **411** | **—** | **(378)** | **—** | **(9)** | **—** | **24** |  | 745 |  | (605) |  | (132) |  | 8 |
| Changes due to modifications not <br>derecognised<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |  |  |  |  | (25) |  | (25) |  |
| Net new and further lending/repayments | **41379** | **(7)** | **(8622)** | **310** | **(467)** | **78** | **32290** | **381** | 29789 | (17) | (7889) | 278 | (796) | 470 | 21104 | 731 |
| Change to risk parameters – credit quality  | **—** | **209** | **—** | **(1165)** | **—** | **(1141)** | **—** | **(2097)** |  | 251 |  | (874) |  | (1437) |  | (2060) |
| Changes to models used for ECL calculation | **—** | **(29)** | **—** | **(5)** | **—** | **(16)** | **—** | **(50)** |  | 29 |  | (109) |  | (20) |  | (100) |
| Assets written off | **—** | **—** | **—** | **—** | **(1641)** | **1641** | **(1641)** | **1641** |  |  |  |  | (1534) | 1534 | (1534) | 1534 |
| Foreign exchange and others<sup>1,2,3,4</sup> | **13403** | **(23)** | **2310** | **(86)** | **236** | **(69)** | **15949** | **(178)** | (21938) | 52 | (1111) | 109 | (227) | 72 | (23276) | 233 |
| **At 31 Dec** | **718636** | **(690)** | **25832** | **(1240)** | **4037** | **(895)** | **748505** | **(2825)** | 656651 | (587) | 41610 | (1158) | 3646 | (801) | 701907 | (2546) |
| ECL income statement change for the <br>period<br>|  | **584** |  | **(1238)** |  | **(1088)** |  | **(1742)** |  | 1008 |  | (1310) |  | (1119) |  | (1421) |
| Recoveries |  |  |  |  |  |  |  | **243** |  |  |  |  |  |  |  | 220 |
| Others |  |  |  |  |  |  |  | **19** |  |  |  |  |  |  |  | (32) |
| **Total ECL income statement change for** <br>**the period**<br>|  |  |  |  |  |  |  | **(1480)** |  |  |  |  |  |  |  | (1233) |

---

1At 31 December 2025, total includes $2.7bn (31 December 2024: $0.8bn) of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of $16m (31 December

2024: $23m), reflecting business disposals, as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page 355.

2This includes $7.2bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $7m in relation to disposal of our retained portfolio of home and other retail loans in France as disclosed in Note 23 on page

355. 3At 31 December 2024, total includes $6.4bn of nominal amount and $1m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees following the sale of our banking business in Canada

during 2024.

4At December 2024, total includes $2.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina during 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **181** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

During the year, there was a net transfer from stage 2 to stage 1 of $7,602m gross carrying/nominal amounts. This was mainly driven by model

recalibration for retail portfolios in HSBC UK ($11,245m) where the PD was aligned to the most recent observed performance. This was partly

offset by a net transfer from stage 1 to stage 2 in Hong Kong ($1,152m) primarily due to a new mortgage model implementation and in Mexico

($1,042m) within the unsecured lending portfolios.

🡠A summary of basis of preparation is available on page <u>[158](#ie4edc76213cf40e9ae3dd93b36f88427_154)</u>.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **Total** | **Total** |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **344676** | **(58)** | **34341** | **(130)** | **2474** | **(285)** | **381491** | **(473)** |
| Transfers of financial instruments: | **10647** | **(89)** | **(11388)** | **82** | **741** | **7** | **—** | **—** |
| – transfers from stage 1 to stage 2 | **(29872)** | **9** | **29872** | **(9)** | **—** | **—** | **—** | **—** |
| – transfers from stage 2 to stage 1 | **40658** | **(84)** | **(40658)** | **84** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(289)** | **—** | **(1146)** | **50** | **1435** | **(50)** | **—** | **—** |
| – transfers from stage 3 | **150** | **(14)** | **544** | **(43)** | **(694)** | **57** | **—** | **—** |
| Net remeasurement of ECL arising from transfer of <br>stage<br>| **—** | **52** | **—** | **(31)** | **—** | **(1)** | **—** | **20** |
| Net new and further lending/repayments | **20746** | **(4)** | **(6856)** | **29** | **(657)** | **28** | **13233** | **53** |
| Change to risk parameters – credit quality  | **—** | **39** | **—** | **(43)** | **—** | **(104)** | **—** | **(108)** |
| Changes to models used for ECL calculation | **—** | **5** | **—** | **(4)** | **—** | **—** | **—** | **1** |
| Assets written off | **—** | **—** | **—** | **—** | **(63)** | **63** | **(63)** | **63** |
| Foreign exchange and others<sup>1,2</sup> | **12254** | **(5)** | **2190** | **(11)** | **176** | **(20)** | **14620** | **(36)** |
| **At 31 Dec 2025** | **388323** | **(60)** | **18287** | **(108)** | **2671** | **(312)** | **409281** | **(480)** |
| ECL income statement change for the period |  | **92** |  | **(49)** |  | **(77)** |  | **(34)** |
| Recoveries |  |  |  |  |  |  |  | **6** |
| Others |  |  |  |  |  |  |  | **4** |
| **Total ECL income statement change for the** <br>**period**<br>|  |  |  |  |  |  |  | **(24)** |

---

1Total includes $2.3bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding

allowance for ECL of $2m, including business disposals as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page 355.

2This includes $0.4bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $1m in relation to disposal of our retained

portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) | First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to <br>customers including loan commitments and financial guarantees (continued) |
|  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired |  |  |
|  | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | Total | Total |
|  | Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 340764 | (109) | 38513 | (202) | 2258 | (264) | 381535 | (575) |
| Transfers of financial instruments: | (3561) | (232) | 2694 | 232 | 867 |  |  |  |
| – transfers from stage 1 to stage 2 | (33524) | 23 | 33524 | (23) |  |  |  |  |
| – transfers from stage 2 to stage 1 | 30113 | (244) | (30113) | 244 |  |  |  |  |
| – transfers to stage 3 | (290) | 6 | (1127) | 90 | 1417 | (96) |  |  |
| – transfers from stage 3 | 140 | (17) | 410 | (79) | (550) | 96 |  |  |
| Net remeasurement of ECL arising from transfer of <br>stage<br>|  | 163 |  | (152) |  | (30) |  | (19) |
| Net new and further lending/repayments | 14008 | 20 | (6336) | 26 | (523) | 33 | 7149 | 79 |
| Change to risk parameters – credit quality  |  | 115 |  | (73) |  | (103) |  | (61) |
| Changes to models used for ECL calculation |  | (8) |  | 29 |  | 1 |  | 22 |
| Assets written off |  |  |  |  | (63) | 63 | (63) | 63 |
| Foreign exchange and others | (6535) | (7) | (530) | 10 | (65) | 15 | (7130) | 18 |
| At 31 Dec 2024 | 344676 | (58) | 34341 | (130) | 2474 | (285) | 381491 | (473) |
| ECL income statement change for the period |  | 290 |  | (170) |  | (99) |  | 21 |
| Recoveries |  |  |  |  |  |  |  | 7 |
| Others |  |  |  |  |  |  |  | (1) |
| Total ECL income statement change for the period |  |  |  |  |  |  |  | 27 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **182** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments | Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan <br>commitments |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **Total** | **Total** |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **156312** | **(280)** | **3760** | **(658)** | **343** | **(199)** | **160415** | **(1137)** |
| Transfers of financial instruments: | **(2134)** | **(381)** | **1322** | **742** | **812** | **(361)** | **—** | **—** |
| – transfers from stage 1 to stage 2 | **(7206)** | **144** | **7206** | **(144)** | **—** | **—** | **—** | **—** |
| – transfers from stage 2 to stage 1 | **5138** | **(518)** | **(5138)** | **518** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(122)** | **3** | **(828)** | **408** | **950** | **(411)** | **—** | **—** |
| – transfers from stage 3 | **56** | **(10)** | **82** | **(40)** | **(138)** | **50** | **—** | **—** |
| Net remeasurement of ECL arising from transfer of <br>stage<br>| **—** | **255** | **—** | **(246)** | **—** | **(4)** | **—** | **5** |
| Changes due to modifications not derecognised | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Net new and further lending/repayments | **5503** | **61** | **(758)** | **108** | **103** | **34** | **4848** | **203** |
| Change to risk parameters – credit quality  | **—** | **39** | **—** | **(640)** | **—** | **(517)** | **—** | **(1118)** |
| Changes to models used for ECL calculation | **—** | **(34)** | **—** | **—** | **—** | **(17)** | **—** | **(51)** |
| Assets written off | **—** | **—** | **—** | **—** | **(847)** | **847** | **(847)** | **847** |
| Foreign exchange and others | **4118** | **(14)** | **147** | **(43)** | **23** | **(14)** | **4288** | **(71)** |
| **At 31 Dec 2025** | **163799** | **(354)** | **4471** | **(737)** | **434** | **(231)** | **168704** | **(1322)** |
| ECL income statement change for the period |  | **321** |  | **(778)** |  | **(504)** |  | **(961)** |
| Recoveries |  |  |  |  |  |  |  | **123** |
| Others |  |  |  |  |  |  |  | **(5)** |
| **Total ECL income statement change for the** <br>**period**<br>|  |  |  |  |  |  |  | **(843)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 1 Jan 2024 | 153292 | (253) | 6547 | (698) | 450 | (144) | 160289 | (1095) |
| Transfers of financial instruments: | 796 | (453) | (1469) | 717 | 673 | (264) |  |  |
| – transfers from stage 1 to stage 2 | (6427) | 129 | 6427 | (129) |  |  |  |  |
| – transfers from stage 2 to stage 1 | 7255 | (569) | (7255) | 569 |  |  |  |  |
| – transfers to stage 3 | (179) | 2 | (765) | 327 | 944 | (329) |  |  |
| – transfers from stage 3 | 147 | (15) | 124 | (50) | (271) | 65 |  |  |
| Net remeasurement of ECL arising from transfer of <br>stage<br>|  | 280 |  | (256) |  | (45) |  | (21) |
| Changes due to modifications not derecognised |  |  |  |  | (2) |  | (2) |  |
| Net new and further lending/repayments | 9604 | 18 | (1122) | 127 | (1) | 194 | 8481 | 339 |
| Change to risk parameters – credit quality  |  | 79 |  | (476) |  | (694) |  | (1091) |
| Changes to models used for ECL calculation |  | 22 |  | (122) |  | 1 |  | (99) |
| Assets written off |  |  |  |  | (736) | 736 | (736) | 736 |
| Foreign exchange and others<sup>1</sup> | (7380) | 27 | (196) | 50 | (41) | 17 | (7617) | 94 |
| At 31 Dec 2024 | 156312 | (280) | 3760 | (658) | 343 | (199) | 160415 | (1137) |
| ECL income statement change for the period |  | 399 |  | (727) |  | (544) |  | (872) |
| Recoveries |  |  |  |  |  |  |  | 106 |
| Others |  |  |  |  |  |  |  | (10) |
| Total ECL income statement change for the period |  |  |  |  |  |  |  | (776) |

---

1Total includes $4.5bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in

Canada and our business in Argentina during 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **183** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees |
|  | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Non-credit impaired** | **Credit impaired** | **Credit impaired** |  |  |
|  | **Stage 1** | **Stage 1** | **Stage 2** | **Stage 2** | **Stage 3** | **Stage 3** | **Total** | **Total** |
|  | **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>| **Gross** <br>**carrying/** <br>**nominal** <br>**amount**<br>| **Allowance** <br>**for ECL**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **155663** | **(249)** | **3509** | **(370)** | **829** | **(317)** | **160001** | **(936)** |
| Transfers of financial instruments: | **(1310)** | **(194)** | **600** | **418** | **710** | **(224)** | **—** | **—** |
| – transfers from stage 1 to stage 2 | **(4026)** | **72** | **4026** | **(72)** | **—** | **—** | **—** | **—** |
| – transfers from stage 2 to stage 1 | **2910** | **(259)** | **(2910)** | **259** | **—** | **—** | **—** | **—** |
| – transfers to stage 3 | **(252)** | **8** | **(681)** | **298** | **933** | **(306)** | **—** | **—** |
| – transfers from stage 3 | **58** | **(15)** | **165** | **(67)** | **(223)** | **82** | **—** | **—** |
| Net remeasurement of ECL arising from transfer of <br>stage<br>| **—** | **104** | **—** | **(101)** | **—** | **(4)** | **—** | **(1)** |
| Changes due to modifications not derecognised | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Net new and further lending/repayments | **15130** | **(64)** | **(1008)** | **173** | **87** | **16** | **14209** | **125** |
| Change to risk parameters – credit quality  | **—** | **131** | **—** | **(482)** | **—** | **(520)** | **—** | **(871)** |
| Changes to models used for ECL calculation | **—** | **—** | **—** | **(1)** | **—** | **1** | **—** | **—** |
| Assets written off | **—** | **—** | **—** | **—** | **(731)** | **731** | **(731)** | **731** |
| Foreign exchange and others<sup>1,2</sup> | **(2969)** | **(4)** | **(27)** | **(32)** | **37** | **(35)** | **(2959)** | **(71)** |
| **At 31 Dec 2025** | **166514** | **(276)** | **3074** | **(395)** | **932** | **(352)** | **170520** | **(1023)** |
| ECL income statement change for the period |  | **171** |  | **(411)** |  | **(507)** |  | **(747)** |
| Recoveries |  |  |  |  |  |  |  | **114** |
| Others |  |  |  |  |  |  |  | **20** |
| **Total ECL income statement change for the** <br>**period**<br>|  |  |  |  |  |  |  | **(613)** |

---

1Total includes $0.4bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $11m,

reflecting business disposals, as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page 355.

2This includes $6.8bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $6m in relation to disposal of our retained

portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) | Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers <br>including loan commitments and financial guarantees (continued) |
|  | Non-credit impaired | Non-credit impaired | Non-credit impaired | Non-credit impaired | Credit impaired | Credit impaired |  |  |
|  | Stage 1 | Stage 1 | Stage 2 | Stage 2 | Stage 3 | Stage 3 | Total | Total |
|  | Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>| Gross <br>carrying/ <br>nominal <br>amount<br>| Allowance <br>for ECL<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 156767 | (240) | 5895 | (534) | 1152 | (448) | 163814 | (1222) |
| Transfers of financial instruments: | 742 | (360) | (1570) | 528 | 828 | (168) |  |  |
| – transfers from stage 1 to stage 2 | (5269) | 94 | 5269 | (94) |  |  |  |  |
| – transfers from stage 2 to stage 1 | 6181 | (434) | (6181) | 434 |  |  |  |  |
| – transfers to stage 3 | (274) | 1 | (823) | 268 | 1097 | (269) |  |  |
| – transfers from stage 3 | 104 | (21) | 165 | (80) | (269) | 101 |  |  |
| Net remeasurement of ECL arising from transfer of <br>stage<br>|  | 302 |  | (197) |  | (57) |  | 48 |
| Changes due to modifications not derecognised |  |  |  |  | (23) |  | (23) |  |
| Net new and further lending/repayments | 6177 | (55) | (431) | 125 | (272) | 243 | 5474 | 313 |
| Change to risk parameters – credit quality  |  | 57 |  | (325) |  | (640) |  | (908) |
| Changes to models used for ECL calculation |  | 15 |  | (16) |  | (22) |  | (23) |
| Assets written off |  |  |  |  | (735) | 735 | (735) | 735 |
| Foreign exchange and others<sup>1,2</sup> | (8023) | 32 | (385) | 49 | (121) | 40 | (8529) | 121 |
| At 31 Dec 2024 | 155663 | (249) | 3509 | (370) | 829 | (317) | 160001 | (936) |
| ECL income statement change for the period |  | 319 |  | (413) |  | (476) |  | (570) |
| Recoveries |  |  |  |  |  |  |  | 107 |
| Others |  |  |  |  |  |  |  | (21) |
| Total ECL income statement change for the period |  |  |  |  |  |  |  | (484) |

---

1Total includes $0.3bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $10m,

reflecting business disposals, as disclosed in Note 23 'Assets held for sale and liabilities of disposal groups held for sale' on page 355.

2Total includes $4.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in

Canada during 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **184** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  | Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost  |
|  |  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |  |
|  | **PD range**<sup>1,2</sup> | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **ECL** <br>**coverage**<br>|
|  | **%** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** |
| **First lien residential** <br>**mortgages**<br>|  | **365498** | **18148** | **2655** | **386301** | **(58)** | **(109)** | **(313)** | **(480)** | **0.1** |
| – Band 1 | **0.000 to 0.250** | **251963** | **1147** | **—** | **253110** | **(14)** | **(4)** | **—** | **(18)** | **—** |
| – Band 2 | **0.251 to 0.500** | **81972** | **1911** | **—** | **83883** | **(15)** | **(5)** | **—** | **(20)** | **—** |
| – Band 3 | **0.501 to 1.500** | **26508** | **9975** | **—** | **36483** | **(11)** | **(21)** | **—** | **(32)** | **0.1** |
| – Band 4 | **1.501 to 5.000** | **4458** | **3160** | **—** | **7618** | **(16)** | **(15)** | **—** | **(31)** | **0.4** |
| – Band 5 | **5.001 to 20.000** | **327** | **1130** | **—** | **1457** | **—** | **(11)** | **—** | **(11)** | **0.8** |
| – Band 6 | **20.001 to 99.999** | **270** | **825** | **—** | **1095** | **(2)** | **(53)** | **—** | **(55)** | **5.0** |
| – Band 7 | **100.000** | **—** | **—** | **2655** | **2655** | **—** | **—** | **(313)** | **(313)** | **11.8** |
| **Credit cards** |  | **22781** | **3260** | **373** | **26414** | **(339)** | **(731)** | **(231)** | **(1301)** | **4.9** |
| – Band 1 | **0.000 to 0.250** | **10033** | **1** | **—** | **10034** | **(25)** | **—** | **—** | **(25)** | **0.2** |
| – Band 2 | **0.251 to 0.500** | **1583** | **5** | **—** | **1588** | **(11)** | **(1)** | **—** | **(12)** | **0.8** |
| – Band 3 | **0.501 to 1.500** | **6389** | **86** | **—** | **6475** | **(89)** | **(9)** | **—** | **(98)** | **1.5** |
| – Band 4 | **1.501 to 5.000** | **3960** | **834** | **—** | **4794** | **(125)** | **(75)** | **—** | **(200)** | **4.2** |
| – Band 5 | **5.001 to 20.000** | **799** | **1736** | **—** | **2535** | **(86)** | **(279)** | **—** | **(365)** | **14.4** |
| – Band 6 | **20.001 to 99.999** | **17** | **598** | **—** | **615** | **(3)** | **(367)** | **—** | **(370)** | **60.2** |
| – Band 7 | **100.000** | **—** | **—** | **373** | **373** | **—** | **—** | **(231)** | **(231)** | **61.9** |
| **Other personal lending** |  | **58417** | **2479** | **917** | **61813** | **(270)** | **(395)** | **(351)** | **(1016)** | **1.6** |
| – Band 1 | **0.000 to 0.250** | **25714** | **3** | **—** | **25717** | **(26)** | **—** | **—** | **(26)** | **0.1** |
| – Band 2 | **0.251 to 0.500** | **5680** | **18** | **—** | **5698** | **(5)** | **—** | **—** | **(5)** | **0.1** |
| – Band 3 | **0.501 to 1.500** | **13964** | **142** | **—** | **14106** | **(44)** | **(1)** | **—** | **(45)** | **0.3** |
| – Band 4 | **1.501 to 5.000** | **11219** | **387** | **—** | **11606** | **(114)** | **(13)** | **—** | **(127)** | **1.1** |
| – Band 5 | **5.001 to 20.000** | **1443** | **1235** | **—** | **2678** | **(79)** | **(132)** | **—** | **(211)** | **7.9** |
| – Band 6 | **20.001 to 99.999** | **397** | **694** | **—** | **1091** | **(2)** | **(249)** | **—** | **(251)** | **23.0** |
| – Band 7 | **100.000** | **—** | **—** | **917** | **917** | **—** | **—** | **(351)** | **(351)** | **38.3** |
| **At 31 Dec 2025** |  | **446696** | **23887** | **3945** | **474528** | **(667)** | **(1235)** | **(895)** | **(2797)** | **0.6** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| First lien residential <br>mortgages<br>|  | 324703 | 34177 | 2450 | 361330 | (59) | (130) | (284) | (473) | 0.1 |
| – Band 1 | 0.000 to 0.250 | 234451 | 1820 |  | 236271 | (15) | (4) |  | (19) |  |
| – Band 2 | 0.251 to 0.500 | 64340 | 11816 |  | 76156 | (10) | (9) |  | (19) |  |
| – Band 3 | 0.501 to 1.500 | 22005 | 14631 |  | 36636 | (16) | (25) |  | (41) | 0.1 |
| – Band 4 | 1.501 to 5.000 | 3668 | 3990 |  | 7658 | (17) | (27) |  | (44) | 0.6 |
| – Band 5 | 5.001 to 20.000 | 117 | 1178 |  | 1295 |  | (13) |  | (13) | 1.0 |
| – Band 6 | 20.001 to 99.999 | 122 | 742 |  | 864 | (1) | (52) |  | (53) | 6.1 |
| – Band 7 | 100.000 |  |  | 2450 | 2450 |  |  | (284) | (284) | 11.6 |
| Credit cards |  | 21611 | 2991 | 313 | 24915 | (268) | (660) | (199) | (1127) | 4.5 |
| – Band 1 | 0.000 to 0.250 | 10051 | 1 |  | 10052 | (26) |  |  | (26) | 0.3 |
| – Band 2 | 0.251 to 0.500 | 2340 | 4 |  | 2344 | (15) | (1) |  | (16) | 0.7 |
| – Band 3 | 0.501 to 1.500 | 5113 | 23 |  | 5136 | (72) | (5) |  | (77) | 1.5 |
| – Band 4 | 1.501 to 5.000 | 3847 | 1013 |  | 4860 | (123) | (103) |  | (226) | 4.7 |
| – Band 5 | 5.001 to 20.000 | 260 | 1526 |  | 1786 | (32) | (263) |  | (295) | 16.5 |
| – Band 6 | 20.001 to 99.999 |  | 424 |  | 424 |  | (288) |  | (288) | 67.9 |
| – Band 7 | 100 |  |  | 313 | 313 |  |  | (199) | (199) | 63.6 |
| Other personal lending |  | 57432 | 2751 | 797 | 60980 | (243) | (368) | (313) | (924) | 1.5 |
| – Band 1 | 0.000 to 0.250 | 29124 | 19 |  | 29143 | (30) |  |  | (30) | 0.1 |
| – Band 2 | 0.251 to 0.500 | 6109 | 242 |  | 6351 | (9) | (1) |  | (10) | 0.2 |
| – Band 3 | 0.501 to 1.500 | 11702 | 121 |  | 11823 | (37) | (3) |  | (40) | 0.3 |
| – Band 4 | 1.501 to 5.000 | 9006 | 660 |  | 9666 | (95) | (25) |  | (120) | 1.2 |
| – Band 5 | 5.001 to 20.000 | 1433 | 1076 |  | 2509 | (70) | (111) |  | (181) | 7.2 |
| – Band 6 | 20.001 to 99.999 | 58 | 633 |  | 691 | (2) | (228) |  | (230) | 33.3 |
| – Band 7 | 100.000 |  |  | 797 | 797 |  |  | (313) | (313) | 39.3 |
| At 31 Dec 2024 |  | 403746 | 39919 | 3560 | 447225 | (570) | (1158) | (796) | (2524) | 0.6 |

---

112-month point in time adjusted for multiple economic scenarios.

2PD bands do not consider the impact of any management judgemental adjustments on stage or allowances for ECL including the impact of new models not yet

formally implemented. For a list of management judgemental adjustments see page <u>[153](#ie4edc76213cf40e9ae3dd93b36f88427_5795)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **185** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  | Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees  |
|  |  | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Nominal amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |  |
|  | **PD range**<sup>1</sup> | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **Stage 1** | **Stage 2** | **Stage 3** | **Total** | **ECL** <br>**coverage**<br>|
|  | **%** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **%** |
| **Loan and other credit-**<br>**related commitments**<br>|  | **270494** | **1945** | **92** | **272531** | **(22)** | **(5)** | **—** | **(27)** | **—** |
| – Band 1 | **0.000 to 0.250** | **218170** | **98** | **—** | **218268** | **(9)** | **—** | **—** | **(9)** | **—** |
| – Band 2 | **0.251 to 0.500** | **11412** | **76** | **—** | **11488** | **(2)** | **—** | **—** | **(2)** | **—** |
| – Band 3 | **0.501 to 1.500** | **33294** | **423** | **—** | **33717** | **(7)** | **—** | **—** | **(7)** | **—** |
| – Band 4 | **1.501 to 5.000** | **6694** | **615** | **—** | **7309** | **(3)** | **(3)** | **—** | **(6)** | **0.1** |
| – Band 5 | **5.001 to 20.000** | **793** | **586** | **—** | **1379** | **(1)** | **—** | **—** | **(1)** | **0.1** |
| – Band 6 | **20.001 to 99.999** | **131** | **147** | **—** | **278** | **—** | **(2)** | **—** | **(2)** | **0.7** |
| – Band 7 | **100.000** | **—** | **—** | **92** | **92** | **—** | **—** | **—** | **—** | **—** |
| **Financial guarantees** |  | **1446** | **—** | **—** | **1446** | **(1)** | **—** | **—** | **(1)** | **0.1** |
| – Band 1 | **0.000 to 0.250** | **1353** | **—** | **—** | **1353** | **(1)** | **—** | **—** | **(1)** | **0.1** |
| – Band 2 | **0.251 to 0.500** | **30** | **—** | **—** | **30** | **—** | **—** | **—** | **—** | **—** |
| – Band 3 | **0.501 to 1.500** | **44** | **—** | **—** | **44** | **—** | **—** | **—** | **—** | **—** |
| – Band 4 | **1.501 to 5.000** | **19** | **—** | **—** | **19** | **—** | **—** | **—** | **—** | **—** |
| – Band 5 | **5.001 to 20.000** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| – Band 6 | **20.001 to 99.999** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| – Band 7 | **100.000** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **At 31 Dec 2025** |  | **271940** | **1945** | **92** | **273977** | **(23)** | **(5)** | **—** | **(28)** | **—** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loan and other credit-<br>related commitments<br>|  | 251489 | 1680 | 86 | 253255 | (17) | (5) | (22) |  |
| – Band 1 | 0.000 to 0.250 | 199314 | 65 |  | 199379 | (9) |  | (9) |  |
| – Band 2 | 0.251 to 0.500 | 14409 | 178 |  | 14587 | (2) |  | (2) |  |
| – Band 3 | 0.501 to 1.500 | 28081 | 389 |  | 28470 | (1) |  | (1) |  |
| – Band 4 | 1.501 to 5.000 | 8431 | 463 |  | 8894 | (3) |  | (3) |  |
| – Band 5 | 5.001 to 20.000 | 800 | 484 |  | 1284 | (2) |  | (2) | 0.2 |
| – Band 6 | 20.001 to 99.999 | 454 | 101 |  | 555 |  |  |  |  |
| – Band 7 | 100.000 |  |  | 86 | 86 |  | (5) | (5) | 5.8 |
| Financial guarantees |  | 1416 | 11 |  | 1427 |  |  |  |  |
| – Band 1 | 0.000 to 0.250 | 743 |  |  | 743 |  |  |  |  |
| – Band 2 | 0.251 to 0.500 | 389 |  |  | 389 |  |  |  |  |
| – Band 3 | 0.501 to 1.500 | 55 |  |  | 55 |  |  |  |  |
| – Band 4 | 1.501 to 5.000 | 220 |  |  | 220 |  |  |  |  |
| – Band 5 | 5.001 to 20.000 | 3 | 11 |  | 14 |  |  |  |  |
| – Band 6 | 20.001 to 99.999 | 6 |  |  | 6 |  |  |  |  |
| – Band 7 | 100.000 |  |  |  |  |  |  |  |  |
| At 31 Dec 2024 |  | 252905 | 1691 | 86 | 254682 | (17) | (5) | (22) |  |

---

112-month point in time adjusted for multiple economic scenarios.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **186** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

Supplementary information

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory | Wholesale lending – loans and advances to customers at amortised cost by country/territory |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |
|  | **Corporate** <br>**and** <br>**commercial**<br>| **of which: real** <br>**estate and** <br>**construction**<sup>1</sup><br>| **Non-bank** <br>**financial** <br>**institutions**<br>| **Total** | **Corporate** <br>**and** <br>**commercial**<br>| **of which: real** <br>**estate and** <br>**construction**<sup>1</sup><br>| **Non-bank** <br>**financial** <br>**institutions**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| UK | **116284** | **21104** | **27232** | **143516** | **(1270)** | **(286)** | **(127)** | **(1397)** |
| –of which: HSBC UK Bank <br>plc (ring-fenced bank)<br>| **93186** | **20112** | **11518** | **104704** | **(1173)** | **(253)** | **(84)** | **(1257)** |
| –of which: HSBC Bank plc <br>(non-ring-fenced bank)<br>| **23098** | **992** | **15714** | **38812** | **(97)** | **(33)** | **(43)** | **(140)** |
| France | **25655** | **4032** | **10556** | **36211** | **(379)** | **(90)** | **(28)** | **(407)** |
| Germany | **5883** | **431** | **142** | **6025** | **(175)** | **(10)** | **—** | **(175)** |
| Hong Kong | **114792** | **37890** | **18591** | **133383** | **(3515)** | **(1991)** | **(117)** | **(3632)** |
| Australia | **14472** | **4725** | **4627** | **19099** | **(28)** | **(3)** | **(1)** | **(29)** |
| India | **13789** | **2131** | **6687** | **20476** | **(53)** | **(5)** | **(7)** | **(60)** |
| Indonesia | **3063** | **172** | **573** | **3636** | **(74)** | **—** | **(1)** | **(75)** |
| Mainland China | **27663** | **5254** | **12272** | **39935** | **(281)** | **(197)** | **(4)** | **(285)** |
| Malaysia | **5560** | **1059** | **486** | **6046** | **(34)** | **(7)** | **—** | **(34)** |
| Singapore | **16619** | **2878** | **1912** | **18531** | **(126)** | **(54)** | **(1)** | **(127)** |
| Taiwan | **4685** | **69** | **—** | **4685** | **(1)** | **—** | **—** | **(1)** |
| Egypt | **806** | **34** | **41** | **847** | **(111)** | **(24)** | **—** | **(111)** |
| UAE | **14082** | **1792** | **2714** | **16796** | **(535)** | **(333)** | **(42)** | **(577)** |
| US | **22054** | **2355** | **9916** | **31970** | **(276)** | **(80)** | **(10)** | **(286)** |
| Mexico | **11655** | **683** | **1133** | **12788** | **(263)** | **(35)** | **(23)** | **(286)** |
| Other | **27443** | **3243** | **3176** | **30619** | **(405)** | **(148)** | **(8)** | **(413)** |
| **At 31 Dec 2025** | **424505** | **87852** | **100058** | **524563** | **(7526)** | **(3263)** | **(369)** | **(7895)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| UK | 102245 | 17540 | 21771 | 124016 | (1412) | (289) | (234) | (1646) |
| –of which: HSBC UK Bank <br>plc (ring-fenced bank)<br>| 79833 | 16722 | 10268 | 90101 | (1146) | (260) | (54) | (1200) |
| –of which: HSBC Bank plc <br>(non-ring-fenced bank)<br>| 22412 | 818 | 11503 | 33915 | (266) | (29) | (180) | (446) |
| France | 25950 | 3986 | 7222 | 33172 | (257) | (42) | (9) | (266) |
| Germany | 6256 | 264 | 421 | 6677 | (153) |  |  | (153) |
| Hong Kong | 118332 | 42042 | 17846 | 136178 | (2922) | (1494) | (112) | (3034) |
| Australia | 12532 | 4509 | 2931 | 15463 | (30) | (3) |  | (30) |
| India | 12540 | 2581 | 6425 | 18965 | (45) | (5) | (6) | (51) |
| Indonesia | 3132 | 184 | 356 | 3488 | (109) | (44) |  | (109) |
| Mainland China | 29930 | 5326 | 8044 | 37974 | (222) | (117) | (6) | (228) |
| Malaysia | 5773 | 1067 | 278 | 6051 | (40) | (10) |  | (40) |
| Singapore | 17267 | 3266 | 1830 | 19097 | (234) | (80) | (1) | (235) |
| Taiwan | 3848 | 60 |  | 3848 |  |  |  |  |
| Egypt | 777 | 32 | 51 | 828 | (115) | (20) |  | (115) |
| UAE | 13278 | 1809 | 1589 | 14867 | (408) | (258) |  | (408) |
| US | 24084 | 4028 | 10348 | 34432 | (246) | (106) | (47) | (293) |
| Mexico | 10318 | 525 | 1407 | 11725 | (201) | (9) | (11) | (212) |
| Other | 24422 | 2844 | 1945 | 26367 | (361) | (121) | (10) | (371) |
| At 31 Dec 2024 | 410684 | 90063 | 82464 | 493148 | (6755) | (2598) | (436) | (7191) |

---

1Real estate lending within this disclosure corresponds solely to the industry of the borrower. Commercial real estate on page <u>[174](#ie4edc76213cf40e9ae3dd93b36f88427_181)</u> includes borrowers in multiple

industries investing in income-producing assets and, to a lesser extent, their construction and development.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **187** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory | Personal lending – loans and advances to customers at amortised cost by country/territory |
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** | **Allowance for ECL** |
|  | **First lien** <br>**residential** <br>**mortgages**<br>| **Credit** <br>**cards**<br>| **Other** <br>**personal** <br>**lending**<br>| **Total** | **First lien** <br>**residential** <br>**mortgages**<br>| **Credit** <br>**cards**<br>| **Other** <br>**personal** <br>**lending**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| UK | **191180** | **9083** | **15671** | **215934** | **(138)** | **(345)** | **(324)** | **(807)** |
| –of which: HSBC UK Bank plc (ring-fenced bank) | **186776** | **8992** | **11673** | **207441** | **(134)** | **(344)** | **(294)** | **(772)** |
| – of which: HSBC Bank plc (non-ring-fenced <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;bank)<br>| **4404** | **91** | **3998** | **8493** | **(4)** | **(1)** | **(30)** | **(35)** |
| France | **22** | **—** | **3** | **25** | **(12)** | **—** | **(2)** | **(14)** |
| Hong Kong | **108200** | **10379** | **25551** | **144130** | **(4)** | **(311)** | **(170)** | **(485)** |
| Australia | **25619** | **288** | **19** | **25926** | **(8)** | **(8)** | **—** | **(16)** |
| India | **2344** | **323** | **667** | **3334** | **(3)** | **(20)** | **(3)** | **(26)** |
| Indonesia | **36** | **152** | **58** | **246** | **(2)** | **(8)** | **(5)** | **(15)** |
| Mainland China | **5417** | **164** | **402** | **5983** | **(20)** | **(22)** | **(6)** | **(48)** |
| Malaysia | **3494** | **1070** | **267** | **4831** | **(16)** | **(38)** | **(26)** | **(80)** |
| Singapore | **6776** | **691** | **7415** | **14882** | **—** | **(38)** | **(36)** | **(74)** |
| Taiwan | **6570** | **437** | **1123** | **8130** | **—** | **(5)** | **(14)** | **(19)** |
| Egypt | **—** | **119** | **278** | **397** | **—** | **(1)** | **(1)** | **(2)** |
| UAE | **2456** | **587** | **970** | **4013** | **(5)** | **(39)** | **(18)** | **(62)** |
| US | **19773** | **183** | **567** | **20523** | **(14)** | **(14)** | **(2)** | **(30)** |
| Mexico | **8390** | **2289** | **3055** | **13734** | **(192)** | **(415)** | **(376)** | **(983)** |
| Other | **6024** | **649** | **5767** | **12440** | **(66)** | **(37)** | **(33)** | **(136)** |
| **At 31 Dec 2025** | **386301** | **26414** | **61813** | **474528** | **(480)** | **(1301)** | **(1016)** | **(2797)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| UK | 170809 | 8016 | 13410 | 192235 | (139) | (284) | (256) | (679) |
| – of which: HSBC UK Bank plc (ring-fenced bank) | 166709 | 7933 | 10096 | 184738 | (132) | (283) | (251) | (666) |
| – of which: HSBC Bank plc (non-ring-fenced <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;bank)<br>| 4100 | 83 | 3314 | 7497 | (7) | (1) | (5) | (13) |
| France | 377 | 1 | 6600 | 6978 | (12) |  | (12) | (24) |
| Hong Kong | 107759 | 10165 | 21511 | 139435 | (5) | (291) | (130) | (426) |
| Australia | 22154 | 372 | 35 | 22561 | (7) | (8) | (1) | (16) |
| India | 1984 | 265 | 600 | 2849 | (3) | (14) | (4) | (21) |
| Indonesia | 46 | 142 | 181 | 369 | (3) | (6) | (5) | (14) |
| Mainland China | 6087 | 227 | 544 | 6858 | (12) | (33) | (9) | (54) |
| Malaysia | 3252 | 938 | 260 | 4450 | (23) | (36) | (26) | (85) |
| Singapore | 5802 | 571 | 6082 | 12455 |  | (28) | (28) | (56) |
| Taiwan | 5788 | 340 | 1084 | 7212 |  | (4) | (11) | (15) |
| Egypt |  | 89 | 232 | 321 |  |  | (1) | (1) |
| UAE | 2082 | 543 | 795 | 3420 | (3) | (31) | (24) | (58) |
| US | 21021 | 195 | 458 | 21674 | (12) | (14) | (2) | (28) |
| Mexico | 7488 | 2242 | 3078 | 12808 | (167) | (339) | (380) | (886) |
| Other | 6681 | 809 | 6110 | 13600 | (87) | (39) | (35) | (161) |
| At 31 Dec 2024 | 361330 | 24915 | 60980 | 447225 | (473) | (1127) | (924) | (2524) |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **188** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information | Loans and advances to customers and banks – other supplementary information |  |  |  |  |  |  |  |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Gross** <br>**carrying** <br>**amount**<br>| **of which:** <br>**stage 3** <br>**and POCI**<br>| **Allowance** <br>**for ECL**<br>| **of which:** <br>**stage 3** <br>**and POCI**<br>| **Change in** <br>**ECL**<br>| **Write-offs** | **Recoveries** | Gross <br>carrying <br>amount<br>| of which: <br>stage 3 <br>and POCI<br>| Allowance <br>for ECL<br>| of which: <br>stage 3 <br>and POCI<br>| Change in <br>ECL<br>| Write-offs | Recoveries |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m | $m |
| First lien residential mortgages | **386301** | **2655** | **(480)** | **(313)** | **(24)** | **(63)** | **6** | 361330 | 2450 | (473) | (284) | 33 | (63) | 7 |
| Credit cards | **26414** | **373** | **(1301)** | **(231)** | **(830)** | **(847)** | **123** | 24915 | 313 | (1127) | (199) | (804) | (736) | 106 |
| Other personal lending | **61813** | **917** | **(1016)** | **(351)** | **(621)** | **(731)** | **114** | 60980 | 797 | (924) | (313) | (508) | (735) | 107 |
| – other personal lending which is secured<sup>1</sup> | **40693** | **270** | **(108)** | **(65)** | **(46)** | **(35)** | **5** | 40320 | 199 | (86) | (34) | (24) | (36) | 4 |
| – other personal lending which is unsecured | **21120** | **647** | **(908)** | **(286)** | **(575)** | **(696)** | **109** | 20660 | 598 | (838) | (279) | (484) | (699) | 103 |
| **Personal lending** | **474528** | **3945** | **(2797)** | **(895)** | **(1475)** | **(1641)** | **243** | 447225 | 3560 | (2524) | (796) | (1279) | (1534) | 220 |
| – agriculture, forestry and fishing | **7592** | **355** | **(97)** | **(60)** | **(11)** | **(10)** | **—** | 7033 | 282 | (94) | (46) | 4 | (10) | 1 |
| – mining and quarrying | **6982** | **126** | **(86)** | **(70)** | **(58)** | **(19)** | **—** | 7592 | 318 | (45) | (32) | 29 | (26) |  |
| – manufacturing | **86372** | **2266** | **(960)** | **(741)** | **(271)** | **(307)** | **16** | 82724 | 1487 | (893) | (638) | (170) | (403) | 3 |
| – electricity, gas, steam and air-conditioning supply | **19322** | **206** | **(126)** | **(85)** | **(19)** | **(17)** | **—** | 16457 | 209 | (122) | (85) |  |  |  |
| – water supply, sewerage, waste management and <br>remediation<br>| **2563** | **112** | **(41)** | **(36)** | **(22)** | **(6)** | **—** | 2961 | 43 | (24) | (16) | 2 | (40) |  |
| – real estate and construction | **87852** | **10589** | **(3263)** | **(2730)** | **(1296)** | **(574)** | **19** | 90063 | 8949 | (2598) | (1842) | (812) | (1554) | 12 |
| – wholesale and retail trade, repair of motor vehicles and <br>motorcycles<br>| **84557** | **2549** | **(1287)** | **(1126)** | **(234)** | **(286)** | **28** | 77830 | 2728 | (1372) | (1188) | (369) | (337) | 8 |
| – transportation and storage | **20719** | **307** | **(174)** | **(75)** | **(40)** | **(205)** | **2** | 22643 | 417 | (321) | (232) | (104) | (20) | 1 |
| – accommodation and food | **14389** | **1436** | **(399)** | **(303)** | **(124)** | **(31)** | **2** | 14734 | 1610 | (299) | (214) | (81) | (27) |  |
| – publishing, audiovisual and broadcasting | **25347** | **377** | **(198)** | **(108)** | **(75)** | **(46)** | **—** | 19826 | 229 | (158) | (61) | (79) | (75) | 2 |
| – professional, scientific and technical activities | **25023** | **520** | **(218)** | **(153)** | **(66)** | **(89)** | **1** | 26128 | 648 | (266) | (188) | (132) | (174) | 1 |
| – administrative and support services | **19525** | **570** | **(395)** | **(321)** | **(151)** | **(59)** | **—** | 20117 | 739 | (320) | (254) | (39) | (88) | 1 |
| – public administration and defence, compulsory social <br>security<br>| **64** | **—** | **—** | **—** | **—** | **—** | **—** | 64 |  |  |  |  |  |  |
| – education | **2259** | **40** | **(26)** | **(11)** | **(2)** | **(3)** | **—** | 1596 | 43 | (27) | (16) | (16) | (3) |  |
| – health and care | **4403** | **98** | **(32)** | **(14)** | **3** | **(13)** | **—** | 4030 | 184 | (51) | (25) | (3) | (12) | 1 |
| – arts, entertainment and recreation | **2313** | **123** | **(51)** | **(42)** | **(29)** | **(16)** | **—** | 2066 | 78 | (35) | (26) | (19) | (22) |  |
| – other services | **6599** | **311** | **(168)** | **(106)** | **44** | **(51)** | **7** | 7288 | 327 | (110) | (66) | (82) | (115) | 10 |
| – activities of households | **841** | **—** | **—** | **—** | **—** | **—** | **—** | 589 |  |  |  |  |  |  |
| – extra-territorial organisations and bodies activities | **164** | **—** | **—** | **—** | **—** | **—** | **—** | 118 |  |  |  |  |  |  |
| – government | **7619** | **121** | **(5)** | **(3)** | **(1)** | **—** | **—** | 6793 | 175 | (7) | (5) | 6 |  |  |
| – asset-backed securities | **—** | **—** | **—** | **—** | **(1)** | **(14)** | **—** | 32 |  | (13) |  | 1 |  |  |
| Corporate and commercial | **424505** | **20106** | **(7526)** | **(5984)** | **(2353)** | **(1746)** | **75** | 410684 | 18466 | (6755) | (4934) | (1864) | (2906) | 40 |
| Non-bank financial institutions | **100058** | **671** | **(369)** | **(294)** | **(112)** | **(182)** | **2** | 82464 | 679 | (436) | (361) | (59) | (19) |  |
| **Wholesale lending** | **524563** | **20777** | **(7895)** | **(6278)** | **(2465)** | **(1928)** | **77** | 493148 | 19145 | (7191) | (5295) | (1923) | (2925) | 40 |
| Loans and advances to customers | **999091** | **24722** | **(10692)** | **(7173)** | **(3940)** | **(3569)** | **320** | 940373 | 22705 | (9715) | (6091) | (3202) | (4459) | 260 |
| Loans and advances to banks | **108469** | **1** | **(7)** | **(1)** | **9** | **—** | **—** | 102052 | 2 | (13) | (2) | (1) |  |  |
| **At 31 Dec 2025** | **1107560** | **24723** | **(10699)** | **(7174)** | **(3931)** | **(3569)** | **320** | 1042425 | 22707 | (9728) | (6093) | (3203) | (4459) | 260 |

---

1'Other personal lending which is secured' has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to residential property, which were previously reported as separate line items.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **189** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Credit risk |  |  |  |

---

HSBC Holdings

(Audited)

Credit risk in HSBC Holdings primarily arises from transactions with

Group subsidiaries.

In HSBC Holdings, the maximum exposure to credit risk arises from

two components:

–financial assets on the balance sheet, where maximum exposure

equals the carrying amount (see page 297); and

–financial guarantees and other guarantees, where the maximum

exposure is the maximum that we would have to pay if the

guarantees were called upon (see Note 33).

In the case of our derivative asset balances (see page 297), there is a

legally enforceable right of offset in the event of counterparty default

and where, as a result, there is a net exposure for credit risk purposes.

However, as there is no intention to settle these balances on a net

basis under normal circumstances, they do not qualify for net

presentation for accounting purposes. These offsets also include

collateral received in cash and other financial assets.

The total offset relating to our derivative asset balances was $1.8bn at

31 December 2025 (2024: $3.0bn).

The credit quality of loans and advances and financial investments,

both of which consist of intra-Group lending and US Treasury bills and

bonds, is assessed as 'strong', with 100% of the exposure being

neither past due nor impaired (2024: 100%). For further details of credit

quality classification, see page <u>[141](#ia4de77d561b247c5a4fe2f73d6ba3dc0_0-0-1-7-10756088)</u>.

Treasury risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Treasury risk.

Approach and policy

(Audited)

We manage treasury risks in order to maintain appropriate levels of

capital, liquidity, funding, foreign exchange and non-traded market risk

to support our business strategy, and meet our regulatory and stress

testing-related requirements.

Our approach to treasury risk management is shaped by our

organisational needs and the regulatory, economic and commercial

environment. We aim to maintain a strong capital and liquidity base to

manage inherent business risks and invest in accordance with our

strategy, adhering to both consolidated and local regulatory

requirements at all times.

Our policy is supported by a risk management framework, with further

details provided on page 119.

🡠For further details, refer to our Pillar 3 Disclosures at 31 December 2025.

Treasury risk management

Key developments in 2025

–The Group continues to maintain and benefit from a healthy capital,

liquidity and funding position, which has been resilient throughout

periods of volatility in the macroeconomic environment and global

markets during 2025. This was further demonstrated by our strong

CET1 performance in the Bank Capital Stress Test published by the

Bank of England as part of the Financial Stability Report on 2

December 2025.

–See page <u>[121](#ie4edc76213cf40e9ae3dd93b36f88427_40)</u> for a summary of key risks including geopolitical and

macroeconomic risks that we are managing.

–The CET1 capital impact of the privatisation of Hang Seng Bank was

a net 110bps in January 2026 (based on the CET1 capital ratio as at

31 December 2025). This included a day one impact on CET1 capital

of around 120bps, partly offset by the release of structural foreign

exchange RWAs, which related to hedging in the run up to the

transaction. These had an adverse impact on CET1 capital of around

10bps at 31 December 2025, which unwound upon the privatisation

taking effect.

🡠For quantitative disclosures on capital ratios, own funds and risk-weighted

assets ('RWAs'), see pages <u>[191](#ie4edc76213cf40e9ae3dd93b36f88427_3855)</u> to <u>[192](#ie4edc76213cf40e9ae3dd93b36f88427_3834)</u>. For quantitative disclosures on

liquidity and funding metrics, see pages <u>[194](#ie4edc76213cf40e9ae3dd93b36f88427_253)</u> to <u>[195](#ie4edc76213cf40e9ae3dd93b36f88427_259)</u>. For quantitative

disclosures on interest rate risk in the banking book, see pages <u>[197](#ie4edc76213cf40e9ae3dd93b36f88427_4944)</u> to <u>[199](#ie4edc76213cf40e9ae3dd93b36f88427_340)</u>.

Governance and structure

The Group Treasurer owns all treasury risks, except for pension and

insurance risks. Pension risk is jointly owned with the Group Head of

Performance and Reward, while insurance risk is owned by the Chief

Executive Officer for Global Insurance. The Global Head of Traded and

Treasury Risk Management and Risk Analytics is the risk steward for all

treasury risks.

Treasury risks excluding pension and insurance risks are the

responsibility of the Group Finance Management Meeting ('GFMM')

and the Group Risk Committee ('GRC'). These risks are actively

managed by Global Treasury with support from the Holdings Asset and

Liability Management Committee ('ALCO') and local ALCOs, overseen

by Treasury Risk Management and Risk Management Meetings.

Pension risk is monitored through local and regional pension risk

management meetings, with global oversight provided by the Global

Pension Financial Risk Management Meeting, chaired by the

accountable risk steward. Insurance risk is overseen by the Global

Insurance Risk Management Meeting, chaired by the Chief Risk and

Compliance Officer for Global Insurance.

Capital, liquidity and funding risk

management processes

Assessment and risk appetite

Our capital management approach is underpinned by a global capital

risk policy, complemented by frameworks for recovery and resolution

planning and stress testing. The policy sets out our approach to

determining key capital risk appetites including for our CET1 ratio, total

capital, minimum requirements for own funds and eligible liabilities

('MREL'), leverage ratio and double leverage. Our internal capital

adequacy assessment process ('ICAAP') evaluates the Group's capital

position, considering both regulatory and internal capital resources and

requirements. Subsidiaries align their ICAAPs with global guidance,

while considering local regulatory regimes to establish their own risk

appetite.

HSBC Holdings provides MREL to its subsidiaries, encompassing both

equity and non-equity capital. These investments are funded by HSBC

Holdings' own equity capital and MREL-eligible debt. MREL includes

own funds and eligible liabilities that can be written down or converted

into capital resources in order to absorb losses or recapitalise a bank in

the event of its failure. HSBC has three resolution groups – the

European, the Asian and the US, with some smaller entities outside

these groups.

HSBC Holdings seeks to maintain a prudent balance between the

composition of its capital and its investments in subsidiaries.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **190** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

As a matter of long-standing policy, HSBC Holdings retains a

substantial holdings capital buffer comprising cash and other high-

quality liquid assets, which we seek to manage within our target

operating range of $19bn - $24bn.

HSBC maintains an adequate and well-diversified liquidity buffer, as

well as a stable funding base, to meet its liquidity and funding

regulatory requirements. We seek to ensure contractual or contingent

obligations can be met by having the appropriate amount, tenor and

composition of funding and liquidity to support our assets.

We aim to ensure management oversight of liquidity and funding risks

at both Group and entity levels through governance arrangements

aligned with our risk management framework. Liquidity and funding

risks are managed at the operating entity level seeking to adhere to

globally consistent policies, procedures and reporting standards.

Operating entities are required to meet internal minimum requirements

and any applicable regulatory requirements at all times.

Our internal liquidity adequacy assessment process ('ILAAP') seeks to

ensure operating entities have strategies, policies, processes and

systems for the identification, measurement, management and

monitoring of liquidity risk across various time horizons, including intra-

day. The ILAAP informs risk appetite setting, and assesses the

capability to manage liquidity and funding effectively in major entities.

Metrics are locally set and managed but undergo global review and

challenge to ensure consistency with the Group's policies and controls.

Planning and performance

Capital and RWA plans are integral to our annual financial resource

strategy approved by the Board. Monthly forecasts are submitted to

the Group Operating Committee, ensuring ongoing monitoring and

management. The responsibility for global capital allocation principles

rests with the Group Chief Financial Officer, supported by the Group

Capital Management Meeting. This is a specialist forum addressing

capital management, reporting into the Holdings ALCO.

Our internal governance processes aim to enhance discipline over our

investment and capital allocation decisions, helping to ensure that

returns align with management's objectives. The Group strategically

allocates financial resources to support business execution and fulfil

regulatory and economic capital needs. We assess business returns by

using a return on average tangible equity measure and a related

economic profit measure.

Funding and liquidity are part of the Board-approved financial resource

plan. Key measures include the liquidity coverage ratio ('LCR') and net

stable funding ratio ('NSFR') and internal liquidity metrics, at the entity

level. We employ a set of measures to help maintain a suitable funding

and liquidity profile such as depositor concentration limits, intra-day

liquidity and forward-looking funding assessments.

🡠For details on regulatory developments see our Pillar 3 Disclosures at

31 December 2025.

Stress testing and recovery and resolution

planning

HSBC employs stress testing to guide the management of capital and

liquidity required to withstand both internal and external shocks to the

organisation, such as systems failure or a global economic downturn.

In addition to our internal stress tests, HSBC undergoes supervisory

stress testing across various jurisdictions, and results from these tests

are critical for evaluating our internal capital and liquidity needs through

the ICAAP and ILAAP. The outcomes from these assessments

influence the setting of regulatory requirements and inform internally

set management buffers.

Stress tests input into business performance through tangible equity

allocation and prompt a reassessment of business plans when

capital, liquidity or returns fall short of targets. These tests also

inform risk mitigation strategies and aid in recovery and resolution

planning. We maintain recovery plans, including contingency funding

plans for the Group and material entities, outlining potential stress

events that could result in a breach of capital or liquidity buffers.

The Group recovery plan establishes a framework and governance

arrangements to support restoring HSBC to a stable and viable

position, reducing the probability of failure from either specific or

market-wide stresses. The recovery plans of our material entities

provide detailed actions that could be taken to stabilise their financial

position in stress environments.

HSBC is equipped with the necessary capabilities and resources to

help manage the unlikely event that the Group might not be

recoverable and would require resolution by regulators. We are

committed to continuing to improve our recovery and resolution

capabilities, aligning with the BoE's expectations and Resolvability

Assessment Framework ('RAF') requirements.

Measurement of interest rate risk in the

banking book processes

Interest rate risk in the banking book ('IRRBB') refers to the potential

negative impact on earnings or capital due to fluctuations in market

interest rates or changes in the expected repricing of client products.

The risk arises from our non-traded assets and liabilities that are not

held for trading intent or in order to hedge positions held with trading

intent. Our global IRRBB risk management framework is designed to

identify, measure, manage and monitor all material sources of IRRBB.

We have established policies and frameworks to help ensure oversight.

To help manage IRRBB and provide more stable earnings, we use a

structural hedge, which is a portfolio of fixed rate assets such as

bonds, derivatives and customer loans. The size and duration of this

hedge may be limited in certain currencies and locations, depending

on available financial resources and market conditions. To reduce

accounting mismatches, we mostly hedge with amortised cost

financial instruments or hedge-accounted derivatives. However,

bonds measured at fair value through other comprehensive income

are also used. We utilise a combination of economic value and

earnings-based measures to help manage IRRBB effectively. These

measures are used to assess IRRBB across the banking book,

supporting the overall monitoring against risk appetite. They include:

–Banking net interest income ('banking NII') sensitivity; and

–Economic value of equity ('EVE') sensitivity.

🡠Further details of HSBC's risk management of interest rate risk in the

banking book can be found in the Group's Pillar 3 Disclosures at

31 December 2025.

Other Group risks

Non-trading book foreign exchange

exposures

Structural foreign exchange exposures

Structural foreign exchange exposures occur when capital is invested

or net assets are held in a foreign operation, such as a subsidiary,

associate, joint venture or branch operating in a different currency than

the reporting entity. The functional currency of an entity typically aligns

with the primary economic environment in which the entity operates.

Exchange differences from these structural exposures are recognised

in other comprehensive income. We present our consolidated financial

statements in US dollars because the US dollar and linked currencies

form the primary currency bloc for our transaction and funding.

Consequently, our consolidated balance sheet is impacted by foreign

exchange differences between the US dollar and all the non-US dollar

functional currencies of our foreign operations. Our main goal in

managing these exposures is to protect our consolidated capital ratios

and those of our banking subsidiaries from exchange rate fluctuations.

We employ hedging strategies, such as net investment and economic

hedges, when it is capital efficient to do so and within approved limits.

The hedging positions are monitored and rebalanced to manage RWAs

or downside risks associated with HSBC's foreign currency

investments.

🡠For further details of our structural foreign exchange exposures, see page

196. ---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **191** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

Transactional foreign exchange exposures

Transactional foreign exchange risk stems from day-to-day transactions

in the banking book generating profit and loss or fair value through

other comprehensive income reserves in a currency different from the

entity's reporting currency. Transactional foreign exchange exposure

generated through profit and loss is periodically transferred to Markets

and Securities Services and managed within limits, except for minor

residual foreign exchange exposure arising from timing differences or

for other reasons. Transactional foreign exchange exposure generated

through other comprehensive income reserves is managed by Global

Treasury within approved appetite.

HSBC Holdings risk management

As a financial services holding company, HSBC Holdings has limited

market risk activities. HSBC Holdings focuses on maintaining sufficient

capital resources to support its diverse activities, distributing these

resources across businesses, and generating dividend and interest

income from its investments. Additionally, it manages operating

expenses, provides dividends to shareholders, pays interest to debt

capital providers, and ensures a reserve of short-term liquid assets for

unexpected situations.

The primary market risks HSBC Holdings is exposed to are banking book

interest rate risk and foreign currency risk. These risks stem from short-

term cash balances, funding positions, loans to subsidiaries, investments

in long-term assets, financial liabilities and foreign exchange hedges. The

objective of HSBC Holdings' market risk management strategy is to

manage volatility in capital resources, cash flows and distributable

reserves due to market changes.

To manage interest rate and foreign currency risk from long-term debt,

HSBC Holdings employs interest rate swaps and cross-currency

interest rate swaps. Additionally, forward foreign exchange contracts

are used to manage structural foreign exchange exposures. Holdings

ALCO oversees market risk in accordance with the company's risk

appetite statement.

🡠For quantitative disclosures on HSBC Holdings' interest rate risk in the

banking book see page <u>[200](#ie4edc76213cf40e9ae3dd93b36f88427_352)</u>.

Pension risk management processes

Our global pensions strategy is to move from defined benefit to

defined contribution plans, where local law allows and it is considered

competitive to do so. Our most significant defined benefit plans have

been closed to new members for years, and many (including the

largest plan in the UK) are also closed to future accrual.

In defined contribution pension plans, the contributions that HSBC is

required to make are known, while the final pension benefits depend

on investment returns from employee selected options. While the

market risk of defined contribution plans is minimal for HSBC,

operational and reputational risks remain.

In defined benefit pension plans, the level of pension benefit is known,

but HSBC's contribution levels can fluctuate due to a number of risks,

including:

–investments delivering a return below the level required to provide

the projected plan benefits;

–economic environment downturns causing asset value reductions

(both equity and debt);

–changes in interest rates or inflation expectations, causing an

increase in the value of plan liabilities; and

–plan members living longer than expected (longevity risk).

Pension risk is assessed using an economic capital model that takes

into account potential variations in these factors. The impact of these

variations on both pension assets and pension liabilities is assessed

using a one-in-200-year stress test. Scenario analysis and other stress

tests are also used to support pension risk management, including the

review of de-risking opportunities.

To fund the benefits associated with defined benefit plans, sponsoring

Group companies, and in some instances employees, make regular

contributions based on actuarial advice and fiduciary consultations.

Contributions ensure that there are sufficient funds to meet the cost of

the accruing benefits for the future service of active members, with

higher contributions required when plan assets are considered

insufficient to cover the existing pension liabilities. Contribution rates

are revised annually or once every three years, depending on the plan.

The defined benefit plans invest in a range of investments designed to

limit the risk of assets failing to meet a plan's liabilities. Any changes in

expected returns may change future contribution requirements. Asset

allocations are strategically set, with benchmarks reviewed every three

to five years.

In addition, some of the Group's pension plans hold longevity swap

contracts, offering long-term protection against increased costs from

longer than expected lifespans. Notably, the HSBC Bank (UK) Pension

Scheme covers approximately 50% of the plan's pensioner liabilities

with such swaps.

Capital risk in 2025

Capital overview

---

| | | |
|:---|:---|:---|
| Capital and liquidity adequacy metrics | Capital and liquidity adequacy metrics | Capital and liquidity adequacy metrics |
|  | At | At |
|  | **31 Dec 2025** | 31 Dec 2024 |
| **Risk-weighted assets ('RWAs') ($bn)** |  |  |
| Credit risk | **687.0** | 657.9 |
| Counterparty credit risk | **42.4** | 37.7 |
| Market risk | **38.5** | 36.2 |
| Operational risk | **120.7** | 106.5 |
| **Total RWAs** | **888.6** | 838.3 |
| **Capital on a transitional basis ($bn)** |  |  |
| Common equity tier 1 capital | **132.6** | 124.9 |
| Tier 1 capital | **153.4** | 144.1 |
| Total capital | **182.4** | 172.4 |
| **Capital ratios on a transitional basis (%)** |  |  |
| Common equity tier 1 ratio | **14.9** | 14.9 |
| Tier 1 ratio | **17.3** | 17.2 |
| Total capital ratio | **20.5** | 20.6 |
| **Capital on an end point basis ($bn)** |  |  |
| Common equity tier 1 ('CET1') capital | **132.6** | 124.9 |
| Tier 1 capital | **153.4** | 144.1 |
| Total capital | **182.4** | 168.5 |
| **Capital ratios on an end point basis (%)** |  |  |
| Common equity tier 1 ratio | **14.9** | 14.9 |
| Tier 1 ratio | **17.3** | 17.2 |
| Total capital ratio | **20.5** | 20.1 |
| **Liquidity coverage ratio ('LCR')** |  |  |
| Total high-quality liquid assets ($bn) | **702.1** | 649.2 |
| Total net cash outflow ($bn) | **512.1** | 470.7 |
| LCR (%) | **137** | 138 |
| **Net stable funding ratio ('NSFR')** |  |  |
| Total available stable funding ($bn) | **1621.0** | 1523.4 |
| Total required stable funding ($bn) | **1133.3** | 1064.5 |
| NSFR (%) | **143** | 143 |

---

References to EU regulations and directives (including technical

standards) should, as applicable, be read as references to the UK's

version of such regulation or directive, as onshored into UK law under

the European Union (Withdrawal) Act 2018, and as may be

subsequently amended under UK law.

Capital figures and ratios in the previous table are calculated in

accordance with the regulatory requirements of the Capital

Requirements Regulation and Directive, the CRR II regulation and the

Prudential Regulation Authority ('PRA') Rulebook ('CRR II').

Effective 1 January 2025, the IFRS 9 transitional arrangements came

to an end, followed by the end of the CRR II grandfathering

provisions on 28 June 2025. Accordingly, our current period capital

figures are the same on both the transitional and end-point basis.

The liquidity coverage ratio is based on the average value of the

preceding 12 months. The net stable funding ratio is based on the

average value of the four preceding quarters.

Regulatory numbers and ratios are presented as at the date of

reporting. Small changes may exist between these numbers and ratios

and those submitted in regulatory filings. Where differences are

significant, we may restate in subsequent periods.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **192** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Own funds disclosure | Own funds disclosure | Own funds disclosure | Own funds disclosure |
| (Table audited) | (Table audited) | At | At |
|  |  | **31 Dec 2025** | 31 Dec 2024 |
| Ref\* |  | **$m** | $m |
|  | **Common equity tier 1 capital: instruments and reserves** |  |  |
| 1 | Capital instruments and the related share premium accounts | **8699** | 22378 |
|  | – ordinary shares | **8699** | 22378 |
| 2 | Retained earnings | **152936** | 138959 |
| 3 | Accumulated other comprehensive income (and other reserves) | **(27)** | (8410) |
| 5 | Minority interests (amount allowed in consolidated CET1) | **3303** | 3960 |
| 5a | Independently reviewed net profits net of any foreseeable charge or dividend | **8076** | 7184 |
| 6 | **Common equity tier 1 capital before regulatory adjustments** | **172987** | 164071 |
| 28 | Total regulatory adjustments to common equity tier 1 | **(40394)** | (39160) |
| 29 | **Common equity tier 1 capital** | **132593** | 124911 |
| 36 | Additional tier 1 capital before regulatory adjustments | **20874** | 19286 |
| 43 | Total regulatory adjustments to additional tier 1 capital | **(70)** | (70) |
| 44 | **Additional tier 1 capital** | **20804** | 19216 |
| 45 | **Tier 1 capital** | **153397** | 144127 |
| 51 | Tier 2 capital before regulatory adjustments | **30167** | 29334 |
| 57 | Total regulatory adjustments to tier 2 capital | **(1193)** | (1075) |
| 58 | **Tier 2 capital** | **28974** | 28259 |
| 59 | **Total capital** | **182371** | 172386 |

---

\*The references identify lines prescribed in the PRA template, which are applicable and where there is a value.

At 31 December 2025, our CET1 capital ratio remained at 14.9%,

unchanged from 31 December 2024. The increase in CET1 capital of

$7.7bn was offset by an increase in RWAs of $50.3bn. The key drivers

of the movements within the CET1 ratio during the year were:

–a 0.5 percentage point increase from capital generation, mainly

through regulatory profits net of dividends and share buy-backs.

Share buy-backs were paused following the announcement of the

privatisation of Hang Seng Bank;

–a 0.1 percentage point increase in the fair value of hold-to-collect-

and-sell debt instruments, following a decrease in yields, and the

net impact from foreign exchange fluctuations, partly offset by

regulatory deductions;

–a 0.2 percentage point decrease due to the loss on our portfolio of

home and certain other loans in France under hold-to-collect-and-

sell, measured at FVOCI in 1Q25, which was partly offset by PRA

waivers granted for the exclusion of operational risk RWAs in

2Q25; and

–a 0.4 percentage point decrease due to an increase in RWAs,

mainly driven by organic balance sheet growth.

Our Pillar 2A requirement at 31 December 2025, as per the PRA's

Individual Capital Requirement based on a point-in-time assessment,

was equivalent to 2.5% of RWAs, of which 1.4% must be met by

CET1. Throughout 2025, we complied with the PRA's regulatory capital

adequacy requirement.

Risk-weighted assets

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| RWAs by business segment | RWAs by business segment | RWAs by business segment | RWAs by business segment | RWAs by business segment | RWAs by business segment | RWAs by business segment |
|  | **Hong** <br>**Kong**<br>| **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total**<br>**RWAs**<br>|
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| Credit risk | **114.5** | **130.3** | **282.3** | **71.5** | **88.4** | **687.0** |
| Counterparty credit risk | **0.1** | **0.1** | **40.2** | **0.8** | **1.2** | **42.4** |
| Market risk | **0.7** | **—** | **24.4** | **0.3** | **13.1** | **38.5** |
| Operational risk | **24.3** | **22.5** | **61.8** | **17.3** | **(5.2)** | **120.7** |
| **At 31 Dec 2025** | **139.6** | **152.9** | **408.7** | **89.9** | **97.5** | **888.6** |
| At 31 Dec 2024 | 143.7 | 133.5 | 388.0 | 85.7 | 87.4 | 838.3 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> | RWAs by legal entities<sup>1</sup> |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<br>| **The Hongkong** <br>**and Shanghai** <br>**Banking** <br>**Corporation** <br>**Limited**<br>| **HSBC Bank** <br>**Middle East** <br>**Limited**<br>| **HSBC North** <br>**America** <br>**Holdings Inc**<br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A.**<br>**de C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Holding companies,** <br>**shared service** <br>**centres and intra-**<br>**Group eliminations**<br>| **Total** <br>**RWAs**<br>|
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| Credit risk | **133.5** | **73.8** | **319.1** | **18.8** | **58.6** | **25.1** | **46.9** | **11.2** | **687.0** |
| Counterparty credit risk | **0.3** | **23.9** | **10.3** | **0.9** | **4.3** | **0.7** | **2.0** | **—** | **42.4** |
| Market risk<sup>2</sup> | **0.1** | **24.9** | **18.9** | **2.4** | **2.8** | **0.6** | **2.1** | **6.7** | **38.5** |
| Operational risk | **24.1** | **23.4** | **63.5** | **5.1** | **8.3** | **6.1** | **6.0** | **(15.8)** | **120.7** |
| **At 31 Dec 2025** | **158.0** | **146.0** | **411.8** | **27.2** | **74.0** | **32.5** | **57.0** | **2.1** | **888.6** |
| At 31 Dec 2024 | 138.3 | 137.6 | 402.8 | 26.6 | 74.4 | 29.7 | 50.7 | (0.6) | 838.3 |

---

1Balances are on a third-party Group consolidated basis.

2Market risk RWAs are non-additive across the legal entities due to diversification effects within the Group.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **193** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> | RWA movement by legal entities by key driver<sup>1</sup> |
|  | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** |  |  |
|  | **HSBC UK** <br>**Bank plc**<br>| **HSBC** <br>**Bank plc**<sup>2</sup><br>| **The** <br>**Hongkong** <br>**and** <br>**Shanghai** <br>**Banking** <br>**Corporation** <br>**Limited**<sup>2</sup><br>| **HSBC** <br>**Bank** <br>**Middle** <br>**East** <br>**Limited**<br>| **HSBC** <br>**North** <br>**America** <br>**Holdings** <br>**Inc**<br>| **Grupo** <br>**Financiero** <br>**HSBC, S.A.**<br>**de C.V.**<br>| **Other** <br>**trading** <br>**entities**<br>| **Holding** <br>**companies,** <br>**shared** <br>**service** <br>**centres and** <br>**intra-Group** <br>**eliminations**<br>| **Market** <br>**risk**<br>| **Total** <br>**RWAs**<br>|
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| **RWAs at 1 Jan 2025** | **138.1** | **111.5** | **379.8** | **24.5** | **71.7** | **29.2** | **49.4** | **(2.1)** | **36.2** | **838.3** |
| Asset size | **15.9** | **2.1** | **13.3** | **1.1** | **2.5** | **(1.1)** | **6.7** | **(2.8)** | **2.2** | **39.9** |
| Asset quality | **1.1** | **0.9** | **1.8** | **(0.6)** | **(2.5)** | **(0.1)** | **(0.1)** | **—** | **—** | **0.5** |
| Model updates | **(0.5)** | **—** | **(0.5)** | **(0.1)** | **(0.3)** | **—** | **—** | **—** | **—** | **(1.4)** |
| Methodology and policy | **(6.1)** | **1.6** | **(8.2)** | **(0.1)** | **(0.3)** | **0.2** | **0.1** | **1.1** | **0.1** | **(11.6)** |
| Acquisitions and disposals<sup>2</sup> | **—** | **(3.4)** | **1.5** | **(0.1)** | **—** | **—** | **(1.5)** | **(1.0)** | **—** | **(4.5)** |
| Foreign exchange movements<sup>3</sup> | **9.4** | **8.4** | **5.2** | **0.1** | **0.1** | **3.7** | **0.3** | **0.2** | **—** | **27.4** |
| **Total RWA movement** | **19.8** | **9.6** | **13.1** | **0.3** | **(0.5)** | **2.7** | **5.5** | **(2.5)** | **2.3** | **50.3** |
| **RWAs at 31 Dec 2025** | **157.9** | **121.1** | **392.9** | **24.8** | **71.2** | **31.9** | **54.9** | **(4.6)** | **38.5** | **888.6** |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver | RWA movement by business segment by key driver |
|  | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** | **Credit risk, counterparty credit risk and operational risk** |  |  |
|  | **Hong**<br>**Kong**<br>| **UK** | **CIB** | **IWPB**<sup>2</sup> | **Corporate** <br>**Centre**<sup>2</sup><br>| **Market**<br>**risk**<br>| **Total**<br>**RWAs**<br>|
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| **RWAs at 1 Jan 2025** | **142.0** | **133.5** | **360.7** | **85.6** | **80.3** | **36.2** | **838.3** |
| Asset size | **0.2** | **16.0** | **13.9** | **2.5** | **5.1** | **2.2** | **39.9** |
| Asset quality | **(0.4)** | **0.8** | **(0.2)** | **(0.1)** | **0.4** | **—** | **0.5** |
| Model updates | **0.2** | **(0.5)** | **(1.1)** | **—** | **—** | **—** | **(1.4)** |
| Methodology and policy | **(3.7)** | **(6.1)** | **(0.6)** | **0.1** | **(1.4)** | **0.1** | **(11.6)** |
| Acquisitions and disposals<sup>2</sup> | **—** | **—** | **(1.0)** | **(2.4)** | **(1.1)** | **—** | **(4.5)** |
| Foreign exchange movements<sup>3</sup> | **0.6** | **9.2** | **12.6** | **3.9** | **1.1** | **—** | **27.4** |
| **Total RWA movement** | **(3.1)** | **19.4** | **23.6** | **4.0** | **4.1** | **2.3** | **50.3** |
| **RWAs at 31 Dec 2025** | **138.9** | **152.9** | **384.3** | **89.6** | **84.4** | **38.5** | **888.6** |

---

1Balances are on a third-party Group consolidated basis.

2Includes changes in the allocation of $1.5bn significant investment RWAs from HSBC Bank plc to The Hongkong and Shanghai Banking Corporation Limited,

following the disposal of the French life insurance business.

3Credit risk foreign exchange movements in this disclosure are computed by retranslating the RWAs into US dollars based on the underlying transactional

currencies, and other movements in the table are presented on a constant currency basis.

RWAs increased by $50.3bn during the year, mainly due to asset size

movements of $39.9bn and foreign currency translation differences of

$27.4bn, which were partly offset by methodology and policy changes

of $11.6bn and strategic disposals of $4.5bn.

Asset size

Asset size RWAs increased by $39.9bn, of which $26.1bn related to

credit risk asset size, largely driven by corporate lending in our UK and

CIB businesses, and in SAB within Corporate Centre.

Additionally, there was an $11.6bn rise in operational risk RWAs driven

by higher average income across our business segments.

Market risk RWAs increased by $2.2bn, mainly as a result of higher

structural foreign exchange exposures of $5.7bn, to hedge the

anticipated impact of the Hang Seng Bank privatisation, which was

partly offset by lower stressed value at risk ('SVaR') of $3bn due to an

improved risk profile in the rates portfolio.

Asset quality

The marginal $0.5bn increase in RWAs was mainly driven by

unfavourable credit risk migrations, which were largely offset by

increased credit risk mitigation in our Hong Kong and CIB businesses.

This included an increase due to portfolio mix changes in our UK

business.

Model updates

The decrease of $1.4bn in RWAs was primarily driven by the

recalibration of post-model adjustments to address wholesale internal-

ratings credit risk model limitations, mainly in CIB.

Methodology and policy

The $11.6bn decrease in RWAs was primarily due to credit risk

parameter refinements, including methodology changes to our

undrawn exposures within the UK and CIB businesses; and a UK

transaction where some credit risk was transferred to a third party.

Acquisitions and disposals

RWAs decreased by $4.5bn, due to the PRA waiver granted in 2025

for the exclusion of operational risk RWAs previously associated with

the sale of our retail banking operations in France and the disposal of

our business in Argentina. Additionally, we sold the ADRs in Grupo

Financiero Galicia that we received as purchase consideration from the

sale of our business in Argentina. A further decrease resulted from the

sale of our French retained portfolio of home and certain other loans.

Leverage ratio

---

| | | |
|:---|:---|:---|
|  | At | At |
|  | **31 Dec 2025** | 31 Dec 2024 |
|  | **$bn** | $bn |
| Tier 1 capital (leverage) | **153.4** | 144.1 |
| Total leverage ratio exposure | **2877.1** | 2571.1 |
|  | **%** | % |
| Leverage ratio | **5.3** | 5.6 |

---

Our leverage ratio was 5.3% at 31 December 2025, down from 5.6%

at 31 December 2024. The increase in the leverage exposures led to a

0.6 percentage points fall in the leverage ratio, which was partly offset

by higher tier 1 capital of 0.3 percentage points.The change in leverage

exposure was driven by 0.4 percentage points increase due to growth

in the balance sheet and by a 0.2 percentage points increase from

foreign currency translation differences.

At 31 December 2025, our UK minimum leverage ratio requirement

was 3.25%, with an additional buffer of 0.9% - comprising a 0.7%

additional leverage ratio buffer and a 0.2% countercyclical leverage

ratio buffer. These buffers translated into capital values of $20.1bn and

$5.8bn, respectively. We exceeded these leverage requirements

throughout 2025.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **194** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

Pillar 3 disclosure requirements

Pillar 3 of the Basel regulatory framework is related to market discipline

and aims to make financial services firms more transparent by requiring

publication of wide-ranging information on their risks, capital and

management.

🡠For further details, see our Pillar 3 Disclosures at 31 December 2025, which

is published at www.hsbc.com/investors.

Liquidity and funding risk in 2025

Liquidity metrics

At 31 December 2025, all of the Group's material operating entities

were above the required regulatory minimum liquidity and funding

levels. Each entity maintains sufficient unencumbered liquid assets to

comply with internal and local regulatory requirements. Each entity

maintains a sufficient stable funding profile and is assessed using the

NSFR or other appropriate metrics.

In addition to regulatory metrics, we use a wide set of measures to

manage our liquidity and funding profile.

The Group liquidity and funding position on an average basis is

analysed in the following sections.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Operating entities' liquidity | Operating entities' liquidity | Operating entities' liquidity | Operating entities' liquidity | Operating entities' liquidity |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **LCR**<sup>1</sup> | **HQLA** | **Net outflows** | **NSFR**<sup>1</sup> |
|  | **%** | **$bn** | **$bn** | **%** |
| HSBC UK Bank plc (ring-fenced bank)<sup>2</sup> | **175** | **124** | **71** | **146** |
| HSBC Bank plc (non-ring-fenced bank)<sup>3</sup> | **148** | **145** | **99** | **114** |
| The Hongkong and Shanghai Banking Corporation – Hong Kong branch<sup>4, 6</sup> | **189** | **170** | **90** | **125** |
| HSBC Singapore<sup>5</sup> | **228** | **37** | **16** | **168** |
| Hang Seng Bank | **322** | **64** | **20** | **184** |
| HSBC Bank China | **203** | **26** | **13** | **153** |
| HSBC Bank USA | **167** | **84** | **50** | **129** |
| HSBC Continental Europe | **147** | **100** | **68** | **148** |
| HSBC Bank Middle East Ltd – UAE branch | **232** | **16** | **7** | **152** |
| HSBC Mexico | **166** | **9** | **5** | **110** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
| HSBC UK Bank plc (ring-fenced bank)<sup>2</sup> | 190 | 117 | 61 | 154 |
| HSBC Bank plc (non-ring-fenced bank)<sup>3</sup> | 148 | 138 | 93 | 115 |
| The Hongkong and Shanghai Banking Corporation – Hong Kong branch<sup>4</sup> | 191 | 145 | 76 | 124 |
| HSBC Singapore<sup>5</sup> | 287 | 32 | 11 | 184 |
| Hang Seng Bank | 299 | 57 | 19 | 174 |
| HSBC Bank China | 191 | 27 | 14 | 147 |
| HSBC Bank USA | 167 | 80 | 48 | 127 |
| HSBC Continental Europe | 149 | 82 | 55 | 139 |
| HSBC Bank Middle East Ltd – UAE branch | 251 | 14 | 6 | 151 |
| HSBC Mexico | 164 | 9 | 6 | 125 |

---

1The LCR and NSFR ratios presented in the above table are based on average values. The LCR is the average of the preceding 12 months. The NSFR is the average of the

preceding four quarters. LCR details are based on local regulations wherever applicable except the LCR for our UAE branch, which is reported on a PRA basis. NSFR

details are reported based on the PRA's NSFR rules.

2HSBC UK Bank plc refers to the HSBC UK liquidity group, which comprises four legal entities: HSBC UK Bank plc, Marks and Spencer Financial Services plc, HSBC

Private Bank (UK) Ltd and HSBC Innovation Bank Limited, managed as a single operating entity, in line with the application of UK liquidity regulation as agreed with the

PRA.

3HSBC Bank plc includes overseas branches and special purpose entities consolidated by HSBC for financial statements purposes.

4The Hongkong and Shanghai Banking Corporation – Hong Kong branch represents the material activities of The Hongkong and Shanghai Banking Corporation Limited. It

is monitored and controlled for liquidity and funding risk purposes as a stand-alone operating entity.

5HSBC Singapore includes HSBC Bank Singapore Limited and The Hongkong and Shanghai Banking Corporation – Singapore branch. Liquidity and funding risk is

monitored and controlled at country level in line with the local regulator's approval.

6In 4Q25, The Hongkong and Shanghai Banking Corporation – Hong Kong branch segregated $16.6bn of Level 1 high-quality liquid assets towards funding the

privatisation of Hang Seng Bank. These assets were excluded from the liquid asset buffer for the purpose of LCR reporting and reduced the entity's local LCR

by c. 5.5% on an average basis.

Consolidated liquidity metrics

Net stable funding ratio

We manage funding risk based on the PRA's NSFR rules. The Group's

NSFR at 31 December 2025, calculated from the average of the four

preceding quarters, was 143%.

---

| | | | |
|:---|:---|:---|:---|
|  | At | At | At |
|  | **31 Dec 2025** | 30 Jun 2025 | 31 Dec 2024 |
|  | **$bn** | $bn | $bn |
| Total available stable funding ($bn) | **1621** | 1572 | 1523 |
| Total required stable funding ($bn) | **1133** | 1083 | 1064 |
| NSFR ratio (%) | **143** | 145 | 143 |

---

Liquidity coverage ratio

At 31 December 2025, the average high-quality liquid assets ('HQLA')

held at entity level amounted to $862bn (31 December 2024: $790bn).

The Group consolidation methodology includes a deduction to

reflect the impact of limitations in the transferability of entity liquidity

around the Group. That resulted in an adjustment of $160bn to LCR

HQLA and $5bn to LCR inflows on an average basis.

---

| | | | |
|:---|:---|:---|:---|
|  | At<sup>1</sup> | At<sup>1</sup> | At<sup>1</sup> |
|  | **31 Dec 2025** | 30 Jun 2025 | 31 Dec 2024 |
|  | **$bn** | $bn | $bn |
| High-quality liquid assets (in <br>entities)<br>| **862** | 833 | 790 |
| Group LCR HQLA | **702** | 678 | 649 |
| Net outflows | **512** | 486 | 471 |
| Liquidity coverage ratio (%) | **137** | 140 | 138 |
| Adjustment for transfer <br>restrictions<sup>2</sup><br>| **(165)** | (161) | (147) |

---

1Group LCR numbers above are based on average values. The LCR is the

average of the preceding 12 months.

2This includes adjustments made to high-quality liquid assets and inflows in

entities to reflect liquidity transfer restrictions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **195** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

Liquid assets

After the $160bn deduction, the average Group LCR HQLA of $702bn (31 December 2024: $649bn) was held in a range of asset classes and

currencies. Of these, 97% were eligible as Level 1 (31 December 2024: 95%). The following tables reflect the composition of the average liquidity

pool by asset type and currency at 31 December 2025.

---

| | | | |
|:---|:---|:---|:---|
| Liquidity pool by asset type<sup>1</sup> | Liquidity pool by asset type<sup>1</sup> | Liquidity pool by asset type<sup>1</sup> | Liquidity pool by asset type<sup>1</sup> |
|  | **Liquidity** <br>**pool**<br>| **Level 1**<sup>2</sup> | **Level 2**<sup>2</sup> |
|  | **$bn** | **$bn** | **$bn** |
| Cash and balance at central bank | **248** | **248** | **—** |
| Central and local government bonds | **413** | **401** | **12** |
| Regional government public sector <br>entities<br>| **2** | **2** | **—** |
| International organisation and multilateral <br>developments banks<br>| **29** | **29** | **—** |
| Covered bonds | **7** | **2** | **5** |
| Other | **3** | **—** | **3** |
| **Total at 31 Dec 2025** | **702** | **682** | **20** |
| Total at 31 Dec 2024 | 649 | 615 | 34 |

---

1Group liquid assets numbers are based on average values.

2As defined in the PRA Rulebook, Level 1 assets means 'assets of extremely

high liquidity and credit quality', and Level 2 assets means 'assets of high

liquidity and credit quality'.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Liquidity pool by currency<sup>1</sup> | Liquidity pool by currency<sup>1</sup> | Liquidity pool by currency<sup>1</sup> | Liquidity pool by currency<sup>1</sup> | Liquidity pool by currency<sup>1</sup> | Liquidity pool by currency<sup>1</sup> |
|  | $**£** | **€** | **HK$** | **Other** | **Total** |
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| **Liquidity pool at** <br>**31 Dec 2025**<br>| **170** | **136** | **43** | **121** | **702** |
| Liquidity pool at <br>31 Dec 2024<br>| 170 | 113 | 47 | 123 | 649 |

---

1Group liquid assets numbers are based on average month-end values over

the preceding 12 months.

Sources of funding

Our primary sources of funding are customer current accounts and

savings deposits payable on demand or at short notice. We issue

secured and unsecured wholesale securities to supplement customer

deposits, meet regulatory obligations and seek to ensure that we

maintain a diversified funding profile through a balanced mix of

currencies, maturities and locations of our liabilities. The following

'Funding sources' and 'Funding uses' tables provide a view of how our

consolidated balance sheet is funded. In practice, all the principal

operating entities are required to manage liquidity and funding risk on a

stand-alone basis.

The tables analyse our consolidated balance sheet according to the

assets that primarily arise from operating activities and the sources of

funding primarily supporting these activities. Assets and liabilities that

do not arise from operating activities are presented as a net balancing

source or deployment of funds.

The funding risk management framework seeks to ensure operating

entities maintain a diversified funding profile defined in their funding

plans which are taken through regular governance, in line with globally

consistent policies and standards. Diversification is achieved through a

balanced mix of funding sources, tenors, currencies and geographies,

seeking to mitigate concentration risks and to avoid extraordinary

reliance on central banks or intra-group funding support. The

framework requires entities to have policies, processes and controls

for monitoring and managing funding by tenors and sources, supported

by governance of limits. Entities also model cashflows from maturing

short-term debts within the internal liquidity monitoring to help ensure

sufficient liquidity is maintained to meet the maturing debt obligations.

---

| | | |
|:---|:---|:---|
| Funding sources  | Funding sources  | Funding sources  |
| (Audited) | (Audited) | (Audited) |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Customer accounts | **1786828** | 1654955 |
| Deposits by banks | **97952** | 73997 |
| Repurchase agreements – non-trading | **204974** | 180880 |
| Debt securities in issue | **99675** | 105785 |
| Cash collateral, margin, settlement accounts and <br>items in course of transmission to other banks<br>| **91087** | 82732 |
| Liabilities of disposal groups held for sale | **23382** | 29011 |
| Subordinated liabilities | **28406** | 25958 |
| Financial liabilities designated at fair value | **158456** | 138727 |
| Insurance contract liabilities | **122955** | 107629 |
| Trading liabilities | **72122** | 65982 |
| – repos | **13113** | 14806 |
| – stock lending | **6250** | 3525 |
| – other trading liabilities | **52759** | 47651 |
| Total equity | **205666** | 192273 |
| Other balance sheet liabilities | **341531** | 359119 |
| **At 31 Dec** | **3233034** | 3017048 |

---

---

| | | |
|:---|:---|:---|
| Funding uses | Funding uses | Funding uses |
| (Audited) | (Audited) | (Audited) |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Loans and advances to customers | **988399** | 930658 |
| Loans and advances to banks | **108462** | 102039 |
| Reverse repurchase agreements – non-trading | **298392** | 252549 |
| Cash collateral, margin, settlement accounts and <br>items in course of collection from other banks<br>| **87667** | 78538 |
| Assets held for sale | **11115** | 27234 |
| Trading assets | **366153** | 314842 |
| – reverse repos | **18449** | 16823 |
| – stock borrowing | **14947** | 8374 |
| – other trading assets | **332757** | 289645 |
| Financial investments | **567211** | 493166 |
| Cash and balances with central banks | **242859** | 267674 |
| Other balance sheet assets | **562776** | 550348 |
| **At 31 Dec** | **3233034** | 3017048 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **196** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

Wholesale term debt maturity profile

The maturity profile of our wholesale term debt obligations is set out in

the following table. The balances in the table are not directly

comparable with those in the consolidated balance sheet because the

table presents gross cash flows relating to principal payments and not

the balance sheet carrying value, which includes debt securities and

subordinated liabilities measured at fair value.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> | Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities<sup>1</sup> |
|  | **Due not**<br>**more** <br>**than**<br>**1 month**<br>| **Due over** <br>**1 month** <br>**but not** <br>**more than** <br>**3 months**<br>| **Due over** <br>**3 months** <br>**but not** <br>**more than** <br>**6 months**<br>| **Due over** <br>**6 months** <br>**but not** <br>**more than** <br>**9 months**<br>| **Due over** <br>**9 months**<br>**but not** <br>**more than** <br>**1 year**<br>| **Due over**<br>**1 year**<br>**but not** <br>**more than** <br>**2 years**<br>| **Due over** <br>**2 years**<br>**but not** <br>**more than** <br>**5 years**<br>| **Due over**<br>**5 years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Debt securities issued** | **14531** | **12338** | **14004** | **7561** | **8780** | **26365** | **70542** | **65835** | **219956** |
| – unsecured CDs and CP | **5729** | **4484** | **6781** | **4211** | **5198** | **1855** | **999** | **570** | **29827** |
| – unsecured senior MTNs | **5835** | **6262** | **5020** | **1853** | **1416** | **17953** | **52645** | **53455** | **144439** |
| – unsecured senior structured notes | **2459** | **1060** | **2037** | **1150** | **1739** | **5572** | **11145** | **9164** | **34326** |
| – secured covered bonds | **—** | **—** | **—** | **—** | **—** | **671** | **1550** | **—** | **2221** |
| – secured asset-backed commercial paper | **486** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **486** |
| – secured ABS | **22** | **43** | **62** | **58** | **338** | **201** | **693** | **1401** | **2818** |
| – others | **—** | **489** | **104** | **289** | **89** | **113** | **3510** | **1245** | **5839** |
| **Subordinated liabilities** | **—** | **—** | **—** | **—** | **892** | **874** | **2049** | **34541** | **38356** |
| – subordinated debt securities | **—** | **—** | **—** | **—** | **892** | **874** | **2049** | **33602** | **37417** |
| – preferred securities | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **939** | **939** |
| **At 31 Dec 2025** | **14531** | **12338** | **14004** | **7561** | **9672** | **27239** | **72591** | **100376** | **258312** |
| Debt securities issued | 14260 | 15011 | 13841 | 10235 | 11644 | 29639 | 62434 | 53814 | 210878 |
| – unsecured CDs and CP | 5346 | 7803 | 10495 | 6623 | 6829 | 662 | 1787 | 1598 | 41143 |
| – unsecured senior MTNs | 7528 | 3351 | 1014 | 1269 | 2736 | 21593 | 47236 | 42899 | 127626 |
| – unsecured senior structured notes | 874 | 1826 | 2258 | 1457 | 1526 | 6055 | 9160 | 6520 | 29676 |
| – secured covered bonds |  |  |  |  |  |  | 1254 |  | 1254 |
| – secured asset-backed commercial paper | 488 |  |  |  |  |  |  |  | 488 |
| – secured ABS | 24 | 47 | 67 | 64 | 61 | 664 | 520 | 864 | 2311 |
| – others |  | 1984 | 7 | 822 | 492 | 665 | 2477 | 1933 | 8380 |
| Subordinated liabilities |  |  | 1737 | 1030 |  | 892 | 2694 | 30349 | 36702 |
| – subordinated debt securities |  |  | 1737 | 1030 |  | 892 | 2694 | 29471 | 35824 |
| – preferred securities |  |  |  |  |  |  |  | 878 | 878 |
| At 31 Dec 2024 | 14260 | 15011 | 15578 | 11265 | 11644 | 30531 | 65128 | 84163 | 247580 |

---

1Excludes financial liabilities of disposal groups.

Structural foreign exchange risk in 2025

Structural foreign exchange exposures represent net assets or capital investments in subsidiaries, branches, joint arrangements or associates,

together with any associated hedges, the functional currencies of which are currencies other than the US dollar. Exchange differences on

structural exposures are usually recognised in 'other comprehensive income'.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Net structural foreign exchange exposures | Net structural foreign exchange exposures | Net structural foreign exchange exposures | Net structural foreign exchange exposures | Net structural foreign exchange exposures | Net structural foreign exchange exposures | Net structural foreign exchange exposures |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
| **Currency of structural exposure** | **Net investment in** <br>**foreign operations** <br>**(excl non-controlling** <br>**interest)**<br>| **Net** <br>**investment** <br>**hedges**<br>| **Structural foreign** <br>**exchange** <br>**exposures (pre-**<br>**economic hedges)**<br>| **Economic** <br>**hedges –** <br>**structural FX** <br>**hedges**<sup>1</sup><br>| **Economic** <br>**hedges – equity** <br>**securities (AT1)**<sup>2</sup><br>| **Net structural** <br>**foreign** <br>**exchange** <br>**exposures**<br>|
| **Currency of structural exposure** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Hong Kong dollars | **45486** | **(5737)** | **39749** | **(9905)** | **—** | **29844** |
| Pounds sterling | **51315** | **(17254)** | **34061** | **—** | **(1341)** | **32720** |
| Chinese renminbi | **36084** | **(7622)** | **28462** | **(1078)** | **—** | **27384** |
| Euros | **18017** | **(4162)** | **13855** | **—** | **(1466)** | **12389** |
| Indian rupees | **7747** | **(3264)** | **4483** | **—** | **—** | **4483** |
| Mexican pesos | **4873** | **—** | **4873** | **—** | **—** | **4873** |
| Saudi riyals | **5132** | **—** | **5132** | **—** | **—** | **5132** |
| UAE dirhams | **5436** | **(1176)** | **4260** | **(2691)** | **—** | **1569** |
| Malaysian ringgit | **3473** | **(1727)** | **1746** | **—** | **—** | **1746** |
| Singapore dollars | **2711** | **(493)** | **2218** | **1728** | **(1770)** | **2176** |
| Australian dollars | **2367** | **—** | **2367** | **—** | **—** | **2367** |
| Taiwanese dollars | **2473** | **(1387)** | **1086** | **—** | **—** | **1086** |
| Indonesian rupiah | **1561** | **(501)** | **1060** | **(98)** | **—** | **962** |
| Swiss francs | **1549** | **(617)** | **932** | **(248)** | **—** | **684** |
| Korean won | **1326** | **(856)** | **470** | **—** | **—** | **470** |
| Thai baht | **1048** | **(757)** | **291** | **—** | **—** | **291** |
| Egyptian pound | **1125** | **—** | **1125** | **—** | **—** | **1125** |
| Qatari rial | **736** | **(172)** | **564** | **(299)** | **—** | **265** |
| Vietnamese dong | **767** | **—** | **767** | **—** | **—** | **767** |
| Others, each less than $700m | **4692** | **(658)** | **4034** | **—** | **—** | **4034** |
| **At 31 Dec** | **197918** | **(46383)** | **151535** | **(12591)** | **(4577)** | **134367** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **197** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) | Net structural foreign exchange exposures (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| Currency of structural exposure | Net investment in <br>foreign operations <br>(excl non-controlling <br>interest)<br>| Net <br>investment <br>hedges<br>| Structural foreign <br>exchange <br>exposures (pre-<br>economic hedges)<br>| Economic <br>hedges – <br>structural FX <br>hedges<sup>1</sup><br>| Economic <br>hedges – equity <br>securities (AT1)<sup>2</sup><br>| Net structural <br>foreign <br>exchange <br>exposures<br>|
| Currency of structural exposure | $m | $m | $m | $m | $m | $m |
| Hong Kong dollars | 40106 | (5841) | 34265 | (9861) |  | 24404 |
| Pounds sterling | 46462 | (15024) | 31438 |  | (1254) | 30184 |
| Chinese renminbi | 35032 | (4725) | 30307 | (1080) |  | 29227 |
| Euros | 17391 | (2013) | 15378 |  | (1297) | 14081 |
| Indian rupees | 7056 | (1973) | 5083 |  |  | 5083 |
| Mexican pesos | 3991 |  | 3991 |  |  | 3991 |
| Saudi riyals | 4675 |  | 4675 |  |  | 4675 |
| UAE dirhams | 5264 | (893) | 4371 | (2543) |  | 1828 |
| Malaysian ringgit | 3036 |  | 3036 |  |  | 3036 |
| Singapore dollars | 2405 |  | 2405 | 1092 | (1089) | 2408 |
| Australian dollars | 2126 |  | 2126 |  |  | 2126 |
| Taiwanese dollars | 2199 | (1015) | 1184 |  |  | 1184 |
| Indonesian rupiah | 1541 | (533) | 1008 |  |  | 1008 |
| Swiss francs | 1096 | (541) | 555 |  |  | 555 |
| Korean won | 1204 | (756) | 448 |  |  | 448 |
| Thai baht | 976 | (460) | 516 |  |  | 516 |
| Egyptian pound | 891 |  | 891 |  |  | 891 |
| Qatari rial | 728 | (97) | 631 | (299) |  | 332 |
| Vietnamese dong | 769 |  | 769 |  |  | 769 |
| Others, each less than $700m | 4370 | (463) | 3907 |  |  | 3907 |
| At 31 Dec | 181318 | (34334) | 146984 | (12691) | (3640) | 130653 |

---

1Represents hedges that do not qualify as net investment hedges for accounting purposes. The SGD position represents the hedge against our SGD AT1

issuances.

2Represents foreign currency-denominated preference share and AT1 instruments. These are accounted for at historical cost under IFRS Accounting Standards

and do not qualify as net investment hedges for accounting purposes. The gain or loss arising from changes in the US dollar value of these instruments is

recognised on redemption in retained earnings.

🡠For a definition of structural foreign exchange exposures, see page 190.

Interest rate risk in the banking book in 2025

Banking net interest income sensitivity

Banking NII sensitivity is the sensitivity of our banking net interest

income to interest rate shocks. This metric includes the sensitivity

arising from the use of banking book liabilities to fund trading assets, as

well as the impacts of vanilla foreign exchange swaps to optimise cash

management across the Group. It is aligned with the presentation in

the Group's financial disclosures of banking NII as an alternative

performance measure intended to approximate the Group's banking

revenue that is directly impacted by changes in interest rates.

The following tables set out the assessed impact to a hypothetical

base case projection of our banking NII under an immediate shock of

100bps to the current market-implied path of interest rates across all

currencies on 31 December 2025 (effects in the first, second and third

years). For example, Year 3 shows the impact of an immediate rate

shock on the banking NII projected for the third year.

The banking NII sensitivities shown represent a hypothetical simulation

of the base case banking NII, assuming a static balance sheet

(specifically no assumed migration from current account to term

deposits), and no management actions from Global Treasury. This also

incorporates the effect of interest rate behaviouralisation, prepayment

of mortgages and commercial margins. The sensitivity calculations

exclude pensions, insurance exposures, and our interests in

associates.

All forecasted market rates are based on implied forward rates from

the reporting date. Customer pricing includes flooring where there

are contractual obligations.

As the market and policy rates move, the degree to which these

changes are passed on to customers will vary based on several factors,

including the absolute level of market interest rates, regulatory and

contractual frameworks, and competitive dynamics. To aid

comparability between markets, we have simplified the basis of

preparation for our disclosure and have used a 50% pass-on

assumption for major entities on certain interest-bearing deposits. Our

asset pass-on assumptions are largely in line with our contractual

agreements or established market practice, which typically results in a

significant portion of interest rate changes being passed on.

An immediate interest rate rise of 100bps would increase projected

banking NII by $2.4bn. An immediate interest rate fall of 100bps would

decrease projected banking NII by $3.4bn.

The sensitivity of banking NII for the 12 months as at 31 December

2025 increased by $0.3bn in the plus 100bps parallel shock and by

$0.5bn in the minus 100bps parallel shock, when compared with

31 December 2024. The increase in sensitivities was primarily driven

by deposit growth and the impact of rate floors due to lower prevailing

market rates offset by stabilisation initiatives executed during the year.

🡠For further details of measurement of interest rate risk in the banking book,

see page <u>[190](#ie4edc76213cf40e9ae3dd93b36f88427_4882)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **198** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency | Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency | Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency | Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency | Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency |
|  | **Currency** | **Currency** | **Currency** |  |
|  | $**HK$** | £**€** | **Other** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** |
| **Change in Jan 2026 to Dec 2026 (based on balance sheet at 31 Dec 2025)** |  |  |  |  |
| +100bps parallel | **310** | **91** | **871** | **2421** |
| -100bps parallel | **(606)** | **(129)** | **(971)** | **(3389)** |
| Change in Jan 2025 to Dec 2025 (based on balance sheet at 31 Dec 2024) |  |  |  |  |
| +100bps parallel | 220 | 301 | 821 | 2133 |
| -100bps parallel | (403) | (314) | (954) | (2886) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency | Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency | Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency | Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency | Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency |
|  | **Currency** | **Currency** | **Currency** |  |
|  | $**HK$** | £**€** | **Other** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** |
| **Change in banking NII (based on balance sheet at 31 Dec 2025)** |  |  |  |  |
| Year 2 (Jan 2027 to Dec 2027) | **(745)** | **(223)** | **(1331)** | **(4475)** |
| Year 3 (Jan 2028 to Dec 2028) | **(906)** | **(274)** | **(1499)** | **(5513)** |
| Change in banking NII (based on balance sheet at 31 Dec 2024) |  |  |  |  |
| Year 2 (Jan 2026 to Dec 2026) | (509) | (444) | (1333) | (4075) |
| Year 3 (Jan 2027 to Dec 2027) | (550) | (504) | (1449) | (5056) |

---

Non-trading portfolios

Value at risk of non-trading portfolios

Non-trading portfolios comprise positions that primarily arise from the

interest rate management of our retail and wholesale banking assets

and liabilities and financial investments measured at fair value through

other comprehensive income ('FVOCI') or at amortised cost. The use

of value at risk ('VaR') is integrated into the market risk management of

non-trading portfolios to have a complete picture of risk,

complementing risk sensitivity analysis.

VaR of non-trading portfolios is a technique for estimating potential

losses on risk positions as a result of movements in market rates and

prices over a specified time horizon and to a given level of confidence.

Our models predominantly rely on historical simulations incorporating:

–historical market rates and prices, calculated with reference to

interest rates, credit spreads and associated volatilities;

–potential market movements derived from data covering the past

two years; and

–calculations to a 99% confidence level with a 10-day holding period.

Although a valuable guide to risk, VaR is used for non-trading portfolios

with awareness of its limitations. For example:

–Historical data is used to estimate future market movements, and

may not cover all potential events, particularly those that are

extreme in nature. As the model is calibrated on the last 500

business days, it does not adjust instantly to a change in market

regime.

–The 10-day holding period for risk management purposes of non-

trading books is an indication and does not reflect the actual time

period needed to hedge or liquidate positions.

–The use of a 99% confidence level does not consider losses that

might occur beyond this level of confidence.

Non-trading VaR includes non-trading financial instruments held in

portfolios managed by Global Treasury. The management of interest

rate risk in the banking book is described further in 'Banking net

interest income sensitivity' on page <u>[197](#ie4edc76213cf40e9ae3dd93b36f88427_4950)</u>.

The interest rate risk on the fixed-rate securities issued by HSBC

Holdings is not included in the Group non-trading VaR. The

management of this risk is described on page <u>[200](#ie4edc76213cf40e9ae3dd93b36f88427_355)</u>. Insurance

operations were excluded from non-trading VaR as of 30 June 2025

which resulted in an immaterial impact. Details on insurance operations

can be found on page <u>[215](#ie4edc76213cf40e9ae3dd93b36f88427_6623)</u> and the market risk impact of insurance

operations on page <u>[217](#ie4edc76213cf40e9ae3dd93b36f88427_400)</u>. Non-trading VaR also excludes the equity risk

on securities held at fair value and non-trading book foreign exchange

risk.

The weekly levels of total non-trading VaR in 2025 are set out in the

graph below.

Weekly VaR (non-trading portfolios), 99% 10 day ($m)<br>

![1562](hsbc-20251231_g72.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **199** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

The Group non-trading VaR for 2025 is shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Non-trading VaR, 99% 10 day | Non-trading VaR, 99% 10 day | Non-trading VaR, 99% 10 day | Non-trading VaR, 99% 10 day | Non-trading VaR, 99% 10 day |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Interest rate** | **Credit spread** | **Portfolio diversification**<sup>1</sup> | **Total**<sup>2</sup> |
|  | **$m** | **$m** | **$m** | **$m** |
| **Balance at 31 Dec 2025** | **499.6** | **149.6** | **(102.5)** | **546.6** |
| Average | **465.2** | **190.8** | **(115.8)** | **540.1** |
| Maximum | **575.3** | **254.6** |  | **617.5** |
| Minimum | **378.9** | **93.9** |  | **458.0** |
| Balance at 31 Dec 2024 | 528.4 | 246.1 | (220.7) | 553.8 |
| Average | 603.7 | 315.1 | (222.9) | 695.8 |
| Maximum | 1000.6 | 369.1 |  | 1097.6 |
| Minimum | 292.1 | 242.4 |  | 408.7 |

---

1Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic

market risk that occurs when combining a number of different risk types – such as interest rate and credit spreads – together in one portfolio. It is measured as

the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of portfolio

diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit

for these measures.

2The total VaR is non-additive across risk types due to diversification effects.

The VaR for non-trading activity remained stable, decreasing by $7m

due to lower historical shocks in our two-year historical window, largely

offset by an increase in the duration risk of Global Treasury's portfolios.

The average portfolio diversification effect between interest rate and

credit spread exposure decreased from $223m to $116m, mainly due

to higher correlations between the two asset classes. The reduction in

credit spread VaR at the end of September was the result of volatile

scenarios dropping out of the two-year historical window. Non-trading

VaR is managed and controlled through a limit approved by the Group

Chief Risk and Compliance Officer for HSBC Holdings.

Sensitivity of capital and reserves

The Group holds various portfolios of securities under a hold-to-collect-

and-sell business model, of which the most material is the portfolio of

high quality assets held by Global Treasury for contingent liquidity and

NII stabilisation purposes. These portfolios, together with any

associated derivatives in designated hedge accounting relationships,

are accounted for at fair value through comprehensive income, and

changes in mark-to-market value have an impact on CET1. We use a

variety of tools, including risk sensitivities and VaR measures, to

manage the risk of these portfolios.

The table below measures the sensitivity of our hold-to-collect-and-sell

portfolios to an instantaneous 100 basis point increase in interest rates,

based on the risk sensitivity of a shift in value for a 1 basis point ('bps')

parallel movement in interest rates.

---

| | |
|:---|:---|
| Sensitivity of hold-to-collect-and-sell reserves to interest rate <br>movements | Sensitivity of hold-to-collect-and-sell reserves to interest rate <br>movements |
|  | **$m** |
| **At 31 Dec 2025** |  |
| +100 basis point parallel move in all yield curves | **(4424)** |
| As a percentage of total shareholders' equity | **(2.23)%** |
| At 31 Dec 2024 |  |
| +100 basis point parallel move in all yield curves | (3433) |
| As a percentage of total shareholders' equity | (1.86)% |

---

The increase in the sensitivity of the portfolio during 2025 was mainly

driven by an increase in NII stabilisation hedging in line with our

strategy. While this hedging has increased the capital sensitivity of the

portfolio it has the effect of further dampening the volatility of our

banking NII over time and through the cycle. The figures in the table

above do not take into account the effects of interest rate convexity.

The portfolio mostly comprises vanilla sovereign bonds in a variety of

currencies and the primary risk is interest rate duration risk, although

the portfolio also generates asset swap, credit spread and asset spread

risks that are managed within appetite as part of our risk management

framework. A minus 100bps shock would lead to an approximately

symmetrical gain.

Alongside our monitoring of the hold-to-collect-and-sell reserve

sensitivity, we also monitor the sensitivity of reported cash flow

hedging reserves to interest rate movements annually by

assessing the expected reduction in the valuation of cash flow hedges

due to an instantaneous 100bps increase in all yield curves.

The sensitivity is indicative and based on a simplified scenario.

The following table details the sensitivity of our cash flow hedging

reserve which remained stable compared with 31 December 2024 and

continued to be mainly driven by our NII stabilisation activity. Our

exposure to fixed rate pound sterling hedges continued to be the

largest in size followed by Hong Kong dollar and United States dollar

hedges. A minus 100bps shock would lead to a largely symmetrical

gain.

---

| | |
|:---|:---|
| Sensitivity of cash flow hedging reported reserves to interest rate <br>movements | Sensitivity of cash flow hedging reported reserves to interest rate <br>movements |
|  | **$m** |
| **At 31 Dec 2025** |  |
| +100 basis point parallel move in all yield curves | **(4438)** |
| As a percentage of total shareholders' equity | **(2.24)%** |
| At 31 Dec 2024 |  |
| +100 basis point parallel move in all yield curves | (4496) |
| As a percentage of total shareholders' equity | (2.43)% |

---

Third-party assets in Markets Treasury

Third-party assets in Markets Treasury increased by 6% compared with

31 December 2024. The net increase of $55bn is partly reflective of

higher commercial surpluses during the year, with the increase of

$68bn in 'Financial investments' and the decrease of $25bn in 'Cash

and balances at central banks' largely driven by NII stabilisation activity.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **200** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Treasury risk |  |  |  |

---

---

| | | |
|:---|:---|:---|
| Third-party assets in Markets Treasury  | Third-party assets in Markets Treasury  | Third-party assets in Markets Treasury  |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Cash and balances at central banks | **236259** | 261284 |
| Trading assets | **(8)** | 163 |
| Loans and advances: |  |  |
| – to banks | **66614** | 66518 |
| – to customers | **1113** | 743 |
| Reverse repurchase agreements | **58191** | 47812 |
| Financial investments | **533519** | 465123 |
| Other | **12774** | 12232 |
| **At 31 Dec** | **908462** | 853875 |

---

Defined benefit pension plans

Market risk arises within our defined benefit pension plans to the

extent that the obligations of the plans are not fully matched by assets

with determinable cash flows.

🡠For details of our defined benefit plans, including asset allocation, see Note

5 on the financial statements, and for pension risk management, see page

<u>[191](#ie4edc76213cf40e9ae3dd93b36f88427_4888)</u>.

Additional market risk measures

applicable only to the parent company

HSBC Holdings monitors and manages foreign exchange risk and

interest rate risk. In order to manage interest rate risk, HSBC Holdings

uses the projected sensitivity of its NII to future changes in yield

curves.

Foreign exchange risk

HSBC Holdings' foreign exchange exposures derive almost entirely

from the execution of structural foreign exchange hedges on behalf of

the Group. At 31 December 2025, HSBC Holdings had forward foreign

exchange contracts of $34.4bn (2024: $33.9bn) to manage the Group's

structural foreign exchange exposures.

🡠For further details of our Group structural foreign exchange exposures, see

page <u>[196](#ie4edc76213cf40e9ae3dd93b36f88427_4937)</u>.

Sensitivity of banking net interest income

Banking NII sensitivity is the assessed impact to a hypothetical base

case projection of our banking NII under an immediate shock of 100bps

to the current market-implied path of interest rates across all currencies

on 31 December 2025.

Banking NII sensitivity includes the impact of AT1 instruments as well

as vanilla foreign exchange swaps to optimise cash management, with

the assumption of a static balance sheet and no management actions

from Global Treasury. The sensitivity assumes that any issuance where

HSBC Holdings has an option to redeem at a future call date is called at

that date.

An immediate interest rate rise of 100bps would decrease projected

banking NII for the 12 months to 31 December 2026 by $163m.

Conversely, an immediate fall of 100bps would increase projected

banking NII for the 12 months to 31 December 2026 by $163m. This

compares with the prior year sensitivities for the 12 months to

31 December 2025 of a $156m decrease, and a $156m increase,

respectively.

Overall the banking NII sensitivity is mainly driven by interest rate

sensitive liabilities funding equity (non-interest bearing) investments in

subsidiaries.

Market risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Market risk.

Market risk arises from both trading portfolios and non-trading

portfolios. Trading portfolios comprise positions held for client servicing

and market-making, with the intention of short-term resale and/or to

hedge risks resulting from such positions.

🡠For further details of market risk in non-trading portfolios, see page <u>[198](#ie4edc76213cf40e9ae3dd93b36f88427_313)</u>.

Market risk management

Governance and structure

The following table summarises the main business areas where trading

market risks reside and the market risk measures used to monitor and

limit exposures.

---

| | |
|:---|:---|
| **Risk types** | **Trading risk** |
| **Risk types** | –Foreign exchange and commodities<br>–Interest rates<br>–Credit spreads<br>–Equities<br>|
| **Global business** | CIB |
| **Risk measure** | Value at risk \| Sensitivity \| Stress testing |

---

The objective of our risk management policies and measurement

techniques is to manage and control market risk exposures through

prudent oversight, to ensure that our market risk profile aligns with our

established risk appetite and strategic objectives.

Market risk is managed and controlled through limits approved by the

Group's senior management. These limits are allocated across

business lines and to the Group's legal entities. Each major operating

entity has an independent market risk management and control sub-

function, which is responsible for measuring, monitoring and reporting

market risk exposures against limits on a daily basis. Each operating

entity is required to assess the market risks arising in its business and

to transfer them either to its local Markets and Securities Services or

Markets Treasury unit for management, or to separate books managed

under the supervision of the local ALCO. The Traded Risk function

enforces the controls around trading in permissible instruments

approved for each site as well as changes that follow the approval of

new products. Traded Risk also restricts trading in the more complex

derivative products to only those offices with appropriate levels of

product expertise and control systems.

Key risk management processes

Monitoring and limiting market risk

exposures

Our objective is to manage and control market risk exposures while

maintaining a market profile consistent with our risk appetite.

We use a range of tools to monitor and limit market risk exposures

including sensitivity analysis, VaR and stress testing.

Sensitivity analysis

Sensitivity analysis measures the impact of movements in individual

market factors on specific instruments or portfolios, including interest

rates, foreign exchange rates and equity prices. We use sensitivity

measures to monitor the market risk positions within each risk type.

Granular sensitivity limits are set for trading desks with consideration of

market liquidity, customer demand and capital constraints, among

other factors.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **201** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Market risk |  |  |  |

---

Value at risk

(Audited)

VaR is a technique for estimating potential losses on risk positions as a

result of movements in market rates and prices over a specified time

horizon and to a given level of confidence. The use of VaR is integrated

into market risk management and calculated for all trading positions

regardless of how we capitalise them.

Our models are predominantly based on historical simulation that

incorporates the following features:

–historical market rates and prices, which are calculated with

reference to foreign exchange rates, commodity prices, interest

rates, equity prices and the associated volatilities;

–potential market movements that are calculated with reference to

data from the past two years; and

–calculations to a 99% confidence level and using a one-day holding

period.

The models also incorporate the effect of option features on the

underlying exposures. The nature of the VaR models means that an

increase in observed market volatility will lead to an increase in VaR

without any changes in the underlying positions.

VaR model limitations

Although a valuable guide to risk, VaR is used with awareness of its

limitations. For example:

–The use of historical data as a proxy for estimating future market

moves may not encompass all potential market events, particularly

those that are extreme in nature. As the model is calibrated on the

last 500 business days, it does not adjust instantaneously to a

change in the market regime.

–The use of a one-day holding period for risk management purposes

of trading books assumes that this short period is sufficient to

hedge or liquidate all positions.

–The use of a 99% confidence level by definition does not take into

account losses that might occur beyond this level of confidence.

–VaR is calculated on the basis of exposures outstanding at the close

of business and therefore does not reflect intra-day exposures.

Risk not in VaR framework

The risks not in VaR ('RNIV') framework captures and capitalises

material market risks that are not adequately covered in the VaR

model.

Risk factors are reviewed on a regular basis and are either incorporated

directly into the VaR models, where possible, or quantified through

either the VaR-based RNIV approach or a stress test approach within

the RNIV framework. While VaR-based RNIVs are calculated by using

historical scenarios, stress-type RNIVs are estimated on the basis of

stress scenarios whose severity is calibrated to be in line with the

capital adequacy requirements. The outcome of the VaR-based RNIV

approach is included in the overall VaR calculation but excluded from

the VaR measure used for regulatory back-testing.

Stress-type RNIVs include a deal contingent derivatives capital charge

to capture risk for these transactions and a de-peg risk measure to

capture risk to pegged and heavily-managed currencies.

Stress testing

Stress testing is an important procedure that is integrated into our

market risk management framework to evaluate the potential impact

on portfolio values of more extreme, although plausible, events or

movements in a set of financial variables. In such scenarios, losses can

be much greater than those predicted by VaR modelling. Stress testing

and reverse stress testing provide senior management with insights

regarding the 'tail risk' beyond VaR.

Stress testing is implemented at legal entity, regional and overall Group

levels. A set of scenarios is used consistently across all regions within

the Group. Market risk stress testing incorporates both historical and

hypothetical events. Market risk reverse stress tests are designed to

identify vulnerabilities in our portfolios by looking for scenarios that lead

to loss levels considered severe for the relevant portfolio. These

scenarios may be local or idiosyncratic in nature and complement the

systematic top-down stress testing.

The risk appetite around potential stress losses for the Group is set and

monitored against limits.

Back-testing

We routinely validate the accuracy of our VaR models by back-testing

the VaR metric against both actual and hypothetical profit and loss.

Hypothetical profit and loss excludes non-modelled items such as fees,

commissions and revenue related to intra-day transactions.

The hypothetical profit and loss reflects the profit and loss that would

be realised if positions were held constant from the end of one trading

day to the end of the next. This measure of profit and loss does not

align with how risk is dynamically hedged, and is therefore not

necessarily indicative of the actual performance of the business.

The number of hypothetical loss back-testing exceptions, together with

a number of other indicators, is used to assess model performance and

to consider whether enhanced internal monitoring of a VaR model is

required. We back-test our VaR at set levels of our Group entity

hierarchy.

During 2025, the Group experienced one back-testing exception

against hypothetical losses. This exception was mainly driven by

heightened market volatility observed after tariff policy

announcements, with equity volatilities and credit spreads as the main

contributing risk factors.

Key developments in 2025

There were no material changes to our policies and practices for the

management of market risk in 2025.

We continued to manage market risk prudently during 2025. Market

risk was managed using a complementary set of risk measures and

limits, including stress testing and scenario analysis. Main sensitivity

exposures and VaR remained within appetite as the business pursued

its core market-making activity in support of our customers. We

employed stress testing tools to assess a range of geopolitical and

technical scenarios that were relevant during the year.

Trading portfolios

Value at risk of the trading portfolios

Trading VaR is predominantly generated by Markets and Securities

Services. As of 31 December 2025, Trading VaR stood at $38.9m, a

small increase compared with $38.3m as of 31 December 2024. At the

end of December 2025, Trading VaR was mainly driven by exposures

to foreign exchange and interest rate risk factors from the Global

Foreign Exchange business line to facilitate client-driven activity.

Trading VaR peaked at $57.1m in January 2025, driven by exposures to

US dollar interest rates. Trading VaR reduced during the rest of 2025

mainly as a result of some volatile interest rate scenarios rolling off the

VaR scenario window.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **202** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Market risk |  |  |  |

---

The daily levels of total trading VaR during 2025 are set out in the graph below.

Daily VaR (trading portfolios), 99% 1 day ($m)<br>

![762](hsbc-20251231_g73.gif)

The Group trading VaR for the year is shown in the table below.

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> | Trading VaR, 99% 1 day<sup>1</sup> |  |  |  |  |  |  |
| (Audited) | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 | At 31 Dec 2024 |
|  | **Foreign**<br>**exchange and** <br>**commodity**<br>| **Interest**<br>**rate**<br>| **Equity** | **Credit**<br>**spread**<br>| **Portfolio** <br>**diversification**<sup>1</sup><br>| **Total**<sup>2</sup> | Foreign<br>exchange and <br>commodity<br>| Interest<br>rate<br>| Equity | Credit<br>spread<br>| Portfolio <br>diversification<sup>1</sup><br>| Total<sup>2</sup> |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m |
| **Balance** | **13.9** | **18.9** | **17.1** | **8.5** | **(19.5)** | **38.9** | 14.6 | 34.9 | 16.3 | 8.2 | (35.7) | 38.3 |
| Average | **13.6** | **27.5** | **16.3** | **10.1** | **(29.1)** | **38.5** | 15.2 | 48.3 | 14.8 | 9.9 | (35.1) | 53.1 |
| Maximum | **26.9** | **54.9** | **24.6** | **17.9** |  | **57.1** | 29.8 | 78.1 | 20.5 | 13.1 |  | 83.3 |
| Minimum | **6.2** | **17.1** | **12.3** | **6.4** |  | **27.3** | 6.9 | 24.8 | 12.7 | 6.6 |  | 37.0 |

---

1See page <u>[199](#ie4edc76213cf40e9ae3dd93b36f88427_316)</u> for our definition of 'Portfolio diversification'.

2The total VaR is non-additive across risk types due to diversification effects.

The table below shows trading VaR at a 99% confidence level

compared with trading VaR at a 95% confidence level at

31 December 2025. This comparison facilitates the benchmarking of

the trading VaR, which can be stated at different confidence levels,

with financial institution peers. The 95% VaR is unaudited.

---

| | | |
|:---|:---|:---|
| Comparison of trading VaR, 99% 1 day vs trading VaR, 95% 1 day | Comparison of trading VaR, 99% 1 day vs trading VaR, 95% 1 day | Comparison of trading VaR, 99% 1 day vs trading VaR, 95% 1 day |
|  | **Trading VaR, 99% 1 day** | **Trading VaR, 95% 1 day** |
|  | **$m** | **$m** |
| **Balance at** <br>**31 Dec 2025**<br>| **38.9** | **21.0** |
| Average | **38.5** | **23.3** |
| Maximum | **57.1** | **31.4** |
| Minimum | **27.3** | **18.1** |
| Balance at <br>31 Dec 2024<br>| 38.3 | 23.4 |
| Average | 53.1 | 33.0 |
| Maximum | 83.3 | 48.9 |
| Minimum | 37.0 | 22.0 |

---

Market risk balance sheet linkages

The following balance sheet lines in the Group's consolidated position

are subject to market risk:

Trading assets and liabilities

The Group's trading assets and liabilities are in almost all cases

originated by CIB. Other than a limited number of exceptions, these

assets and liabilities are treated as traded risk for the purposes of

market risk management. The exceptions primarily arise in the Banking

business, where the short-term acquisition and disposal of assets is

linked to other non-trading-related activities, such as loan origination.

Derivative assets and liabilities

We undertake derivative activity for three primary purposes: to create

risk management solutions for clients, to manage the portfolio risks

arising from client business, and to manage and hedge our own risks.

Most of our derivative exposures arise from sales and trading activities

within CIB. The assets and liabilities included in trading VaR give rise to

a large proportion of the income included in net income from financial

instruments held for trading or managed on a fair value basis.

Adjustments to trading income such as valuation adjustments are not

measured by the trading VaR model.

🡠For information on the accounting policies applied to financial instruments

at fair value, see Note 1.2 on the financial statements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **203** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Climate risk

**TCFD**<br>

Our climate risk approach identifies two primary drivers of climate risk:

–physical risk, which arises from the increased frequency and

severity of extreme weather events, such as hurricanes and floods,

or chronic gradual shifts in weather patterns or rises in the sea level;

and

–transition risk, which arises from the process of moving to a net

zero economy, including changes in government policy and

legislation, technology, market demand, and reputational

implications triggered by a change in stakeholder expectations,

action or inaction.

We continue to identify a thematic issue related to climate risk that

could manifest as reputational, regulatory compliance, and litigation

risks: the risk of greenwashing. This risk arises from knowingly or

unknowingly making inaccurate, unclear, misleading or unsubstantiated

claims regarding sustainability to our stakeholders.

Net zero alignment risk had previously been identified as a thematic

issue and is now replaced and managed within the new risk type,

sustainability execution risk.

🡠See page 138 for our definition of climate risk.

Approach

We acknowledge that the physical effects of climate change and the

shift towards a net zero economy may pose substantial financial risks

to companies, investors, and the financial system. HSBC may

encounter climate risks directly or indirectly through our customer

relationships, potentially leading to both financial and non-financial

consequences.

Our climate risk approach aims to effectively manage the material risks

that could impact our operations, financial performance and stability,

and reputation. It is informed by the evolving expectations of our

regulators and is aligned to our Group-wide risk management

framework, which sets out how we identify, assess and manage our

risks across our three lines of defence.

We continue to work to enhance our climate risk capabilities across our

businesses by prioritising sectors, portfolios and counterparties with

the highest impacts. Recognising this as a long-term iterative process,

we aim to expand our coverage and integrate more advanced data,

climate analytics, frameworks and tools, while adapting to emerging

industry best practices and climate-related regulations.

We regularly reflect on the evolving nature of financial and non-financial

climate risks in the real world to improve the integration of climate risk

factors into strategic planning, transactions, and decision-making

across our operations. Our current processes for managing climate and

sustainability-related targets, net zero transition plans, and climate

strategy include conducting impact assessments of HSBC's M&A

activities.

The tables below provide an overview of the risk drivers and thematic

issue considered within HSBC's climate risk approach.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Climate risk – risk drivers | Climate risk – risk drivers | Climate risk – risk drivers | Climate risk – risk drivers | Climate risk – risk drivers |
|  |  | **Details** | **Potential impacts** | **Time horizons** |
| **Physical** | **Acute** | Increased frequency and severity of weather events causing <br>disruption to business operations.<br>| –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |
|  | **Chronic** | Longer-term shifts in climate patterns (e.g. sustained higher <br>temperatures, sea level rise, shifting monsoons or chronic heat <br>waves).<br>| –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |
| **Transition** | **Policy and legal** | Mandates for, and regulation of products, and services and/or <br>policy support for low-carbon alternatives. Litigation from parties <br>who have suffered loss and damage from climate impacts.<br>| –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |
| **Transition** | **Technology** | Replacement of existing products with lower emissions options. | –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |
| **Transition** | **End-demand (market)** | Changing consumer demand from individuals and corporates. | –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |
| **Transition** | **Reputational** | Increased scrutiny following a change in stakeholder perceptions <br>of climate-related action or inaction, and diverging national and <br>political agendas.<br>| –Decreased real estate <br>values or stranded assets.<br>–Decreased household <br>income and wealth.<br>–Increased costs of legal <br>and compliance.<br>–Increased public scrutiny.<br>–Decreased profitability.<br>–Lower asset performance. | Short-term<br>Medium-term<br>Long-term |

---

---

| | | |
|:---|:---|:---|
| Climate risk – thematic issue | Climate risk – thematic issue | Climate risk – thematic issue |
| **Risk of** <br>**greenwashing** | **Firm** | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to our sustainability ambitions, targets and <br>commitments, as well as the reporting of our performance towards them.<br>|
| **Risk of** <br>**greenwashing** | **Product** | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to products or services offered to clients <br>that have stated sustainability objectives, characteristics, impacts or features.<br>|
| **Risk of** <br>**greenwashing** | **Client** | Making inaccurate, unclear, misleading or unsubstantiated claims as a consequence of our relationships with clients or <br>transactions we undertake with them, where their sustainability commitments or related performance are <br>misrepresented or are not aligned to our own commitments.<br>|

---

Our annual climate risk materiality assessment helps us to understand

how climate risk may impact across HSBC's risk taxonomy. It

assesses the type of impact, likelihood and severity over a 12-month

period, and also considers forward-looking risk impacts.

It is used to support policy, control enhancements, and scenario

analysis. For further details of scenario analysis and the definition of the

time horizons used for assessing potential risks, see page 206.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Climate risk drivers** | **Credit risk** | **Traded risk** | **Reputational risk** | **Regulatory** <br>**compliance risk**<br>| **Resilience risk** | **Other financial** <br>**and non-financial** <br>**risk types**<br>|
| **Physical risk** | ◆ | ◆ |  |  | ◆ | ◆ |
| **Transition risk** | ◆ | ◆ | ◆ | ◆ | ◆ | ◆ |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **204** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

Climate risk management

Key developments in 2025

We continue to develop our climate risk management capabilities. The

following outlines key developments in 2025:

–We have enhanced our approach to managing our financed

emission targets in our wholesale portfolio, through developing

portfolio steering capabilities and revenue at risk assessments.

–We enhanced our approach to assessing the impact of climate

change on capital, focusing on credit, traded and operational risk.

–We enhanced our internal climate scenario analysis, including

through improvements to input data and models. For further details

of scenario analysis, see page 206.

–We enhanced our approach to managing and mitigating the risk of

greenwashing.

–We revised our climate risk guidelines for relationship managers to

further embed climate risk considerations into credit risk

assessments.

While we have made progress, further work remains, including the

need to develop additional metrics and tools to measure our exposure

to climate-related risks.

Governance and structure

The Board takes overall supervisory responsibility for our ESG strategy,

overseeing executive management in developing the approach,

execution and associated reporting.

The Group Chief Risk and Compliance Officer is the senior manager

responsible for the management of climate risk under the UK Senior

Managers Regime.

The Group Reputational Risk Committee provides recommendations

and advice on significant reputational risk matters with impacts across

the Group.

The Environmental Risk Steering Meeting provides oversight of

environmental risk and the risk of greenwashing. Equivalent forums

have been established at a regional level, and we will continue to

develop our approach to governance and oversight.

The Group Risk Management Meeting and the Group Risk Committee

receive updates on our climate risk profile.

🡠For further details of the Group's ESG governance structure, see page 57.

Risk appetite

Our climate risk appetite statement forms part of the Group's risk

appetite statement and is approved and overseen by the Board. This

supports the business in delivering our net zero ambition effectively

and sustainably, and is reviewed annually, or sooner should a breach

occur.

Climate risk indicators are reported on a quarterly basis for oversight by

the Group Risk Management Meeting and the Group Risk Committee.

Policies, processes and controls

We continue to update and integrate climate risk into policies,

processes and controls across many areas of our organisation.

🡠For further details of how we manage climate risk across our business

segments, see page 49.

Embedding our climate risk approach

The below details how we have embedded the management of

climate risk across key risk types. For further details of our internal

scenario analysis, see 'Insights from climate scenario analysis' on page

206. Wholesale credit risk

We have metrics in place to monitor the exposure of our wholesale

corporate lending portfolio to six high transition risk sectors, as shown

in the below table. As at 31 December 2025, the overall exposure to

the six high transition risk sectors was 17.5% of the total gross

carrying amount of wholesale loans and advances. These disclosures

cover the whole of the value chain of the sector. The sector

classifications are based on internal HSBC definitions and are applied

on a group of counterparties, which can be judgemental in nature. We

use publicly available data, as well as internal data and input from

subject matter experts to determine the appropriate sector. The sector

classifications are subject to ongoing data quality improvements and

continuous enhancement of our processes. The data will continue to

be refined in future years.

Our relationship managers engage with our material wholesale

customers, including those in higher transition risk sectors, through a

transition engagement questionnaire ('TEQ'). The TEQ covers all

geographies, and it helps to gather information and assess our

wholesale customers' business model alignment to a net zero

transition and their exposure to physical and transition risks. We use

the responses to the questionnaire to support risk assessments of our

material wholesale customers.

Our credit policies require that relationship managers comment on

climate risk factors in credit applications for new money requests and

annual credit reviews. Our credit policies also require manual credit risk

rating overrides if climate is deemed to have a material impact on

credit risk under 12 months if not already captured under the original

credit risk rating.

In 2025, we continued to develop our approach towards credit risk

management, and refine climate risk guidelines for relationship

managers to further embed climate risk considerations into credit risk

assessments.

Key challenges for further embedding climate risk into credit risk

management relate to the availability of adequate physical risk data to

assess impacts on our wholesale customers.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **205** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 | Wholesale loan exposure to high transition risk sectors at 31 December 2025 |
|  | **Units** | **Automotive** | **Chemicals** | **Construction, Contracting** <br>**& Building Materials**<br>| **Metals and** <br>**mining**<br>| **Oil and** <br>**gas**<br>| **Power and** <br>**utilities**<br>| **Total** |
| Wholesale loan exposure<sup>1,2,3,4</sup> | **$bn** | **20** | **12** | **19** | **17** | **18** | **25** | **111** |

---

1 Amounts shown in the table also include green and other sustainable finance loans, which support the transition to the net zero economy. The methodology for

quantifying our exposure to high transition risk sectors and the transition risk metrics will evolve over time as more data becomes available and is incorporated

into our risk management systems and processes. We are aiming to develop the appropriate systems, data and processes to provide enhanced disclosures in

future years.

2 Counterparties are allocated to the high transition risk sectors via a two-step approach. Firstly, where the main business of a group of connected counterparties

is in a high transition risk sector, all lending to the group is included in one high transition risk sector irrespective of the sector of each individual obligor within

the group. Secondly, where the main business of a group of connected counterparties is not in a high transition risk sector, only lending to individual obligors in

the high transition risk sectors is included. The main business of a group of connected counterparties is identified by the industry that generates the majority of

revenue within a group. Customer revenue data utilised during this allocation process is the most recent and readily available and will not always align to our

own reporting period.

3 The six high transition risk sectors make up 17.5% of the total gross carrying amount of wholesale loans and advances to banks and customers of $635bn.

Amounts include assets held for sale.

4 The sectors used to monitor the wholesale corporate lending portfolio set out in the table are different to the scope of sectors we focus on for financed

emissions targets and reporting. The latter focus on the most carbon-emissive sectors, and the parts of the value chain where we believe the majority of

emissions are produced to help reduce double counting. These sectors are set out within the 'Financed emissions' section on page 41.

Retail credit risk

Climate risk may impact retail credit risk through an increase in credit

losses on our global retail mortgage portfolio, primarily due to the

impact of physical risk. Our climate scenario analysis conducted over

the last two years shows that climate-related risk is not expected to

become significant for credit default in the medium term to 2030, due

to a relatively low loan-to-value ('LTV') profile of properties, their

locations and availability of property insurance for our customers.

Property insurance remains a mitigant. However, as climate risk

increases, alongside uncertainties of how the insurance market will

evolve, impacts are expected to increase over the longer term beyond

2030. Results are considered directional and will evolve over time as

our approach continues to mature. Within our mortgage portfolios,

properties or areas with potential heightened physical risk are identified

and assessed locally with exposure monitored. A reduction in property

value, higher insurance costs and insurance availability are potential

future negative financial impacts for higher physical risk properties.

Retail mortgage book and relevant 2025

enhancements

The UK and Hong Kong are our most material mortgage markets by

exposure, which at December 2025, represented approximately 50%

and approximately 30% respectively of our global mortgage portfolio,

with other IWPB markets accounting for the remaining balance.

Analysis conducted over the last two years on the maturity profile of

the UK mortgage book shows that the average remaining contractual

term is 22.2 years. However, with some customers undertaking

refinancing options during this term, the average term of the mortgage

in practice is between five and eight years. This means our strategic

approach to climate risk needs to consider short-term risk through to

long-term forward-looking risk, given that customers may choose to

remain with us over the whole life of the loan. We have also performed

forward-looking climate scenario analysis on UK, Hong Kong and

additional markets, including US and Australia, collectively covering

over 90% of our retail portfolio. For further information, see page 209.

We continue to improve our climate risk management approach,

including enhancements to our internal climate risk policy in 2025 and

associated controls. This includes mandating key risk indicators for

physical risk and introducing a climate risk assessment in mortgage

decision making. The UK already considers physical risk in relation to

flooding and coastal erosion as part of an established mortgage

decisioning process, using data sourced from third-party providers.

Hong Kong introduced physical risk considerations into the mortgage

origination process during 2025, utilising third-party data.

Physical risk

UK flood data considers present day risk from tidal, river and surface

water flooding baselined to 2021. A flood risk rating score of 0-100 is

provided, with 100 being the highest risk. Flood risk bands are based

on the average annual loss generated using flood hazard frequency,

flood depths, and the probability of flooding events occurring. Based on

available data, 3.6% of the UK mortgage book by balances is at very

high/high risk of flooding. Geographically, our highest risk exposures

are Greater London and the South East.

🡠For the Hong Kong physical risk information, please refer to the scenario

analysis section on page 209.

Transition risk

Transition risk for retail mortgages is the risk of potential loss of

property value and/or customer financial impairment resulting from the

adjustment towards a lower carbon economy. Examples of these

impacts include changes in energy prices and evolving government

regulation for energy efficiency standards.

For the UK, we monitor the energy performance certificate ('EPC')

ratings of individual properties from A (highest efficiency) through to G

(least efficient), as EPCs are commonly used as an indicator of

transition risk. All UK rental properties must have a minimum EPC

rating of E. We track EPC ratings for both owner occupier ('OO') and

buy to let ('BTL') properties. The ESG data file details the profile of

current EPCs. For completeness, where we do not hold a current EPC,

we have included expired EPCs. For OO, 85.3% of properties by

lending balances hold a valid EPC/expired certificate, of which 41% are

EPC A-C. For BTL, 83.1% of properties by lending balances hold a valid

EPC/expired certificate, of which 60.2% are EPC A-C. We continue to

monitor the profile of EPC ratings and closely track evolving

government legislation, which will be a key factor in the

decarbonisation of buildings.

🡠For further details of flood risk, EPC breakdown and the average

tenor of our UK retail mortgage portfolio, see our ESG Data Pack at

www.hsbc.com/esg.

Treasury risk

Climate risk may impact Treasury risk through increased regulatory

requirements and from changes to customer behaviours, which may

result in increased deposit outflows. Climate risk may also impact

interest rates and consequently the repricing profile of the balance

sheet.

As part of our ICAAP, we assess the impact of climate change on

capital, focusing on credit risk, traded risk and operational risk, and

perform sensitivity analysis on our Internal Capital Planning Buffer.

As part of our ILAAP, we assess how climate risk could impact the

Group liquidity position.

Pension risk

Climate risk could result in additional costs within our defined benefit

pension plans, due to changes in the investment performance of

pension plans or through having to meet evolving regulatory

requirements.

Our global policies covering the oversight of pension investments

include climate considerations. We also conduct an annual exercise to

estimate the exposure of our largest pension plans to climate risk.

Insurance risk

We are improving our ability to perform exploratory assessments of the

solvency resilience of our biggest insurance businesses under climate

stress scenarios.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **206** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

Traded risk

Climate risk may result in trading losses due to increases in market

volatility and widening spreads from the macro and microeconomic

impacts of transition and physical risk. We monitor climate sensitive

exposures against regional and global limits in our global and entity

mandates, including for vulnerable countries and high-transition risk

sectors.

Climate scenarios are included in our stress testing scenario library

and run every month to identify the vulnerabilities of the trading book

in a climate-stressed context. The scenarios are updated annually in

light of the most recent developments in terms of policy and climate

events, with exposures and stress testing results reported to global

and regional senior management.

Reputational risk

We manage the reputational impact of climate risk through our broader

reputational risk framework, which plays a role in managing the risk of

greenwashing, and is supported by our sustainability risk policies and

metrics.

Our global network of sustainability risk managers provides local policy

guidance to relationship managers for the oversight of policy

compliance, and in support of implementation across our wholesale

banking activities.

🡠For further details of our sustainability risk policies, see page 49.

🡠For further details of our approach to reputational risk, see https://

www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/

reputational-risk.

Sustainability execution risk

Sustainability execution risk has been formally defined as a new risk

type and embedded in our Risk Taxonomy to help identify and

manage the risks around the delivery and execution of our

sustainability ambitions, targets and commitments. Sustainability

execution risk enables effective end-to-end risk management through

dedicated risk stewardship, monitoring and assessment of controls

and emerging risks.

Regulatory compliance risk

Regulatory compliance oversees and supports the business in the

management of climate-related risks that could cause breaches of our

regulatory duties to customers and inappropriate market conduct. Our

policies include sustainability considerations, particularly in relation to

new and ongoing product management, sales outcomes, conflicts of

interest and product marketing. We continue to enhance the

associated control frameworks, processes and customer outcomes.

Resilience risk

Climate risk may influence resilience risks through impacts on our

buildings or through physical and/or transition disruption to third-party

supplier relationships.

As part of our Internal Climate Scenarios Analysis ('ICSA'), we have

developed different scenarios to understand the impact of physical

climate risk on our properties. For further details, please see page 210.

We continue to review and adapt our resilience risk policies as climate

risk requirements evolve.

Model risk

Model risk in a climate-related context refers to the uncertainties and

complexities inherent in the modelling of the financial impact

translation of climate-related changes and scenarios.

Climate risk models are used for climate scenario analysis, risk

management, and emissions reporting among other use cases. Key

challenges, shared across the industry, include the quality and

consistency of data, and assumptions required to mitigate these

inherent model limitations.

Model risk policy and procedures continue to evolve in line with

regulation, setting out the minimum control requirements for

identifying, measuring and managing model risk for climate-related

models.

Financial reporting risk

Climate risk impacts financial reporting risk through increased

disclosure requirements.

The scope of financial reporting risk includes oversight of the accuracy

and completeness of ESG and climate-related reporting. Our risk

appetite statement states that HSBC has no appetite for material errors

in ESG disclosures in our key markets, balanced with the evolving

requirements and data availability.

In addition, our internal controls incorporate requirements for

addressing the risk of misstatement in ESG and climate reporting. To

support this, a framework is used to provide guidance on control

implementation over ESG and climate reporting and disclosures, which

includes areas such as process and data governance, and risk

assessment.

Challenges

Key challenges include:

–an increasingly complex and divergent regulatory environment

across jurisdictions;

–the diverse range of internal and external data sources and data

structures needed for climate-related reporting, which introduces

data accuracy and reliability risks;

–industry-wide data gaps on customer emissions and transition plan

and methodology gaps, which limit our ability to assess transition

risks accurately; and

–data limitations on customer assets and supply chains, and

methodology gaps, which hinder our ability to assess physical risks

accurately.

*.*

Insights from climate scenario analysis

Climate scenario analysis supports our strategy by assessing our

potential exposures to risks and vulnerabilities under a range of climate

scenarios.

Our exercises focus on areas most vulnerable to climate risks across

various business sectors, portfolios, counterparties and our own

properties. They serve as forward-looking tools that assess the

potential impacts of climate-related risks on our operations, credit

portfolio and capital. By simulating the impacts on our customers'

financials and collateral, the analysis provides insights into the long-

term effects that climate risks may have on our balance sheet. While

credit risk is the primary focus, we also examine potential impacts

upon other principal risk types. For further details about these risks,

see 'Climate risk' on page 203.

Our Group-wide internal climate scenario analysis exercises are

sufficiently diverse to enable key physical and transition risk

vulnerabilities to be explored using a wide range of potential climate

outcomes. They provide insights that enhance how we understand the

various transition and global warming pathways that may unfold, which

help to inform how we manage the potential financial implications for

our customers and our shareholders.

We have conducted an internal climate scenario analysis exercise

annually since 2021. The 2025 exercise supplements bespoke analyses

prepared in response to regulatory requirements in various

jurisdictions. It focused on the following time horizons:

–Short-term: 2025-2027 (0-2 years)

–Medium-term: 2028-2030 (3-5 years)

–Long-term: 2031-2040 (6-15 years)

The short- and medium-term horizons align with our internal strategic

planning cycle, while the long-term highlights risks beyond that horizon.

The scenario analysis exercise supports our assessment that the Group

is well capitalised in relation to the potential risks and challenges posed

by climate change. The results are reviewed and endorsed by the

Group Risk Committee.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **207** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

Climate scenario analysis is an evolving discipline. While we seek

continuous methodology enhancement to utilise the latest

developments and best-available data, it remains the case that there

are significant limitations and assumptions. As capabilities improve,

climate scenario analysis outcomes may change. For further details see

'Assumptions and limitations' on page 211.

Our climate scenario analysis approach

Our internal climate scenario analysis exercise used four scenarios designed to examine a range of climate pathways. These are shown in

'Characteristics of our climate scenarios' below:

Characteristics of our climate scenarios

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

![](hsbc-20251231_g74.gif)

+Physical Risk Transition Risk+

![](hsbc-20251231_g75.gif)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | **Scenarios** | **Scenarios** | **Scenarios** | **Scenarios** | **Scenarios** | **Scenarios** | **Scenarios** |
| | | | **Downside Physical Risk** | **Downside Physical Risk** | **Severe Climate Stress**<sup>2</sup> | **Current Commitments** | **Current Commitments** | **Below 2 Degrees** | **Below 2 Degrees** |
| **Scenario** <br>**outcomes** | **Scenario narrative** | **Scenario narrative** | Climate action is limited <br>to currently implemented <br>governmental policies, <br>new decarbonisation <br>policies fail to get <br>introduced leading to <br>significant global warming <br>and physical risk events | Climate action is limited <br>to currently implemented <br>governmental policies, <br>new decarbonisation <br>policies fail to get <br>introduced leading to <br>significant global warming <br>and physical risk events | An extreme scenario <br>assessing concurrent <br>impacts of accelerated <br>climate policies and severe <br>physical risk events. It <br>specifically explores <br>disorderly climate action that <br>has been triggered by <br>physical events leading to a <br>short sharp economic <br>recession. | Climate action includes <br>policies already in place <br>and governmental <br>commitments likely to be <br>implemented. This leads <br>to a slower-than-required <br>transition to a net zero <br>economy reflective of the <br>current pace of transition.  | Climate action includes <br>policies already in place <br>and governmental <br>commitments likely to be <br>implemented. This leads <br>to a slower-than-required <br>transition to a net zero <br>economy reflective of the <br>current pace of transition.  | A Paris Agreement-aligned <br>scenario that assumes an <br>orderly and gradual rise in <br>the stringency of climate <br>policies over time. Net zero <br>is achieved but after 2050.  | A Paris Agreement-aligned <br>scenario that assumes an <br>orderly and gradual rise in <br>the stringency of climate <br>policies over time. Net zero <br>is achieved but after 2050.  |
| **Scenario** <br>**outcomes** | **Rise in global temperatures** <br>**by 2100 (vs pre-industrial** <br>**levels)** | **Rise in global temperatures** <br>**by 2100 (vs pre-industrial** <br>**levels)** | **4°C+** | ![Thermometre-01.jpg](hsbc-20251231_g76.jpg) | **N/A** | **2.6˚C** | ![Thermometre-02.jpg](hsbc-20251231_g77.jpg) | **1.7˚C** | ![Thermometre-03.jpg](hsbc-20251231_g78.jpg) |
| **Scenario** <br>**outcomes** | **How scenario aligns to RCP**<sup>3</sup> | **How scenario aligns to RCP**<sup>3</sup> | **RCP 8.5** | **RCP 8.5** | **N/A** | **RCP 4.5** | **RCP 4.5** | **RCP 2.6** | **RCP 2.6** |
|  | **Scenario end point** | **Scenario end point** | **2050** | **2050** | **2030** | **2050** | **2050** | **2050** | **2050** |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Global climate actions** | **Global climate actions** | Implemented policies only | Implemented policies only | Rapid & disorderly transition | Viable pledged policies | Viable pledged policies | Gradually rising stringency <br>of policies | Gradually rising stringency <br>of policies |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Assumed pace of technology** <br>**change and adoption** | **Assumed pace of technology** <br>**change and adoption** | Slow change | Slow change | Accelerated progress | Limited progress | Limited progress | Moderate change | Moderate change |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Assumed socioeconomic** <br>**impact** | **Assumed socioeconomic** <br>**impact** | High | High | Very high | Moderate | Moderate | Moderate to high | Moderate to high |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** |  |  | **2030** | **2040** | **2030** | **2030** | **2040** | **2030** | **2040** |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Assumed carbon price** <br>**($/tCO2)**<sup>1</sup> | **Assumed carbon price** <br>**($/tCO2)**<sup>1</sup> | 18 | 18 | 326 | 29 | 54 | 44 | 81 |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Assumed % increase in GDP** <br>**since 2020** | **Assumed % increase in GDP** <br>**since 2020** | 29% | 55% | 24% | 32% | 65% | 32% | 69% |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **Assumed % increase in** <br>**energy usage since 2020** | **Assumed % increase in** <br>**energy usage since 2020** | 23% | 38% | 4% | 15% | 23% | 9% | 9% |
| **Underlying** <br>**assumptions** <br>**based on** <br>**global** <br>**averages** | **% renewable energy mix** | **% renewable energy mix** | 12% | 16% | 26% | 16% | 25% | 19% | 36% |
| **Scenario risk** <br>**characteristics** | **Climate** <br>**risk** | **Physical** | ▲ | Higher | Higher | ► | Moderate | ▼ | Lower |
| **Scenario risk** <br>**characteristics** | **Climate** <br>**risk** | **Transition** | ▼ | Lower | Higher | ► | Moderate | ▲ | Higher |

---

1Carbon price represents the cost effects of climate-related policies that aim to discourage carbon-emitting activities and encourage low-carbon solutions. The

expected result of higher carbon prices is a reduction in emissions as high emissions become uneconomical.

2The scenario characteristics shown for the Severe Climate Stress scenario only describe the scenario that was used to assess credit risk.

3Representative Concentration Pathways (RCPs) are a set of greenhouse gas concentration trajectories developed for climate modelling and research. They were

formally adopted by the IPCC and are used to assess the potential impacts of climate change based on different levels of greenhouse gas emissions.

Our climate scenarios

We have designed a suite of diverse climate scenarios that explore

plausible pathways which can support a holistic view that supplements

the Group's current and future strategic thinking.

The climate scenarios are underpinned by well-established industry

bodies, such as the Network for Greening the Financial System

('NGFS') Phase V, the Intergovernmental Panel on Climate Change

('IPCC') and International Energy Agency ('IEA'), which are further

enriched for additional granularity, to seek to ensure consistency with

industry-recognised approaches and to reflect the latest climate policy

and economic outlook and our portfolio vulnerabilities.

There are three long-term scenarios. The Below 2 Degrees scenario is

our Paris Agreement-aligned scenario. We use the Current

Commitments scenario to support the Group's financial planning, as

this is deemed to be the most likely scenario to occur over the five-

year planning horizon. The Downside Physical Risk scenario is a less

probable scenario with higher global warming and more significant

physical risk impacts.

To support how we assess the climate-related impacts observed

within our climate scenarios, we have also artificially constructed a

counterfactual scenario (which is a climate agnostic scenario). This

entailed taking our Current Commitments scenario and removing the

climate impacts, using climate-related GDP deviations as a proxy.

The Severe Climate Stress scenario is a highly improbable short- and

medium-term stress scenario, aligned to NGFS's Short-Term Scenario

Framework. The scenario envisages that extreme physical risk events

– which include 1-in-100 year flooding, heatwave and drought events –

pivot the public consensus on climate change, which accelerates the

transition to net zero. It has the effect of compressing both physical

risks and transition risks into a short timeframe. Although the scenario

is extreme and highly unlikely, it assists us in understanding our current

exposures.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **208** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

We use the scenarios to assess our key risk types and businesses as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis | Evaluating key risk types and businesses using climate scenario analysis |
| **Resulting Climate Vulnerabilities and Opportunities** | **Climate scenarios**<sup>1</sup> | **Climate scenarios**<sup>1</sup> | **Climate scenarios**<sup>1</sup> | **Climate scenarios**<sup>1</sup> | **Climate risk type assessed**<sup>2</sup> | **Climate risk type assessed**<sup>2</sup> |
| **Resulting Climate Vulnerabilities and Opportunities** | **DP** | **SCS** | **CC** | **B2C** | **TR** | **PR** |
| **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** | **Theme: More frequent and disruptive weather events and rising temperature over long term** |
| Retail and wholesale credit risk (real estate portfolios) – our clients may <br>experience property valuation impacts due to heightened physical risk or <br>revenue loss due to business disruption<br>| ◆ | ◆ | ◆ |  |  | ◆ |
| Traded risk – a re-pricing of assets exposed to acute and chronic physical risks | ◆ | ◆ |  |  |  | ◆ |
| Resilience risk – physical damage to our buildings, business interruption and <br>inability to process transactions can result in operational impacts<br>| ◆ | ◆ | ◆ | ◆ |  | ◆ |
| Liquidity risk – evaluating both physical risk and greenwashing risk stress tested <br>over a 90-day horizon to analyse the resulting liquidity impact<br>|  | ◆ |  |  |  | ◆ |
| **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** | **Theme: Our ambition to support customer decarbonisation creates risks & opportunities** |
| Wholesale credit risk – corporates exposed to transition risk may experience <br>revenue loss or increased costs<br>|  | ◆ | ◆ | ◆ | ◆ |  |
| **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** | **Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions** |
| Sustainability execution risk – assessing our revenue at risk as a result of HSBC <br>meeting or not meeting its ESG ambitions, targets and commitments<br>|  |  | ◆ | ◆ | ◆ |  |
| Wholesale credit risk – reshaping our portfolios away from high emitting clients <br>to low emitting clients<br>|  |  | ◆ | ◆ | ◆ |  |
| **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** | **Theme: Unpacking ESG risks may uncover hidden risks for HSBC** |
| Specific non-financial risks<sup>3</sup> – ESG is a relatively new area with uncertainty over <br>future environmental and policy changes and potential greenwashing risks<br>|  | ◆ | ◆ | ◆ | ◆ |  |
| Pension risk – pension funding levels may shrink if climate risk crystalises |  | ◆ |  |  | ◆ | ◆ |

---

1Climate scenarios are explained in the previous section. DP = Downside Physical Risk; SCS = Severe Climate Stress; CC = Current Commitments; and B2C = Below 2

Degrees. The Severe Climate Stress scenario used to assess credit risk employed a different narrative from the tailored scenarios used to assess the other risk types.

2TR = Transition risk; PR = Physical risk. A selected climate risk type does not imply that it was assessed against all selected climate scenarios on the same row.

3Specific non-financial risks refer to financial reporting risk and regulatory compliance risk.

Assessing our resilience to climate risk

Overall, climate-related risks are not currently projected to significantly

impact our strategic priorities or business models, however the

exercise did highlight the likely challenges of meeting any net-zero

objectives in a world that is not on a net-zero pathway.

Our climate strategy includes approaches to mitigate climate change

impacts, such as portfolio steering and credit decisioning. These

support efforts to manage climate-related risks over time. Our focus is

on supporting our customers to implement quality climate transition

plans; reducing our financed emissions; continued investment into

climate modelling capabilities; and the embedding of climate risk

assessment into business-as-usual risk management processes.

Conducting climate scenario analysis involves significant assumptions

and inherent limitations. For further details see 'Assumptions and

limitations' on page 211.

Within the scope and limitations of our exercise, our analysis

anticipates that climate risk will be heightened within our wholesale

lending portfolio. In line with expectations of increasing transition and

physical risks, we expect climate-related credit risk to grow over time,

with the speed dependent on the severity of the risks in the assessed

scenarios. However, our global portfolios remain resilient to risks

arising from the transition to a low carbon economy. While exposures

to other risk types may also contribute to climate-related losses, their

financial impacts are expected to remain minimal in the near term.

Wholesale credit risk is projected to be the primary contributor to our

climate-related financial impacts, driven by transition risk.

The chart on the right shows how, under the Current Commitments

and Below 2 Degrees scenarios, climate transition-related ECL will

change relative to a counterfactual scenario that incorporates no

climate change effects. It shows how transition risks in our wholesale

lending portfolio are expected to remain low in the near term but

become a bigger driver of ECL into the long term as global transition

policies are forecast to increase in stringency. As shown by the

difference in results between the two regional entities referred to in

the chart, the effects of transition risks can vary significantly due to

each entity-level portfolio exposure, and the differing climate policies in

different parts of the world. The future stringency of global climate

policies, a critical differentiator in our climate scenarios, will significantly

influence climate-related financial impacts.

Projected climate transition risk-related ECL impacts on the Group's

wholesale lending portfolio<sup>1</sup>

25%

20%

15%

10%

5%

0%

![235845244262307](hsbc-20251231_g79.gif)

1A 10% increase is equivalent to a 1.1x-fold increase in the table on page 209.

Near-term acute physical risk shocks due to perils, such as typhoons and

heatwaves, are becoming more common as surface temperatures rise

with a slow transition to a low carbon economy. These have the potential

to increase our climate-related losses each year. The size of these losses

is dependent on the availability of insurance and the resilience of buildings

to extreme weather. While our existing analysis indicates resiliency, this

will be an area of particular focus as we further develop our capabilities.

During the five-year period assessed under the Severe Climate Stress

scenario, the Group demonstrated robust resilience. Despite the

substantial projected increase in climate-related losses, compared with

the results observed under our other climate scenarios, the stress test

results indicate that we are well-positioned to withstand adverse

climate-related conditions and maintain operational stability.

The Current Commitments scenario shows muted impacts over the

Group's five-year planning horizon, with the projected climate-related

impacts on ECL remaining within the Group's current risk appetite. A shift

towards the Below 2 Degrees pathway would be expected to crystallise

some incremental climate-related losses over the planning horizon but

these are expected to remain minimal at Group level. Beyond the long-

term horizon, unmitigated climate stress has the potential to be a

headwind to the Group's financial performance and capital position as

transition and physical risks intensify.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **209** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

How climate change is impacting our wholesale lending portfolio

The primary channel of climate risk exposure within our wholesale

portfolio is through lending activities. We have identified six key

sectors with elevated transition risk as detailed on page 204. These

sectors, together with an additional five sectors, were selected due to

the size of our climate risk exposures for in-depth assessments to be

evaluated as part of our climate scenario analysis.

Our assessment specifically examines the influence of transition risk

on the portfolio with an emphasis on the high transition risk sectors.

We quantify the modelled climate-related impact on our projected ECL

across the short-, medium- and long-term horizons under our transition

risk scenarios. This was compared with a counterfactual scenario that

excludes climate change impacts to isolate the climate-related changes

within our ECL.

Our results, as shown in the adjacent table, suggest that in the short

and medium term, we expect climate-related financial impacts to

remain relatively muted, but to increase in the long term particularly

under the Below 2 Degrees scenario, where transition risks grow at a

faster rate. A key risk driver comes from the phasing out of climate-

related government subsidies and 'free carbon allowances' within the

EU, introducing a potential situation where some of our customers may

lose their competitive advantages.

We project that we would see our most significant climate-related

financial impacts across a few key sectors, including: the

manufacturing sector, which includes the construction, contracting and

building materials sectors and the chemicals sector due to higher costs

following rising carbon prices; in the oil and gas sector, due to higher

production costs and lower demand; in the automotive sector due to

increased competition within the EV market; and in the metals and

mining sector due to high climate transition costs.

This year the exercise benefited from a significantly higher prevalence

of customer transition plans used in our modelling. We experienced a

46% increase compared with our 2024 exercise, allowing us to place

more emphasis on how our customers expect to transition to net zero

within our approach.

The impact on our wholesale portfolios is demonstrated by the

adjacent table, which shows the size of exposures by sector in 2024

and the increase in ECL compared with the counterfactual scenario

(expressed as a multiple). The size of our exposure in each sector is

represented by our exposure at default ('EAD') relative to one another.

Overall, our analysis indicates that our wholesale lending portfolio is

expected to remain resilient to climate-related risks across our

assessed time horizon.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios | Impact on wholesale lending portfolios |
| **Wholesale sectors** | **Exposure at** <br>**default** <br>**(EAD)**<sup>3</sup> <br>**2024** | **Average ECL increase** <sup>1, 2</sup> | **Average ECL increase** <sup>1, 2</sup> | **Average ECL increase** <sup>1, 2</sup> | **Average ECL increase** <sup>1, 2</sup> | **Average ECL increase** <sup>1, 2</sup> | **Average ECL increase** <sup>1, 2</sup> |
| **Wholesale sectors** | **Exposure at** <br>**default** <br>**(EAD)**<sup>3</sup> <br>**2024** | **Climate Scenarios** | **Climate Scenarios** | **Climate Scenarios** | **Climate Scenarios** | **Climate Scenarios** | **Climate Scenarios** |
| **Wholesale sectors** | **Exposure at** <br>**default** <br>**(EAD)**<sup>3</sup> <br>**2024** | **Current** <br>**Commitments** | **Current** <br>**Commitments** | **Current** <br>**Commitments** | **Below 2** <br>**Degrees** | **Below 2** <br>**Degrees** | **Below 2** <br>**Degrees** |
| **Wholesale sectors** | **Exposure at** <br>**default** <br>**(EAD)**<sup>3</sup> <br>**2024** | **ST** | **MT** | **LT** | **ST** | **MT** | **LT** |
| **Wholesale Lending** <br>**Portfolio - Overall**<sup>4</sup><br>| **100%** |  |  |  |  |  |  |
| Other wholesale sectors <br>(low - medium risk)<sup>5</sup><br>| **50%** |  |  |  |  |  |  |
| Conglomerates and <br>industrials<br>| ⚫ |  |  |  |  |  |  |
| Power and utilities | ⚫ |  |  |  |  |  |  |
| Automotive | ⚫ |  |  |  |  |  |  |
| Oil and gas | ⚫ |  |  |  |  |  |  |
| Construction, contracting <br>and building materials<br>| ⚫ |  |  |  |  |  |  |
| Metals and mining | ⚫ |  |  |  |  |  |  |
| Land transport and <br>logistics<br>| ⚫ |  |  |  |  |  |  |
| Chemicals | ⚫ |  |  |  |  |  |  |
| Agriculture & soft <br>commodities<br>| ⚫ |  |  |  |  |  |  |
| Aviation | ⚫ |  |  |  |  |  |  |
| Marine | ⚫ |  |  |  |  |  |  |

---

1 Increase in ECL compared with counterfactual over short-, medium- and

long-term time horizons, expressed as a multiple. It represents the average

increase across the stated time period.

2 Values in the key represent the fold-increase in ECL, i.e. <1.1 equates to

less than 10% increase over the counterfactual.

3 The size of the bubbles is a visual representation of the portfolios, in terms

of EAD, relative to one another.

4 "Wholesale lending portfolio - Overall" refers to the entire portfolio including

the CRE sector.

5 "Other wholesale sectors" include the remaining sectors not listed in the

table. The CRE sector, which is disclosed on page 210, is not included.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Lower** <br>**Impact**<br>| <1.1x | <1.25x | <1.5x | <2x | <2.5x | <3x | **Higher** <br>**Impact**<br>|

---

How climate change is impacting our retail mortgage portfolio

Since 2023, as part of our climate scenario analysis exercises, we have

executed a climate risk assessment, at least once, for the following

mortgage portfolios: UK, Hong Kong (including Hang Seng Bank), the

United States, Singapore, Malaysia, Australia, mainland China and the

UAE. These portfolios collectively account for over 90% of the

balances in our global retail mortgage portfolio.

Our physical risk assessment methodology evaluates the impacts of

physical risk perils on property valuations, as well as on affordability for

customers arising from increased insurance and repair costs.

Additionally, for our UK portfolio, we conducted a transition risk

assessment that includes an assessment of the impacts of rising

energy costs and government legislation, including requirements for

homeowner energy efficiency upgrades.

The results of the climate scenario analysis exercise conducted on the

retail mortgage portfolio indicated that, over the long term, we

anticipate minimal climate-related losses. Although the severity of

climate perils is projected to increase, our overall losses are anticipated

to remain low, even under a severe Downside Physical Risk scenario

through to the long term. This projection assumes the ongoing

availability of insurance and reflects the portfolio's relatively low loan-

to-value ratio.

Given the limited availability of historical climate loss data and the

uncertainty surrounding future changes in insurance provision, our

assessment should be regarded as indicative. Our analysis will

continue to evolve as our lending profile, assessment methodologies,

data sources and modelling techniques mature.

Our ESG Data Pack offers detailed analysis of the flood risk exposure

within our retail mortgage portfolio across our key markets. The

accompanying table presents projected flood depths based on the

locations of our mortgaged properties under different climate

scenarios, enabling an assessment of the potential impacts. However,

it does not consider building archetypes.

🡠Please refer to the ESG Data Pack at www.hsbc.com/esg

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **210** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

How climate change is impacting our

commercial real estate portfolios

The commercial real estate ('CRE') sector within our wholesale lending

portfolio is a globally-diversified portfolio with our largest concentrations

in Hong Kong and the UK. In 2025, we carried out a detailed

assessment of our portfolios in Hong Kong, the UAE and France.

Properties in a real estate-focused portfolio are exposed to physical

climate risk, which varies significantly by geographical location. They

may also face future transition risks should governments introduce

climate-related regulation for commercial properties, such as

requirements for climate-resilient retrofitting, which we have assessed

in previous years.

When assessing physical risk impacts across the portfolio, we analysed

how the specific perils such as coastal inundation, riverine flooding,

surface flooding, cyclones and wildfires may affect the financial

performance of our portfolio under various climate scenarios. Our

primary objective was to quantify the potential damage and assess how

these events could influence the repayment capacity of borrowers

taking into account both direct impacts, such as repair costs, and

indirect impacts, such as downtime resulting from business disruption.

However, our methodology is subject to several constraints, including

limited historical data, a dependence on precise building co-ordinates

and limited insight into the resilience of individual properties. The

results are also sensitive to key assumptions, particularly those relating

to insurance coverage and reinstatement values.

The table below shows the proportion of our CRE portfolio exposed to

specific physical perils in our key markets. This analysis only focuses on

the properties within the portfolio for which we have required data.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Exposure to peril (%)<sup>1</sup> | Exposure to peril (%)<sup>1</sup> | Exposure to peril (%)<sup>1</sup> | Exposure to peril (%)<sup>1</sup> | Exposure to peril (%)<sup>1</sup> | Exposure to peril (%)<sup>1</sup> |  |
| **Market** | **Exposure** <br>**at default** <br>**(EAD)**<sup>2</sup><br>**2024**<br>| **Coastal** <br>**inundation**<br>| **Cyclone** <br>**wind**<sup>3</sup><br>| **Surface** <br>**water** <br>**flooding**<br>| **Riverine** <br>**flooding**<br>| **Forest** <br>**Fires**<br>|
| Hong <br>Kong<br>| ⚫ | **17** | **100** | **20** | **15** | **2** |
| UK | ⚫ | **15** | **0** | **17** | **23** | **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 Although all properties in the UK could be impacted by some damage due to

extreme wind, the intensity of impact is projected to be very insignificant

and highly muted in some regions, represented by approximately 0%

exposure to this peril.

Over a long-term horizon, we assess chronic physical risks using the

Current Commitments and Downside Physical Risk scenarios to

capture the gradual evolution of physical climate impacts. The table

below shows the ECL impact on our CRE portfolio compared with a

counterfactual scenario (expressed as a multiple).

---

| | | | |
|:---|:---|:---|:---|
| Impact on our commercial real estate portfolio | Impact on our commercial real estate portfolio | Impact on our commercial real estate portfolio | Impact on our commercial real estate portfolio |
| **Climate Scenarios** | **ECL increase** <sup>1,2</sup> | **ECL increase** <sup>1,2</sup> | **ECL increase** <sup>1,2</sup> |
| **Climate Scenarios** | **Short-term** | **Medium-term** | **Long-term** |
| Current Commitments |  |  |  |
| Downside Physical Risk (2024)<sup>3</sup> |  |  |  |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Lower** <br>**Impact**<br>| <1.1x | <1.25x | <1.5x | <2x | <2.5x | <3x | **Higher** <br>**Impact**<br>|

---

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

term time horizons, expressed as a multiple.

2 Values in the key represent the fold-increase in ECL, i.e. <1.1 equates to

less than 10% increase over the counterfactual which excludes climate

change impacts.

3Results under the Downside Physical Risk scenario refers to 2024 exercise.

In the most likely Current Commitments scenario, chronic physical risks

are expected to increase slowly over time with ECL estimated to be

less than 5% higher relative to the counterfactual scenario by 2040. In

the more severe Downside Physical Risk scenario, greater global

warming leads to heightened physical risks over time and the ECL

impact is estimated to be less than 15% higher than relative to the

counterfactual scenario.

This year, we also conducted a sensitivity analysis to test the impact of

extreme tail-end physical risks materialising earlier than expected under

the Downside Physical Risk scenario. In this assessment, we shift the

physical risk effects that are expected to occur between 2055-2080

towards the period between 2025-2050. Under these stressed

conditions, projected ECL were higher but still manageable, and up to

40% higher than they would have been under the counterfactual

scenario by 2040. These results show our CRE portfolio is resilient to

climate risk.

Our portfolio in Hong Kong, which represents our largest CRE portfolio,

is primarily exposed to flooding risks, including coastal inundation and

tropical cyclones. The severity and frequency of these events have

increased in recent years. Through our climate scenarios, we assess

both long-term chronic physical risks and short-term acute weather

events, with the latter being significantly more severe than those

experienced to date.

Our analysis continues to indicate that strong building standards, local

flood-mitigation measures, such as drainage tunnels, and insurance

coverage are likely to limit the financial impact of climate change on the

Hong Kong portfolio. We have also conducted sensitivity analyses to

account for variations in insurance availability.

In France, the principal physical risks are coastal inundation from storm-

driven tidal surges and riverine flooding due to overflowing river banks.

Only a small proportion of the portfolio is exposed to these hazards,

resulting in minimal financial exposure. Our clients typically hold

diversified CRE portfolios, and property elevation serves as a key

mitigator, making the portfolio more resilient to both chronic and acute

physical risks.

This year, we also analysed our UAE portfolio as part of a regulatory

exercise by the Central Bank of the UAE, focusing on physical risks.

The exercise separately modelled two key perils – storm surge and

rainfall – using severity levels and valuation shocks provided directly by

the regulator. The capital impact was found to be minimal, as customer

assets tend to be located in less vulnerable zones. Strong loan-to-value

ratios further mitigated the effect of severe valuation shocks.

Overall, and consistent with our previous assessments, our analysis

shows that our CRE portfolio remains resilient to climate risk. We

continue to monitor emerging risks closely and adapt our strategies to

ensure the ongoing financial stability of the portfolio under evolving

climate scenarios.

How climate change may impact our

properties

We use stress testing to evaluate the potential impact on our owned or

leased premises. Our 2025 scenario stress test analysed how six

climate change-related hazards – comprising coastal inundation, surface

water flooding, riverine flooding, forest fires, extreme wind and tropical

cyclones – could impact 2,276 of our properties.

Key findings from the RCP8.5, Downside Physical Risk scenario

included that by 2050, 20 of our 2,276 properties will have a high

potential for impact due to climate change, with insurance-related

losses estimated to be in excess of 3% of the insured value of the

buildings.

A key finding from the RCP4.5, Current Commitments scenario

showed that the total number of buildings at risk reduces to 15. The

highlighted facilities are still at risk from the same perils of coastal

inundation and tropical cyclone by 2050.

The resilience of our properties

Climate change poses a physical risk to the buildings that we occupy,

potentially impacting our operational resilience. This includes our

offices, retail branches and data centres, both in terms of loss and

damage, and business interruption.

We measure the impacts of climate and weather events on our

buildings on an ongoing basis using historical, current and scenario-

modelled forecast data. In 2025, there were 33 major storms.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **211** |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

No facilities were impacted but two branches were proactively closed

to mitigate any risk due to the extreme weather conditions.

Forward-looking analysis along with historical data helps inform real

estate planning. We will continue to enhance our understanding of how

extreme weather events impact our buildings portfolio as climate risk

assessment tools improve and evolve. We buy insurance for property

damage and business interruption and consider insurance as a loss-

mitigation strategy.

We regularly review and enhance our building selection process and

global engineering standards and will continue to assess historical

claims data to help ensure our building selection and design standards

address the potential impacts of climate change.

How we use the outputs of climate

scenario analysis

Scenario analysis is used to assess our ability to withstand, adapt to

and recover from climate-related risks. It supports the Group to assess

the impact of our net zero ambitions on our revenue and profitability

which helps to strengthen our understanding of business model risk,

and supports how we increase the awareness of our climate risk. It

informs strategic planning, including any strategic management actions

needed to mitigate the identified risks.

From a financial and capital planning perspective, climate scenario

analysis informs IFRS 9 ECL provisioning (see page 212), and the

assessment of capital adequacy as part of the Group's Internal Capital

Adequacy Assessment Process ('ICAAP'). This supports how we

assess the appropriate levels of capital needed to guard against

climate-related risks.

Climate scenario analysis also supports the management of financed

emissions at a portfolio level and enhances the forward-looking

elements of our climate risk appetite framework. In addition, it assists

in the assessment of climate-related opportunities, such as potential

increases in lending under accelerated transition scenarios. These

contribute to the development of a more climate-resilient balance

sheet.

We have completed our first quantitative analysis of the potential

forward-looking impact on our revenue due to the alignment or

misalignment with our net zero ambitions, as well as climate-related

risks and opportunities. There is a high degree of uncertainty and

subjective assumptions with these results.

We will continue to enhance the use of climate scenario analysis in our

business decision making and continue to develop our modelling

capabilities, including the assessment of nature-related risks, over time.

Our climate scenario analysis modelling

approach

The models that we use for climate scenario analysis incorporate a

range of climate-specific metrics that could potentially impact our

customers, including expected production volumes, revenue, costs and

capital expenditure.

For transition risk, we assess how these metrics interplay with

economic factors, such as carbon prices, which represent the cost

effects of climate-related policies that aim to discourage carbon-

emitting activities and encourage low-carbon solutions. The expected

result of higher carbon prices is a reduction in emissions as high-

emission activities become uneconomical.

For physical risks, our models assess the impacts of acute and chronic

climate hazards on our customers' operations and asset bases. Key

loss drivers include damage to physical assets and property from

extreme weather events, as well as business disruption caused by

operational downtime. These factors can reduce revenues, increase

repair and operating costs, and place pressure on liquidity and capital

expenditure, leading to a deterioration in our customers' credit profiles.

🡠For a broad overview of the models that we use for our climate scenario

analysis, as well as graphs that show how global carbon prices and carbon

emissions will differ under our climate scenarios, see our ESG Data Pack at

www.hsbc.com/esg.

Assumptions and limitations

Our climate scenario analysis exercises rely on a significant set of

assumptions and limitations, which may constrain the reliability and

robustness of our resulting outputs. Outcomes may change in the

future, potentially materially, as capabilities improve.

The information provided within this section is supplemented by the

ESG cautionary statement on page 1.

Assumptions that we use within our wholesale lending modelling

approach include the following:

–Scenario analysis is conducted on counterparties with sufficient data

and extrapolated to the remaining portfolio. It assumes that there is

a broadly consistent climate risk profile across each portfolio.

–Transition risk impacts are assumed to be limited for sectors that

we have assessed as having a low transition risk exposure.

–Our customers will successfully execute their transition plans,

where those plans are assessed as credible.

–Customers in certain wholesale sectors are assumed to pass some

of their costs relating to higher carbon prices through to their own

customers. These pass-through rates are based on externally

calibrated pass-through rates and reviewed by internal sector

experts.

–State support will continue for government-owned or government-

backed customers, and for customers providing essential goods and

services critical to societal functioning.

Within our retail lending models, we assume that:

–When quantifying the impacts of climate events, insurance

availability is recognised as a key mitigant of loss. Our approach

incorporates benchmarking against insurance industry standards to

assess both the availability of cover and premium levels, using

calculations based on average annualised loss.

–Flood Re, the UK government-backed insurance scheme established

to ensure the availability of insurance for properties at higher risk of

flooding, is expected to operate effectively only until its current

anticipated expiry date in 2039. Beyond this point, affected

properties are likely to face increased insurance costs, with some

potentially becoming uninsurable.

Our models are designed to produce outputs that can support our

assessment of the level of our climate resilience. However, there are a

number of industry-wide limitations, including:

–Data availability – Climate scenario analysis is a data-intensive

exercise and the required information is only available for a subset

of the Group's exposures. In particular, we see a number of climate-

related financial data gaps relating to reliable forward-looking

climate-aligned data.

–Scenario limitations – There are inherent uncertainties in the ways

our scenarios are designed, which are largely attributed to the

limited history of the interactions between climate risks and the

economy. Our climate scenarios consider a range of possible future

outcomes, however quantifying the full effects of all climate-related

outcomes, such as the effects of potential tipping points, remains

challenging.

–Modelling uncertainties – There are inherent limitations within

climate models due to the challenges of modelling (with any

precision) how climate-related interactions (both physical and

transition risks) will manifest. These include estimating how policy

changes, carbon pricing or new technologies will impact specific

customers, how these customers will adapt, and uncertainty in

estimating physical risk losses as historical data may not be

representative under evolving climate patterns. These limitations are

further compounded as the modelled time horizon lengthens and

the uncertainties behind higher-order impacts increase. However,

internal judgements are used to mitigate some of these effects.

Our wholesale methodology for our non-real estate portfolios did not

consider the potential impacts from climate-related physical risk,

second order supply chain impacts, the volatility of commodity prices,

and how climate risks are correlated between sectors.

Our wholesale physical risk methodology did not include the indirect

impact of factors such as supply chain disruption and the risk of

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **212** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Climate risk |  |  |  |

---

stranded assets. However, we are building capabilities to capture these

effects.

How we are enhancing our climate scenario

analysis approach

We continue to enhance our climate scenario analysis methodology by

incorporating lessons learnt from previous exercises, feedback from

key stakeholders, which includes internal stakeholders as well as

external regulators, and by assessing the direction of general industry

practices.

We have made several key enhancements across climate scenario

development and climate risk modelling, which include improvements

to our cash flow models, and more granular assumptions with respect

to how we model carbon prices. We have also improved how we

embed the outputs from climate scenario analysis exercises into our

risk management frameworks. Our climate scenarios and modelling

capabilities are being integrated into the wider bank-wide stress testing

procedures.

In 2025, improvements within our wholesale lending climate modelling

process included targeted improvements to our oil and gas, automotive

and emission-based models, and the continued enhancement of our

customer transition plans. These support how we improve the quality

of our modelled outcomes.

Over the last 12 months, we have strengthened our commercial and

retail real estate climate assessment capability by bringing the

geocoding process in house, which will go live in 2026 and further

enhance our ability to identify and address data quality and accuracy.

We have also conducted independent model validation and

implemented continuous enhancements based on validation outcomes.

In 2026, we intend to increase our focus on how physical risk events

could impact our non-commercial real estate portfolio, including the

impact from asset damage and business model disruption channels.

We will also continue to explore the impacts on our portfolio from a

nature risk perspective and expect our modelling capabilities to evolve

over time.

Assessing the effect of climate credit

risk on IFRS 9 ECL

We continue to integrate climate considerations into our business and

risk management processes to ensure climate-related risks are

appropriately managed. As part of our ECL assessment for 31

December 2025, we conducted a climate-related ECL sensitivity

analysis. Additionally, where climate events have previously influenced

or recently affected our economies, these impacts were implicitly

reflected within our IFRS 9 scenarios.

We used available information including our ICSA results to determine

areas of potential risk in the credit portfolios to perform a climate ECL

sensitivity analysis for both our wholesale and retail portfolios. In our

wholesale portfolio, the exercise covers both physical and transition

risk. For retail, the exercise covers physical risk for our largest

mortgage portfolios (UK and Hong Kong). Properties with elevated

climate risk and insurance vulnerability are identified, and the

associated potential losses are estimated by assessing the impact on

customer affordability and collateral valuations under physical stress

conditions.

The overall estimated sensitivity of ECL under IFRS 9 as at

31 December 2025 was less than $50m.

This ECL sensitivity is influenced by several factors including the tenor

of the underlying portfolios and observable market prices of collateral. A

significant proportion of our wholesale portfolio is short dated.

Furthermore, our secured retail portfolio has low average loan-to-value

ratios, which helps to mitigate the effect of property damage on

customer default risk and loss given default.

Our wholesale ECL is likely to remain relatively muted in the short and

medium terms, as illustrated in the graph on page 208. While this

impact may increase over time, long dated cashflows are less likely to

impact current expectations of credit loss, as future cashflows are

discounted as part of the ECL modelling process.

The ECL sensitivity is dependent on the timing and severity of climate

change within the period over which HSBC measures ECL. As there is

limited historical climate loss data available and uncertainty on how

insurance will change over time, our assessment is considered

indicative and will evolve as our lending profile, assessment approach,

data, and modelling methodologies continue to mature. For more

information on the impact of climate on our reporting and financial

statements, see page 34.

How we assess the climate risk impacts

on other risk types

We use climate scenario analysis to assess the impacts on other risks,

including non-financial risks, traded risk and treasury risk.

Non-financial risk – financial reporting risk

and regulatory compliance risk

We analysed the potential impacts associated with greenwashing,

specifically focusing on inaccuracies in climate-related disclosures and

shortcomings in product governance and marketing of sustainable

finance offerings. Our findings indicate that under scenarios involving

accelerated net-zero transitions and heightened regulatory scrutiny, we

may face increased financial exposure to greenwashing incidents.

Traded risk

In 2025, we explored the potential fair value impacts of climate risks on

our trading and banking portfolio. Our analysis evaluated portfolio

performance under the long-term Downside Physical Risk scenario as

well as two shorter-term scenarios focused on dry perils and wet perils

aligned with NGFS's short-term "Disasters and Policy Stagnation"

scenario focusing on physical risk impacts over a one-year horizon. The

assessment encompassed all major asset classes including interest

rates, foreign exchange, credit and equities.

The results supported our understanding of the climate resilience of the

trading portfolio. Under both short-term scenarios, the portfolio exhibited

gains driven by the long defensive profile in our Equity Derivatives

positions and from Rate Options. Offsetting these were losses

generated by distressed debt and secondary private credit loans and by

rate exposures to countries and territories more sensitive to physical risk.

Treasury risk – pensions

This year, we conducted balance sheet and income statement

projections for six of our largest pension plans and all regional plans,

utilising macroeconomic variables influenced by climate change, which

focused on the short- and medium-term horizons. Our exercise focused

on a shorter-term scenario assessing the concurrent impacts of severe

physical hazards with moderate transition risk. The scenario

concentrated on physical climate risks, carbon pricing, economic

growth trajectories, and evolving regulatory requirements.

Key findings indicated that, at the peak stress point in the climate

stress scenario (which was in the first projection year), the Group's

pension scheme funding levels were projected to decline slightly. This

reduction was primarily attributable to a reduction in climate-sensitive

bond and equity values.

Treasury risk – liquidity

Under the climate scenario analysis exercise, other risk types – aside

from liquidity – are assessed over annual or multi-year horizons and are

primarily capital-related stress events with limited effects on the bank's

liquidity. To specifically assess liquidity risk, a tailored 90-day climate

scenario was developed, building on previous exercises and reflecting

current industry perspectives on plausible climate outcomes.

The analysis considered the impact of climate risk on key liquidity risk

drivers including wholesale and retail deposit risk off-balance sheet

facilities risk, credit downgrade risk, and intraday liquidity risk. No

significant impact on our liquidity position was identified in the analysis.

Insurance risk

We are improving our ability to perform exploratory assessments of the

solvency resilience of our biggest insurance businesses under climate

stress scenarios.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **213** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Resilience risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Resilience risk

Resilience risk management

Key developments in 2025

During the year, we conducted several initiatives to keep pace with

geopolitical, regulatory and technology changes, and to help strengthen

the management of resilience risk.

–Where HSBC identified that enhancements were required to the

Group's operational resilience capabilities, these were incorporated

into the Group's business and investment planning, helping to

ensure we continue to meet the expectations of our customers and

our regulators.

–We recognise that our customers were impacted at times by

service disruptions. We responded to these in line with our Incident

Management plans and aimed to recover with minimal delay and

customer impact. Following any operational disruption, we

conducted post-incident reviews to identify lessons and strengthen

our operations.

–We monitored markets affected by geopolitical events for any

potential impact they may have on our colleagues and operations,

enhancing response playbooks as events evolved.

–We provided analysis and easy-to-access risk and control

information and metrics to enable management to focus on non-

financial risks in their decision making and appetite setting.

–We prioritised our efforts on material risks and areas undergoing

strategic growth, aligning our location strategy to this need. We also

remotely provide oversight and stewardship, including support of

chief risk officers, in territories where we have no physical

presence.

Governance and structure

The Group Resilience Risk target operating model provides a globally

consistent view across resilience risks, strengthening our risk

management oversight. We view resilience risk across seven sub-risk

types related to: technology and cybersecurity risk; third-party risk;

transaction and payment processing risk; business interruption and

incident risk; data risk; facilities availability, safety and security risk; and

operational and resilience regulatory reporting risk.

Risk appetite and key escalations for resilience risk are reported to the

Group Risk Management Meeting and Group Risk Committee.

Operational resilience

We operate processes to support our operational resilience according

to our Risk Management Framework. Operational resilience is our

ability to anticipate, prevent, adapt, respond to, recover, and learn from

internal or external disruption, and provide Important Business Services

(IBS) to customers and clients, while seeking to minimise impact on

the wider financial system when disruption occurs. We seek to achieve

this via day-to-day oversight and ongoing assurance. We have invested

to seek to improve response and recovery strategies for our IBS and

Important Group Business Services, to align to regulatory and

customer expectations and to help minimise any potential impacts

should disruption occur.

Business operations continuity

We continue to monitor potential disruptive events, such as geopolitical

volatility, adverse weather conditions and cyber attacks, and remain ready

to take measures to help ensure business continuity in affected markets

should the situation require. When disruptive events occur, businesses

and infrastructure functions continually review their continuity plans and

response to minimise any potential impacts.

Regulatory compliance risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Regulatory compliance risk.

Regulatory compliance risk management

Key developments in 2025

Regulatory Compliance risk stewardship is provided across a wide

range of transformational change and control enhancement initiatives

supporting HSBC's strategy and organisational structure; such as the

framework for digital assets, including Regulatory Compliance's

stewardship of Markets and Securities Services (MSS)' asset

tokenisation and issuance initiatives, as well as Regulatory Compliance

control frameworks, policies and governance processes.

Regulatory horizon scanning and mapping capabilities continue to

evolve with a focus on enhanced connectivity to risk management

systems to support better traceability of regulatory obligations. Work is

underway to transition from event-driven technology to incorporate

cloud and analytics capability to enhance our oversight abilities in areas

such as surveillance.

Governance and structure

The Group Head of Regulatory Compliance reports to the Group Chief

Risk and Compliance Officer. Regulatory Compliance and Financial

Crime teams work together and with relevant stakeholders to help

achieve good conduct outcomes and provide enterprise-wide support

on the Compliance risk agenda in close collaboration with colleagues

from the Group Risk and Compliance function.

Key risk management processes

The Global Regulatory Compliance function is responsible for

establishing global policies, standards, risk appetite, frameworks and

tools to guide the Group's management of Regulatory Compliance risk.

The function provides oversight, review and challenge to the business,

aiding them in identifying, assessing and mitigating Regulatory

Compliance risks.

Relevant events and issues are escalated in line with the Group's Risk

Management Framework including reporting to executive and non-

executive risk governance committees for transparency, accountability

and informed decision making. The Group Head of Regulatory

Compliance attends the Risk and Compliance Leadership Meeting, the

Group Risk Management Meeting, and the Group Risk Committee.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **214** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Financial crime risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Financial crime risk.

Financial crime risk management

Key developments in 2025

We regularly review the effectiveness of our financial crime risk

management framework, which includes continued consideration of

complex sanctions and export control risks. We continued to respond

to evolving financial sanctions and trade restrictions, including methods

used to evade sanctions and export controls.

We continued to make progress with several key financial crime risk

management initiatives, including:

–deployment of our intelligence-led, dynamic risk assessment

capability for customer account monitoring in additional entities and

business segments;

–deployment and optimisation of a capability to increase our

monitoring coverage of correspondent banking activity in additional

markets;

–enhancing our fraud controls and continuing to invest in, and

monitor, technological developments; and

–enhancements in response to the rapidly evolving and complex

global payments landscape and refinement of the control

framework required to support HSBC's digital assets and currencies

strategy.

Governance and structure

The structure of the Financial Crime team in Risk and Compliance

remained substantively unchanged in 2025. The Group Head of

Financial Crime continues to report to the Group Chief Risk and

Compliance Officer, while the Group Risk Committee retains oversight

of matters relating to financial crime.

Key risk management processes

We will not tolerate knowingly conducting business with individuals or

entities believed to be engaged in criminal activity. We require

everybody in HSBC to play their role in maintaining effective systems

and controls to help prevent and detect financial crime. Where we

believe we have identified suspected criminal activity or vulnerabilities

in our control framework, we will take appropriate mitigating action.

We manage financial crime risk because it is the right thing to do to

protect our customers, shareholders, staff, the communities in which

we operate, as well as the integrity of the financial system on which

we all rely. We operate in a highly regulated industry in which these

same policy goals are codified in law and regulation.

We are committed to complying with the laws and regulations of all

the markets in which we operate and apply a consistently high financial

crime standard globally.

We continued to invest in enhancing our operational control capabilities

and technology solutions to deter and detect criminal activity. We

further strengthened our financial crime risk taxonomy and control

libraries and our monitoring capabilities through technology

deployments. We developed more targeted metrics, and continued to

seek to enhance our governance and reporting.

We are committed to working in partnership with the wider industry

and the public sector in managing financial crime risk. In 2025, our

focus remained on measures to improve the overall effectiveness of

the global financial crime risk management framework and promote a

risk-based approach.

Through our work with industry bodies, such as the Wolfsberg Group,

we provided input into legislative and regulatory reform activities and

supported the efforts of the global financial crime standard setter, the

Financial Action Task Force. We did this by participating in

consultations and other engagements focused on delivering more

effective outcomes in managing financial crime risk, which also

enhances financial inclusion. Key themes for external engagement

include risk-based supervision, the use of innovative technology,

payment transparency standards, fraud risk management, and tackling

sanctions and export controls evasion.

Model risk

🡠See page <u>[138](#ie4edc76213cf40e9ae3dd93b36f88427_67)</u> for our definition of Model risk.

Key developments in 2025

In 2025, we continued to make improvements in our Model Risk

Management ('MRM') processes amid regulatory changes in MRM

requirements.

Initiatives during the year included:

–further updates to our MRM Framework to meet the requirements

of the PRA's SS1/23. Our multi-year programme of work is in

progress to implement these changes across the full model

landscape;

–completing the identification of Deterministic Quantitative Methods

(DQMs) across the organisation. These are complex and material

calculators that although not technically models, still present similar

risks;

–continued enhancements to the development and validation

processes for internal ratings-based ('IRB') models;

–continued enhancements to our framework for the independent

validation of models, including new GenAI techniques that are

becoming more widely used; and

–continued to work closely with businesses and infrastructure teams

in developing a governance framework to manage the range of risks

these AI techniques, including machine learning and agentic AI

Governance and structure

We have completed a review of model risk governance committees

at the Group, business and functional levels to help ensure they

provide effective and efficient oversight of model risk. The

committees include senior leaders from the businesses,

infrastructure teams and the Group Risk and Compliance function.

They focus on model-related concerns and are supported by key

model risk metrics. We have aligned our Committees to our new

organisational structure with each of the four business segments

having a Model Risk Committee focused on local requirements. The

Group-level Model Risk Committee remains in place and is chaired by

the Group Chief Risk and Compliance Officer, and the heads of key

businesses participate in these meetings.

Key risk management processes

We use a variety of modelling approaches, including regression,

simulation, sampling, machine learning and judgemental scorecards for a

range of business applications. These activities include customer

selection, product pricing, financial crime transaction monitoring,

creditworthiness evaluation and financial reporting. Global responsibility

for managing model risk is delegated from the Board to the Group Chief

Risk and Compliance Officer, who authorises the Group Model Risk

Committee. This committee regularly reviews our model risk

management policies and procedures, and requires the first line of

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| **HSBC Holdings plc** Annual Report on Form 20-F |
| **215** |

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| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Model risk |  |  |  |

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defence to demonstrate comprehensive and effective controls based on

a library of model risk controls provided by Model Risk Management.

Model Risk Management also reports on model risk to senior

management and the Group Risk Committee on a regular basis through

the use of the risk map, risk appetite metrics and top and emerging risks.

We regularly review the effectiveness of these processes, including

the model risk committee structure, to help ensure the appropriate

understanding and ownership of model risk is embedded in the

businesses and functions.

Insurance manufacturing operations risk

🡠See page <u>[139](#ie4edc76213cf40e9ae3dd93b36f88427_73)</u> for our definition of Insurance manufacturing operations risk.

HSBC's insurance business

We sell insurance products through a range of channels including our

branches, insurance sales forces, direct channels and third-party

distributors. The majority of sales are through an integrated

bancassurance model that provides insurance products principally for

customers with whom we have a banking relationship, meanwhile the

proportion of sales through other sources such as independent

financial advisers, tied agents and digital platforms is increasing.

For the insurance products we manufacture, the majority of sales are

savings, universal life and protection contracts.

We choose to manufacture these insurance products in HSBC

subsidiaries based on an assessment of operational scale and risk

appetite. Manufacturing insurance allows us to retain the risks and

rewards associated with writing insurance contracts by keeping part of

the underwriting profit and investment income within the Group.

Our life insurance manufacturing subsidiaries operate in seven

markets, which are Hong Kong, Macau, Singapore, mainland China,

UK, Malta and Mexico. This excludes France where the sale of the

insurance business was completed on 31 October 2025. In addition,

we have: an interest in a life insurance manufacturing associate in

India; captive insurance entities in Bermuda and Hong Kong; and a

reinsurance entity in Bermuda.

Where we do not have the risk appetite or operational scale to be an

effective insurance manufacturer, we engage with a select number of

leading external insurance companies in order to provide insurance

products to our customers. These arrangements are generally

structured with our exclusive strategic partners and earn the Group a

combination of commissions, fees and a share of profits. We distribute

insurance products in all of our geographical regions.

This section focuses only on the risks relating to the insurance

products we manufacture.

Insurance manufacturing operations

risk management

Key developments in 2025

The insurance manufacturing subsidiaries follow the Group's risk

management framework. In 2025, we continued to strengthen the

insurance specific policies, frameworks and controls particularly across

the financial and capital reporting processes, stress testing, asset-

liability management, reinsurance and insurance underwriting risks.

During the year, there was continued market volatility observed across

interest rates, equity and credit markets and foreign exchange rates.

This was predominantly driven by geopolitical factors including the

introduction of trade tariffs by the US, and wider inflationary concerns.

The sale of the French insurance business HSBC Assurances Vie

(France) was completed on 31 October 2025. Following HSBC's

announcement on 3 July 2025 of entering into a binding agreement to

sell its UK life insurance business HSBC Life (UK) Limited, the balance

sheet of the UK business has been reported as held for sale at 31

December 2025. Further details are provided on page 355.

Governance and structure

Insurance manufacturing risks are managed to a defined risk appetite,

which is aligned to the Group's risk appetite and risk management

framework, including its three lines of defence model. For details of

the Group's governance framework, see page <u>[119](#ie4edc76213cf40e9ae3dd93b36f88427_16)</u>. The Global

Insurance Risk Management Meeting oversees the control framework

globally and is accountable to the IWPB Risk Management Meeting on

risk matters relating to the insurance business.

The monitoring of the risks within our insurance operations is carried

out by Insurance Risk teams. The Group's risk stewardship functions

support the Insurance Risk teams in their respective areas of expertise.

Stress and scenario testing

Stress testing forms a key part of the risk management framework for

the insurance business. We participate in local and Group-wide

regulatory stress tests, as well as internally developed stress and

scenario tests, including Group internal stress test exercises.

The results of these stress tests and the adequacy of management

action plans to mitigate these risks are considered in the Group's

ICAAP and the entities' regulatory Own Risk and Solvency

Assessments, which are produced by all material entities.

Key risk management processes

**Market risk**

(Audited)

All our insurance manufacturing subsidiaries have market risk

mandates and limits that specify the investment instruments in which

they are permitted to invest and the maximum quantum of market risk

that they may retain. They manage market risk by using some or all of

the techniques listed below, among others, depending on the nature of

the contracts written.

–We are able to adjust bonus rates and other discretionary benefits

to manage the liabilities to policyholders for products with

participating features. The effect is that a significant proportion of

the market risk is shared with the policyholders.

–We use asset and liability matching where asset portfolios are

structured to support projected liability cash flows.

–We use derivatives and other financial instruments, along with

reinsurance to protect against adverse market movements.

–We design new products to mitigate market risk, such as changing

the investment return sharing proportion between policyholders and

the shareholder.

**Credit risk**

(Audited)

Our insurance manufacturing subsidiaries also have credit risk

mandates and limits within which they are permitted to operate, which

consider the credit risk exposure, quality and performance of their

investment portfolios. Our assessment of the creditworthiness of

issuers and counterparties is based primarily upon internationally

recognised credit ratings and other publicly available information.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **216** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Insurance manufacturing operations risk | Insurance manufacturing operations risk |  |  |

---

Stress testing is performed on investment credit exposures using

credit spread sensitivities and default probabilities.

We use a number of tools to manage and monitor credit risk. These

include a credit report containing a watch-list of investments with

current credit concerns, primarily investments that may be at risk of

future impairment or where high concentrations to counterparties are

present in the investment portfolio. Sensitivities to credit spread risk

are assessed and monitored regularly.

**Capital and liquidity risk**

(Audited)

Capital risk for our insurance manufacturing subsidiaries is assessed in

the Group's ICAAP, based on their financial capacity to support the

risks to which they are exposed. Capital adequacy is assessed on both

the relevant local insurance regulatory basis and an internal capital

basis.

Risk appetite buffers are set to ensure that the operations are able to

remain solvent, allowing for business-as-usual volatility and extreme

but plausible stress events.

Liquidity risk is less material for the insurance business. It is managed

by cash flow matching and maintaining sufficient cash resources,

investing in high credit-quality investments with deep and liquid

markets, monitoring investment concentrations and restricting them

where appropriate, and establishing committed contingency borrowing

facilities.

Insurance manufacturing subsidiaries complete quarterly liquidity risk

reports and an annual review of the liquidity risks to which they are

exposed.

**Insurance underwriting risk**

(Audited)

Our insurance manufacturing subsidiaries primarily use the following

frameworks and processes to manage and mitigate insurance

underwriting risks:

–a formal approval process for launching new products or making

changes to products to ensure insurance risks are identified and

mitigated;

–a product pricing and profitability framework, which requires initial

and ongoing assessment of the adequacy of premiums charged on

new insurance contracts to meet the risks associated with them;

–a framework for customer underwriting;

–reinsurance, which cedes risks to third-party reinsurers to keep risks

within risk appetite, reduce volatility and improve capital efficiency;

and

–oversight by actuarial review committees in each of our entities of

the methodology and assumptions that underpin IFRS 17 reporting

to ensure that appropriate reserves are established to cover

insurance underwriting risks.

Insurance manufacturing operations

risk in 2025

Measurement

The following tables show the composition of the fair value of

underlying items of the Group's participating contracts at the reporting

date and by the following type of contract:

–'Life direct participating and investment discretionary participation

feature ('DPF') contracts' are life direct participating contracts and

investment contracts with DPF. These are substantially measured

under the variable fee approach measurement model.

–'Life other contracts' are measured under the general measurement

model and mainly include protection insurance contracts as well as

reinsurance contracts. The reinsurance contracts primarily provide

diversification benefits over the life direct participating and

investment DPF contracts.

–'Other contracts' includes investment contracts for which HSBC

does not bear significant insurance risk.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Balance sheet of insurance manufacturing subsidiaries by type of contract | Balance sheet of insurance manufacturing subsidiaries by type of contract | Balance sheet of insurance manufacturing subsidiaries by type of contract | Balance sheet of insurance manufacturing subsidiaries by type of contract | Balance sheet of insurance manufacturing subsidiaries by type of contract | Balance sheet of insurance manufacturing subsidiaries by type of contract |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | **Life direct participating** <br>**and investment DPF** <br>**contracts**<br>| **Life**<br>**other** <br>**contracts**<br>| **Other**<br>**contracts**<br>| **Shareholder** <br>**assets**<br>**and liabilities**<br>| **Total** |
| **At 31 Dec 2025** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Financial assets | **111078** | **5277** | **5672** | **5405** | **127432** |
| –financial assets designated and otherwise mandatorily measured <br>at fair value through profit or loss<br>| **106705** | **4984** | **4337** | **579** | **116605** |
| – derivatives | **136** | **8** | **—** | **—** | **144** |
| – financial investments – at amortised cost | **609** | **115** | **1010** | **3654** | **5388** |
| – financial assets at fair value through other comprehensive income | **—** | **—** | **3** | **214** | **217** |
| – other financial assets | **3628** | **170** | **322** | **958** | **5078** |
| Insurance contract assets | **12** | **98** | **—** | **—** | **110** |
| Reinsurance contract assets | **—** | **5948** | **—** | **—** | **5948** |
| Assets held for sale<sup>1</sup> | **4748** | **258** | **1347** | **271** | **6624** |
| Other assets and investment properties | **1785** | **118** | **45** | **2696** | **4644** |
| **Total assets** | **117623** | **11699** | **7064** | **8372** | **144758** |
| Liabilities under investment contracts designated at fair value | **—** | **—** | **5288** | **—** | **5288** |
| Insurance contract liabilities | **117107** | **4761** | **—** | **—** | **121868** |
| Reinsurance contract liabilities | **—** | **680** | **—** | **—** | **680** |
| Liabilities of disposal groups held for sale<sup>1</sup> | **4734** | **234** | **—** | **1418** | **6386** |
| Other liabilities | **—** | **—** | **—** | **3821** | **3821** |
| **Total liabilities** | **121841** | **5675** | **5288** | **5239** | **138043** |
| Total equity | **—** | **—** | **—** | **6715** | **6715** |
| **Total liabilities and equity** | **121841** | **5675** | **5288** | **11954** | **144758** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **217** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Insurance manufacturing operations risk | Insurance manufacturing operations risk |  |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | Life direct participating <br>and investment DPF <br>contracts<br>| Life<br>other <br>contracts<br>| Other<br>contracts<br>| Shareholder <br>assets<br>and liabilities<br>| Total |
| At 31 Dec 2024 | $m | $m | $m | $m | $m |
| Financial assets | 98676 | 4452 | 6227 | 5967 | 115322 |
| – financial assets designated and otherwise mandatorily measured <br>at fair value through profit or loss<br>| 94327 | 4233 | 4839 | 690 | 104089 |
| – derivatives | 207 | 7 | 1 |  | 215 |
| – financial investments – at amortised cost | 545 | 90 | 1060 | 4335 | 6030 |
| – financial assets at fair value through other comprehensive income |  |  | 6 | 73 | 79 |
| – other financial assets | 3597 | 122 | 321 | 869 | 4909 |
| Insurance contract assets | 14 | 104 |  |  | 118 |
| Reinsurance contract assets |  | 5013 |  |  | 5013 |
| Assets held for sale<sup>1</sup> | 22855 |  |  | 1367 | 24222 |
| Other assets and investment properties | 1792 | 64 | 36 | 1970 | 3862 |
| Total assets | 123337 | 9633 | 6263 | 9304 | 148537 |
| Liabilities under investment contracts designated at fair value |  |  | 5931 |  | 5931 |
| Insurance contract liabilities | 102605 | 4427 |  |  | 107032 |
| Reinsurance contract liabilities |  | 701 |  |  | 701 |
| Liabilities of disposal groups held for sale<sup>1</sup> | 21772 | 39 |  | 1609 | 23420 |
| Other liabilities |  |  |  | 4438 | 4438 |
| Total liabilities | 124377 | 5167 | 5931 | 6047 | 141522 |
| Total equity |  |  |  | 7015 | 7015 |
| Total liabilities and equity | 124377 | 5167 | 5931 | 13062 | 148537 |

---

1HSBC Life (UK) Limited is classified as held for sale at 31 December 2025. HSBC Assurances Vie (France) was classified as held for sale at 31 December 2024.

Further details are provided on page 355.

Key risk types

Market risk

(Audited)

**Description and exposure**

Market risk is the risk of changes in market factors affecting HSBC's

capital or profit. Market factors include interest rates, equity and

growth assets, credit spreads and foreign exchange rates.

Our exposure varies depending on the type of contract issued. Our

most significant life insurance products are contracts with participating

features. These products typically include some form of capital

guarantee or guaranteed return on the sums invested by the

policyholders, to which bonuses are added if allowed by the overall

performance of the funds. For contracts without participating features,

some form of guarantee may still exist but HSBC's ability to share risks

with policyholders will be reduced. Funds supporting these savings

products are invested in a mix of fixed income assets (to support

guarantees) and other asset classes (to provide customers with the

potential for enhanced returns).

These products expose HSBC to the risk of variation in asset returns,

which will impact our participation in the investment performance.

In certain circumstances, asset returns may be insufficient to meet the

policyholders' guaranteed benefits. For non-participating contracts, any

resulting shortfall is borne by HSBC.

For unit-linked contracts, market risk is substantially borne by the

policyholder, but some market risk exposure typically remains, as fees

earned are typically related to the market value of the linked assets.

**Sensitivities**

The following table shows the sensitivity of the CSM, profit and total

equity of our insurance manufacturing subsidiaries to changes in

interest rates, credit spreads, growth assets and foreign exchange

rates. These sensitivities are prepared in accordance with current IFRS

Accounting Standards.

Due in part to the nature of the guarantees, and the reinsurance and

hedging strategies which may be in place, the relationship between the

CSM, profit and total equity is not linear. The sensitivities are before

management actions that may mitigate the effect of changes in the

market environment. The lower profit after tax sensitivity to yield curve

shifts is driven by improved asset and liability matching in mainland

China, partly offset by the impact of methodology updates in Hong

Kong.

The 2025 sensitivities below exclude HSBC Assurances Vie (France)

following completion of its sale on 31 October 2025. Further details are

provided on page 355.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors |
| (Audited) |  |  |  |  |  |
|  | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Effect on** <br>**CSM**<br>| **Effect on** <br>**total equity**<br>| Effect on <br>CSM<br>| Effect on <br>profit after tax <br>for the year<br>| Effect on <br>total equity<br>|
|  | **$m** | **$m** | $m | $m | $m |
| +100 basis point parallel shift in yield curves | **(370)** | **36** | (155) | 83 | 52 |
| -100 basis point parallel shift in yield curves | **(51)** | **(127)** | (249) | (217) | (186) |
| +100 basis point shift in credit spreads | **(918)** | **(15)** | (907) | (84) | (115) |
| -100 basis point shift in credit spreads | **897** | **74** | 876 | 60 | 91 |
| 10% increase in growth assets<sup>1</sup> | **461** | **64** | 467 | 73 | 73 |
| 10% decrease in growth assets<sup>1</sup> | **(533)** | **(75)** | (514) | (79) | (79) |
| 10% appreciation in US dollar exchange rate against local functional currency | **102** | **20** | 71 | 17 | 17 |
| 10% depreciation in US dollar exchange rate against local functional currency | **(75)** | **(15)** | (26) | (3) | (3) |

---

1'Growth assets' primarily comprise equity securities and investment properties. Variability in growth asset fair value constitutes a market risk to insurance

manufacturing subsidiaries.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **218** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | **Risk review** | Corporate <br>Governance Report<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  | Insurance manufacturing operations risk | Insurance manufacturing operations risk |  |  |

---

Credit risk

(Audited)

**Description and exposure** 

Credit risk is the risk of financial loss if a customer or counterparty fails

to meet their obligation under a contract. It arises in two main risks for

our insurance manufacturers:

–the risk associated with credit spread volatility and default by debt

security counterparties after investing premiums to generate a

return for policyholders and shareholders; and

–the risk of default by reinsurance counterparties and non-

reimbursement for claims made after ceding insurance risk.

The amounts outstanding at the balance sheet date in respect of these

items are shown in the table on page <u>[216](#ie4edc76213cf40e9ae3dd93b36f88427_391)</u>.

The credit quality of the reinsurers' share of liabilities under insurance

contracts is assessed as 'satisfactory' or higher (as defined on

page 141), with none of the exposure being either past due or impaired

(2024: none).

Credit risk on assets supporting unit-linked liabilities is predominantly

borne by the policyholders. Therefore, our exposure is primarily related

to liabilities under non-linked insurance and investment contracts and

shareholders' funds. The credit quality of insurance financial assets is

included in the table on page <u>[161](#ie4edc76213cf40e9ae3dd93b36f88427_157)</u>.

The risk associated with credit spread volatility is to a large extent

mitigated by holding debt securities to maturity, and sharing a degree

of credit spread experience with policyholders.

Liquidity risk

(Audited)

**Description and exposure**

Liquidity risk is the risk that an insurance operation, though solvent,

either does not have sufficient financial resources available to meet its

obligations when they fall due, or can secure them only at excessive

cost. Liquidity risk may be able to be shared with policyholders for

products with participating features.

The remaining maturity of insurance contract liabilities is included in

Note 4 on page 319.

The amounts of insurance contract liabilities that are payable on

demand are set out by the product grouping below and exclude

insurance businesses classified as held for sale (2025: HSBC Life (UK)

Limited; 2024: HSBC Assurances Vie (France). Further details are

provided on page 355.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Amounts payable on demand | Amounts payable on demand | Amounts payable on demand | Amounts payable on demand | Amounts payable on demand |
| (Audited) |  |  |  |  |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Amounts** <br>**payable on** <br>**demand**<br>| **Carrying** <br>**amount for** <br>**these** <br>**contracts**<br>| Amounts <br>payable on <br>demand<br>| Carrying <br>amount for <br>these <br>contracts<br>|
|  | **$m** | **$m** | $m | $m |
| Life direct participating <br>and investment DPF <br>contracts<br>| **108416** | **117107** | 98275 | 102605 |
| Life other contracts | **3820** | **4761** | 2960 | 4427 |
| **At 31 Dec** | **112236** | **121868** | 101235 | 107032 |

---

Insurance underwriting risk

(Audited)

**Description and exposure**

Insurance underwriting risk is the risk of loss through adverse

experience, in either timing or amount, of insurance underwriting

parameters (non-economic assumptions). These parameters include

mortality, morbidity, longevity, lapse and expense rates.

The principal risk we face is that, over time, the cost of the contract,

including claims and benefits, may exceed the total amount of

premiums and investment income received.

The tables on page <u>[216](#ie4edc76213cf40e9ae3dd93b36f88427_391)</u> analyse our life insurance underwriting risk

exposures by type of contract.

The insurance underwriting risk profile and related exposures remain

largely consistent with those observed at 31 December 2024.

**Sensitivities** 

(Audited)

The following table shows the sensitivity of the CSM, profit and total

equity of our insurance manufacturing subsidiaries to changes in non-

economic assumptions, after considering the impacts of reinsurance

contracts held as risk mitigation.

These sensitivities are prepared in accordance with current IFRS

Accounting Standards.

Sensitivity to lapse rates depends on the type of contracts

being written. An increase in lapse rates typically has a negative effect

on CSM (and therefore expected future profits) due to the loss

of future income on the lapsed policies. However, some contract

lapses have a positive effect on profit due to the existence of policy

surrender charges.

Mortality and morbidity risk is typically associated with life insurance

contracts. The effect on profit of an increase in mortality or morbidity

depends on the type of business being written.

Expense rate risk is the exposure to a change in the allocated cost

of administering insurance contracts. To the extent that increased

expenses cannot be passed on to policyholders, an increase in

expense rates will have a negative effect on CSM and profits.

The impact of changing insurance underwriting risk factors is primarily

absorbed within the CSM, unless contracts are onerous in which case

the impact is directly to profit. The impact of changes to the CSM is

released to profits over the expected coverage periods of the related

insurance contracts.

The 2025 sensitivities below exclude HSBC Assurances Vie (France)

following completion of its sale on 31 October 2025. Further details are

provided on page 355.

---

| | | | |
|:---|:---|:---|:---|
| Sensitivity of HSBC's insurance manufacturing subsidiaries to <br>insurance underwriting risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to <br>insurance underwriting risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to <br>insurance underwriting risk factors | Sensitivity of HSBC's insurance manufacturing subsidiaries to <br>insurance underwriting risk factors |
| (Audited) |  |  |  |
|  | **Effect on** <br>**CSM**<br>| **Effect on** <br>**profit after tax** <br>**for the year**<br>| **Effect on** <br>**total equity**<br>|
| **At 31 Dec 2025** | **$m** | **$m** | **$m** |
| 10% increase in lapse rates | **(310)** | **(6)** | **(6)** |
| 10% decrease in lapse rates | **322** | **3** | **3** |
| 5% increase in mortality and/or <br>morbidity rates<br>| **(85)** | **(15)** | **(17)** |
| 5% decrease in mortality and/or <br>morbidity rates<br>| **87** | **12** | **14** |
| 10% increase in expense rates | **(48)** | **(14)** | **(14)** |
| 10% decrease in expense rates | **49** | **12** | **12** |
| At 31 Dec 2024 |  |  |  |
| 10% increase in lapse rates | (282) | (21) | (30) |
| 10% decrease in lapse rates | 297 | 23 | 36 |
| 5% increase in mortality and/or <br>morbidity rates<br>| (92) | (16) | (20) |
| 5% decrease in mortality and/or <br>morbidity rates<br>| 102 | 14 | 23 |
| 10% increase in expense rates | (66) | (11) | (15) |
| 10% decrease in expense rates | 68 | 12 | 15 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **219** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Corporate

governance

report

In this report, which constitutes our Directors'

Report, we provide insights into our Group

governance practices and the systems and

policies in place that help ensure the Group

is well managed, with effective oversight

and controls.

---

| | |
|:---|:---|
| **[220](#id42dbec1de4a4a5390289335f1b45526_10)**  | The Board |
| **[224](#id42dbec1de4a4a5390289335f1b45526_16)** | Senior management |
| **[226](#id42dbec1de4a4a5390289335f1b45526_22)** | How we are governed |
| **[233](#id42dbec1de4a4a5390289335f1b45526_43)** | Board committees |
| **[249](#id42dbec1de4a4a5390289335f1b45526_94)** | Directors' remuneration report |
| **[275](#id42dbec1de4a4a5390289335f1b45526_211)** | Share capital and other governance <br>disclosures<br>|
| **[280](#id42dbec1de4a4a5390289335f1b45526_250)** | Internal control |
| **[282](#id42dbec1de4a4a5390289335f1b45526_259)** | Employees |
| **[284](#id42dbec1de4a4a5390289335f1b45526_289)** | Statement of compliance |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **220** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

The Board

The Board, which seeks to promote the Group's long-term success, deliver sustainable value to shareholders and promote a culture

of openness and debate, comprises diverse, high-calibre members who have experience in our global markets.

Group Chairman and executive Directors

---

| | | | |
|:---|:---|:---|:---|
| Brendan Nelson (76) ![Governance icons-06.jpg](hsbc-20251231_g80.jpg)<br>![Governance icons-08.jpg](hsbc-20251231_g81.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg) | Brendan Nelson (76) ![Governance icons-06.jpg](hsbc-20251231_g80.jpg)<br>![Governance icons-08.jpg](hsbc-20251231_g81.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg) |  |  |
| ![1.5.7.3.2 RT_Brendan_Nelson 2025_sRGB_FLAT.jpg](hsbc-20251231_g84.jpg) | **Skills and experience:** Brendan has <br>extensive experience in financial <br>services, gained through leadership <br>positions at global firms and senior <br>appointments on the Boards of global <br>organisations. <br>| from KPMG in 2010. He served as <br>non-executive Director on the Boards <br>of bp plc, from 2010 to 2021, and <br>NatWest Group plc, from 2010 to <br>2019. He was Chairman of the Audit <br>Committee at both companies.<br>Brendan is a qualified Chartered <br>Accountant. He was President of the <br>Institute of Chartered Accountants of <br>Scotland from 2013 to 2014. He was a <br>member of the Financial Services <br>Practitioner Panel and the Financial <br>Reporting Review Panel of the UK <br>Financial Reporting Council. He <br>currently serves as a non-executive <br>Director of HSBC UK Bank plc. | **External appointments:** <br>–Chairman of BP Pension Trustees <br>Limited <br>–Director of the Institute of <br>International Finance |
| ![1.5.7.3.2 RT_Brendan_Nelson 2025_sRGB_FLAT.jpg](hsbc-20251231_g84.jpg) | **Career:** Brendan spent over 25 years <br>at KPMG LLP, where he was <br>admitted as a Partner in 1984. During <br>his time at KPMG, he held various <br>positions, including Global Chairman <br>of Banking and Global Chairman of <br>Financial Services. He served on the <br>KPMG UK Board, starting in 2000. He <br>became a Vice Chairman in 2006 – a <br>position he held until his retirement  | from KPMG in 2010. He served as <br>non-executive Director on the Boards <br>of bp plc, from 2010 to 2021, and <br>NatWest Group plc, from 2010 to <br>2019. He was Chairman of the Audit <br>Committee at both companies.<br>Brendan is a qualified Chartered <br>Accountant. He was President of the <br>Institute of Chartered Accountants of <br>Scotland from 2013 to 2014. He was a <br>member of the Financial Services <br>Practitioner Panel and the Financial <br>Reporting Review Panel of the UK <br>Financial Reporting Council. He <br>currently serves as a non-executive <br>Director of HSBC UK Bank plc. | **External appointments:** <br>–Chairman of BP Pension Trustees <br>Limited <br>–Director of the Institute of <br>International Finance |
| **Group Chairman**<br>Appointed to the Board: September 2023 <br>Group Chairman since: October 2025 | **Career:** Brendan spent over 25 years <br>at KPMG LLP, where he was <br>admitted as a Partner in 1984. During <br>his time at KPMG, he held various <br>positions, including Global Chairman <br>of Banking and Global Chairman of <br>Financial Services. He served on the <br>KPMG UK Board, starting in 2000. He <br>became a Vice Chairman in 2006 – a <br>position he held until his retirement  | from KPMG in 2010. He served as <br>non-executive Director on the Boards <br>of bp plc, from 2010 to 2021, and <br>NatWest Group plc, from 2010 to <br>2019. He was Chairman of the Audit <br>Committee at both companies.<br>Brendan is a qualified Chartered <br>Accountant. He was President of the <br>Institute of Chartered Accountants of <br>Scotland from 2013 to 2014. He was a <br>member of the Financial Services <br>Practitioner Panel and the Financial <br>Reporting Review Panel of the UK <br>Financial Reporting Council. He <br>currently serves as a non-executive <br>Director of HSBC UK Bank plc. | **External appointments:** <br>–Chairman of BP Pension Trustees <br>Limited <br>–Director of the Institute of <br>International Finance |

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| | | | |
|:---|:---|:---|:---|
| Georges Elhedery (51)  | Georges Elhedery (51)  |  |  |
| ![George Elhedery_NEW.jpg](hsbc-20251231_g85.jpg) | **Skills and experience:** Georges has <br>almost 30 years of experience in the <br>banking industry across Europe, the <br>Middle East and Asia, and has held a <br>number of executive roles at a <br>regional, global business and <br>functional level.<br>| Head of Global Banking and Markets, <br>Middle East and North Africa; Chief <br>Executive Officer for HSBC, Middle <br>East, North Africa and Türkiye; Global <br>Head of Markets; and co-Chief <br>Executive Officer, Global Banking and <br>Markets based in London. <br>| –Member of the UK-India CEO <br>Forum<br>–Member of the Semafor World <br>Economy Global Advisory Board <br>–Member of the Board of Directors <br>of the Peterson Institute for <br>International Economics <br>–Member of the World Bank <br>Private Sector Investment Lab <br>–Member of Advisory Board of The <br>China Children Development Fund<br>–Principal Member of The Glasgow <br>Financial Alliance for Net Zero<br>–Member of Financial Services <br>Task Force of the SMI |
| ![George Elhedery_NEW.jpg](hsbc-20251231_g85.jpg) | **Career:** Georges was appointed <br>Group CEO from 2 September 2024. <br>He most recently served as Group <br>CFO between January 2023 and <br>September 2024. Georges joined <br>HSBC in 2005 with extensive trading <br>experience in London, Paris and <br>Tokyo. He has since held a number of <br>senior leadership roles, including  | **External appointments:**<br>–Member of Monetary Authority of <br>Singapore, International Advisory <br>Panel<br>–Member of the Asia Business <br>Council <br>–Member of the International <br>Business Leaders Advisory <br>Council (Beijing IBLAC)  | –Member of the UK-India CEO <br>Forum<br>–Member of the Semafor World <br>Economy Global Advisory Board <br>–Member of the Board of Directors <br>of the Peterson Institute for <br>International Economics <br>–Member of the World Bank <br>Private Sector Investment Lab <br>–Member of Advisory Board of The <br>China Children Development Fund<br>–Principal Member of The Glasgow <br>Financial Alliance for Net Zero<br>–Member of Financial Services <br>Task Force of the SMI |
| ![George Elhedery_NEW.jpg](hsbc-20251231_g85.jpg) | **Career:** Georges was appointed <br>Group CEO from 2 September 2024. <br>He most recently served as Group <br>CFO between January 2023 and <br>September 2024. Georges joined <br>HSBC in 2005 with extensive trading <br>experience in London, Paris and <br>Tokyo. He has since held a number of <br>senior leadership roles, including  | **External appointments:**<br>–Member of Monetary Authority of <br>Singapore, International Advisory <br>Panel<br>–Member of the Asia Business <br>Council <br>–Member of the International <br>Business Leaders Advisory <br>Council (Beijing IBLAC)  | –Member of the UK-India CEO <br>Forum<br>–Member of the Semafor World <br>Economy Global Advisory Board <br>–Member of the Board of Directors <br>of the Peterson Institute for <br>International Economics <br>–Member of the World Bank <br>Private Sector Investment Lab <br>–Member of Advisory Board of The <br>China Children Development Fund<br>–Principal Member of The Glasgow <br>Financial Alliance for Net Zero<br>–Member of Financial Services <br>Task Force of the SMI |
| **Group CEO**<br>Appointed to the Board: January 2023<br>| **Career:** Georges was appointed <br>Group CEO from 2 September 2024. <br>He most recently served as Group <br>CFO between January 2023 and <br>September 2024. Georges joined <br>HSBC in 2005 with extensive trading <br>experience in London, Paris and <br>Tokyo. He has since held a number of <br>senior leadership roles, including  | **External appointments:**<br>–Member of Monetary Authority of <br>Singapore, International Advisory <br>Panel<br>–Member of the Asia Business <br>Council <br>–Member of the International <br>Business Leaders Advisory <br>Council (Beijing IBLAC)  | –Member of the UK-India CEO <br>Forum<br>–Member of the Semafor World <br>Economy Global Advisory Board <br>–Member of the Board of Directors <br>of the Peterson Institute for <br>International Economics <br>–Member of the World Bank <br>Private Sector Investment Lab <br>–Member of Advisory Board of The <br>China Children Development Fund<br>–Principal Member of The Glasgow <br>Financial Alliance for Net Zero<br>–Member of Financial Services <br>Task Force of the SMI |

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| | | | |
|:---|:---|:---|:---|
| Manveen Kaur (known as Pam Kaur) (62)  | Manveen Kaur (known as Pam Kaur) (62)  |  |  |
| ![RT_Pam Kaur 2024_PSO Uncoated v3 (FOGRA52) copy.jpg](hsbc-20251231_g86.jpg) | **Skills and experience:** Pam has <br>extensive global banking experience, <br>gained over an almost 40-year career <br>with a number of global financial <br>institutions. She has performed many <br>senior roles in audit, business, <br>compliance, finance and risk <br>management.<br>| **Career:** Pam was appointed Group <br>CFO on 1 January 2025. Prior to this, <br>she served as Group Chief Risk <br>Officer from January 2020 and <br>assumed responsibility for <br>Compliance in June 2021. She served <br>as Group Chief Risk and Compliance <br>Officer until December 2024. Prior to <br>joining HSBC in April 2013 as Group <br>Head of Internal Audit, Pam held <br>several senior positions including <br>Global Head of Group Audit for <br>Deutsche Bank; Chief Financial <br>Officer and Chief Operating Officer of <br>the Restructuring and Risk Division  | for Royal Bank of Scotland Group plc; <br>Group Head of Compliance and Anti-<br>Money Laundering for Lloyds TSB; <br>and Chief Compliance Officer for <br>Citigroup International. Pam <br>previously served as a non-executive <br>Director of Centrica plc and Aberdeen <br>Group plc. She currently serves as a <br>non-executive Director of The <br>Hongkong and Shanghai Banking <br>Corporation Limited. <br>|
| ![RT_Pam Kaur 2024_PSO Uncoated v3 (FOGRA52) copy.jpg](hsbc-20251231_g86.jpg) |  | **Career:** Pam was appointed Group <br>CFO on 1 January 2025. Prior to this, <br>she served as Group Chief Risk <br>Officer from January 2020 and <br>assumed responsibility for <br>Compliance in June 2021. She served <br>as Group Chief Risk and Compliance <br>Officer until December 2024. Prior to <br>joining HSBC in April 2013 as Group <br>Head of Internal Audit, Pam held <br>several senior positions including <br>Global Head of Group Audit for <br>Deutsche Bank; Chief Financial <br>Officer and Chief Operating Officer of <br>the Restructuring and Risk Division  | **External appointments:** <br>–No external appointments |
|  |  | **Career:** Pam was appointed Group <br>CFO on 1 January 2025. Prior to this, <br>she served as Group Chief Risk <br>Officer from January 2020 and <br>assumed responsibility for <br>Compliance in June 2021. She served <br>as Group Chief Risk and Compliance <br>Officer until December 2024. Prior to <br>joining HSBC in April 2013 as Group <br>Head of Internal Audit, Pam held <br>several senior positions including <br>Global Head of Group Audit for <br>Deutsche Bank; Chief Financial <br>Officer and Chief Operating Officer of <br>the Restructuring and Risk Division  | **External appointments:** <br>–No external appointments |
| **Group CFO** <br>Appointed to the Board: January 2025<br>|  | **Career:** Pam was appointed Group <br>CFO on 1 January 2025. Prior to this, <br>she served as Group Chief Risk <br>Officer from January 2020 and <br>assumed responsibility for <br>Compliance in June 2021. She served <br>as Group Chief Risk and Compliance <br>Officer until December 2024. Prior to <br>joining HSBC in April 2013 as Group <br>Head of Internal Audit, Pam held <br>several senior positions including <br>Global Head of Group Audit for <br>Deutsche Bank; Chief Financial <br>Officer and Chief Operating Officer of <br>the Restructuring and Risk Division  | **External appointments:** <br>–No external appointments |

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**Board committee membership key**

Committee Chair

![Governance icons-09.jpg](hsbc-20251231_g87.jpg)

Group Audit Committee

![Governance icons-01.jpg](hsbc-20251231_g88.jpg)

Group Risk Committee

![Governance icons-02.jpg](hsbc-20251231_g82.jpg)

Group Remuneration Committee

![Governance icons-03.jpg](hsbc-20251231_g89.jpg)

Nomination & Corporate

![Governance icons-07.jpg](hsbc-20251231_g90.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governance Committee

Group Technology and Operations

![Governance icons-11.jpg](hsbc-20251231_g83.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Committee

🡠For full biographical details of our

Board members, see

www.hsbc.com/who-we-are/our-

people/board-of-directors.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **221** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | The Board |  |  |

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Independent non-executive Directors

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| | | | |
|:---|:---|:---|:---|
| Geraldine Buckingham (48) ![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Geraldine Buckingham (48) ![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![geraldine-buckingham.jpg](hsbc-20251231_g91.jpg) | **Skills and experience:** Geraldine is <br>an experienced executive within the <br>global financial services industry, with <br>significant leadership experience in <br>Asia. <br>| **Career:** Geraldine is the former Chair <br>and Head of Asia-Pacific at <br>BlackRock, where she was <br>responsible for all business activities <br>across Hong Kong, mainland China, <br>Japan, Australia, Singapore, India and <br>Korea. After stepping down from this <br>role, she acted as senior adviser to <br>the Chairman and Chief Executive <br>Officer of BlackRock. She earlier <br>served as BlackRock's Global Head of <br>Corporate Strategy, and previously <br>was a partner within McKinsey & <br>Company's financial services practice.  | **External appointments:** <br>–Independent non-executive <br>Director of Brunswick Group <br>Partnership Ltd<br>–Independent non-executive <br>Director of H.R.L. Morrison & Co <br>Limited<br>–Member of the Advisory Board of <br>the McKinsey Health Institute |
| ![geraldine-buckingham.jpg](hsbc-20251231_g91.jpg) |  | **Career:** Geraldine is the former Chair <br>and Head of Asia-Pacific at <br>BlackRock, where she was <br>responsible for all business activities <br>across Hong Kong, mainland China, <br>Japan, Australia, Singapore, India and <br>Korea. After stepping down from this <br>role, she acted as senior adviser to <br>the Chairman and Chief Executive <br>Officer of BlackRock. She earlier <br>served as BlackRock's Global Head of <br>Corporate Strategy, and previously <br>was a partner within McKinsey & <br>Company's financial services practice.  | **External appointments:** <br>–Independent non-executive <br>Director of Brunswick Group <br>Partnership Ltd<br>–Independent non-executive <br>Director of H.R.L. Morrison & Co <br>Limited<br>–Member of the Advisory Board of <br>the McKinsey Health Institute |
| **Independent non-executive Director**<br>Appointed to the Board: May 2022  |  | **Career:** Geraldine is the former Chair <br>and Head of Asia-Pacific at <br>BlackRock, where she was <br>responsible for all business activities <br>across Hong Kong, mainland China, <br>Japan, Australia, Singapore, India and <br>Korea. After stepping down from this <br>role, she acted as senior adviser to <br>the Chairman and Chief Executive <br>Officer of BlackRock. She earlier <br>served as BlackRock's Global Head of <br>Corporate Strategy, and previously <br>was a partner within McKinsey & <br>Company's financial services practice.  | **External appointments:** <br>–Independent non-executive <br>Director of Brunswick Group <br>Partnership Ltd<br>–Independent non-executive <br>Director of H.R.L. Morrison & Co <br>Limited<br>–Member of the Advisory Board of <br>the McKinsey Health Institute |

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| | | | |
|:---|:---|:---|:---|
| Wei Sun Christianson (69) ![Governance icons-07.jpg](hsbc-20251231_g90.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg) | Wei Sun Christianson (69) ![Governance icons-07.jpg](hsbc-20251231_g90.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg) |  |  |
| ![1.5.7.3.4 RT_Wei_Sun_Christianson 2025_sRGB_FLAT.jpg](hsbc-20251231_g92.jpg) | **Skills and experience:** Wei brings <br>extensive banking and regulatory <br>experience gained over a 30-year <br>international career.<br>| **Career:** Wei previously served as a <br>Senior Advisor at Morgan Stanley, <br>following her retirement in 2022 after <br>serving as Co-CEO, Asia Pacific since <br>2011. She was also CEO, Morgan <br>Stanley China from 2006 to 2022. Prior <br>to joining Morgan Stanley, Wei held <br>senior regulatory roles at the Hong Kong <br>Securities and Futures Commission, <br>where she was involved in drafting the <br>regulatory structure that enabled <br>companies from the People's Republic <br>of China to be listed outside China. | **External appointments:** <br>–Independent non-executive <br>Director of LVMH Moët Hennessy <br>Louis Vuitton SE |
| ![1.5.7.3.4 RT_Wei_Sun_Christianson 2025_sRGB_FLAT.jpg](hsbc-20251231_g92.jpg) |  | **Career:** Wei previously served as a <br>Senior Advisor at Morgan Stanley, <br>following her retirement in 2022 after <br>serving as Co-CEO, Asia Pacific since <br>2011. She was also CEO, Morgan <br>Stanley China from 2006 to 2022. Prior <br>to joining Morgan Stanley, Wei held <br>senior regulatory roles at the Hong Kong <br>Securities and Futures Commission, <br>where she was involved in drafting the <br>regulatory structure that enabled <br>companies from the People's Republic <br>of China to be listed outside China. | **External appointments:** <br>–Independent non-executive <br>Director of LVMH Moët Hennessy <br>Louis Vuitton SE |
|  |  | **Career:** Wei previously served as a <br>Senior Advisor at Morgan Stanley, <br>following her retirement in 2022 after <br>serving as Co-CEO, Asia Pacific since <br>2011. She was also CEO, Morgan <br>Stanley China from 2006 to 2022. Prior <br>to joining Morgan Stanley, Wei held <br>senior regulatory roles at the Hong Kong <br>Securities and Futures Commission, <br>where she was involved in drafting the <br>regulatory structure that enabled <br>companies from the People's Republic <br>of China to be listed outside China. | **External appointments:** <br>–Independent non-executive <br>Director of LVMH Moët Hennessy <br>Louis Vuitton SE |
| **Independent non-executive Director**<br>Appointed to the Board: January 2026 |  | **Career:** Wei previously served as a <br>Senior Advisor at Morgan Stanley, <br>following her retirement in 2022 after <br>serving as Co-CEO, Asia Pacific since <br>2011. She was also CEO, Morgan <br>Stanley China from 2006 to 2022. Prior <br>to joining Morgan Stanley, Wei held <br>senior regulatory roles at the Hong Kong <br>Securities and Futures Commission, <br>where she was involved in drafting the <br>regulatory structure that enabled <br>companies from the People's Republic <br>of China to be listed outside China. | **External appointments:** <br>–Independent non-executive <br>Director of LVMH Moët Hennessy <br>Louis Vuitton SE |

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| | | | |
|:---|:---|:---|:---|
| Rachel Duan (55) ![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Rachel Duan (55) ![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Rachel Duan.jpg](hsbc-20251231_g93.jpg) | **Skills and experience:** Rachel is an <br>experienced business leader with <br>exceptional international experience <br>in the US, Japan, mainland China and <br>Hong Kong.<br>| **Career:** Rachel spent 24 years at <br>General Electric ('GE'), where she <br>held positions including Senior Vice <br>President of GE, and President and <br>Chief Executive Officer of GE's Global <br>Markets where she was responsible <br>for driving GE's growth in Asia-<br>Pacific, the Middle East, Africa, Latin <br>America, Russia and the <br>Commonwealth of Independent <br>States. She also previously served as <br>President and Chief Executive Officer <br>of GE Advanced Materials China and <br>then of Asia-Pacific; President and <br>CEO of GE Healthcare China; and <br>President and CEO of GE China. She <br>has previously served as a non-<br>executive Director of AXA S.A.  | **External appointments:** <br>–Independent non-executive <br>Director of Sanofi S.A.<br>–Independent non-executive <br>Director of the Adecco Group AG<br>–Independent non-executive <br>Director of Kering S.A. |
| ![Rachel Duan.jpg](hsbc-20251231_g93.jpg) |  | **Career:** Rachel spent 24 years at <br>General Electric ('GE'), where she <br>held positions including Senior Vice <br>President of GE, and President and <br>Chief Executive Officer of GE's Global <br>Markets where she was responsible <br>for driving GE's growth in Asia-<br>Pacific, the Middle East, Africa, Latin <br>America, Russia and the <br>Commonwealth of Independent <br>States. She also previously served as <br>President and Chief Executive Officer <br>of GE Advanced Materials China and <br>then of Asia-Pacific; President and <br>CEO of GE Healthcare China; and <br>President and CEO of GE China. She <br>has previously served as a non-<br>executive Director of AXA S.A.  | **External appointments:** <br>–Independent non-executive <br>Director of Sanofi S.A.<br>–Independent non-executive <br>Director of the Adecco Group AG<br>–Independent non-executive <br>Director of Kering S.A. |
|  |  | **Career:** Rachel spent 24 years at <br>General Electric ('GE'), where she <br>held positions including Senior Vice <br>President of GE, and President and <br>Chief Executive Officer of GE's Global <br>Markets where she was responsible <br>for driving GE's growth in Asia-<br>Pacific, the Middle East, Africa, Latin <br>America, Russia and the <br>Commonwealth of Independent <br>States. She also previously served as <br>President and Chief Executive Officer <br>of GE Advanced Materials China and <br>then of Asia-Pacific; President and <br>CEO of GE Healthcare China; and <br>President and CEO of GE China. She <br>has previously served as a non-<br>executive Director of AXA S.A.  | **External appointments:** <br>–Independent non-executive <br>Director of Sanofi S.A.<br>–Independent non-executive <br>Director of the Adecco Group AG<br>–Independent non-executive <br>Director of Kering S.A. |
| **Independent non-executive Director**<br>Appointed to the Board: September 2021 |  | **Career:** Rachel spent 24 years at <br>General Electric ('GE'), where she <br>held positions including Senior Vice <br>President of GE, and President and <br>Chief Executive Officer of GE's Global <br>Markets where she was responsible <br>for driving GE's growth in Asia-<br>Pacific, the Middle East, Africa, Latin <br>America, Russia and the <br>Commonwealth of Independent <br>States. She also previously served as <br>President and Chief Executive Officer <br>of GE Advanced Materials China and <br>then of Asia-Pacific; President and <br>CEO of GE Healthcare China; and <br>President and CEO of GE China. She <br>has previously served as a non-<br>executive Director of AXA S.A.  | **External appointments:** <br>–Independent non-executive <br>Director of Sanofi S.A.<br>–Independent non-executive <br>Director of the Adecco Group AG<br>–Independent non-executive <br>Director of Kering S.A. |

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| | | | |
|:---|:---|:---|:---|
| Dame Carolyn Fairbairn (65) ![Governance icons-04.jpg](hsbc-20251231_g94.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Dame Carolyn Fairbairn (65) ![Governance icons-04.jpg](hsbc-20251231_g94.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Carolyn_D.jpg](hsbc-20251231_g95.jpg) | **Skills and experience:** Carolyn has <br>significant experience across the <br>media, government and finance <br>sectors, and a deep understanding of <br>the macroeconomic, regulatory and <br>political environment.<br>| **Career:** An economist by training, <br>Carolyn has served as a partner at <br>McKinsey & Company, a member of <br>the UK prime minister John Major's <br>Number 10 Policy Unit, and as Director-<br>General of the Confederation of British <br>Industry, and held senior executive <br>positions at the BBC and ITV plc. She <br>has extensive board experience, having <br>previously served as non-executive <br>Director of Lloyds Banking Group plc, <br>The Vitec Group plc, Capita plc and BAE <br>Systems plc. She has also served as a <br>non-executive Director of the UK <br>Competition and Markets Authority and <br>the Financial Services Authority.  | **External appointments:** <br>–Senior Independent Director of <br>Tesco plc<br>–Member of the Advisory Council of <br>Frontier Economics |
| ![Carolyn_D.jpg](hsbc-20251231_g95.jpg) |  | **Career:** An economist by training, <br>Carolyn has served as a partner at <br>McKinsey & Company, a member of <br>the UK prime minister John Major's <br>Number 10 Policy Unit, and as Director-<br>General of the Confederation of British <br>Industry, and held senior executive <br>positions at the BBC and ITV plc. She <br>has extensive board experience, having <br>previously served as non-executive <br>Director of Lloyds Banking Group plc, <br>The Vitec Group plc, Capita plc and BAE <br>Systems plc. She has also served as a <br>non-executive Director of the UK <br>Competition and Markets Authority and <br>the Financial Services Authority.  | **External appointments:** <br>–Senior Independent Director of <br>Tesco plc<br>–Member of the Advisory Council of <br>Frontier Economics |
|  |  | **Career:** An economist by training, <br>Carolyn has served as a partner at <br>McKinsey & Company, a member of <br>the UK prime minister John Major's <br>Number 10 Policy Unit, and as Director-<br>General of the Confederation of British <br>Industry, and held senior executive <br>positions at the BBC and ITV plc. She <br>has extensive board experience, having <br>previously served as non-executive <br>Director of Lloyds Banking Group plc, <br>The Vitec Group plc, Capita plc and BAE <br>Systems plc. She has also served as a <br>non-executive Director of the UK <br>Competition and Markets Authority and <br>the Financial Services Authority.  | **External appointments:** <br>–Senior Independent Director of <br>Tesco plc<br>–Member of the Advisory Council of <br>Frontier Economics |
| **Independent non-executive Director**<br>Appointed to the Board: September 2021 |  | **Career:** An economist by training, <br>Carolyn has served as a partner at <br>McKinsey & Company, a member of <br>the UK prime minister John Major's <br>Number 10 Policy Unit, and as Director-<br>General of the Confederation of British <br>Industry, and held senior executive <br>positions at the BBC and ITV plc. She <br>has extensive board experience, having <br>previously served as non-executive <br>Director of Lloyds Banking Group plc, <br>The Vitec Group plc, Capita plc and BAE <br>Systems plc. She has also served as a <br>non-executive Director of the UK <br>Competition and Markets Authority and <br>the Financial Services Authority.  | **External appointments:** <br>–Senior Independent Director of <br>Tesco plc<br>–Member of the Advisory Council of <br>Frontier Economics |

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **222** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | The Board |  |  |

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|:---|:---|:---|:---|
| James Forese (63) ![Governance icons-05.jpg](hsbc-20251231_g96.jpg)<br>![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | James Forese (63) ![Governance icons-05.jpg](hsbc-20251231_g96.jpg)<br>![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![James Forese.jpg](hsbc-20251231_g97.jpg) | **Skills and experience:** Jamie has <br>over 30 years of international <br>business and management <br>experience in the finance industry <br>working in areas including global <br>markets, investment and private <br>banking.<br>| **Career:** Jamie formerly served as <br>President of Citigroup. He began his <br>career in securities trading with Salomon <br>Brothers, one of Citigroup's predecessor <br>companies, in 1985. In addition to his <br>most recent role as Citigroup's <br>President, he was Chief Executive <br>Officer of Citigroup's Institutional Clients <br>Group. He has held the positions of <br>Chief Executive of its Securities and <br>Banking division and Head of its Global <br>Markets business. He previously served <br>as non-executive Chairman of Global <br>Bamboo Technologies. Jamie currently <br>serves as non-executive Chair of HSBC <br>North America Holdings Inc. | **External appointments:** <br>–No external appointments |
| ![James Forese.jpg](hsbc-20251231_g97.jpg) |  | **Career:** Jamie formerly served as <br>President of Citigroup. He began his <br>career in securities trading with Salomon <br>Brothers, one of Citigroup's predecessor <br>companies, in 1985. In addition to his <br>most recent role as Citigroup's <br>President, he was Chief Executive <br>Officer of Citigroup's Institutional Clients <br>Group. He has held the positions of <br>Chief Executive of its Securities and <br>Banking division and Head of its Global <br>Markets business. He previously served <br>as non-executive Chairman of Global <br>Bamboo Technologies. Jamie currently <br>serves as non-executive Chair of HSBC <br>North America Holdings Inc. | **External appointments:** <br>–No external appointments |
| **Independent non-executive Director**<br>Appointed to the Board: May 2020 |  | **Career:** Jamie formerly served as <br>President of Citigroup. He began his <br>career in securities trading with Salomon <br>Brothers, one of Citigroup's predecessor <br>companies, in 1985. In addition to his <br>most recent role as Citigroup's <br>President, he was Chief Executive <br>Officer of Citigroup's Institutional Clients <br>Group. He has held the positions of <br>Chief Executive of its Securities and <br>Banking division and Head of its Global <br>Markets business. He previously served <br>as non-executive Chairman of Global <br>Bamboo Technologies. Jamie currently <br>serves as non-executive Chair of HSBC <br>North America Holdings Inc. | **External appointments:** <br>–No external appointments |

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| | | | |
|:---|:---|:---|:---|
| Ann Godbehere (70) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Ann Godbehere (70) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-01.jpg](hsbc-20251231_g88.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Ann Godbehere .jpg](hsbc-20251231_g98.jpg) | **Skills and experience:** Ann brings <br>deep financial acumen and extensive <br>financial services experience over a <br>30-year career spanning insurance, <br>retail and private banking, and wealth <br>management. She also provides <br>global perspectives, drawing upon <br>experiences and insights gained from <br>a long career in international <br>business. | **Career:** After joining Swiss Re in 1996, <br>Ann served as the company's Chief <br>Financial Officer from 2003 to 2007. <br>She was also Interim Chief Financial <br>Officer of Northern Rock Bank from <br>2008 to 2009 in the period immediately <br>after its nationalisation. Ann also has <br>extensive board experience, including <br>with FTSE 100 companies, having <br>previously served as non-executive <br>Director of Prudential plc, British <br>American Tobacco plc, UBS AG, UBS <br>Group AG and as Senior Independent <br>Director of Rio Tinto plc and Rio Tinto <br>Limited. She currently serves as non-<br>executive Chair of HSBC Bank plc. | **External appointments:** <br>–Non-executive Director and Chair of <br>the Audit Committee of Stellantis <br>N.V.<br>–Non-executive Director and Chair of <br>the Audit and Risk Committee of <br>Shell plc |
| ![Ann Godbehere .jpg](hsbc-20251231_g98.jpg) | **Skills and experience:** Ann brings <br>deep financial acumen and extensive <br>financial services experience over a <br>30-year career spanning insurance, <br>retail and private banking, and wealth <br>management. She also provides <br>global perspectives, drawing upon <br>experiences and insights gained from <br>a long career in international <br>business. | **Career:** After joining Swiss Re in 1996, <br>Ann served as the company's Chief <br>Financial Officer from 2003 to 2007. <br>She was also Interim Chief Financial <br>Officer of Northern Rock Bank from <br>2008 to 2009 in the period immediately <br>after its nationalisation. Ann also has <br>extensive board experience, including <br>with FTSE 100 companies, having <br>previously served as non-executive <br>Director of Prudential plc, British <br>American Tobacco plc, UBS AG, UBS <br>Group AG and as Senior Independent <br>Director of Rio Tinto plc and Rio Tinto <br>Limited. She currently serves as non-<br>executive Chair of HSBC Bank plc. | **External appointments:** <br>–Non-executive Director and Chair of <br>the Audit Committee of Stellantis <br>N.V.<br>–Non-executive Director and Chair of <br>the Audit and Risk Committee of <br>Shell plc |
|  |  | **Career:** After joining Swiss Re in 1996, <br>Ann served as the company's Chief <br>Financial Officer from 2003 to 2007. <br>She was also Interim Chief Financial <br>Officer of Northern Rock Bank from <br>2008 to 2009 in the period immediately <br>after its nationalisation. Ann also has <br>extensive board experience, including <br>with FTSE 100 companies, having <br>previously served as non-executive <br>Director of Prudential plc, British <br>American Tobacco plc, UBS AG, UBS <br>Group AG and as Senior Independent <br>Director of Rio Tinto plc and Rio Tinto <br>Limited. She currently serves as non-<br>executive Chair of HSBC Bank plc. | **External appointments:** <br>–Non-executive Director and Chair of <br>the Audit Committee of Stellantis <br>N.V.<br>–Non-executive Director and Chair of <br>the Audit and Risk Committee of <br>Shell plc |
| **Independent non-executive Director**<br>Appointed to the Board: September 2023 <br>Senior Independent Director: May 2024 | **Independent non-executive Director**<br>Appointed to the Board: September 2023 <br>Senior Independent Director: May 2024 | **Career:** After joining Swiss Re in 1996, <br>Ann served as the company's Chief <br>Financial Officer from 2003 to 2007. <br>She was also Interim Chief Financial <br>Officer of Northern Rock Bank from <br>2008 to 2009 in the period immediately <br>after its nationalisation. Ann also has <br>extensive board experience, including <br>with FTSE 100 companies, having <br>previously served as non-executive <br>Director of Prudential plc, British <br>American Tobacco plc, UBS AG, UBS <br>Group AG and as Senior Independent <br>Director of Rio Tinto plc and Rio Tinto <br>Limited. She currently serves as non-<br>executive Chair of HSBC Bank plc. | **External appointments:** <br>–Non-executive Director and Chair of <br>the Audit Committee of Stellantis <br>N.V.<br>–Non-executive Director and Chair of <br>the Audit and Risk Committee of <br>Shell plc |

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|:---|:---|:---|:---|
| Steven Guggenheimer (60) ![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Steven Guggenheimer (60) ![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Steven Guggenheimer .jpg](hsbc-20251231_g99.jpg) | **Skills and experience:** Steven <br>brings extensive insight into <br>technologies ranging from artificial <br>intelligence to Cloud computing, <br>through his experience advising <br>businesses on digital transformation.<br>| **Career:** Steven has more than 25 years <br>of experience at Microsoft, including <br>more than a decade as Corporate Vice <br>President, where he led teams focused <br>on original equipment manufacturers, <br>developers and independent software <br>vendors and artificial intelligence <br>solutions. | **External appointments:** <br>–Independent non-executive <br>Director of BT Group plc<br>–Independent non-executive <br>Director of Leupold & Stevens, Inc<br>–Independent non-executive <br>Director of Forrit Holdings Limited<br>–Member of Advisory Board of <br>Quantexa Limited |
| ![Steven Guggenheimer .jpg](hsbc-20251231_g99.jpg) |  | **Career:** Steven has more than 25 years <br>of experience at Microsoft, including <br>more than a decade as Corporate Vice <br>President, where he led teams focused <br>on original equipment manufacturers, <br>developers and independent software <br>vendors and artificial intelligence <br>solutions. | **External appointments:** <br>–Independent non-executive <br>Director of BT Group plc<br>–Independent non-executive <br>Director of Leupold & Stevens, Inc<br>–Independent non-executive <br>Director of Forrit Holdings Limited<br>–Member of Advisory Board of <br>Quantexa Limited |
|  |  | **Career:** Steven has more than 25 years <br>of experience at Microsoft, including <br>more than a decade as Corporate Vice <br>President, where he led teams focused <br>on original equipment manufacturers, <br>developers and independent software <br>vendors and artificial intelligence <br>solutions. | **External appointments:** <br>–Independent non-executive <br>Director of BT Group plc<br>–Independent non-executive <br>Director of Leupold & Stevens, Inc<br>–Independent non-executive <br>Director of Forrit Holdings Limited<br>–Member of Advisory Board of <br>Quantexa Limited |
| **Independent non-executive Director**<br>Appointed to the Board: May 2020 |  | **Career:** Steven has more than 25 years <br>of experience at Microsoft, including <br>more than a decade as Corporate Vice <br>President, where he led teams focused <br>on original equipment manufacturers, <br>developers and independent software <br>vendors and artificial intelligence <br>solutions. | **External appointments:** <br>–Independent non-executive <br>Director of BT Group plc<br>–Independent non-executive <br>Director of Leupold & Stevens, Inc<br>–Independent non-executive <br>Director of Forrit Holdings Limited<br>–Member of Advisory Board of <br>Quantexa Limited |

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|:---|:---|:---|:---|
| Dr José Antonio Meade Kuribreña (56) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Dr José Antonio Meade Kuribreña (56) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![jose-antonio-meade-kuribrena.jpg](hsbc-20251231_g100.jpg) | **Skills and experience:** José has <br>extensive experience in public <br>administration, banking and financial <br>policy.<br>| **Career:** José has held cabinet-level <br>positions in the federal government of <br>Mexico, including as Secretary of <br>Finance and Public Credit, Secretary of <br>Social Development, Secretary of <br>Foreign Affairs and Secretary of Energy. <br>Prior to his appointment to the cabinet, <br>he served as Undersecretary and as <br>Chief of Staff in the Ministry of Finance <br>and Public Credit. José is also a former <br>Director General of Banking and Savings <br>at the Ministry of Finance and Public <br>Credit, and served as Chief Executive <br>Officer of the National Bank for Rural <br>Credit. He currently serves as non-<br>executive Chair of Grupo Financiero <br>HSBC, S. A. de C. V, HSBC Latin <br>America Holdings (UK) Limited and of | HSBC Mexico, S.A., Institucion de <br>Banca Multiple, Grupo Financiero <br>HSBC.<br>**External appointments:** <br>–Independent non-executive <br>Director of Grupo Comercial <br>Chedraui, S.A.B. de C.V.<br>–Independent Member of the <br>Technical Committee of Fibra Uno <br>Administracion SA de CV<br>–Member of the Advisory Board of <br>the University of California, Centre <br>for US-Mexican Studies<br>–Member of the UNICEF Mexico <br>Advisory Board<br>–Independent non-executive <br>Director of Nemak, S.A.B de C.V |
| ![jose-antonio-meade-kuribrena.jpg](hsbc-20251231_g100.jpg) |  | **Career:** José has held cabinet-level <br>positions in the federal government of <br>Mexico, including as Secretary of <br>Finance and Public Credit, Secretary of <br>Social Development, Secretary of <br>Foreign Affairs and Secretary of Energy. <br>Prior to his appointment to the cabinet, <br>he served as Undersecretary and as <br>Chief of Staff in the Ministry of Finance <br>and Public Credit. José is also a former <br>Director General of Banking and Savings <br>at the Ministry of Finance and Public <br>Credit, and served as Chief Executive <br>Officer of the National Bank for Rural <br>Credit. He currently serves as non-<br>executive Chair of Grupo Financiero <br>HSBC, S. A. de C. V, HSBC Latin <br>America Holdings (UK) Limited and of | HSBC Mexico, S.A., Institucion de <br>Banca Multiple, Grupo Financiero <br>HSBC.<br>**External appointments:** <br>–Independent non-executive <br>Director of Grupo Comercial <br>Chedraui, S.A.B. de C.V.<br>–Independent Member of the <br>Technical Committee of Fibra Uno <br>Administracion SA de CV<br>–Member of the Advisory Board of <br>the University of California, Centre <br>for US-Mexican Studies<br>–Member of the UNICEF Mexico <br>Advisory Board<br>–Independent non-executive <br>Director of Nemak, S.A.B de C.V |
|  |  | **Career:** José has held cabinet-level <br>positions in the federal government of <br>Mexico, including as Secretary of <br>Finance and Public Credit, Secretary of <br>Social Development, Secretary of <br>Foreign Affairs and Secretary of Energy. <br>Prior to his appointment to the cabinet, <br>he served as Undersecretary and as <br>Chief of Staff in the Ministry of Finance <br>and Public Credit. José is also a former <br>Director General of Banking and Savings <br>at the Ministry of Finance and Public <br>Credit, and served as Chief Executive <br>Officer of the National Bank for Rural <br>Credit. He currently serves as non-<br>executive Chair of Grupo Financiero <br>HSBC, S. A. de C. V, HSBC Latin <br>America Holdings (UK) Limited and of | HSBC Mexico, S.A., Institucion de <br>Banca Multiple, Grupo Financiero <br>HSBC.<br>**External appointments:** <br>–Independent non-executive <br>Director of Grupo Comercial <br>Chedraui, S.A.B. de C.V.<br>–Independent Member of the <br>Technical Committee of Fibra Uno <br>Administracion SA de CV<br>–Member of the Advisory Board of <br>the University of California, Centre <br>for US-Mexican Studies<br>–Member of the UNICEF Mexico <br>Advisory Board<br>–Independent non-executive <br>Director of Nemak, S.A.B de C.V |
| **Independent non-executive Director**<br>Appointed to the Board: March 2019<br>Workforce engagement non-executive Director since: June 2022 | **Independent non-executive Director**<br>Appointed to the Board: March 2019<br>Workforce engagement non-executive Director since: June 2022 | **Career:** José has held cabinet-level <br>positions in the federal government of <br>Mexico, including as Secretary of <br>Finance and Public Credit, Secretary of <br>Social Development, Secretary of <br>Foreign Affairs and Secretary of Energy. <br>Prior to his appointment to the cabinet, <br>he served as Undersecretary and as <br>Chief of Staff in the Ministry of Finance <br>and Public Credit. José is also a former <br>Director General of Banking and Savings <br>at the Ministry of Finance and Public <br>Credit, and served as Chief Executive <br>Officer of the National Bank for Rural <br>Credit. He currently serves as non-<br>executive Chair of Grupo Financiero <br>HSBC, S. A. de C. V, HSBC Latin <br>America Holdings (UK) Limited and of | HSBC Mexico, S.A., Institucion de <br>Banca Multiple, Grupo Financiero <br>HSBC.<br>**External appointments:** <br>–Independent non-executive <br>Director of Grupo Comercial <br>Chedraui, S.A.B. de C.V.<br>–Independent Member of the <br>Technical Committee of Fibra Uno <br>Administracion SA de CV<br>–Member of the Advisory Board of <br>the University of California, Centre <br>for US-Mexican Studies<br>–Member of the UNICEF Mexico <br>Advisory Board<br>–Independent non-executive <br>Director of Nemak, S.A.B de C.V |

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **223** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | The Board |  |  |

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|:---|:---|:---|:---|
| Kalpana Morparia (76) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Kalpana Morparia (76) ![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![KalpanaMorparia.jpg](hsbc-20251231_g101.jpg) | **Skills and experience:** Kalpana is a <br>skilled business leader with <br>significant experience gained through <br>a 45-year career in banking across <br>Asia, primarily in India.<br>| **Career:** Kalpana's most recent <br>executive role was as Chair of J.P. <br>Morgan, South and Southeast Asia and <br>a member of J.P. Morgan's Asia <br>executive committee, held until her <br>retirement in 2021. Before J.P. Morgan, <br>she was the Joint Managing Director of <br>ICICI Bank, India's second-largest bank, <br>from 2001 to 2007. She has previously <br>served as a non-executive Director on <br>the boards of Hindustan Unilever <br>Limited, Dr.Reddy's Laboratories Ltd <br>and Meesho Inc. Kalpana also serves as <br>a board and governing council member <br>of several non-profit organisations in the <br>education sector.  | **External appointments:** <br>–Independent non-executive <br>Director of The Great Eastern <br>Shipping Company Limited<br>–Independent non-executive <br>Director of Philip Morris <br>International Inc<br>–Member of the Mentor Council of <br>the Institute for Sustainability, <br>Employment and Growth (ISEG <br>Foundation) |
| ![KalpanaMorparia.jpg](hsbc-20251231_g101.jpg) |  | **Career:** Kalpana's most recent <br>executive role was as Chair of J.P. <br>Morgan, South and Southeast Asia and <br>a member of J.P. Morgan's Asia <br>executive committee, held until her <br>retirement in 2021. Before J.P. Morgan, <br>she was the Joint Managing Director of <br>ICICI Bank, India's second-largest bank, <br>from 2001 to 2007. She has previously <br>served as a non-executive Director on <br>the boards of Hindustan Unilever <br>Limited, Dr.Reddy's Laboratories Ltd <br>and Meesho Inc. Kalpana also serves as <br>a board and governing council member <br>of several non-profit organisations in the <br>education sector.  | **External appointments:** <br>–Independent non-executive <br>Director of The Great Eastern <br>Shipping Company Limited<br>–Independent non-executive <br>Director of Philip Morris <br>International Inc<br>–Member of the Mentor Council of <br>the Institute for Sustainability, <br>Employment and Growth (ISEG <br>Foundation) |
|  |  | **Career:** Kalpana's most recent <br>executive role was as Chair of J.P. <br>Morgan, South and Southeast Asia and <br>a member of J.P. Morgan's Asia <br>executive committee, held until her <br>retirement in 2021. Before J.P. Morgan, <br>she was the Joint Managing Director of <br>ICICI Bank, India's second-largest bank, <br>from 2001 to 2007. She has previously <br>served as a non-executive Director on <br>the boards of Hindustan Unilever <br>Limited, Dr.Reddy's Laboratories Ltd <br>and Meesho Inc. Kalpana also serves as <br>a board and governing council member <br>of several non-profit organisations in the <br>education sector.  | **External appointments:** <br>–Independent non-executive <br>Director of The Great Eastern <br>Shipping Company Limited<br>–Independent non-executive <br>Director of Philip Morris <br>International Inc<br>–Member of the Mentor Council of <br>the Institute for Sustainability, <br>Employment and Growth (ISEG <br>Foundation) |
| **Independent non-executive Director**<br>Appointed to the Board: March 2023 |  | **Career:** Kalpana's most recent <br>executive role was as Chair of J.P. <br>Morgan, South and Southeast Asia and <br>a member of J.P. Morgan's Asia <br>executive committee, held until her <br>retirement in 2021. Before J.P. Morgan, <br>she was the Joint Managing Director of <br>ICICI Bank, India's second-largest bank, <br>from 2001 to 2007. She has previously <br>served as a non-executive Director on <br>the boards of Hindustan Unilever <br>Limited, Dr.Reddy's Laboratories Ltd <br>and Meesho Inc. Kalpana also serves as <br>a board and governing council member <br>of several non-profit organisations in the <br>education sector.  | **External appointments:** <br>–Independent non-executive <br>Director of The Great Eastern <br>Shipping Company Limited<br>–Independent non-executive <br>Director of Philip Morris <br>International Inc<br>–Member of the Mentor Council of <br>the Institute for Sustainability, <br>Employment and Growth (ISEG <br>Foundation) |

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|:---|:---|:---|:---|
| Eileen Murray (67) ![Governance icons-12.jpg](hsbc-20251231_g102.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Eileen Murray (67) ![Governance icons-12.jpg](hsbc-20251231_g102.jpg)<br>![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-03.jpg](hsbc-20251231_g89.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Eileen Murray.jpg](hsbc-20251231_g103.jpg) | **Skills and experience:** Eileen has <br>extensive knowledge in financial <br>services, technology and corporate <br>strategy from a career spanning more <br>than 40 years.<br>| **Career:** Eileen previously served as co-<br>CEO of Bridgewater Associates, LP. <br>Before this, she was CEO for <br>Investment Risk Management LLC, and <br>President and co-CEO of Duff Capital <br>Advisors. She also served as Chair of <br>the Financial Industry Regulatory <br>Authority. Eileen started her career at <br>Morgan Stanley, where she held <br>positions including Controller, Treasurer, <br>and Global Head of Technology and <br>Operations, as well as Chief Operating <br>Officer for its Institutional Securities <br>Group. She was also Head of Global <br>Technology, Operations and Product <br>Control at Credit Suisse. | **External appointments:** <br>–Independent non-executive <br>Director of Guardian Life Insurance <br>Company of America<br>–Chair of Broadridge Financial <br>Solutions, Inc<br>–Chair of Invisible Urban Charging<br>–Operating partner of Liberty City <br>Ventures |
| ![Eileen Murray.jpg](hsbc-20251231_g103.jpg) |  | **Career:** Eileen previously served as co-<br>CEO of Bridgewater Associates, LP. <br>Before this, she was CEO for <br>Investment Risk Management LLC, and <br>President and co-CEO of Duff Capital <br>Advisors. She also served as Chair of <br>the Financial Industry Regulatory <br>Authority. Eileen started her career at <br>Morgan Stanley, where she held <br>positions including Controller, Treasurer, <br>and Global Head of Technology and <br>Operations, as well as Chief Operating <br>Officer for its Institutional Securities <br>Group. She was also Head of Global <br>Technology, Operations and Product <br>Control at Credit Suisse. | **External appointments:** <br>–Independent non-executive <br>Director of Guardian Life Insurance <br>Company of America<br>–Chair of Broadridge Financial <br>Solutions, Inc<br>–Chair of Invisible Urban Charging<br>–Operating partner of Liberty City <br>Ventures |
|  |  | **Career:** Eileen previously served as co-<br>CEO of Bridgewater Associates, LP. <br>Before this, she was CEO for <br>Investment Risk Management LLC, and <br>President and co-CEO of Duff Capital <br>Advisors. She also served as Chair of <br>the Financial Industry Regulatory <br>Authority. Eileen started her career at <br>Morgan Stanley, where she held <br>positions including Controller, Treasurer, <br>and Global Head of Technology and <br>Operations, as well as Chief Operating <br>Officer for its Institutional Securities <br>Group. She was also Head of Global <br>Technology, Operations and Product <br>Control at Credit Suisse. | **External appointments:** <br>–Independent non-executive <br>Director of Guardian Life Insurance <br>Company of America<br>–Chair of Broadridge Financial <br>Solutions, Inc<br>–Chair of Invisible Urban Charging<br>–Operating partner of Liberty City <br>Ventures |
| **Independent non-executive Director**<br>Appointed to the Board: July 2020 |  | **Career:** Eileen previously served as co-<br>CEO of Bridgewater Associates, LP. <br>Before this, she was CEO for <br>Investment Risk Management LLC, and <br>President and co-CEO of Duff Capital <br>Advisors. She also served as Chair of <br>the Financial Industry Regulatory <br>Authority. Eileen started her career at <br>Morgan Stanley, where she held <br>positions including Controller, Treasurer, <br>and Global Head of Technology and <br>Operations, as well as Chief Operating <br>Officer for its Institutional Securities <br>Group. She was also Head of Global <br>Technology, Operations and Product <br>Control at Credit Suisse. | **External appointments:** <br>–Independent non-executive <br>Director of Guardian Life Insurance <br>Company of America<br>–Chair of Broadridge Financial <br>Solutions, Inc<br>–Chair of Invisible Urban Charging<br>–Operating partner of Liberty City <br>Ventures |

---

---

| | | | |
|:---|:---|:---|:---|
| Swee Lian Teo (66) ![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) | Swee Lian Teo (66) ![Governance icons-02.jpg](hsbc-20251231_g82.jpg)<br>![Governance icons-11.jpg](hsbc-20251231_g83.jpg)<br>![Governance icons-07.jpg](hsbc-20251231_g90.jpg) |  |  |
| ![Swee Lian Teo .jpg](hsbc-20251231_g104.jpg) | **Skills and experience:** Swee Lian <br>brings extensive experience within <br>the international financial services <br>industry, having previously spent over <br>27 years with the Monetary Authority <br>of Singapore ('MAS').<br>| **Career:** During Swee Lian's time at the <br>MAS, she worked in foreign reserves <br>management, financial sector <br>development, strategic planning and <br>financial supervision, before she <br>became the Deputy Managing Director <br>for Financial Supervision. She retired <br>from the MAS in 2015 after serving as <br>Special Advisor, focused on MAS's role <br>in the international regulatory <br>framework, in the Managing Director's <br>office. Swee Lian previously served as a <br>non-executive Director on the boards of <br>AIA Group Limited, Singapore <br>Telecommunications Limited and the <br>Dubai Financial Services Authority. | **External appointments:** <br>–Chair of CapitaLand Integrated <br>Commercial Trust Management <br>Limited<br>–Director of Clifford Capital Pte Ltd<br>–Chair of Singapore Post Limited |
| ![Swee Lian Teo .jpg](hsbc-20251231_g104.jpg) |  | **Career:** During Swee Lian's time at the <br>MAS, she worked in foreign reserves <br>management, financial sector <br>development, strategic planning and <br>financial supervision, before she <br>became the Deputy Managing Director <br>for Financial Supervision. She retired <br>from the MAS in 2015 after serving as <br>Special Advisor, focused on MAS's role <br>in the international regulatory <br>framework, in the Managing Director's <br>office. Swee Lian previously served as a <br>non-executive Director on the boards of <br>AIA Group Limited, Singapore <br>Telecommunications Limited and the <br>Dubai Financial Services Authority. | **External appointments:** <br>–Chair of CapitaLand Integrated <br>Commercial Trust Management <br>Limited<br>–Director of Clifford Capital Pte Ltd<br>–Chair of Singapore Post Limited |
|  |  | **Career:** During Swee Lian's time at the <br>MAS, she worked in foreign reserves <br>management, financial sector <br>development, strategic planning and <br>financial supervision, before she <br>became the Deputy Managing Director <br>for Financial Supervision. She retired <br>from the MAS in 2015 after serving as <br>Special Advisor, focused on MAS's role <br>in the international regulatory <br>framework, in the Managing Director's <br>office. Swee Lian previously served as a <br>non-executive Director on the boards of <br>AIA Group Limited, Singapore <br>Telecommunications Limited and the <br>Dubai Financial Services Authority. | **External appointments:** <br>–Chair of CapitaLand Integrated <br>Commercial Trust Management <br>Limited<br>–Director of Clifford Capital Pte Ltd<br>–Chair of Singapore Post Limited |
| **Independent non-executive Director**<br>Appointed to the Board: October 2023 |  | **Career:** During Swee Lian's time at the <br>MAS, she worked in foreign reserves <br>management, financial sector <br>development, strategic planning and <br>financial supervision, before she <br>became the Deputy Managing Director <br>for Financial Supervision. She retired <br>from the MAS in 2015 after serving as <br>Special Advisor, focused on MAS's role <br>in the international regulatory <br>framework, in the Managing Director's <br>office. Swee Lian previously served as a <br>non-executive Director on the boards of <br>AIA Group Limited, Singapore <br>Telecommunications Limited and the <br>Dubai Financial Services Authority. | **External appointments:** <br>–Chair of CapitaLand Integrated <br>Commercial Trust Management <br>Limited<br>–Director of Clifford Capital Pte Ltd<br>–Chair of Singapore Post Limited |

---

---

| | | |
|:---|:---|:---|
| Angela McEntee (49)  | Angela McEntee (49)  |  |
| ![1.5.7.3.1 RT_Angela_McEntee 2025_sRGB_FLAT.jpg](hsbc-20251231_g105.jpg) | **Skills and experience:** Angela is a <br>qualified solicitor with extensive legal, <br>regulatory, risk, and corporate <br>governance experience. She has <br>significant expertise in the UK and <br>Hong Kong Corporate Governance <br>Codes and Listing Rules having <br>worked with the Holdings Board and <br>Management Committees since <br>joining HSBC.<br>| **Career:** Prior to joining HSBC in 2020, <br>Angela held senior roles in the <br>Governance function at NatWest Group <br>plc including legal, governance, <br>regulatory affairs and compliance, latterly <br>providing support to the Board Risk and <br>Audit Committees, together with <br>oversight for regulatory engagement <br>and advice on individual accountabilities.  |
|  |  | **Career:** Prior to joining HSBC in 2020, <br>Angela held senior roles in the <br>Governance function at NatWest Group <br>plc including legal, governance, <br>regulatory affairs and compliance, latterly <br>providing support to the Board Risk and <br>Audit Committees, together with <br>oversight for regulatory engagement <br>and advice on individual accountabilities.  |
| **Group Company Secretary**<br>Appointed: January 2026 |  | **Career:** Prior to joining HSBC in 2020, <br>Angela held senior roles in the <br>Governance function at NatWest Group <br>plc including legal, governance, <br>regulatory affairs and compliance, latterly <br>providing support to the Board Risk and <br>Audit Committees, together with <br>oversight for regulatory engagement <br>and advice on individual accountabilities.  |

---

**Former Directors who served during the year**

Sir Mark Tucker retired from the Board on 30 September 2025

🡠For full biographical details of our Board members, see www.hsbc.com/who-we-are/our-people/board-of-directors.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **224** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | The Board |  |  |

---

Senior management

Senior management, which includes the Group Operating Committee, supports the Group CEO in the day-to-day management of the business and

the implementation of strategy.

![Richard Blackburn.jpg](hsbc-20251231_g106.jpg)

**Richard Blackburn (60)** 

**Group Chief Risk and Compliance** 

**Officer** 

Richard was appointed Group Chief Risk

and Compliance Officer in April 2025,

having held the role in an interim

capacity since January 2025. With 36

years in financial services and over 20

years at HSBC, he has held several

senior positions including Regional Chief

Risk Officer for Europe and MENAT,

Chief Risk & Compliance Officer for

Global Banking and Markets, and Chief

Risk & Compliance Officer for Global

Commercial Banking.

![SM_BarryOByrne.jpg](hsbc-20251231_g107.jpg)

**Barry O'Byrne (50)** 

**Chief Executive Officer, International** 

**Wealth & Premier Banking**

Barry was appointed CEO of

International Wealth and Premier

Banking in October 2024. He joined

HSBC in 2017 as Chief Operating

Officer for Global Commercial Banking

and became CEO of the business in

2019. Before HSBC, Barry spent 19

years at GE Capital where he held

various senior leadership roles,

including CEO and Chief Operating

Officer for GE Capital International.

![SM_Bob Hoyt.jpg](hsbc-20251231_g108.jpg)

**Bob Hoyt (61)** 

**Group Chief Legal Officer** 

Bob joined HSBC as Group Chief Legal

Officer in January 2021. He leads

HSBC's global legal function, advising

the Board, Chief Executive and senior

management on legal and regulatory

matters. Bob previously held positions

in the US government as General

Counsel of the US Department of the

Treasury, and Associate Counsel to the

President.

![SM_Russel Jackson.jpg](hsbc-20251231_g109.jpg)

**Russell Jackson (42)** 

**Group Head of Internal Audit** 

Russell Jackson was appointed Group

Head of Internal Audit in June 2025. He

is a standing attendee of the Group

Operating Committee. He joined HSBC

in 2023 as Group Head of Enterprise

Risk. Prior to joining HSBC, he served

as CEO of Fnality Services. He has also

previously held a range of risk and

regulatory roles at the Bank of England

and Prudential Regulation Authority.

![1.4.9.1 RT_David Liao_Adobe .jpg](hsbc-20251231_g110.jpg)

**David Liao (53)** 

**Co-Chief Executive, Asia and** 

**Middle East**

David was appointed Co-Chief

Executive of the Asia-Pacific region in

2021, with his role expanding to cover

the Middle East in January 2025. Since

joining HSBC in 1997, he has held

many senior roles and now serves as

Chair of HSBC Bank (China) Company

Limited, and as a Director of Bank of

Communications Co., Limited and

Hang Seng Bank Limited.

![1.5.7.3.3 RT_David_Lindberg 2025_sRGB_FLAT.jpg](hsbc-20251231_g111.jpg)

**David Lindberg (50)** 

**Chief Executive Officer, HSBC UK** 

**Bank plc** 

David was appointed CEO of HSBC UK

Bank plc in December 2025. With 27

years' international banking experience, he

has led businesses in the UK, America and

Australia, focusing on retail, commercial

banking, and digital transformation. He

previously served as CEO of Retail Banking

at NatWest, CEO of Commercial and

Business Banking for Westpac Group,

CEO of Consumer Banking for Westpac

Group and other senior roles at CBA, ANZ

and First Manhattan.

![Stuart Riley.jpg](hsbc-20251231_g112.jpg)

**Stuart Riley (51)** 

**Group Chief Information Officer**

Stuart was appointed Group Chief

Information Officer in February 2024.

He is responsible for leading the bank's

technology strategy, enabling the

delivery of an efficient, resilient,

and innovative digital bank. Prior

to joining HSBC, he was Co-Chief

Information Officer of Citi and

previously held senior technology

roles at Deutsche Bank.

![SM_michael-roberts.jpg](hsbc-20251231_g113.jpg)

**Michael Roberts (65)** 

**Chief Executive Officer, HSBC** 

**Bank plc, and Corporate and** 

**Institutional Banking** 

Michael was appointed CEO of

Corporate and Institutional Banking and

Western Markets in January 2025, also

serving as CEO of HSBC Bank plc. He

previously led HSBC US and Americas

until December 2024. Before joining

HSBC in 2019, Michael spent over 30

years at Citigroup, holding senior roles

such as Global Head of Corporate

Banking and Capital Management.

![1.4.9.2 RT_Surendra Rosha_Adobe RGB.jpg](hsbc-20251231_g114.jpg)

**Surendra Rosha (57)** 

**Co-Chief Executive, Asia and** 

**Middle East**

Surendra was appointed Co-Chief

Executive of the Asia-Pacific region in

2021, with his role expanding to the

Middle East in January 2025. He is a

Director of The Hongkong and

Shanghai Banking Corporation Limited

and Saudi Awwal Bank. Since joining

HSBC in 1991, he has held senior

positions including Head of Institutional

Sales, Asia-Pacific and Chief Executive

for HSBC India.

![SM_Aileen Taylor.jpg](hsbc-20251231_g115.jpg)

**Aileen Taylor (53)** 

**Group Chief People & Governance** 

**Officer**

Aileen was appointed Group Chief

People & Governance Officer in

October 2024. Aileen joined HSBC in

2019 as Group Company Secretary and

Chief Governance Officer and became

Group Chief People & Governance

Officer in 2024. Prior to joining HSBC,

she spent 19 years at the Royal Bank

of Scotland Group, holding various

legal, risk and compliance roles.

![1.4.9.3 RT_Suzy White_v2_Adobe RGB.jpg](hsbc-20251231_g116.jpg)

**Suzy White (49)** 

**Group Chief Operating Officer**

Suzy was appointed Group COO in

October 2024. With over 25 years at

HSBC, she has held numerous senior

roles including COO for Global Banking

and Markets, Regional COO for Global

Markets (Americas) and Chief Risk

Officer for Global Banking and Markets

and Commercial Banking in the US.

She is a Director of HSBC Bank

(Singapore) Limited.

**Other Senior Management**<br>**who served during**<br>**the year:** <br>–Jonathan Calvert Davies, <br>former Group Head of Internal <br>Audit and standing attendee of <br>the Group Operating <br>Committee, stepped down on <br>2 June 2025.<br>–John David (Ian) Stuart, former <br>Chief Executive Officer, HSBC <br>UK Bank plc stepped down as a <br>Group Operating Committee <br>member on 7 December 2025. <br>He assumed the role of Group <br>Customer and Culture Director <br>on 8 December and is a standing <br>attendee of the Group Operating <br>Committee.<br>

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **225** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Board and senior management diversity

We value difference

We believe that a diverse and inclusive Board, reflective of the communities we serve, is a

critical component of effective decision-making and of developing a sustainable and

successful business for HSBC.

Gender and ethnic representation

As at 31 December 2025, the Board met the targets set out within the

UK Listing Rule 6.6.6 (9) and FTSE Women Leaders Review. Female

representation on the Board was 62% and two women held senior

Board positions. The Board had six Directors who identified as being

from an ethnic minority background. Following Wei Sun Christianson's

appointment on 1 January 2026, female representation increased to

64% and the number of Directors from ethnic minority backgrounds

increased to seven.

The tables below outline the current gender and ethnic representation

of the HSBC Holdings Board and executive management reflecting

data gathered through self-identification as at 31 December 2025 in

accordance with the requirements of UK Listing Rule 6.6.6 (10).

Gender identity

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Board members** | **Board members** |  | **Executive** <br>**management**<sup>2</sup> | **Executive** <br>**management**<sup>2</sup> |
|  | **Number** | **%** | **Number of** <br>**senior** <br>**positions**<sup>1</sup><br>| **Number** | **%** |
| Men | **5** | **38** | **2** | **10** | **77** |
| Women | **8** | **62** | **2** | **3** | **23** |
| Other | **—** | **—** | **—** | **—** | **—** |
| Not specified/prefer <br>not to say<br>| **—** | **—** | **—** | **—** | **—** |

---

Ethnic background

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Board members** | **Board members** |  | **Executive** <br>**management**<sup>2</sup> | **Executive** <br>**management**<sup>2</sup> |
|  | **Number** | **%** | **Number of** <br>**senior** <br>**positions**<sup>1</sup><br>| **Number** | **%** |
| White British or other <br>White (including <br>minority-White groups)<br>| **7** | **54** | **2** | **9** | **69** |
| Mixed/multiple ethnic <br>groups<br>| **—** | **—** | **—** | **—** | **—** |
| Asian/Asian British | **4** | **31** | **1** | **3** | **23** |
| Black/African/<br>Caribbean/Black British<br>| **—** | **—** | **—** | **—** | **—** |
| Other ethnic groups | **2** | **15** | **1** | **1** | **8** |
| Not specified/prefer <br>not to say<br>| **—** | **—** | **—** | **—** | **—** |

---

1Senior positions on the Board comprise the Group Chairman, Group CEO,

Group CFO and Senior Independent Director.

2Executive management comprises the Group Operating Committee

members and the Group Head of Internal Audit.

Skills and experience

As it is essential to the effective governance of the Group, and the

Board's oversight and challenge of management, the Board ensures

that collectively and individually, the Board possess the necessary

skills, knowledge, expertise and experience.

The summary provides an overview of the skills and experiences held

by the non-executive Directors on the Board. This is based on the

current skills matrix, which is reviewed annually by the Nomination &

Corporate Governance Committee to ensure that the Board has the

skills and experience required to effectively discharge its duties and to

support succession planning discussions. The skills and experiences of

the newly appointed non-executive Director are also included in the

summary.

---

| |
|:---|
| 11 |
| 8 |
| 9 |
| 7 |
| 4 |
| 5 |
| 6 |
| 3 |
| 9 |

---

![72567767435969](hsbc-20251231_g117.gif)

Banking

Finance

Risk

Customer

Digital technology

Sustainability

Direct Asia market experience

Direct UK market experience

Global business experience

1. ---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **226** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

How we are governed

We are committed to high standards of corporate governance. The Group has in place a comprehensive range of policies and procedures to help

ensure that its end-to-end governance is well managed, with appropriate and effective oversight and controls.

---

| | |
|:---|:---|
| **Board of Directors**<br>A schedule of matters <br>reserved for the Board is <br>set out within its terms of <br>reference, which are <br>available at <br>www.hsbc.com/who-we-<br>are/our-people/board-of-<br>directors/board-<br>responsibilities. <br>| The Board has overall, collective responsibility for the long-term success of the Group and delivery of sustainable value to <br>shareholders. Led by the Group Chairman, the Board is responsible for, among other matters:<br>–approving the Group's strategy and objectives, and monitoring the alignment of the Group's purpose, strategy and values with the <br>desired culture and standards; <br>–setting the Group's risk appetite and monitoring the Group's risk profile; <br>–approving and monitoring capital and financial resource plans for achieving strategic objectives, including material transactions;<br>–considering and approving the Group's technology and environmental, social and governance strategies; <br>–reviewing the effectiveness of stakeholder engagement mechanisms, including engagement with the workforce; <br>–approving appointments to the Board and Board roles, and the remuneration of independent non-executive Directors; <br>–reviewing and approving changes to the Group's overall corporate governance arrangements; and <br>–providing entrepreneurial leadership of the Group within a framework of prudent and effective controls, which enable risks to be <br>assessed and managed.<br>|

---

The Board delegates oversight of certain matters to its committees, which are each chaired by a non-executive Director. Board committees provide

regular reports on their activities and make recommendations to the Board. Only the Group Chairman and non-executive Directors are members of

Board committees. Details of committee memberships are in the Directors' biographies in 'The Board' section on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u>. Terms of

reference of the Board committees are available at www.hsbc.com/who-we-are/our-people/board-of-directors/board-committees.

---

| | | |
|:---|:---|:---|
| **Chairman's Committee** | An ad hoc committee which provides Board members with the opportunity to consider time-critical matters between scheduled Board <br>meetings.  | An ad hoc committee which provides Board members with the opportunity to consider time-critical matters between scheduled Board <br>meetings.  |
| **Group Audit Committee** <br>**('GAC')**<br>| Oversees matters relating to the Group's internal controls, financial resourcing and reporting, internal and external audit, and <br>whistleblowing arrangements. For more information, see the Committee's report from page <u>[236](#id42dbec1de4a4a5390289335f1b45526_52)</u>.  | Oversees matters relating to the Group's internal controls, financial resourcing and reporting, internal and external audit, and <br>whistleblowing arrangements. For more information, see the Committee's report from page <u>[236](#id42dbec1de4a4a5390289335f1b45526_52)</u>.  |
| **Nomination & Corporate** <br>**Governance Committee**<br>| Oversees Board and senior management succession planning and monitors the corporate governance framework of the Group. For <br>more information, see the Committee's report from page <u>[233](#id42dbec1de4a4a5390289335f1b45526_43)</u>. | Oversees Board and senior management succession planning and monitors the corporate governance framework of the Group. For <br>more information, see the Committee's report from page <u>[233](#id42dbec1de4a4a5390289335f1b45526_43)</u>. |
| **Group Remuneration** <br>**Committee**<br>| Responsible for reviewing and making recommendations to the Board, for approval by shareholders, on the Group remuneration policy <br>and approving the remuneration of the executive Directors and other senior employees. For more information, see the committee's <br>report from page <u>[249](#id42dbec1de4a4a5390289335f1b45526_94)</u>. | Responsible for reviewing and making recommendations to the Board, for approval by shareholders, on the Group remuneration policy <br>and approving the remuneration of the executive Directors and other senior employees. For more information, see the committee's <br>report from page <u>[249](#id42dbec1de4a4a5390289335f1b45526_94)</u>. |
| **Group Risk Committee** <br>**('GRC')**<br>| Oversees and advises the Board on all risk-related matters, including financial and non-financial risks. For more information, see the <br>Committee's report from page <u>[242](#id42dbec1de4a4a5390289335f1b45526_73)</u>.  | Oversees and advises the Board on all risk-related matters, including financial and non-financial risks. For more information, see the <br>Committee's report from page <u>[242](#id42dbec1de4a4a5390289335f1b45526_73)</u>.  |
| **Group Technology &**<br>**Operations Committee** <br>**('GTO')**<br>| Oversees HSBC's technology and operations strategies and monitors alignment with overall Group strategy. For more information, see <br>the Committee's report from page <u>[246](#id42dbec1de4a4a5390289335f1b45526_6545)</u>.  | Oversees HSBC's technology and operations strategies and monitors alignment with overall Group strategy. For more information, see <br>the Committee's report from page <u>[246](#id42dbec1de4a4a5390289335f1b45526_6545)</u>.  |
| **Other Governance** <br>**Forums**<br>| **Board Oversight Sub-Group:** an informal mechanism whereby a <br>smaller group of Board members and management may meet on <br>an ad hoc basis to discuss emerging issues and upcoming Board <br>matters. This Sub-Group is chaired by the Group Chairman. <br>| **Board Sustainability Working Group ('SWG'):** supports the <br>delivery of the sustainability strategy and provides oversight and <br>guidance in relation to the Group's sustainability activities. The <br>SWG is comprised of four non-executive Directors. Further <br>information about SWG activities is on page 57.<br>|

---

The Board delegates day-to-day management of the business and delivery of strategy to the Group CEO. During the year, the Group CEO was

supported in these responsibilities by the Group Operating Committee ('Group OpCo').

---

| | |
|:---|:---|
| **Group Operating** <br>**Committee (Group** <br>**OpCo)**<br>| Supports the Group CEO in the day-to-day management of the Group. Comprised of 12 members of senior management including <br>infrastructure heads and the CEOs of each of our four business areas. The Group OpCo members are set out on page <u>[224](#id42dbec1de4a4a5390289335f1b45526_16)</u>. The Group <br>OpCo operates under written terms of reference and its members report to the Board on matters as appropriate. |

---

A number of committees support the Group OpCo by providing specialist oversight and guidance of the matters delegated to them. Such

matters include restructuring and investment considerations, risk management and controls, financial reporting and disclosures.

---

| | | | |
|:---|:---|:---|:---|
| **Group Finance Management** <br>**Meeting**<br>| **Group Risk Management** <br>**Meeting**<br>| **Group Disclosure Committee** | **Acquisitions and Disposals** <br>**Committee**<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **227** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

Board roles and responsibilities

The roles of Group Chairman and Group CEO are held by two different individuals. There is a clear division of responsibilities between the

leadership of the Board by the Group Chairman, and the executive responsibility for day-to-day business management undertaken by the Group

CEO. A summary of director roles and their responsibilities is set out below. Full details are available at https://www.hsbc.com/who-we-are/our-

people/board-of-directors/board-responsibilities.

---

| | |
|:---|:---|
| **Roles** | **Responsibilities** |
| **Group Chairman** | –Provides effective leadership of the Board and promotes the highest standards of corporate governance practices.<br>–Leads the Board in providing strong strategic oversight and setting the Board's agenda, culture and values.<br>–Leads the Board in challenging management's thinking and proposals, and fosters open and constructive debate among Directors.<br>–Maintains internal and external relationships with key stakeholders, and communicates investors' views to the Board.<br>–Organises periodic monitoring and evaluation, including externally facilitated evaluation, of the performance of the Board, its <br>committees and individual Directors.<br>–Leads on succession planning for the Board and its committees, ensuring appointments reflect diverse cultures, skills and <br>experiences.<br>|
| **Group CEO** | –Leads and directs the fulfilment of the Group's purpose and strategy, in alignment with the desired culture and values as set by <br>the Board.<br>–Leads the Group Operating Committee with responsibility for the day-to-day leadership and management of the Group, in <br>accordance with the authority delegated to him by the Board.<br>–Maintains effective relationships with key internal and external stakeholders including the Group Chairman, the Board, customers, <br>regulators, governments and investors.<br>–Maintains accountability for the Group's compliance with applicable laws, codes, rules and regulations, good market practice and <br>HSBC's own standards, value and policies.<br>|
| **Group CFO** | –Supports the Group CEO in developing and implementing the Group strategy, and recommends the annual budget and long-term <br>strategic and financial resource plan.<br>–Leads the Finance function and is responsible for effective financial and regulatory reporting, including the effectiveness of the <br>processes and controls, to ensure the financial control framework is robust and fit for purpose.<br>–Maintains relationships with key stakeholders including shareholders.<br>|
| **Senior Independent** <br>**Director** <br>| –Supports the Group Chairman, acting as intermediary for non-executive Directors when necessary.<br>–Leads the non-executive Directors in the oversight of the Group Chairman, supporting the clear division of responsibility between <br>the Group Chairman and the Group CEO.<br>–Listens to shareholders' views if they have concerns that cannot be resolved through the normal channels.<br>|
| **Non-executive Directors** | –Provide input on the development of Group strategy.<br>–Challenge and oversee the performance of management in achieving agreed corporate goals and objectives.<br>–Contribute to the assessment and monitoring of culture.<br>–Maintain internal and external relationships with the Group's key stakeholders.<br>|
| **Group Company** <br>**Secretary**<br>| –Maintains strong and consistent governance practices at Board level and throughout the Group.<br>–Supports the Group Chairman in ensuring effective functioning of the Board and its committees and engagement between senior <br>management and non-executive Directors.<br>–Facilitates induction and professional development of non-executive Directors.<br>–Advises and supports the Board and management in ensuring effective end-to-end governance and decision making across the <br>Group.<br>|

---

Operation of the Board

The Board is ordinarily scheduled to meet at least seven times a year.

In 2025, the Board held eight scheduled meetings, supplemented by

two ad hoc meetings. The Board agendas are set by the Group

Chairman, supported by the Group CEO and the Group Company

Secretary.

The Board approved the appointment of Angela McEntee as Group

Company Secretary, with effect from 1 January 2026. Angela is a

qualified solicitor with significant legal, regulatory, risk and corporate

governance experience (for further details, read Angela's biography on

page <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u>). Aileen Taylor, formerly the duly appointed Group Company

Secretary, remains in her role as Group Chief People & Governance

Officer.

The Group Chief People & Governance Officer, Group Chief Risk and

Compliance Officer and the Group Chief Legal Officer were regular

attendees at Board meetings during the year. Other members of senior

management were invited to attend to present specific matters. The

CEOs of our four business areas attended Board strategy sessions.

External presenters, including representatives from regulators, were

invited to attend meetings to provide specialist input and context.

Governance practices are in place to enable Board and Board

committee meetings to operate effectively. Papers presented are

expected to follow a template to ensure that Directors have the

appropriate information to take informed decisions. Each template

requires authors to describe any steps taken to engage with relevant

stakeholders and explain the extent to which stakeholders are, or will

be, impacted by the matter under consideration, and how this has

influenced any recommendations to the Board or committee. The

Board receives regular reports from committee Chairs on key matters

and discussions from committee meetings. The Group Chairman

meets with the non-executive Directors without the executive

Directors in attendance after Board meetings and otherwise, as

necessary.

All Directors are encouraged to have contact with management at all

levels and have full access to management information as needed.

Visits to local businesses are arranged for the Directors when they

attend Board meetings in different locations, and when travelling for

other reasons. Members of senior management often attend Directors'

engagements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **228** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

Meeting attendance

Meeting attendance by Board and Board committee members in 2025 is shown below. Attendance is shown as the number of meetings attended

out of the total number of meetings each person was eligible to attend during the year.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Board of** <br>**Directors**<sup>1</sup><br>| **Group Audit** <br>**Committee**<br>| **Nomination &** <br>**Corporate** <br>**Governance** <br>**Committee**<br>| **Group** <br>**Remuneration** <br>**Committee**<br>| **Group Risk** <br>**Committee**<br>| **Group** <br>**Technology &** <br>**Operations** <br>**Committee**<br>| **General** <br>**Meetings**<sup>2</sup><br>|
| **Group Chairman** |  |  |  |  |  |  |  |
| Sir Mark Tucker<sup>3</sup> | 7/7 |  | 6/6 |  |  |  | 1/1 |
| Brendan Nelson<sup>3</sup> | 10/10 | 9/9 | 8/8 |  | 8/8 | 6/6 | 1/1 |
| **Executive Directors** |  |  |  |  |  |  |  |
| Georges Elhedery | 10/10 |  |  |  |  |  | 1/1 |
| Pam Kaur | 10/10 |  |  |  |  |  | 1/1 |
| **Non-Executive Directors** |  |  |  |  |  |  |  |
| Geraldine Buckingham<sup>4,5</sup> | 9/10 | 8/9 | 8/8 | 1/1 |  |  | 1/1 |
| Rachel Duan<sup>4</sup> | 10/10 | 8/9 | 8/8 | 6/6 |  |  | 1/1 |
| Dame Carolyn Fairbairn<sup>4</sup> | 10/10 |  | 8/8 | 6/6 | 7/8 |  | 1/1 |
| James Forese | 10/10 | 9/9 | 8/8 |  | 8/8 |  | 1/1 |
| Ann Godbehere | 10/10 | 9/9 | 8/8 | 6/6 |  |  | 1/1 |
| Steven Guggenheimer<sup>2,4</sup> | 10/10 |  | 7/8 |  | 8/8 | 5/6 | 0/1 |
| José Antonio Meade Kuribreña | 10/10 | 9/9 | 8/8 | 6/6 |  |  | 1/1 |
| Kalpana Morparia | 10/10 |  | 8/8 | 6/6 |  | 6/6 | 1/1 |
| Eileen Murray | 10/10 |  | 8/8 | 6/6 | 8/8 | 6/6 | 1/1 |
| Swee Lian Teo | 10/10 |  | 8/8 |  | 8/8 | 6/6 | 1/1 |

---

1 The total number of Board of Directors meetings comprises eight scheduled meetings and two ad hoc meetings.

2 Comprised of the AGM held on 2 May 2025. Steven Guggenheimer was unable to attend the AGM due to personal circumstances.

3 Sir Mark Tucker retired from the Board with effect from 30 September 2025. Brendan Nelson was appointed Group Chairman on an interim basis with effect

from 1 October 2025 and assumed the role on a permanent basis on 3 December 2025. Brendan Nelson attended seven Board meetings as an independent non-

executive Director and three Board meetings as Group Chairman.

4 Due to prior commitments, Geraldine Buckingham was unable to attend the Board meeting in March and the Group Audit Committee meeting in October, Dame

Carolyn Fairbairn was unable to attend the Group Risk Committee meeting in June, Steven Guggenheimer was unable to attend the Nomination & Corporate

Governance Committee and Group Technology and Operations Committee meetings in July, and Rachel Duan was unable to attend the Group Audit Committee

Meeting in September.

5 Geraldine Buckingham stepped down from the Remuneration Committee with effect from 31 January 2025.

Matters considered by the Board in 2025

---

| | |
|:---|:---|
| **Activities and areas of focus** | **Activities and areas of focus** |
| **Group strategy and** <br>**business performance**<br>| –Agreed and monitored performance towards delivery of Group strategic priorities and reviewed and approved home market and <br>global business strategies.<br>–Provided strategic input to the Group's refreshed ambition and oversaw operational and governance progress towards creating <br>a more simple, agile and customer-centric organisation, including implementation of the new organisational design, our new <br>Leadership Principles and Group-wide leadership framework, How We Lead.<br>–Reviewed strategic growth opportunities, including detailed consideration of the proposal to privatise Hang Seng Bank Limited.<br>–Oversaw strategic disposals and targeted business reviews to support long-term, sustainable growth by focusing on areas of <br>competitive strengths.<br>–Monitored the continued development of the Group's environmental, social and governance strategies, including oversight and <br>approval of the Net Zero Transition Plan 2025, with the support of the Board Sustainability Working Group. ESG matters formed <br>a regular part of Board discussions during the year with formal updates provided at six scheduled Board meetings. <br>|
| **Financials** | –Reviewed and approved key disclosures, including the Annual Report and Accounts 2024, Interim Report 2025 and quarterly <br>earnings releases.<br>–Reviewed and approved distributions, including dividend payments and share buy-backs.<br>–Approved renewal of the various debt issuance programmes.<br>–Reviewed and approved the Financial Resource Plan; oversaw resource allocation and investment decisions. <br>–Provided oversight of key accounting judgements, monitored ECLs and the impact of strategic transactions and significant <br>litigation from an accounting perspective.<br>|
| **Risk, Regulatory and Legal** | – Reviewed and approved frameworks, control documents, core processes and legal and regulatory responsibilities including:<br>–the Group's risk appetite statement;<br>–Individual Liquidity and Capital Adequacy Assessment Processes, Internal Climate Scenario Analysis, Group Internal Stress <br>Test, Bank Capital Stress Test and other stress testing; <br>–the Group's Human Rights and Modern Slavery Statement;<br>–consideration of updates in relation to the Group's recovery and resolution capabilities and related documentation, <br>including testing;<br>–the PRA Operational Resilience self-assessment;<br>–risk data aggregation and risk reporting framework aligned to the Basel Committee on Banking Supervision 239 Principles; <br>–the efficacy of Model Risk Management ('MRM') activities within HSBC;<br>–supervisory requirements, which included preparations in anticipation of new reporting requirements in respect of material <br>controls, under the UK and Hong Kong Corporate Governance Codes that take effect for the company's financial year <br>starting on 1 January 2026, and listing authority renewals;<br>–reviewed the legal implications of strategic transactions, and the impact of significant litigation faced by the Group; and<br>–PRA attendance at meetings and other engagements, including continued regular engagement in relation to leadership and <br>organisational changes.<br>|
| **Technology** | –Oversaw continued strategic alignment of the Group's technology infrastructure, and the programme to simplify and enhance <br>system resilience, and accelerate digital transformation across the bank.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **229** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

---

| | |
|:---|:---|
| **Activities and areas of focus**  | **Activities and areas of focus**  |
| **People & Culture** | –Oversaw the Group's refreshed ambition to become the most trusted bank globally, putting customers at the heart of <br>everything we do, and the development of our six new Leadership Principles and the How We Lead framework.<br>–Received results of the employee Snapshot survey and employee Pulse surveys.<br>–Participated in deep-dive sessions on people matters including on the future state of the workforce.<br>–Participated in various workforce engagement activities and updates.<br>|
| **External** | –External insights gained through presentations and talks by external parties, for example government officials and regulators. |
| **Governance** | –Oversaw development of our refreshed governance framework and operating rhythm. <br>–Approved the appointments of a new Group Chairman, independent non-executive Director and Group Company Secretary.<br>–Reviewed and approved Group policies, terms of reference and delegations of authority.<br>–Undertook an internal Board and committee performance effectiveness review.<br>–Participated in stakeholder engagement activities.<br>–Made recommendations to shareholders for approval at the 2025 AGM.<br>–Continued oversight of Director independence, external appointments and conflicts of interest.<br>|

---

Cultural oversight

The Board has responsibility for ensuring that HSBC's culture is aligned

with the Group's purpose, values and strategy, and for assessing and

monitoring how the desired culture has been embedded and is being

sustained. Our culture is an enabler of our ambition and strategy, and

we are committed to a high performance culture, where talented

people can thrive, raising the standards of what we do every day for the

benefit of our customers, colleagues, shareholders and communities.

During 2025, the Board oversaw the development and implementation

of our new Leadership Principles and the launch of our new, Group-

wide leadership framework, How We Lead. The Leadership Principles

set out our expectations for leaders across HSBC, and How We Lead

provides the common leadership language, behaviours and tools to

enable us to deliver better outcomes for our customers, colleagues and

other stakeholders. A number of Board members supported the launch

of How We Lead at our senior leadership event in June 2025 and the

Board received regular updates on the roll out and further development

of the How We Lead framework.

A Board Culture Health Check has been developed and implemented to

support the Board in assessing how leaders across the Group are

embracing the Leadership Principles, and embedding the How We

Lead tools and language in authentic ways to improve outcomes. The

Board also received updates during the year from employee Pulse

surveys designed to gauge employee awareness, sentiment, and

understanding of organisational changes.

A management Advisory Group, led by the Group Chief People &

Governance Officer and the Group Customer and Culture Director, and

consisting of representatives from across our business areas and

functions, has been established to support and advise on the delivery

and implementation of How We Lead. Non-executive Directors attend

Advisory Group meetings on a rotating basis which provides them with

greater insight into the Group's cultural transformation and ensures

there is alignment between the Board's expectations on culture and

management's delivery and implementation.

The Group Customer and Culture Director role, reporting directly to the

Group CEO, was newly created during the year and has responsibility

for ensuring that the customer's voice is embedded at the heart of our

strategy. Working closely with the Group OpCo, the Group Customer

and Culture Director ensures that colleagues across the Group are

equipped with the right skills and tools to support our customers and

we can meet customers' needs through the development of market-

leading products and propositions.

The Group Chief People & Governance Officer provides a regular paper

to the Board covering key priorities, updates and emerging areas of

focus in people matters. Each scheduled Board meeting begins with a

'customer and culture moment', at which examples of recent

customer, employee or other stakeholder activities and interactions

which demonstrate ways of working, perspectives and other insights

into culture across the Group are presented.

The Board receives further cultural insights from the results of our all-

employee Snapshot survey and broader management reporting, which

provides key data indicators, including on peoples' behaviours,

sentiment and business outcomes.

The governance structure supporting the Board further facilitates

effective oversight of key people and culture matters. Through the

work of the Group Audit Committee, the Board monitors the nature of

risk and control culture across the Group and sees the impact of its

policies and practices and how they are embedded, through reports on

matters such as whistleblowing, code of conduct breaches and

investigations (for further information see the Group Audit Committee

Report on page <u>[236](#id42dbec1de4a4a5390289335f1b45526_52)</u>).

For information about the Board's engagement with our workforce and

other stakeholders see pages 29 and <u>[229](#id42dbec1de4a4a5390289335f1b45526_4109)</u>.

Governance framework

The governance framework and operating rhythm at HSBC has been

reviewed and reshaped during the year to support the creation of a

simpler, more dynamic organisation. By meaningfully simplifying

governance processes we aim to promote greater clarity and individual

accountability, and thereby enable more efficient decision-making. The

Group-level formal governance structure has been streamlined to

increase focus on individual accountability of decision-makers and their

delegates, and this approach has been cascaded throughout the

organisation.

In some instances, governance committees and forums have been

combined or demised to create more focused and strategic governance

pathways. The ESG Committee, Group People Committee and the

Change Prioritisation & Oversight Committee were demised. The

Holdings Asset & Liabilities Committee became a management

committee, reporting to the Group Finance Management Meeting. A

summary of the Group governance framework as at the date of this

report is set out on page <u>[226](#id42dbec1de4a4a5390289335f1b45526_22)</u>.

The Board's engagement with the

workforce

The Board acknowledges the importance of engaging with the Group's

workforce through various forums. Such interactions enable the Board

to gain insights that inform their discussions and decision making. They

also offer colleagues a platform to share ideas and feedback on matters

important to them. While all Directors are responsible for engaging with

the workforce, José Meade serves as the Board's dedicated non-

executive Director for workforce engagement. He provides oversight of

the Group's workforce engagement programme and acts as a central

point for workforce interactions. This role facilitates meaningful,

inclusive dialogues and ensures that employees' voices are considered

in Board decisions where appropriate.

---

| | |
|:---|:---|
| 97 | 20,300 |
| Virtual/physical sessions <br>attended by non-executive <br>Directors<br>| Number of employees engaged <br>physically/virtually<br>|
| 8 | 56 |
| Countries where in-person <br>engagement took place and <br>many more virtually<br>| Virtual/physical sessions <br>attended by workforce <br>engagement non-executive <br>Director<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **230** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

Workforce engagement programme and activities during 2025

The Board agreed an annual workforce engagement programme to

support the Directors' understanding of the views of the wider

workforce. This was developed with input from the dedicated non-

executive Director for workforce engagement and the Group Chief

People & Governance Officer, and was designed to provide Directors

with opportunities to engage with colleagues across the Group. In

keeping with previous years, two primary mechanisms were used for

this engagement: organising events for Board members during Board

travel or as individual Director location allowed; and offering Board

members opportunities to attend pre-existing Group employee events

scheduled during the year. Structuring the programme this way allowed

the Board to meet a diverse group of colleagues and participate in a

broad range of engagements globally. By utilising pre-existing

employee events, the Board was able to gain organic insights into

employee and management interactions. Employee engagements

were held in various formats: in-person meetings and larger-scale

events, including town halls and virtual formats.

Given the organisational changes during the year, the programme for

2025 was anchored to our Group purpose, strategy, values and

ambition which complemented the cultural transformation taking place

through the Group. Further details of the cultural transformation are set

out on page <u>[229](#id42dbec1de4a4a5390289335f1b45526_7528)</u>.

A key component of the 2024 workforce engagement programme was

visits to Global Service and Technology Centres, given the critical role

they play in supporting the wider HSBC business to deliver its strategy.

This remained a priority during 2025 and visits were scheduled to

Mexico City and Pune, and through discussions, floor walks, fireside

chats and town halls, the Board gained deeper insights into the work of

these centres.

José Meade provided regular reports to the Board on the outputs and

key themes arising from engagements, which aided Board discussions

and decision making. During the year, José Meade also attended the

Group OpCo and the Chairman's Forum to share key insights and

issues raised during employee engagements. This enabled open

dialogue with senior executives and other Group subsidiary chairs and

ensured management considered and took timely action in response to

colleague feedback. In addition, this provided the opportunity for the

executives to provide input and share feedback with José Meade to

take forward when considering future engagements.

Key themes included the impact of organisational changes, talent

development and inclusion in the workplace. These themes shaped

conversations between colleagues and Board members and have

informed planning for the 2026 workforce engagement programme,

ensuring events are targeted to reflect these key topic areas.

Each of the Board members continued to sponsor at least one of our

Global Employee Resource Groups ('ERGs'). During 2025, the Directors

met with their respective ERGs to discuss the ERGs' strategy for the

year and upcoming priorities. Directors were also invited to take part in

other ERG events where possible, and every effort was made to

facilitate local ERG members meeting their aligned Director during

planned Board travel.

Set out below is a selection of workforce engagement events that

were held in 2025, attended by José Meade and other Board members.

---

| |
|:---|
| **Strategy**  |
| –Directors met with colleagues in branch to experience how customers are <br>supported through the UK branch network. <br>–Attended a listening session with a small group of UK-based managers to <br>gain insights into experiences on performance and reward matters. <br>–Directors completed a floor walk of the Hang Seng Bank flagship branch to <br>engage with colleagues. <br>–Met with wealth management Hong Kong colleagues to gain a deeper <br>understanding of wealth management and digital capabilities in Hong Kong.<br>–Visited the Pune HSBC Technology Centre. <br>–José Meade visited the HSBC Korea office and met with colleagues to gain <br>a better understanding of the region.<br>–Directors attended various exchange sessions in London to hear the <br>employee voice on the business reorganisation and cultural transformation.<br>|
| **Inclusion** |
| –An engagement session was held with colleagues who were part of the <br>EmpowHER and Solaris networks to discuss inclusion and development. <br>–Directors attended an interactive session to trial the UK Wellbeing initiative, <br>Empathy Box, an immersive learning experience designed to help <br>colleagues better understand vulnerabilities through emotive experiences.<br>–An engagement session was held with a small group of Pride ERG <br>members during Pride Month. <br>–Attended a virtual event to celebrate 15 years of Balance ERG. <br>–José Meade engaged with US-based ERG leaders to discuss business <br>topics, employee sentiment and ERG contribution in the US. <br>|
| **Talent development**  |
| –A number of Directors attended the Senior Leaders Event in Nansha which <br>launched the How We Lead framework.<br>–An engagement session was held with HSBC India leadership.<br>–Attended exchange sessions with UK-based graduates and degree <br>apprentices to hear about their experiences with HSBC.<br>–Attended an exchange session with Hong Kong-based graduates to hear about <br>their experiences with HSBC.<br>–Met with a small group of AI Ambassadors to discuss the education <br>opportunities in technology across the business.<br>–José Meade joined a How We Lead event held in Mexico City as part of the <br>roll out of the new How We Lead framework to senior leaders. <br>|

---

---

| |
|:---|
| "Given the organisational changes during <br>the year, the programme for 2025 was <br>anchored to our Group purpose, strategy, <br>values and ambition, which <br>complemented the cultural transformation <br>taking place through the Group."<br>José Meade, Dedicated Workforce Engagement NED |
| "Given the organisational changes during <br>the year, the programme for 2025 was <br>anchored to our Group purpose, strategy, <br>values and ambition, which <br>complemented the cultural transformation <br>taking place through the Group."<br>José Meade, Dedicated Workforce Engagement NED |

---

---

| | |
|:---|:---|
| ![1.5.14.2 RT_1.5.13.2.34 Degree Apprentices.jpg](hsbc-20251231_g118.jpg) | ![1.5.14.3 RT_1.5.13.2.37 EmpowHER event.jpg](hsbc-20251231_g119.jpg) |
| **José Meade, Geraldine Buckingham and Kalpana Morparia** <br>**at an exchange session with UK-based degree apprentices** <br>**London, April 2025**<br>| **Fireside chat with Kalpana Morparia and the EmpowHER** <br>**and Solaris networks** <br>**London, April 2025**<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **231** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

Board induction and training

The Board recognises the importance of induction and training for its

Directors. To ensure Directors' contributions to the Board remain

informed and relevant, all Board members receive appropriate training,

both individually and collectively, throughout their tenure.

The Group Company Secretary works with the Group Chairman to

ensure that, on appointment, new Directors are provided with tailored

and comprehensive induction programmes appropriate to their

individual experiences and needs, including the process for managing

actual and potential conflicts of interest. Board induction programmes

are conducted through formal briefings and introductory sessions with

other Board members, senior management, legal counsel, auditors, tax

advisers and regulators, as appropriate. Topics covered in the induction

programme include but are not limited to: purpose and values; culture

and leadership; governance and stakeholder management; Directors'

legal and regulatory duties; recovery and resolution planning; anti-

money laundering and anti-bribery; technical and business briefings;

and strategy.

The induction process is often initiated before appointment to allow

each new Board member to contribute meaningfully from appointment.

The structure of the induction supports good information flows

between the Board and its committees, as well as between senior

management and non-executive Directors, providing a clear

understanding of our culture and way of operating.

As part of the transition to Group CFO, Pam Kaur completed an

induction and development plan which was overseen by the

Nomination & Corporate Governance Committee.

Prior to her appointment as a non-executive Director, Wei Sun

Christianson received relevant training and legal advice from a firm of

solicitors on 8 December 2025. Following this training, Wei Sun

Christianson confirmed her understanding of her obligations

as a director of a listed issuer pursuant to Rule 3.09D of the Hong Kong

Listing Rules. As part of her continued onboarding, Wei Sun

Christianson will be provided with a tailored induction, which takes into

account her listed directorship experience.

The approach to Director training is agreed annually by the Nomination

& Corporate Governance Committee. Training sessions are facilitated

by both internal subject matter experts and by external presenters.

During the year Board training sessions included the following key

topics; financial crime, recovery and resolution, and internal controls.

Members of Board committees receive relevant training, as

appropriate. Further details on any specific training commissioned by

Board committees can be found in the respective committee reports

from page <u>[233](#id42dbec1de4a4a5390289335f1b45526_43)</u> onward. Directors may take independent professional

advice at HSBC's expense.

Directors were issued with training modules, which mirrored the

mandatory training undertaken by employees. During 2025, this training

covered topics including risk management, operational resilience,

health and safety, well-being, cyber-security, financial crime, AI and

data protection.

During the year, non-executive Directors discussed individual

development areas with the Group Chairman as part of their

performance discussions. The Group Company Secretary makes

appropriate arrangements for any additional training needs identified

using internal resources, or otherwise, at HSBC's expense.

Board Directors who serve on principal subsidiary boards receive

training that is pertinent to circumstances and context relevant to those

boards. For further information, see 'The role of principal subsidiaries'

on page <u>[232](#id42dbec1de4a4a5390289335f1b45526_4981)</u>.

---

| | | | |
|:---|:---|:---|:---|
| Directors' induction and ongoing development in 2025 | Directors' induction and ongoing development in 2025 | Directors' induction and ongoing development in 2025 | Directors' induction and ongoing development in 2025 |
| **Director** | **Strategy and** <br>**performance**<sup>1</sup><br>| **Risk management** <br>**and**<br>**controls**<sup>2</sup><br>| **Corporate** <br>**governance, ESG** <br>**and other reporting** <br>**matters**<sup>3</sup><br>|
| Geraldine Buckingham | ◆ | ◆ | ◆ |
| Rachel Duan | ◆ | ◆ | ◆ |
| Georges Elhedery | ◆ | ◆ | ◆ |
| Dame Carolyn Fairbairn | ◆ | ◆ | ◆ |
| James Forese | ◆ | ◆ | ◆ |
| Ann Godbehere | ◆ | ◆ | ◆ |
| Steven Guggenheimer | ◆ | ◆ | ◆ |
| Pam Kaur | ◆ | ◆ | ◆ |
| José Antonio Meade Kuribreña | ◆ | ◆ | ◆ |
| Kalpana Morparia | ◆ | ◆ | ◆ |
| Eileen Murray | ◆ | ◆ | ◆ |
| Brendan Nelson | ◆ | ◆ | ◆ |
| Swee Lian Teo | ◆ | ◆ | ◆ |

---

---

| | | | |
|:---|:---|:---|:---|
| ◆ | Matter considered | ◆ | Matter not considered |

---

1Directors received weekly updates on key business updates, performance metrics, investor relations and regulatory matters. Directors also had the opportunity

to attend town halls and business function events regionally.

2 Directors received risk and control training and briefings. Examples of specific sessions held in 2025 included: 'Recovery and Resolution', 'Internal Controls' and

'Financial Crime'.

3 Directors received development updates at Board meetings on: 'Board stakeholder engagement' and ESG matters including regulatory changes. Directors

received additional training through their attendance at forums such as the Chairman's Forum, Remuneration Committee Chairs' Forum and the Global Non-

Executive Director Update.

Board and committee performance review

Performance reviews are an important part of effective governance and

support the operation of the Board and its committees.

The 2025 Board and committee performance review was facilitated

internally by the Group Chief People & Governance Officer and Group

Governance. This followed two externally facilitated reviews in 2023

and 2024.

The 2025 review, which consisted of a questionnaire, supplemented by

interviews with each Director and relevant senior management and

advisers, focused on three key themes:

–Progress against findings from the 2023 and 2024 reviews: all

actions arising from these reviews were considered to have been

effectively delivered.

–Oversight of the organisational changes: reporting to the Board was

considered to have been thorough and transparent, allowing

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **232** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | How we are governed |  |  |

---

Directors to effectively oversee and challenge management on

progress against commitments.

–Oversight of the work to implement a high performance culture and

the How We Lead framework: the Board's oversight of and

engagement with How We Lead was valued, and the introduction of

a Board culture health-check was agreed, which will support the

Board in discharging its oversight responsibilities.

The outputs from the review were presented to the Board and its

committees in December 2025. Overall, the review concluded that the

Board and its committees continued to operate effectively. The review

did not identify any material notable areas for improvement, however,

the Board have agreed to focus on three areas of potential

enhancement to help further improve effectiveness and performance:

–Board reporting: the Group Company Secretary has been tasked

with exploring the use of AI tools to help with report preparation, as

well as to enable Directors to review and analyse information within

meeting packs, to improve the consistency and impact of reports

across the Board and its committees.

–Stakeholder engagement: the Board agreed to review its approach

to stakeholder engagement, to ensure that this continues to be

valuable and to provide insights that inform oversight, challenge and

decision-making by the Board. Opportunities to further enhance the

Board's alignment and connectivity with Principal Subsidiary boards

will also be considered.

–Board and Board committee composition: the Nomination &

Corporate Governance Committee will lead a refreshment of longer-

term succession planning for key Board roles, which will consider

the technical and experiential capabilities required to ensure that the

Board and its committees continue to function effectively in both

the short and longer term.

The former Group Chairman and his interim successor met with each

Director individually during September 2025 in relation to their individual

performance and development. No performance review was conducted

for the Group Chairman owing to the retirement of Sir Mark Tucker,

and the process to identify a permanent successor for the Group

Chairman role, which was ongoing at the time of the review.

The Group Company Secretary will work with the Board and Board

committee Chairs to implement the agreed areas for enhancement

over the course of 2026.

Subsidiary governance

We are committed to maintaining high standards of corporate

governance throughout the Group. All subsidiary boards and their

respective businesses are required to have in place effective

governance arrangements which have regard to the businesses'

nature, size, location and the sectors in which they operate.

The subsidiary accountability framework

The subsidiary accountability framework aims to balance appropriate

governance oversight by the Group with each subsidiary's local legal and

regulatory requirements. The framework supports the Group in promoting

effective governance arrangements across its subsidiaries by:

–setting out high-level principles and expectations which emphasise

best practice governance;

–ensuring a consistent and proportionate approach to corporate

governance arrangements; and

–ensuring a shared and consistent understanding of the Group's

strategic objectives, culture and values.

Group subsidiary board composition is kept under review as part of

succession planning. See the Nomination & Corporate Governance

Committee report on page <u>[233](#id42dbec1de4a4a5390289335f1b45526_43)</u> for information regarding the

succession plans of principal subsidiaries.

The role of principal subsidiaries

Certain subsidiaries are designated formally by the Board as principal

subsidiaries. In addition to their obligations under their respective local

laws and regulations, principal subsidiaries, supported by regional

company secretaries, perform a critical role in ensuring effective and

high standards of governance across the Group and in overseeing the

implementation of the subsidiary accountability framework in the

regions for which they are responsible.

Representatives from principal subsidiaries attend the Board and its

committee meetings for relevant topics, including when the Board

holds meetings outside of the UK. The Chairs of principal subsidiary risk

and audit committees are invited to attend relevant Group committee

meetings. Attendance and participation at these meetings supports

subsidiary directors' understanding of the challenges facing the Group

and helps to identify common challenges and facilitate the sharing of

lessons learned.

The Group Chairman interacts regularly with the chairs of the principal

subsidiaries, including through the Chairman's Forum. The Chairman's

Forum comprises the chairs of each of the principal subsidiaries, the

Group's Senior Independent Director, the chairs of the Group's audit,

risk and remuneration committees, and where relevant, the Group

CEO, other non-executive Directors and members of executive

management, advisers and/or external experts.

In 2025, the Chairman's Forum covered topics such as strategic

planning and reporting, geopolitical issues and macroeconomic outlook,

shareholder engagements, Group-wide connectivity of non-executive

Directors, technology and innovation developments, How We Lead,

workforce engagement and financial performance. The principal

subsidiaries are:

---

| | |
|:---|:---|
| **Principal subsidiary** | **Oversight responsibility** |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| Asia-Pacific |
| HSBC Bank plc | Europe and Bermuda (excluding <br>UK ring-fenced activities)<br>|
| HSBC UK Bank plc | UK ring-fenced bank and its <br>subsidiaries<br>|
| HSBC Middle East Holdings BV | Middle East, North Africa and <br>Türkiye<br>|
| HSBC North America Holdings Inc. | US |
| HSBC Latin America Holdings (UK) Limited | Mexico and Latin America |

---

Subsidiary director development

The Group is dedicated to supporting the continuing professional

development of its subsidiary directors.

The Bank Director Programme, launched in 2022, is designed to

prepare HSBC executives and senior managers to assume roles as

internal non-executive directors on our subsidiary boards. Over 40

delegates have completed the programme and many have now served

as internal non-executive directors on Group subsidiary boards.

Our Bank Chair Programme took place in late 2024 and early 2025 with

attendees comprising subsidiary board and committee chairs from

across the Group. The programme focused on developing our 'chairs of

the future' and equipping them to lead 'best-in-class' subsidiary boards

and committees at HSBC. The programme covered a range of topics

with a future focus including regulation, subsidiary governance, culture,

customers, building a future-focused board, climate, transformation, AI

and geopolitics.

Our annual Global Non-executive Director Update is another way we

engage and connect with subsidiary directors to provide updates and

share knowledge. Over 160 attendees joined our 2025 session where

topics included strategy and performance, the external environment

and culture.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **233** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Nomination & Corporate Governance

Committee

---

| | |
|:---|:---|
| ![Brendan_Nelson_SQAURE.jpg](hsbc-20251231_g120.jpg) | "Continuing to strengthen the <br>succession plans for key roles, in line <br>with the short- and long-term needs <br>of the Board and wider Group, <br>remains a key priority for me and the <br>Committee this year."  |
| ![Brendan_Nelson_SQAURE.jpg](hsbc-20251231_g120.jpg) | **Brendan Nelson**<br>**Chair**<br>Nomination & Corporate Governance <br>Committee |
| For Board committee membership, see Board biographies on <br>pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <br><u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. | For Board committee membership, see Board biographies on <br>pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <br><u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. |
| **Key responsibilities** |  |
| The Committee's key responsibilities include:<br>–overseeing succession planning and leading the process for <br>identifying and nominating candidates for appointment to the <br>Board and its committees; <br>–overseeing succession planning and development of senior <br>leadership;<br>–overseeing and monitoring the corporate governance <br>framework of the Company and its subsidiaries; and <br>–ensuring that the corporate governance framework is consistent <br>with relevant standards and best practices. | The Committee's key responsibilities include:<br>–overseeing succession planning and leading the process for <br>identifying and nominating candidates for appointment to the <br>Board and its committees; <br>–overseeing succession planning and development of senior <br>leadership;<br>–overseeing and monitoring the corporate governance <br>framework of the Company and its subsidiaries; and <br>–ensuring that the corporate governance framework is consistent <br>with relevant standards and best practices. |

---

I am pleased to present the Nomination & Corporate Governance

Committee report, my first since succeeding Sir Mark Tucker as Group

Chairman.

The Committee's immediate priority is to identify successors for Ann

Godbehere as Senior Independent Director, as well as my successor as

Chair of the Group Audit Committee.

As previously announced, following the successful completion of the

Group Chairman succession process, Ann Godbehere, who led the

process as Senior Independent Director, informed the Board of her

decision to step down from the Board at the conclusion of our 2026

AGM. Ann leaves with our very best wishes and thanks for the

considerable commitment she made over her time on the Board.

While we have made good progress over the past two months and

considered both internal and external candidates for the Group Audit

Committee Chair and Senior Independent Director roles, we are not yet

in a position to confirm the outcome of these processes. We continue

to work at pace and will provide an update in due course. We expect to

announce the appointments – and for them to take effect – following

the conclusion of our 2026 AGM on 8 May 2026, subject to completion

of the regulatory approval process.

This means that I will continue to hold the role of Chair of the Group

Audit Committee for a further period. While this has not been and is not

in accordance with Provision 24 of the UK Corporate Governance Code,

the Board has determined at all relevant times that it was in the best

interests of the Group and its stakeholders that I maintain my role as

Group Audit Committee Chair to allow for a permanent successor to be

appointed and to provide continuity of oversight.

During the year, we also welcomed Wei Sun Christianson to the Board

from 1 January 2026. Her appointment enhances the Board's collective

experience of the business, cultural and regulatory context of key

markets, specifically Hong Kong and mainland China. We look forward

to benefiting from the insights and perspectives Wei will bring to the

Board's deliberations.

I am pleased to confirm that the 2025 Performance Review concluded

that the Committee continued to discharge its duties effectively.

Additional details on the annual review of the Board and the

Committee's effectiveness can be found from page <u>[231](#id42dbec1de4a4a5390289335f1b45526_4259)</u>.

Finally, there was significant change to senior leadership as part of the

reorganisation of the Group around its four core businesses in line with

our strategy. The focus throughout 2025 has been on overseeing the

rebuild of succession plans for key roles, which has been led by

Georges Elhedery and Aileen Taylor.

My thanks to my fellow Directors for their commitment to our efforts to

develop talent and future leaders, as evidenced through their mentoring

relationships with senior talent. This has provided excellent exposure to

our senior talent, and has contributed to more informed discussions on

the strength of our succession bench.

**Brendan Nelson**

**Chair of the Nomination & Corporate Governance Committee**

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **234** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Nomination & Corporate Governance Committee | Nomination & Corporate Governance Committee | Nomination & Corporate Governance Committee |

---

Committee governance

The Group Chief People & Governance Officer attended all Committee

meetings during the year. She supported the Group Chairman in

ensuring that the Committee fulfilled its responsibilities under its Terms

of Reference and in line with corporate governance best practice, and

also presented on succession and development activity for the Group

OpCo and other key senior management roles. The Group CEO also

regularly attended Committee meetings throughout the year.

The Committee retains the support of various executive search firms to

assist with its objectives in relation to Board succession planning and

appointments. Russell Reynolds Associates ('RRA'), provided support

to management on senior management succession and recruitment. In

addition, RRA, Christoph Zeiss Partners ('CZ Partners') and MWM

Consulting ('MWM') provided support to the Committee on Board

succession and recruitment. RRA, CZ Partners and MWM have no

other connection to the Group or with members of the Board other

than to support on the Board and senior management succession and

recruitment.

Board composition and succession

Following the appointments during 2024 of Georges Elhedery as Group

CEO and Pam Kaur as Group CFO, the Committee's primary focus

during the year was on succession planning for the Group Chairman

role.

Sir Mark Tucker joined the Board on 1 September 2017 and assumed

the role of Group Chairman on 1 October 2017. The Committee

commenced active succession planning for the Chairman role in Q4

2024 after Sir Mark had served for seven years. On 1 May 2025, the

Group provided an update on the succession process the Committee

was undertaking. On 6 June 2025, the Group announced that Brendan

Nelson would assume the role of Interim Group Chairman upon Sir

Mark's retirement from the Board on 30 September 2025. Brendan

joined the Board in September 2023.

The PRA and FCA granted regulatory approval for Brendan Nelson as

Group Chairman in advance of his appointment as Group Chairman on

an interim basis effective 1 October 2025. A thorough handover

process, in accordance with regulatory expectations, was undertaken

with Sir Mark in advance of Brendan's assumption of the role. He also

underwent a tailored induction plan to ensure he was equipped to fulfil

the role. This focused on refreshing and developing new relationships

with key external stakeholders, particularly investors in Asia.

On 3 December 2025, Brendan was appointed Group Chairman having

held the role on an interim basis since 1 October 2025. This decision

followed a robust process that considered both internal and external

candidates and regulatory approval.

Group Chairman succession

In preparation for Sir Mark Tucker's retirement, the Committee, led by

the Senior Independent Director, proactively commenced the process

to identify his successor in Q4 2024. Key steps in the Group Chairman

succession process included:

---

| | |
|:---|:---|
| Appointment of external <br>search adviser | Establishment of a sub-<br>group of the Committee |
| Appointment of external <br>search adviser | Establishment of a sub-<br>group of the Committee |
| Candidate interviews <br>with Committee <br>members | Agreement of the role <br>profile and success <br>criteria |
| Candidate interviews <br>with Committee <br>members | Agreement of the role <br>profile and success <br>criteria |
| Presentations to <br>Committee and Q&A | Feedback collated and <br>discussed by the <br>Committee |
| Presentations to <br>Committee and Q&A | Feedback collated and <br>discussed by the <br>Committee |
| Consideration of <br>implications on existing <br>HSBC responsibilities  | Decision on preferred <br>candidate |
| Consideration of <br>implications on existing <br>HSBC responsibilities  | Decision on preferred <br>candidate |
| Regulatory engagement <br>and application | Announcement of <br>appointment of Brendan <br>Nelson as Group <br>Chairman |
| Regulatory engagement <br>and application | Announcement of <br>appointment of Brendan <br>Nelson as Group <br>Chairman |

---

The Committee (other than Brendan Nelson who was recused)

selected Brendan Nelson as the preferred candidate, subject to

regulatory confirmation. Following engagement with the PRA and FCA,

the Board approved Brendan Nelson's appointment as permanent

Group Chairman effective immediately, as announced on 3 December

2025. The Board determined at all relevant times that it was in the best

interests of the Group for Brendan to continue in role as Chair of the

Group Audit Committee and that for all applicable purposes he satisfied

the requisite tests of independence.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **235** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Nomination & Corporate Governance Committee | Nomination & Corporate Governance Committee | Nomination & Corporate Governance Committee |

---

Other key board succession decisions

The Committee continued to keep the composition of the Board and of

its committees under review, with assessments focused on the skills,

knowledge, and experience necessary to oversee, challenge and

support management, in the achievement of the Group's strategic and

business objectives.

Following a recruitment process for a new Director, which prioritised

further strengthening the Board's banking experience and deep

business and cultural expertise across Asia, Wei Sun Christianson was

appointed to the Board with effect from 1 January 2026. Wei met with

members of the Board, including the Group CEO and the feedback

from these meetings then informed the Committee's recommendation

to the Board for her appointment. Wei brings extensive banking and

regulatory experience gained over a 30-year international career. Her

biography can be found on page <u>[221](#id42dbec1de4a4a5390289335f1b45526_5767)</u>.

The Committee remains focused on identifying successors for the

Senior Independent Director and Chair of the Group Audit Committee

roles. Good progress has been made in considering and assessing both

internal and external candidates. The Committee will continue to

engage with regulators in relation to the necessary regulatory approvals

and has full confidence that an announcement will be made in time to

allow for the appointments to take effect from the conclusion of the

2026 AGM.

As set out in last year's report, the appointment term of José Meade,

Workforce Engagement non-executive Director, was extended to the

2026 AGM. During 2025, the Committee considered the future needs

of the Board, and the performance and contributions of José, and

agreed a further extension to the 2027 AGM, subject to his re-election

by shareholders. This reflects José's contributions, and leadership in

enhancing the Board's understanding of the views of the workforce. It

is the Board's strong belief that this extension of José's appointment,

given his performance and contributions to the Board, is in the best

interests of the Group and its stakeholders.

During 2026, the Committee will conduct a thorough review of the size

and composition of the Board committees. This review will look to

undertake the effective use of the skills and expertise of the Directors,

and to continue to enable effective support and challenge by the

respective committees.

Board diversity

The Board recognises the importance of gender, social and ethnic

diversity, and the benefits that diverse identities and backgrounds bring

to Board effectiveness. Representation is a consideration in succession

plans and appointments at both Board and senior management level, as

well as more broadly across the Group. The Committee also considers

representation on Board committees when reviewing their

composition.

The Board's diversity and inclusion policy was updated in December

2025, and is available at https://www.hsbc.com/who-we-are/our-

people/board-of-directors/board-responsibilities. Further details on the

Board's diversity data can be found on page <u>[225](#id42dbec1de4a4a5390289335f1b45526_4267)</u>.

Senior executive succession and

development

Following Georges Elhedery's appointment as Group CEO and Pam

Kaur's appointment as Group CFO the Committee monitored and

received updates on their induction and development plans.

Given the new, simpler organisational structure, the Committee

approved updated succession plans for the Group Operating

Committee members. These reflected continued efforts to support the

development and progression of diverse talent and promote the long-

term success of the Group. This included future internal and external

succession options for the Group CEO, to ensure that the Committee

has a robust and actionable succession plan when required.

When considering internal succession plans, the Committee received

updates on individual development plans that supported alignment to

key priorities and career trajectory, as well as exposure to Board and

Group Operating Committee members.

Since the last report, the Committee oversaw and approved several

changes to the senior leadership team. These included the

appointment of the permanent Group Chief Risk and Compliance

Officer, the Group Head of Internal Audit and the CEO of HSBC UK

Bank plc. These appointments completed the work on building a Group

senior leadership team that will drive the Group's strategy into the

future.

Subsidiary governance

In line with the subsidiary accountability framework, the Committee

continued to oversee the corporate governance and succession

arrangements across the principal subsidiary portfolio. Additional details

on the subsidiary accountability framework are set out on page <u>[232](#id42dbec1de4a4a5390289335f1b45526_4981)</u>.

The Committee continued to oversee principal subsidiary composition

and succession planning through the annual review of Board

succession plans.

In order to further strengthen connectivity between the Board and the

most significant subsidiary boards in the Group, the Committee

recommended that José Meade be appointed to the Grupo Financiero

HSBC, S. A. de C. V., HSBC Latin America Holdings Limited and HSBC

Mexico, S.A., Institucion de Banca Multiple, Grupo Financiero HSBC.,

boards. The Committee is confident that these appointments will

further enhance governance arrangements and connectivity.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **236** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Group Audit Committee

---

| | |
|:---|:---|
| ![Brendan_Nelson_SQAURE.jpg](hsbc-20251231_g120.jpg) | "As Chair, I'm pleased with the <br>Committee's commitment to robust <br>oversight and transparent reporting. <br>Together, we've strengthened <br>internal controls and deepened <br>collaboration across the Group." |
| ![Brendan_Nelson_SQAURE.jpg](hsbc-20251231_g120.jpg) | **Brendan Nelson**<br>**Chair**<br>Group Audit Committee |
| For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025, see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. | For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025, see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. |
| **Key responsibilities** |  |
| The Group Audit Committee ('GAC') has non-executive <br>responsibility for the oversight of matters relating to financial <br>reporting and internal controls. The GAC's key responsibilities <br>include:<br>–monitoring the integrity of financial statements;<br>–reviewing the Group's financial and accounting policies and <br>practices;<br>–monitoring the effectiveness of the internal control <br>environment;<br>–monitoring and reviewing the effectiveness of the Global <br>Internal Audit function; and<br>–oversight and remuneration of the external auditor and making <br>recommendations to the Board on the appointment of the <br>external auditor. | The Group Audit Committee ('GAC') has non-executive <br>responsibility for the oversight of matters relating to financial <br>reporting and internal controls. The GAC's key responsibilities <br>include:<br>–monitoring the integrity of financial statements;<br>–reviewing the Group's financial and accounting policies and <br>practices;<br>–monitoring the effectiveness of the internal control <br>environment;<br>–monitoring and reviewing the effectiveness of the Global <br>Internal Audit function; and<br>–oversight and remuneration of the external auditor and making <br>recommendations to the Board on the appointment of the <br>external auditor. |

---

I am pleased to introduce the GAC report, my second as Chair, and

thank the Committee members for their contribution and support

during 2025. The key matters considered by the Committee are set out

below.

**Financial and regulatory reporting**

The GAC received regular updates from the Group CFO and Global

Financial Controller on key financial reporting issues and the related

management judgements. These included spending significant time on

the appropriateness and clarity of the Group's market guidance,

including in relation to returns, costs and expected credit losses ('ECL').

Given the uncertain global macroeconomic environment, the GAC

carefully considered its disclosures on ECL, in particular those relating

to the Group's exposure to the mainland China and Hong Kong

corporate real estate sectors. The GAC also provided close oversight of

the disclosure risks associated with sustainability and climate reporting,

and related controls. This included its review of the Net Zero Transition

Plan which was published in November 2025.

The GAC focused on monitoring the programme of work designed to

enhance the quality and reliability of regulatory reporting and align with

HSBC's internal standards and external regulatory expectations. This

included regular updates from management, focused review meetings

to guide short- and medium-term delivery plans, and meetings with

external parties.

The Financial Reporting Council ('FRC') undertook a Corporate

Reporting Review of HSBC's Annual Report and Accounts 2024, and

we are pleased to report that no formal matters were raised.

**Internal controls**

The GAC has an important role in monitoring and overseeing the

control environment, taking into account the external operating

environment and following the Group's recent reorganisation.

Enhancing the control environment for the Group's regulatory reporting

obligations remains a central focus and ongoing priority for both

management and our regulators globally.

Throughout the year the GAC oversaw ongoing enhancements in this

area, supported by the Group Chief Control Oversight Office. This

included work to support preparations for the Board's declaration on

the effectiveness of material controls, which HSBC will be required to

include in the Annual Report and Accounts 2026, under the UK and

Hong Kong Corporate Governance Codes.

**Connectivity within the Group**

Ensuring strong connectivity between the Group and its subsidiaries is

an important aspect of the GAC's oversight model, and has been a key

feature over the past few years. I have spent time with several of the

subsidiary audit committee chairs, both individually and as part of

plenary sessions, encouraging their participation in Group-wide

discussions including in relation to regulatory reporting. Ongoing,

regular engagement with our subsidiary audit chairs will continue to be

an important part of the GAC's governance practices.

**Global Internal Audit**

We welcomed Russell Jackson as the new Group Head of Internal

Audit, effective 3 June 2025. The handover was supported by myself

and the other GAC members, and we extend our gratitude to Jonathan

Calvert-Davies for his dedication to the role since 2019.

Engagement with the Global Internal Audit function continued

throughout the year, with the GAC receiving regular updates. Following

the positive outcome of the External Quality Review of the Global

Internal Audit function conducted in 2024 by Deloitte, an internal

review under the Global Professional Practices Quality Assurance and

Improvement Programme in 2025 confirmed Global Internal Audit's

ongoing general conformance with the Institute of Internal Auditors

Standards.

**Committee performance**

Finally, I was pleased that the annual review of the GAC's performance

concluded that the Committee continued to operate effectively. Further

details of the review can be found in the 'Board and committee

performance review' section on page <u>[231](#id42dbec1de4a4a5390289335f1b45526_4259)</u>.

**Brendan Nelson**

**Chair of the Group Audit Committee**

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **237** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Audit Committee | Group Audit Committee | Group Audit Committee |

---

How the Committee discharged its responsibilities

Financial reporting

The GAC is responsible for reviewing the Group's financial reporting

disclosures, including the Annual Report and Accounts, Interim Report,

quarterly earnings releases, analyst presentations and Pillar 3

disclosures.

Furthermore, as an area of expanded assurance, the GAC, supported by

the Group Disclosure Committee, provided close oversight of disclosure

risks in relation to sustainability and climate reporting, and related

controls.

As part of its review, the GAC:

–challenged and evaluated management's application of accounting

policies subject to critical estimates and judgements and material

areas in which significant accounting judgements were applied;

–reviewed and challenged management's judgements and

disclosures in relation to impairment reviews of HSBC's investment

in Bank of Communications Co., Limited, performed using a value-in-

use methodology;

–gave particular regard to the analysis and measurement of IFRS 9

ECL, including the key judgements and management adjustments

made in relation to the forward economic guidance, underlying

economic scenarios and reasonableness of the weightings, as well

as modelling and adjustments;

–focused on preparation of disclosures to ensure these were

consistent, appropriate and could be validated under the relevant

financial and governance reporting requirements;

–reviewed analysis and assurance work by external financial advisers

in connection with (i) the Group's reorganisation plans; and (ii) the

privatisation of HASE;

–tracked and monitored delivery against the external audit plan; and

–provided advice to the Board on the form and basis underlying the

long-term viability statement.

We also received limited assurance from an independent third-party on

certain elements of the Group's climate reporting.

In conjunction with the Group Risk Committee, the GAC considered

the current position of the Group, along with the emerging and

principal risks, and carried out a robust assessment of the Group's

prospects. This assessment informed the GAC's recommendation to

the Board on the Group's long-term viability. The GAC also undertook a

detailed review before recommending to the Board that the Group

should continue to prepare its annual and interim financial statements

on a going concern basis.

Financial planning

The GAC reviewed and debated the robustness of the financial plan for

the financial years 2026 to 2030. The GAC considered the risks and

challenges, and ensured that the process to develop the financial

resource plan was robust and that the assumptions driving the financial

performance of the Group were appropriate and subject to appropriate

challenge. Specifically, the Committee reviewed revenue assumptions

against economic and market growth rates in the countries and territories

in which HSBC operates, and considered various downside planning

scenarios against available resources and risk appetite capacity.

Fair, balanced and understandable

The Committee reviewed the draft Annual Report and Accounts 2025

and results announcements and provided feedback and challenge to

management. It was supported by the work of the Group Disclosure

Committee. Following review and challenge of the disclosures, the

Committee recommended to the Board that the Annual Report and

Accounts 2025, taken as a whole, were fair, balanced and

understandable. These provided shareholders with the necessary

information to assess the Company and the Group's position and

performance, business model, strategy and risks facing the business.

Internal controls

The GAC is responsible for overseeing the effectiveness of all internal

controls. During the year, the GAC provided oversight of the ongoing

enhancement of the operation and monitoring of the Group's internal

control environment, informed by reports from the Group Chief Control

Oversight Office.

This included an assessment of the Group's work on material controls

to support the Board's forthcoming declaration of their effectiveness in

the Annual Report and Accounts 2026, under the requirements of the

UK and Hong Kong Corporate Governance Codes. This comprised

evaluating controls with the potential to materially impact the Group, our

customers or the stability of the market, in line with FRC and Hong

Kong Exchanges and Clearing guidance.

Regular updates and confirmations are provided to the GAC on the

actions management take to remediate any failings or weaknesses

identified through the operation of the Group's framework of internal

controls. This is supplemented by reviews of these controls by the Group

Chief Control Oversight Office, the second line of defence, internal audit,

and the external auditors, who provided additional assurance to the

Committee on the effectiveness of these controls.

These updates included the Group's work on compliance with section

404 of the US Sarbanes-Oxley Act, which requires publicly-traded

companies such as HSBC to establish, maintain and assess an

adequate internal controls structure and procedures for financial

reporting. Based on this work, the GAC recommended that the Board

support its assessment of the internal controls over financial reporting.

🡠For further details of how the Board reviewed the effectiveness of key

aspects of internal control, see page <u>[280](#id42dbec1de4a4a5390289335f1b45526_250)</u>.

Regulatory reporting

Regulatory reporting continues to be a key priority. The Committee

oversaw initiatives to enhance the quality and reliability of regulatory

reporting, to align with both HSBC's internal standards and regulatory

reporting expectations.

During 2025, the GAC reviewed progress updates on HSBC-specific

external reviews, examined root causes and emerging themes

identified from assurance activities, and challenged management to

demonstrate sustainable improvements. The GAC also assessed the

management of dependencies with other key programmes, and

discussed programme resourcing.

🡠Further details can be found in the 'Principal activities and significant issues

considered during 2025' table on page <u>[244](#id42dbec1de4a4a5390289335f1b45526_79)</u>.

FRC's Corporate Reporting Review

The FRC conducts routine reviews of the annual reports and accounts

of FTSE 350 companies. The outcome of the FRC's review of HSBC's

Annual Report and Accounts 2024 raised no formal matters for our

attention. This review was based solely on HSBC's Annual Report and

Accounts 2024 and did not include detailed knowledge of HSBC's

business. The scope of such reviews by the FRC does not include

verification of the information set out in those documents or any

related assurance; it is limited to a consideration of compliance with

reporting requirements.

Adequacy of resources

The Committee is responsible, under the Hong Kong Listing Rules, to

annually assess the adequacy of resources of the accounting, internal

audit, financial reporting and ESG performance and reporting functions. It

also monitored the legal and regulatory environment relevant to its

responsibilities.

The Committee determined that each of the functions provided thorough

information with regards to people capacity and capability. This

determination was aided by specific reports from and engagement

meetings with the senior leaders of these functions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **238** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Audit Committee | Group Audit Committee | Group Audit Committee |

---

Connectivity with principal subsidiary audit

committees

The Committee recognises the importance of strong connectivity and

alignment with principal subsidiary audit committees. The mechanisms

to support this are well established and continued to operate

effectively during the year. This included information sharing and

targeted collaboration between audit committee chairs and

management to ensure there was appropriate focus on the local

implementation of programmes. During 2025, this included dedicated

sessions on regulatory reporting, with the principal subsidiary audit

committee chairs, chief executive officers and chief financial officers of

the Europe, Asia-Pacific, Middle East and Americas regions attending

committee meetings to provide updates on progress, discuss local

challenges, and highlight key areas of focus to the Committee.

In addition to the Chair's regular meetings with the audit chairs of the

Group's principal subsidiaries, and their attendance at GAC meetings

for relevant items, they provided quarterly reports on their local audit

committee activities. This included updates on internal control, and

financial and regulatory reporting matters that are significant from a

local or enterprise-wide perspective. On a half-yearly basis, the audit

committees of the principal subsidiaries certify to the GAC that their

financial statements have been prepared appropriately, Group policies

have been followed, and any matters requiring the Committee's

attention have been escalated.

Interaction with regulators

The Committee Chair continued to engage with various key

stakeholders, including regulators to understand their views, key

themes and areas of focus within the broader financial services sector

on matters relevant to the work of the Committee. This included

periodic trilateral meetings involving the Group's external auditor, PwC,

and the PRA.

External auditor

The GAC has primary responsibility for overseeing the relationship with

the Group's external auditor, PwC. PwC completed this year's audit, its

eleventh, providing robust challenge to management and sound

independent advice to the Committee on specific financial reporting

judgements, sustainability reporting and the overall control

environment. Key audit matters discussed with PwC are set out in its

report on page 286. The Committee reviewed, and concluded that, all

requirements of the FRC's Audit Committees and the External Audit:

Minimum Standard ('the Standard'), where relevant, were met during

2025. The GAC reviewed the PwC external audit approach, including

the materiality, risk assessment and scope of the audit.

The GAC assessed the effectiveness of PwC as the Group's external

auditor, focusing on the overall audit process, its effectiveness and the

quality of output, informed in part by the FRC's audit quality indicators.

Key strengths highlighted in the review include strong independent

challenge, deep audit team experience, a thorough understanding of

the Group's businesses and associated risks, and strong technical

accounting and industry knowledge. The review also identified some

areas for improvement, focused on communication of testing status,

planning, timeliness of testing and coordination.

The GAC receives regular updates from PwC and management on

external auditor performance, providing wider visibility of ongoing and

emerging issues. There were no breaches of the policy on hiring

employees or former employees of the external auditor during the

year. The lead audit partner attends all Committee meetings and the

GAC Chair maintains regular contact with the senior audit partner and

his team throughout the year.

The Committee assessed any potential threats to independence that

were self-identified or reported by PwC. Based on the reporting

received, PwC are deemed to be independent. PwC, in accordance

with professional ethical standards and applicable rules and regulations,

provided the GAC with written confirmation of its independence for the

duration of 2025.

The Committee confirms it has complied with the provisions of The

Statutory Audit Services for Large Companies Market Investigation

(Mandatory Use of Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014 for the financial statements.

Following the Committee's recommendation to reappoint PwC as the

auditor, shareholders passed the associated resolution at the 2025

AGM. At the same time, shareholders authorised the Committee to

determine PwC's audit fee for the financial year ended 31 December

2025, which was approved by the Committee at its June 2025

meeting.

The Committee is responsible for setting, reviewing and monitoring the

appropriateness of the provision of non-audit services by the external

auditor. It also applies the Group's policy on the award of non-audit

services to the external auditor. The non-audit services are carried out

in accordance with the external auditor independence policy to ensure

that services do not create a conflict of interest. All non-audit services

are either approved by the GAC Chair, or by Group Finance when

acting within delegated limits and criteria set by the GAC. All non-audit

services where fees exceeded $1m were subject to approval by the

GAC Chair. For all non-audit services provided during 2025, it was

considered to be in the best interests of the Group to use PwC for

these services because they were:

–audit-related assurance services, with the work closely related to

work performed in the audit and in some instances required by local

regulators to be performed by the external auditor; or

–other assurance services that involve obtaining appropriate audit

evidence to express a conclusion designed to enhance the degree

of confidence of the intended users other than the responsible party

about the subject matter information, including attestation reports

on internal controls of a service organisation primarily prepared for

and used by third-party end users.

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| **Auditors' remuneration** | **$m** | $m |
| Total fees payable<sup>1</sup> | **159.1** | 146.6 |
| of which fees for non-audit services | **50.2** | 43.8 |
| Ratio of non-audit fees to audit fees<sup>2</sup> | **46.1%** | 43.0% |

---

1 In addition, $2.1m in expenses were reimbursed to PwC in 2025.

2 The calculation is on a simple ratio and is not based on FRC guidance on

non-audit fees ratio thresholds.

Following the conclusion of a formal competitive audit tender process,

in 2023 the Board approved the re-appointment of PwC as external

auditor for the next 10-year cycle beginning with the financial year

ending 31 December 2025. As a UK public interest entity, HSBC is

required to tender its audit every 10 years and rotate every 20 years.

PwC is a registered public interest entity auditor in Hong Kong.

Whistleblowing and speak-up culture

Speaking up when something does not feel right is integral to HSBC's

values. HSBC remains committed to empowering colleagues to raise

concerns confidently, and to taking appropriate action in response. A

range of channels are available for colleagues to raise concerns,

including the Group's whistleblowing channel, HSBC Confidential (see

page 61 for further information).

The Board has delegated responsibility to the GAC to oversee the

effectiveness of HSBC's whistleblowing arrangements. The Chair of

the GAC is a Group Senior Manager under the FCA's Senior Managers

and Certification Regime, and has a prescribed responsibility as the

Whistleblowers' Champion to ensure the integrity of HSBC's policy and

procedure on whistleblowing and protecting those who report

concerns. The GAC Chair reports to the Board on the GAC's oversight

of whistleblowing as part of his regular reporting updates.

The Committee is also briefed on culture and conduct risks from

whistleblowing cases and actions taken. The Group Head of Regulatory

Compliance updates the GAC annually on whistleblowing

effectiveness, including controls assessments and internal audit

findings.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **239** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Audit Committee | Group Audit Committee | Group Audit Committee |

---

Global Internal Audit

The primary role of the Global Internal Audit function is to help the

Board and management strengthen the Group's ability to create,

protect and sustain value. Global Internal Audit does this by providing

independent, risk based and objective assurance and advisory services

on the design and operating effectiveness of the Group's framework of

risk management, control, and governance processes, prioritising the

greatest areas of risk. The independence of Global Internal Audit from

day-to-day line management responsibility is fundamental to its ability

to deliver objective audit coverage of all parts of the Group. Global

Internal Audit is free from interference by any element in the

organisation, including on matters of audit selection, scope,

procedures, frequency, timing, or internal audit report content. The

Group Head of Internal Audit reports to, and meets frequently with, the

Chair of the GAC. Global Internal Audit adheres to The Institute of

Internal Auditors' mandatory guidance.

Global Internal Audit may also perform advisory work at the request of

the Board or management. The nature and scope of advisory services

are subject to agreement with the Group Head of Internal Audit. When

performing advisory services, Global Internal Audit maintains objectivity

and does not assume management responsibility.

Consistent with previous years, the 2026 audit planning process

included assessment of the inherent risks and strength of the control

environment across the audit entities representing the Group. Results

of this assessment were combined with a top-down analysis of risk

themes by risk category to ensure that themes identified were

addressed in the annual plan. Audit coverage is achieved using a

combination of business and functional audits of processes and

controls, risk management frameworks and major change initiatives, as

well as regulatory audits, investigations and special reviews. The

annual audit plan was approved by the GAC.

The results of audit work, together with an assessment of the Group's

framework of risk management, control and governance processes are

reported to the GAC, GRC and local audit and risk committees, as

appropriate. This reporting includes business and regulatory

developments and an independent view of emerging and horizon risk,

together with details of audit coverage and any required changes to the

annual audit plan. Based on regular internal audit reporting to the GAC,

private sessions with the Group Head of Internal Audit, the Global

Professional Practices annual assessment and quarterly quality

assurance updates, the GAC is satisfied with the effectiveness of the

Global Internal Audit function and the appropriateness of its resources.

Management is accountable for addressing the matters raised by

Global Internal Audit, which must be addressed within an appropriate

and agreed timetable.

Global Internal Audit maintains a close working relationship with

HSBC's external auditor, PwC. The external auditor is kept informed of

Global Internal Audit's activities and results, and is afforded free access

to all internal audit reports and supporting records.

Committee member independence

The Nomination & Corporate Governance Committee has confirmed

that each member of the Committee is independent according to the

criteria of the US Securities and Exchange Commission, and the

Committee and individual members continue to possess competence

relevant to the banking and broader financial services sector in which

the Group operates. The Board has determined that Brendan Nelson

and Ann Godbehere are the Committee's 'financial experts' for the

purposes of section 407 of the Sarbanes-Oxley Act and have recent

and relevant financial experience for the purposes of the UK and Hong

Kong Corporate Governance Codes.

---

| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 |
| **Areas of focus** | **Key issues** | **Conclusions and actions** |
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Expected credit losses**<br>The measurement of ECL involves significant <br>judgements, particularly under current economic <br>conditions. There remains uncertainty over ECL <br>estimation due to high inflation, interest rate volatility, <br>economic and tariff policy changes and weaker <br>economic growth in the Group's key operating <br>markets.<br>| –The Committee reviewed economic scenarios for the key countries and territories in <br>which the Group operates and challenged management's judgements on the <br>weightings assigned to the scenarios. The Committee also challenged <br>management's judgement-based adjustments for uncertainty across specific sectors <br>and geographies, including the controls underpinning the adjustments process and <br>conditions under which the adjustments would be reduced or removed.<br>–The Committee continued to monitor management's updates on areas of particular <br>focus, including downside risk in mainland China and Hong Kong commercial real <br>estate sectors.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Valuation of financial instruments** <br>Management continues to review its methodologies <br>and approaches to valuing the Group's portfolio in <br>relation to investments, trading assets and liabilities <br>and derivatives. <br>| –The Committee received periodic updates on the key valuation metrics and <br>judgements involved in the determination of the fair value of financial instruments.<br>–The Committee agreed with the judgements applied by management, which were <br>validated through appropriate governance and control forums.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Investment in subsidiaries**<br>Management has reviewed investments in <br>subsidiaries for indicators of impairment and <br>reversals, and conducted impairment reviews where <br>relevant. These involve exercising significant <br>judgement to assess the recoverable amounts of <br>subsidiaries, by reference to projected future cash <br>flows, discount rates and regulatory capital <br>assumptions.<br>| –The Committee reviewed the judgements applied in the impairment review of HSBC <br>Overseas Holdings (UK) Limited, including key inputs such as projected profits that <br>support the recoverable amounts of its subsidiaries.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Valuation of defined benefit pension obligations**<br>The valuation of defined benefit pension obligations <br>involves highly judgemental inputs and actuarial <br>assumptions which include interest rate, inflation rate, <br>mortality rates and other demographic assumptions. <br>Management considered these assumptions in <br>consultation with actuarial experts to determine the <br>valuation of the defined benefit obligations.<br>| –The Committee has considered the effect of changes in key assumptions on the <br>HSBC UK Bank plc section of the HSBC Bank (UK) Pensions Scheme, which is the <br>principal plan of HSBC Group. Details of key assumptions can be found on page 324 <br>of the 'Notes on the financial statements'.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **240** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Audit Committee | Group Audit Committee | Group Audit Committee |

---

---

| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) |
| **Areas of focus** | **Key issues** | **Conclusions and actions** |
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Investment in an associate – Bank of** <br>**Communications Co., Limited**<br>During the year, management performed impairment <br>reviews of HSBC's investment in Bank of <br>Communications Co., Ltd ('BoCom'), and considered <br>the financial impact of BoCom's capital issuance in <br>June 2025. The impairment assessments considered <br>whether there is indication of further impairment, or if <br>previously recognised impairment may no longer exist <br>or may have decreased. The impairment reviews are <br>complex and require significant judgements, such as <br>the appropriateness of projected future cash flows, <br>discount rate, and regulatory capital assumptions.<br>| –The Committee reviewed and challenged management's judgements and <br>disclosures in relation to impairment reviews of HSBC's investment in BoCom, <br>performed using a value-in-use methodology. <br>–The Committee reviewed the appropriateness of key assumptions such as projected <br>future cash flows, and assessed management's procedures to ensure that the latest <br>available information was reflected at the 31 December 2025 reporting. <br>–The Committee discussed the impact of BoCom's capital issuance, and resulting <br>dilution of HSBC's investment, on the Group's accounts and challenged <br>management on the related accounting treatment analysis.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Impairment of goodwill and non-financial assets**<br>During the year, management tested for impairment <br>of goodwill and non-financial assets, including <br>additional consideration for the future impacts <br>resulting from the announced organisational <br>restructure. Key judgements in this area relate to <br>long-term growth rates, discount rates and projected <br>future cash flows to include for each cash-generating <br>unit tested, both in terms of compliance with the <br>accounting standards and reasonableness of the <br>forecasts.<br>| –The Committee reviewed and challenged management's approach and methodology <br>used for the impairment testing of goodwill and non-financial assets, with a key <br>focus on the projected cash flows included in the forecasts and discount rates used.<br>–The Committee also challenged management's key judgements and considered the <br>reasonableness of the outcomes against business forecasts and the strategic <br>objectives of the Group.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Legal proceedings and regulatory matters**<br>Management has used judgement in relation to the <br>recognition and measurement of provisions, as well <br>as the existence of contingent liabilities for legal and <br>regulatory matters. <br>| –The Committee reviewed reports from management on legal proceedings and <br>regulatory matters, and challenged related accounting judgements and disclosures. <br>Notably, this included the review of management's judgements in relation to a legal <br>provision following developments in a claim in Luxembourg relating to the Bernard <br>L. Madoff Investment Securities LLC fraud.<br>|
| **Accounting** <br>**policies subject** <br>**to critical** <br>**estimates and** <br>**judgements** | **Deferred tax-related judgements**<br>HSBC has recognised deferred tax assets to the <br>extent that they are recoverable through expected <br>future taxable profits. Significant judgement continues <br>to be exercised in assessing the probability and <br>sufficiency of future taxable profits, future reversals of <br>existing taxable temporary differences and expected <br>outcomes relating to uncertain tax treatments.<br>| –The Committee considered the recoverability of deferred tax assets and <br>management's judgements relating to uncertain tax treatments.<br>|
| **Financial and** <br>**regulatory** <br>**reporting** | **Environmental, social and governance ('ESG')** <br>**reporting**<br>The Committee considered on a periodic basis <br>management's efforts to enhance ESG disclosures <br>and associated verification and assurance activities, <br>with a specific focus on the Net Zero Transition Plan <br>(published in November 2025) and climate-related <br>disclosures made in the Annual Report and Accounts <br>2025.<br>| –The Committee conducted a review of ESG disclosures to ensure they were fair, <br>balanced and transparent regarding the challenges faced while also reflecting the <br>Group's ongoing embedding of sustainability risk policies across the business. <br>|
| **Financial and** <br>**regulatory** <br>**reporting** | **Regulatory reporting**<br>The Committee monitored progress by management <br>in delivering a sustainable control environment for <br>regulatory reporting across the Group. <br>| –The Committee reflected on the continued focus on the quality and reliability of <br>regulatory reporting by the PRA and other regulators globally. <br>–The Committee oversaw management's execution against the agreed remediation <br>plans, and challenged management on the approach and timeframes to deliver <br>accurate reporting submissions to the Group's global regulators. Discussions <br>included a focus on shared dependencies across various Group-wide programmes, <br>for example on data and subject matter expertise. <br>–Periodic reports were presented by certain of the Group's principal subsidiaries, to <br>allow a holistic review of management's remediation activities and to discuss <br>consistency of approach across the Group.<br>–The Committee actively participated in specific meetings on matters relating to <br>regulatory reporting, to allow greater challenge and depth of oversight of targeted <br>milestones and deliverables.<br>|
| **Financial and** <br>**regulatory** <br>**reporting** | **Impact of acquisitions and disposals**<br>HSBC engaged in a number of corporate activities <br>throughout the year. Judgement was involved in <br>determining the timing of recognition of assets held-<br>for-sale, gains or losses, and the measurement of <br>assets and liabilities on acquisition or disposal.<br>| –The Committee reviewed management's judgements related to transactions during <br>the year, including the sale of French home and certain other loans and life <br>insurance assets, the planned sale of HSBC Malta, and the privatisation of HASE. <br>Considerations included the timing of classification as held-for-sale and the <br>accounting impacts of the transactions.<br>|
| **Capital** | **Distributable reserves**<br>On 24 June 2025, the High Court of England and <br>Wales confirmed the cancellation of a combined <br>$16.6bn standing to the credit of HSBC Holdings plc <br>share premium account and capital redemption <br>reserve, which became effective upon registration by <br>the Registrar of Companies on 10 July 2025 ("Capital <br>Reduction"). The effect of this Capital Reduction was <br>to increase distributable reserves, giving the Company <br>further flexibility to deliver shareholder returns over <br>the coming years.<br>| –The Committee received regular management updates on the progress of the Capital <br>Reduction and reviewed the Interim condensed financial statements of HSBC <br>Holdings plc for the period ended 31 July 2025, which reflected the reclassification of <br>cancelled reserves to retained earnings.<br>|

---

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **241** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Audit Committee | Group Audit Committee | Group Audit Committee |

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| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) |
| **Areas of focus** | **Key issues** | **Conclusions and actions** |
| **Going concern** | **Long-term viability and going concern statement** <br>The Committee has considered a wide range of <br>information relating to present and future projections <br>of profitability, cash flows, capital requirements and <br>capital resources. These considerations include <br>stressed scenarios and the implications of: <br>–geopolitical tensions including the ongoing Russia-<br>Ukraine war and Middle East conflicts, US-China <br>tensions and the consequential impacts on supply <br>chains globally; <br>–macroeconomic risks including inflationary risks, <br>mainland China and Hong Kong real estate sector <br>risks and economic policy uncertainty; and<br>–climate risk, operational resilience, and other top <br>and emerging risks, and the related impact on <br>profitability, capital and liquidity.<br>| –In accordance with the UK and Hong Kong Corporate Governance Codes, the <br>Directors carried out a robust assessment of the principal and emerging risks of the <br>Group and parent company. The Committee considered the statement to be made <br>by the Directors and concluded that the Group and parent company will be able to <br>continue in operation and meet liabilities as they fall due, and that it is appropriate <br>that the long-term viability statement covers a period of three years.<br>|
| **Control** <br>**environment**<br>| **Sustainable control environment**<br>The Committee oversaw the effectiveness of the <br>internal control environment of the Group, including <br>with regards to the requirements of the US Sarbanes-<br>Oxley Act. <br>| –The Committee received regular updates on the control environment, and broader <br>change framework, to review the impact on financial reporting and tax risk within <br>the Group.<br>–In these updates the Committee monitored the assessment of the financial <br>reporting risk, tax risk and progress made on remediation of US Sarbanes-Oxley Act-<br>related deficiencies. This oversight enabled the Committee to assess <br>management's progress in implementing strategic actions to remediate identified <br>issues and strengthen the control environment, supporting a sustainable reduction <br>in risk. <br>–The Committee oversaw the work to support the Group's oversight of all internal <br>controls, supported by the Group Controls Oversight Office.<br>|
| **Regulatory** <br>**change**<br>| **Basel 3.1 Reform**<br>The Committee considered the implementation of the <br>Basel 3.1 Reform and the impact on the capital <br>requirements and RWA assurance. This was <br>considered in the context of the strategy and <br>structure of the balance sheet.<br>| –The Committee received updates on the progress and impact of the Basel 3.1 <br>programme on the Group. <br>–Management discussed the delayed implementation dates, ongoing uncertainty <br>over the final definition of the rules by regulators, and the work undertaken to <br>mitigate delivery risks. <br>–The Committee reviewed the ongoing management of risks, issues and <br>dependencies and challenged management to prioritise deliverables in line with <br>regulatory timelines.<br>|

---

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **242** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Group Risk Committee

---

| | |
|:---|:---|
| ![James Forese SQUARE.jpg](hsbc-20251231_g121.jpg) | "In today's rapidly shifting <br>environment, effective risk <br>management, strategic agility, and <br>disciplined capital deployment are <br>essential for navigating evolving <br>market dynamics and securing long-<br>term success." |
| ![James Forese SQUARE.jpg](hsbc-20251231_g121.jpg) | **James Forese**<br>**Chair** |
| For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. | For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. |
| **Key responsibilities** |  |
| The Group Risk Committee ('GRC') has overall non-executive <br>responsibility for the oversight of risk-related matters and the risks <br>impacting the Group. The GRC's key responsibilities include:<br>–overseeing and advising the Board on all risk-related matters, <br>including financial and non-financial risks;<br>–advising the Board on risk appetite-related matters, and key <br>regulatory submissions;<br>–reviewing the effectiveness of the Group's risk management <br>framework and how effectively management is embedding and <br>maintaining an effective risk management control system; <br>–reviewing and challenging the Group's stress testing exercises; <br>and<br>–overseeing the Group's approach to conduct, fairness and the <br>prevention of financial crime. | The Group Risk Committee ('GRC') has overall non-executive <br>responsibility for the oversight of risk-related matters and the risks <br>impacting the Group. The GRC's key responsibilities include:<br>–overseeing and advising the Board on all risk-related matters, <br>including financial and non-financial risks;<br>–advising the Board on risk appetite-related matters, and key <br>regulatory submissions;<br>–reviewing the effectiveness of the Group's risk management <br>framework and how effectively management is embedding and <br>maintaining an effective risk management control system; <br>–reviewing and challenging the Group's stress testing exercises; <br>and<br>–overseeing the Group's approach to conduct, fairness and the <br>prevention of financial crime. |

---

I am pleased to present the GRC report, which reflects a year of

change, both internally and externally.

The GRC membership remained the same this year, providing the

Committee with a period of stability given the extensive organisational

change that took place in H1 2025. The mix of skills and experience of

the current membership remains appropriate to the needs of the

business and our strategy, and has been further enhanced by the

appointment of Wei Sun Christianson in January 2026. The Committee

was pleased to support the appointment of Richard Blackburn as

Group Chief Risk and Compliance Officer in April 2025. Richard has

worked closely with the Committee to ensure robust oversight of the

Group's risk management and compliance frameworks. I am grateful to

my fellow Committee members for their contributions last year, and

look forward to continuing to work together in 2026.

**Macroeconomic environment**

The macroeconomic environment in 2025 was characterised by

moderate growth amid persistent uncertainty. Inflationary pressures

have continued to ease across most major economies, allowing several

central banks to begin a gradual shift towards more neutral monetary

policy. However, regional divergences remain, with ongoing

geopolitical tensions influencing trade flows and investor sentiment.

The Committee has ensured consistent focus on the impact of trade

tariffs as announced in April, both from a financial and operational

perspective, as well as focusing on how we can support our customers

through this period. Financial markets have adjusted to a higher-for-

longer interest rate outlook, prompting recalibration of capital allocation

and risk appetite across sectors. The overall environment underscores

the importance of prudent risk management, strategic agility, and

disciplined capital deployment to navigate evolving market dynamics.

The Group's wholesale credit risk and retail credit risk portfolios have

remained within risk appetite, and overall capital and liquidity positions

remained stable throughout 2025.

**Financial risks**

Financial risks remained well managed in 2025, with a continued focus on

treasury, capital and liquidity risk management activities. The Committee

readily responded to the PRA's request to assess the potential business

model, credit and funding impacts from global economic uncertainty,

utilising our stress-testing capabilities to understand the potential

consequences to our strategy and financial resources. The Committee

held four additional sessions in 2025 to specifically consider our Treasury-

related responsibilities, which included dedicated time to the assessment

of the internal capital adequacy assessment process ('ICAAP') and

internal liquidity adequacy assessment process ('ILAAP'), as well as our

Group Recovery Plan, Bank Capital Stress Test and a deep dive into our

Resolvability Assessment Framework.

**Non-financial risks**

Non-financial risk continues to attract considerable focus of the GRC, in

an environment of fast-developing regulatory expectations, an uncertain

political backdrop and ever-increasing sophistication of cyber criminals

and fraud. Third-party risk management has been a key discussion point,

along with our preparedness for all eventualities, and how resilient we

would be as an organisation to those potential scenarios. We have

considered business continuity planning, operational resilience and

payments controls during these discussions. A deep dive session was

held in October to specifically consider payments and enhance

Committee knowledge of this topic.

Officer directed improvements at the beginning of 2025 to three key

areas of control within HSBC's financial crime framework - customer due

diligence, financial crime investigations and the customer selection and

exit management process. This work has ensured that the policies,

controls and procedures relating to anti-money laundering, sanctions,

terrorist financing and proliferation financing are robust, adequate and

effective.

The Group has been through a year of transformation and change to its

organisational structure, and this has necessitated increased focus on our

culture and our people. The GRC is fully supportive of the Group's cultural

transformation with the introduction of the new Leadership Principles and

How We Lead, our new Group-wide leadership framework, and will

continue to monitor the impact of this on our people and our leaders.

Alongside the Group Technology and Operations Committee ('GTO'), we

have explored the exciting developments in our ventures into AI and have

expanded our risk appetite for digital assets and currencies to respond to

customer demand. We are committed to supporting our customers with

this new technology, while maintaining discipline and rigour with the

associated risks. Other areas of focus and challenge include the Group's

data enhancement programme, global regulatory engagement,

technology risk, and together with the GAC, the adequacy of the wider

control environment.

**Committee performance**

Finally, I was pleased that the annual review of the GRC's performance

concluded that the GRC continued to operate effectively. Further

details of the review can be found in the 'Board and committee

performance review' section on page <u>[231](#id42dbec1de4a4a5390289335f1b45526_4259)</u>.

**Reflections**

I am privileged to have led the Committee through a year of external

uncertainty and internal transformation, and have full confidence in the

GRC's ability to support the Group's strategic ambitions in 2026 and

beyond.

**James Forese**

**Chair**

Group Risk Committee

25 February 2026

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **243** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Risk Committee | Group Risk Committee | Group Risk Committee |

---

How the Committee discharged its

responsibilities

The GRC held a number of meetings outside its regular schedule to

facilitate deeper and more effective oversight of the risks impacting the

Group. Four sessions dedicated to Treasury topics took place throughout

the year to provide additional time for complex subjects such as Hold To

Collect Guardrails, Interest Rate Risk in the Banking Book ('IRRBB') and

Interest Rate Risk Assessment ('IRRA'). The sessions were also utilised

for ICAAP and ILAAP preparations, and prior to the presentation of the

Bank Capital Stress Test. An additional session was also held to prepare

the Committee for its consideration of the Group Level Operational

Resilience Self Assessment, an educational session on payments risk,

and the HSBC UK Separation Playbook.

During 2025, the GRC continued to actively engage with principal

subsidiary risk committees through the scheduled participation of

principal subsidiary risk committee chairs at relevant GRC meetings,

and through regular connectivity meetings with the principal subsidiary

risk committee chairs. These meetings were also attended by the

Group Chief Risk and Compliance Officer. This participation and

connectivity promoted the sharing of information and best practices, as

well as encouraging director relationships.

The GRC also received certifications from the principal subsidiary risk

committees, confirming that management had been challenged on the

quality of the information provided, the committees had reviewed the

actions proposed by management to address any emerging issues and

that risk management and internal control systems had been operating

effectively.

These interactions furthered the GRC's understanding of the risk

profile of the principal subsidiaries, leading to more comprehensive

review and challenge by the GRC.

Focus of future activities

The GRC's focus for 2026 will include the following activities:

–to support the continued enhancement of the Group's risk appetite

and risk management frameworks, particularly in light of continued

geopolitical and macroeconomic headwinds;

–to challenge the Group's resilience and our capabilities to recover

from incidents that are both in and out of our control, to drive

improved standards from our third-party suppliers and to always

derive benefit from the lessons learned;

–to monitor the technology risk and control environment, with a

specific focus on cybersecurity given the heightened external threat

environment and the increased sophistication of attacks;

–to oversee the Group's wholesale and retail credit risk portfolios,

particularly the implementation of the Single Name Concentration

Framework and seek to understand the first line ownership of the

framework;

–to continue to closely monitor the enhancement of our Model Risk

Management capabilities in line with regulatory requirements, as

well as track progress on strengthening our wholesale internal

ratings-based models;

–to continue to oversee financial crime risk and fraud, the

improvements being made to the financial crime control framework,

specifically customer due diligence, investigations and customer

exits;

–to continue to oversee treasury risk to strengthen our capital and

liquidity management capabilities;

–to continue the oversight of recovery and resolution planning

activities to assess our capabilities if such a situation arises, with

particular focus on the development of our Trading Activity Wind

Down capabilities.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **244** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Risk Committee | Group Risk Committee | Group Risk Committee |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 |  |  |  |
| **Risk areas** | **Key issues** | **Conclusions and actions** |  |  |  |
| **Holistic** <br>**enterprise risk** <br>**monitoring,** <br>**including the** <br>**Group's risk** <br>**profile**<br>| Macroeconomic, geopolitical and other emerging <br>risks have the potential to present significant <br>challenges to revenue growth, operational resilience <br>and our commitment to serve customers and local <br>markets. <br>| –The GRC closely monitored geopolitical and macroeconomic risks that could impact <br>the Group's strategy, performance and/or operations. Dedicated agenda time was <br>allocated to the discussion of trade tariffs, sanctions and ongoing global conflict to <br>ensure thorough consideration of the impact of these events on the Group risk <br>profile. In response to the increase in global conflict, the Committee was provided <br>with an overview of the HSBC Defence Equipment Policy, with a particular focus on <br>dual-use items, to confirm that it continued to be fit for purpose. <br>–The GRC continued to track top and emerging risks, our risk appetite and other <br>management information metrics, as well as other early warning measures to <br>understand sensitivities and the likelihood of the potential impact to our operations, <br>customers and stakeholders. The Committee's consideration of the newly emerging <br>private credit market and review and challenge of Group activities in this market is an <br>example of active risk management. The Group's exposure to private credit was <br>closely managed throughout the year and remains a relatively small portion of the <br>overall lending and investment portfolio.<br>–The GRC requested reports on the risk profile of key business areas in local <br>geographies and invited principal subsidiary chairs and relevant management to <br>attend and participate in discussions at meetings.<br>–The GRC has spent time on risk culture as part of the Group's wider 'How We <br>Succeed' ambitions in promoting a high-performance culture. The Committee has <br>overseen the implementation of the Risk Culture Framework, a core component of <br>the overall organisational culture, and the introduction of risk culture self-<br>assessments. <br>–The GRC spent time discussing climate risk, as rapidly-evolving macroeconomic and <br>geopolitical forces continued to drive the climate risk context in 2025.<br>|  |  |  |
| **Risk framework** <br>**and policies** | Effective risk management policies, frameworks, <br>appetites and thresholds, and oversight of these, are <br>essential for HSBC to safely, consistently and <br>sustainably support customers, manage risk and <br>deliver strategic aims. | –Amendments were made to the risk management framework to enable an improved <br>understanding of how the Group's approach to risk management works in practice <br>and to support delivery of the Group strategy. The document has been restructured <br>and rewritten to facilitate a synergised and integrated approach to risk management, <br>as well as making it more accessible and relatable. <br>–After a significant review of the Group risk appetite framework (GRAF) in 2024, the <br>2025 risk appetite refresh proposed a small number of changes to the qualitative <br>statements and quantitative metrics. At the request of the Committee, Oliver <br>Wyman LLC performed an embeddedness review of the GRAF and concluded that <br>HSBC is now meeting, or exceeding, industry good practice in the majority of GRAF <br>dimensions. The output of the Group risk appetite refresh informs the Financial <br>Resource Plan constraints assessment and helps to identify where the risk appetite <br>statement is being partially or fully utilised to meet strategic objectives.<br>–The Group has a risk appetite statement to define risk appetite and tolerance <br>thresholds, which forms the basis of the risk management procedures for the first <br>and second lines of defence, the Group's capacity and capabilities to support <br>customers, and the achievement of strategic goals. The GRC maintained oversight of <br>the Group's risk appetite framework, reviewing enhancements to the Group's risk <br>appetite statements and recommending these to the Board for approval.<br>–The Committee has monitored the Group's control processes and escalation <br>protocols through various reports, and has considered risk acceptance, rapid <br>escalation processes, the adequacy of internal reporting tools and reporting on <br>various issues. |  |  |  |
| **Risk framework** <br>**and policies** | Effective risk management policies, frameworks, <br>appetites and thresholds, and oversight of these, are <br>essential for HSBC to safely, consistently and <br>sustainably support customers, manage risk and <br>deliver strategic aims. | –Amendments were made to the risk management framework to enable an improved <br>understanding of how the Group's approach to risk management works in practice <br>and to support delivery of the Group strategy. The document has been restructured <br>and rewritten to facilitate a synergised and integrated approach to risk management, <br>as well as making it more accessible and relatable. <br>–After a significant review of the Group risk appetite framework (GRAF) in 2024, the <br>2025 risk appetite refresh proposed a small number of changes to the qualitative <br>statements and quantitative metrics. At the request of the Committee, Oliver <br>Wyman LLC performed an embeddedness review of the GRAF and concluded that <br>HSBC is now meeting, or exceeding, industry good practice in the majority of GRAF <br>dimensions. The output of the Group risk appetite refresh informs the Financial <br>Resource Plan constraints assessment and helps to identify where the risk appetite <br>statement is being partially or fully utilised to meet strategic objectives.<br>–The Group has a risk appetite statement to define risk appetite and tolerance <br>thresholds, which forms the basis of the risk management procedures for the first <br>and second lines of defence, the Group's capacity and capabilities to support <br>customers, and the achievement of strategic goals. The GRC maintained oversight of <br>the Group's risk appetite framework, reviewing enhancements to the Group's risk <br>appetite statements and recommending these to the Board for approval.<br>–The Committee has monitored the Group's control processes and escalation <br>protocols through various reports, and has considered risk acceptance, rapid <br>escalation processes, the adequacy of internal reporting tools and reporting on <br>various issues. | **Treasury risk** | It is essential that capital and liquidity risk is <br>monitored effectively, and the Group takes active <br>steps to maintain its capital and liquidity positions. <br>Regular stress testing is undertaken to ascertain the <br>Group's operation when under stress. Developing <br>action plans and guardrails to cover scenarios of <br>recovery or resolution at subsidiary or Group level is <br>a vital part of HSBC's prudential risk management.<br>| –The Group proactively tracks and maintains safeguarding of its capital and liquidity <br>positions, utilising early warning indicators, sensitivity analysis, capital and liquidity <br>reporting and adequacy. It performs internal and regulatory stress tests to measure <br>resilience and performance against a range of stress scenarios, and to challenge the <br>strategic management actions that could be applied against anticipated stress events <br>and headwinds. This capability has been critical this year to allow us to consider <br>numerous scenarios relating to the uncertainty in the external environment and to <br>reposition portfolios accordingly. <br>–The GRC conducted its annual review and challenge of the Group's ICAAP and ILAAP, <br>and provided its recommendations to the Board for approval. In relation to stress <br>testing exercises, the GRC reviewed the Group Recovery Plan stress scenarios and <br>results, and an internal climate scenario analysis was also undertaken. The Committee <br>reviewed and approved the Group-wide internal stress test, scenarios and outputs, <br>which contributes to the Group's commitment to regularly test the resilience of the <br>balance sheet and profit and loss under multiple scenarios of varying severity. In <br>response to the Bank of England's updated approach to stress testing the UK financial <br>system, the Bank Capital Stress Test ('BCST') scenario was considered, and results <br>approved.<br>–As part of its regulatory obligations, the Group is required to show how its recovery <br>and resolution strategies could be executed effectively and identify any risks to <br>successful implementation. The GRC continued its oversight of the Group's progress in <br>maintaining and developing its capabilities under the Bank of England's requirements <br>for resolvability. Further to the March 2025 deadline for meeting the PRA's Trading <br>Activity Wind Down requirements, the Group confirmed that it is able to perform an <br>orderly 24-month wind down of trading activities. The GRC will continue to monitor the <br>development of our Trading Activity Wind Down capabilities in order to meet regulatory <br>policy expectations.<br>–To provide sufficient time and focus on Treasury-related topics, four separate briefings <br>were held throughout the year, which were well attended by members of the <br>Committee and the Board. Topics included: ICAAP, ILAAP, restructuring planning, <br>Interest Rate Risk Assessment, Group Recovery Plan, BCST, Interest Rate Risk in the <br>Banking Book ('IRRBB'), Hold To Collect Guardrails, and a deep dive into the <br>Resolvability Assessment Framework. The format was well received by Directors and <br>will continue in 2026.<br>|

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **245** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Risk Committee | Group Risk Committee | Group Risk Committee |

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| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) |
| **Risk areas** | **Key issues** | **Conclusions and actions** |
| **Model risk** | HSBC can face risks from inappropriate or incorrect <br>business decisions arising from the use of models <br>that have been inadequately designed, implemented <br>or used, or do not perform in line with expectations <br>and predictions.<br>| –The GRC continued to receive regular updates on model risk management, focusing <br>on two key items: i) the implementation of Supervisory Statement (SS) 1/23 – 'Model <br>risk management principles for banks'; and ii) progress in strengthening wholesale <br>internal ratings- based models. The GRC has overseen the regulatory engagement <br>with the PRA and their subsequent feedback on implementation, updated action <br>plans and resourcing required to address the increased validation requirements. <br>|
| **Resilience/**<br>**Operational risk**<br>| A failure in resilience could lead to a situation where <br>HSBC customers might suffer significant disruption <br>to services or loss of data. <br>Technology risks (including cybersecurity) could <br>cause unmanaged disruption to any technology <br>system within HSBC, as a result of malicious acts, <br>accidental actions, poor technology practice, or <br>technology system failure.<br>| –The GRC continued its oversight of the Group's implementation of operational <br>resilience capabilities in line with PRA and FCA policies. The Operational Resilience <br>Group Level Self Assessment was recommended by the Committee to the Holdings <br>Board for approval in March 2025, with the material completion of the <br>implementation of the Operational Resilience (SS1/21 and the PRA rulebook) for UK <br>Important Business Services (IBS) and Important Group Business Services (IGBS). <br>This has resulted in overall improvements to resilience, with fewer disruptions across <br>our UK entities in particular. An additional briefing session on operational resilience <br>was held in March to prepare the Committee for recommendation of the self-<br>assessment.<br>–The GRC regularly reviewed reports on the Group's technology risk profile, as well as <br>receiving updates on cybersecurity risk. Reports have focused on the technology risk <br>and control environment, and the Committee has supported the drive for continuous <br>risk reduction, progress with our strategic future state through the Digital <br>Acceleration Programme, and the heightened external cyber threat environment. The <br>GRC continued with its strong focus on understanding the Group's data risk <br>landscape and the mobilisation of the Group Data Execution Programme. This has <br>included the tracking of progress made and close monitoring of timelines. <br>–The Committee has been specifically briefed on external events that have either <br>impacted peers in the market or third parties. Read across exercises were conducted <br>and lessons learned taken forward to enhance our own operations and resilience. <br>The Committee has also spent additional time on payments risk this year, which has <br>been elevated as a key risk within the risk taxonomy. <br>–The GRC will continue to work with the GTO to consider the risks and opportunities <br>in the use of AI (generative and advanced) and digital assets and currencies in 2026.<br>|
| **Wholesale/**<br>**retail credit risk**<br>| HSBC faces risk from the possibility of losses <br>resulting from the failure of a counterparty to meet <br>its agreed obligations to pay the Group. <br>| –The GRC received regular updates on the macroeconomic and policy landscape <br>impacting credit risk, both retail and commercial, and reviewed updates on the <br>strategy and approach to managing credit risk and credit risk capabilities. The GRC <br>received regular updates on the Group's ECLs and provisions, and the credit risk <br>arising from the wholesale and retail portfolios. The Committee tracked <br>enhancements made to the Country and Industry components of the Credit Risk <br>Appetite Framework, and the related data quality dependencies. The Committee was <br>updated on the implementation of the Single Name Concentration Framework and <br>actions being taken to enhance.<br>|
| **Financial** <br>**reporting risk**<br>| HSBC is exposed to risks where controls supporting <br>the reporting of its financial statements are not <br>effective, resulting in material error or misstatement.<br>| –While the GAC has primary responsibility in relation to internal control systems <br>(including financial controls), with further detail on page <u>[236](#id42dbec1de4a4a5390289335f1b45526_52)</u>, the GRC receives <br>reports on entity level control assessments to enable the oversight of the <br>effectiveness of such controls in support of the Group's financial reporting.<br>|
| **Financial crime** <br>**risk**<br>| There is a risk that HSBC's products and services <br>could be exploited for criminal activity, including <br>fraud, bribery and corruption, tax evasion, sanctions <br>and export control violations, money laundering, <br>terrorist financing and proliferation financing.<br>Insider threat also presents the risk that an individual <br>with access to bank data, systems, infrastructure or <br>finances could use that access to intentionally cause <br>harm to the bank and its customers.<br>| –The GRC was updated regularly on the operation and effectiveness of the systems <br>and controls pertaining to financial crime risk across geographies and businesses. In <br>February, the Committee supported a direction from the Group Head of Financial <br>Crime and Group Money Laundering Reporting Officer for improvements to be made <br>to three key areas: i) customer due diligence; ii) financial crime investigations; and iii) <br>customer selection and exit management process. The Committee will continue to <br>monitor progress of these improvements in 2026. <br>–Sanctions was a key area of focus for the Committee in 2025, with reporting <br>providing detail on how changes to sanctions translated into our business and <br>activities. The Committee was fully informed of our potential exposure to primary <br>and secondary sanctions and how our capabilities are being utilised to detect <br>problematic activity. <br>–The risk of insider threat remained elevated in 2025 due to several factors, including <br>cost-of-living challenges, the potential impact of Group restructuring on staff morale, <br>the inherent risks associated with growth, and the potential for insiders to use new <br>tools, such as AI, to attack the bank.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **246** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Group Technology and Operations

Committee

---

| | |
|:---|:---|
| ![Eileen_Murray_SQUARE.jpg](hsbc-20251231_g122.jpg) | "In 2025, the Committee provided <br>oversight of the Group's technology <br>and operations strategies and <br>supported their sustainability and <br>safe growth-oriented execution, <br>amid rapid technological change and <br>rising external complexity." |
| ![Eileen_Murray_SQUARE.jpg](hsbc-20251231_g122.jpg) | **Eileen Murray**<br>**Chair**<br>Group Technology and Operations Committee |
| For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. | For Committee membership, see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u> and for meeting attendance in 2025 see page <u>[228](#id42dbec1de4a4a5390289335f1b45526_7484)</u>. |
| **Key responsibilities** |  |
| The Committee's key responsibilities include:<br>– reviewing, challenging, and making recommendations to the <br>Board on technology strategy and related matters; <br>– overseeing HSBC's data strategy and framework;<br>– overseeing HSBC's cybersecurity strategy and framework; and<br>– overseeing HSBC's global operations (including payments, third <br>party management, corporate real estate, and operational <br>resilience). | The Committee's key responsibilities include:<br>– reviewing, challenging, and making recommendations to the <br>Board on technology strategy and related matters; <br>– overseeing HSBC's data strategy and framework;<br>– overseeing HSBC's cybersecurity strategy and framework; and<br>– overseeing HSBC's global operations (including payments, third <br>party management, corporate real estate, and operational <br>resilience). |

---

I am pleased to introduce the Group Technology and Operations

Committee ('GTO') report and to provide an overview of the key

matters considered in 2025. As highlighted in last year's report, we

expanded the scope of the GTO to include oversight of the Group Chief

Operating Officer's ('GCOO') remit. We have detailed the key areas of

Committee focus across both the GCOO and Group Chief Information

Officer ('GCIO') accountabilities below.

**Areas of significant focus during 2025** 

During the second year of operation of the GTO, we continued to

provide close oversight of the GCIO priorities, including execution of

the technology strategy and enhancement of technology controls. We

challenged management on prioritisation of deliverables and the

feasibility of achieving these within the proposed timescales.

We dedicated significant time to understanding management's

progress to evolve the holistic data strategy. This included the review

of detailed execution plans, proposed changes to the operating model

for data resources and discussion of how accountability for delivery of

the plan is being supported by regular metrics, allowing progress to be

measured.

We considered the ambitions and strategic plans relating to AI and

digital assets and currencies, with particular focus on understanding

areas of opportunity, peer activity in these areas, the regulatory

landscape and the maturity of supporting risk frameworks and controls.

From a cybersecurity perspective, we discussed the strategic priorities

including ongoing control enhancements to keep pace with the ever-

evolving threat landscape. The GTO received regular updates on the

cybersecurity exposure across all third parties, their adherence to

HSBC's enhanced control standards and implementation progress.

We provided feedback on the GCOO strategy, which will continue to

evolve into 2026. The Group's third party strategy, including how we

oversee the risks posed by material suppliers, was regularly discussed.

Given the increasing volume of external incidents impacting the

financial services and other industries, with root causes related to third

and fourth parties, this is a significant concern and all aspects of third

party management will be a continued focus in 2026.

The global operational resilience programme was discussed several

times, including updates on the status of control and process

improvements being implemented to make the programme more

sustainable, and the risks and challenges relating to regulatory

expectations regarding resilience in a number of jurisdictions.

We also reviewed the ongoing development of a strategic framework

to support Group-wide location strategy decisions, incorporating key

factors such as future state workforce and skills, corporate real estate

portfolio, geopolitical considerations and the macroeconomic

environment.

**Enhancing accountability** 

The GTO has continued to work closely with management, to oversee

actions being taken to reinforce and embed enhanced accountability for

the most critical transformation programmes. We received several

updates on how relevant lessons learned, in respect of complex

transformation programmes, were being considered and applied to

other transformation initiatives. We reviewed a number of strategic

programmes with significant technology components, including global

foreign exchange, wholesale credit and lending, foreign exchange, and

payments.

The GTO also received regular updates on management's programmes

to meet regulatory deliverables and address technology and operations-

related risk and control matters, commensurate with the Group's risk

profile. We continued to challenge the approach to prioritisation and

delivery timelines, while remaining cognisant of the complexity of the

estate. Assurance from Risk and Global Internal Audit on the

robustness of their approaches was also obtained.

**Connectivity within the Group** 

We continue to invite observers from the principal subsidiaries to our

meetings. We held three subsidiary-focused meetings during 2025,

with a focus on operational resilience, and other key risk and control

themes. We discussed regulatory regimes across the different

markets, progress against agreed timelines, challenges to meet

expectations, metrics reporting and dependencies on Group-level

programmes and deliverables.

**Board education** 

The GTO hosted three training sessions in 2025 to which all Board

members were invited. These sessions provided an opportunity for

directors to engage with external subject matter experts and to discuss

external insights and regulatory developments relating to critical topics:

data and third-party risk management, and cybersecurity.

Additionally, in January 2025 there was a three-day visit to Mexico City

that included visits to a retail branch, call centre and the Global Service

Centre. This enabled in-person interactions with several teams across

technology and operations, and enhanced our understanding of key

areas of focus and progress in the region.

I would like to thank my fellow members for their contribution

throughout 2025.

**Committee performance**

Finally, I was pleased that the annual review of the GTO's

performance concluded that the GTO continued to operate

effectively. Further details of the review can be found in the 'Board and

committee performance review' section on page <u>[231](#id42dbec1de4a4a5390289335f1b45526_4259)</u>.

**Eileen Murray** 

**Chair Group Technology and Operations Committee** 

25 February 2026

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **247** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Technology & Operations Committee | Group Technology & Operations Committee | Group Technology & Operations Committee |

---

Committee governance

The GTO operates under delegated authority from the Board and

advises the Board on matters concerning the Group's technology and

operations strategies and related matters. The Chair reports on the key

matters and discussions at the subsequent Board meeting, and the

Board also has access to the GTO papers and receives copies of

meeting agendas and minutes.

The GCIO, GCOO, Group CEO, Group Chief Risk and Compliance

Officer, Group Head of Resilience Risk, Group CFO, Group Head of

Internal Audit, and the external auditor are standing attendees at GTO

meetings.

The Chair and members of the GTO also hold private meetings with the

GCIO, GCOO, Group Chief Risk and Compliance Officer, and Group

Head of Internal Audit, as required.

The Chair meets regularly with the GCIO and GCOO and other

members of senior management, to discuss priorities and track

progress on key actions. The Chair also meets regularly with the GTO

secretary to ensure the GTO addresses its governance responsibilities.

How the Committee discharged its

responsibilities

Engagement outside formal meetings

The Chair engaged with a variety of stakeholders outside of regular

meetings to enable deeper and more effective oversight of all key

topics under the GTO's remit.

Inter-committee communication

The GTO worked closely with the GRC and the GAC to address any

areas of significant overlap, and to oversee technology and operations

more comprehensively through inter-committee communications.

The committees worked closely to ensure appropriate alignment in the

review, discussion, challenge, and conclusions on topics including

technology, cybersecurity, data, operational resilience, third party

management and innovation. This ensured that the committees

benefited from each other's expertise and challenge.

Coordination between the GTO, GRC and the GAC is supported by

cross-membership. The GTO Chair attends the GRC, the GRC Chair

attends the GAC, and the GAC Chair attends both the GTO and GRC,

strengthening connectivity and the flow of information between the

committees.

Connectivity with principal subsidiaries

Non-executive directors from the principal subsidiaries are invited to

attend all regular GTO meetings.

In addition, three additional 'GTO – Principal Subsidiaries' meetings

were held to discuss Operational Resilience and other key risk and

control themes.

Specific areas of focus included discussion of market-specific

challenges, including differences in regulatory regimes, progress

against agreed timelines, challenges to meet expectations, and

dependencies on Group-level programmes and deliverables. There was

also sharing of learnings from the UK Operational Resilience

Programme and other relevant regulatory initiatives.

Education sessions facilitated by third parties

The Chair organised three education sessions presented by

independent third parties, to which all Board members were invited.

For each topic, the third parties also provided peer/industry insights,

and suggested key questions that the Board should ask management.

In March 2025, a detailed session was presented on data opportunities

and challenges. This covered the role of data in the wider digital

ecosystem, different value drivers, perspectives on a good data

strategy, industry view and key Board considerations.

In June 2025, the focus was on third-party risk management including

the global regulatory landscape, various thematic deep dives for

example, fourth parties and concentration risk and vision for the future.

In September 2025, cybersecurity was covered, including an overview

of the threat landscape, attacks and response, regulatory landscape and

the role of the Board in response to a cyber incident.

---

| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 | Principal activities and significant issues considered during 2025 |
| **Area of focus** | **Key issues** | **Conclusions and actions** |
| **Technology** <br>**strategy**<br>| Group-wide focus, including alignment <br>with each of the businesses, to <br>implement the technology strategy. <br>| –The GTO regularly reviewed and challenged updates, including supporting metrics, in relation to the <br>technology strategy and the various programmes in place to deliver control improvements. <br>–The GTO challenged whether funding and resource was appropriate to support execution timelines.<br>–The GTO considered opinions provided by Risk and Global Internal Audit on the robustness of the <br>approach and progress being made.<br>–The GTO met with CIOs, COOs, and board members from the principal subsidiaries to discuss <br>progress, dependencies, and challenges regarding Group-wide implementation of technology <br>programmes and management of risk and control issues.<br>|
| **Investment and** <br>**transformation**<br>| A number of significant programmes <br>with material technology and <br>operations components have been <br>subject to replanning and/or did not <br>deliver the benefits expected.<br>| –The GTO oversaw the ongoing implementation of improvements to drive individual accountability for <br>significant investment and transformation activities.<br>–The GTO discussed the root causes for the replanning of specific programmes and requested the <br>outputs of lessons learned activities and evidence of read across. <br>–Following the Group-wide reorganisation, a key focus was on change and execution risks and on <br>managing and simplifying the volume of change-related activity. <br>|
| **Investment and** <br>**transformation:** <br>**Global FX**<br>| Global FX is a significant proposition <br>for HSBC and is subject to an ongoing <br>investment programme. <br>| –The GTO reviewed the Global FX strategy and investment case, including the business context, <br>competitive landscape, alignment to the desired future state architecture, required capabilities and <br>key opportunities and challenges.<br>|
| **Investment and** <br>**transformation:** <br>**Wholesale** <br>**Credit and** <br>**Lending** <br>| Wholesale credit and lending is a <br>significant proposition for HSBC and is <br>subject to an ongoing investment <br>programme.<br>| –The GTO reviewed the wholesale credit and lending strategy and investment case, including the <br>business context, competitive landscape priority, alignment to the desired future state architecture, <br>transformation initiatives, risks and dependencies. <br>|
| **Operational** <br>**resilience**<br>| Operational resilience remains a key <br>priority for HSBC.<br>| –The GTO regularly discussed progress of work to improve resiliency of services to customers <br>including ongoing efforts to simplify the technology estate and to reduce service interruptions <br>impacting customers.<br>–The GTO reviewed plans to further embed the operational resilience framework, implementation of <br>strategic tooling, automation of manual controls and meeting regulatory requirements.<br>–The GTO discussed challenges being encountered by the principal subsidiaries to meet market-<br>specific regulatory requirements.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **248** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Group Technology & Operations Committee | Group Technology & Operations Committee | Group Technology & Operations Committee |

---

---

| | | |
|:---|:---|:---|
| Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) | Principal activities and significant issues considered during 2025 (continued) |
| **Area of focus** | **Key issues** | **Conclusions and actions** |
| **Generative AI** <br>**strategy**<br>| While GenAI will provide operational <br>efficiency, none of the use cases in <br>production will deliver significant <br>financial impact. <br>| –The GTO reviewed and challenged strategies to leverage the opportunities presented by innovation and <br>new technologies, including in relation to GenAI. <br>–The GTO discussed the recent streamlining of governance and approval processes, enhancement of <br>tooling and upskilling of talent, approach to risk management, the fast-evolving regulatory landscape, and <br>key next steps to be taken by management to further enable the opportunities presented by GenAI. <br>|
| **Digital assets** <br>**and currencies** <br>**strategy**<br>| Digital assets and currencies are a <br>fast-changing market with significant <br>regulatory developments and <br>geopolitical risks. HSBC must provide <br>clients with access to these products <br>in order to maintain market position.<br>| –The GTO reviewed and challenged the Group's digital assets and currencies strategy.<br>–The GTO discussed the opportunities presented by digital assets, as well as the regulatory and <br>competitive environments, the risks, controls, technology architecture and the importance of innovation <br>to empower our customers.<br>|
| **Cybersecurity** | Cybersecurity remains one of the <br>most significant risks faced by the <br>financial services industry.<br>| –The GTO received updates from the GCIO and Global CISO on all key components of the cybersecurity <br>programme, including:<br>–ongoing work to enhance the risk and control framework and to improve resilience; <br>–the external threat environment including incidents; <br>–talent acquisition and competition;<br>–incident readiness and playbook testing; and<br>–cybersecurity exposure across third parties and actions being taken to resolve. <br>–The GTO challenged management on capacity and capability to deliver its strategy and discussed <br>continued focus on prioritisation.<br>|
| **Data** | A holistic Group data strategy is <br>required to drive long term sustainable <br>benefits and enable AI at scale.<br>| –The GTO requested specific updates on the holistic Group data strategy and operating model and <br>reviewed detailed business cases relating to data as well as key milestones and accountable executives.<br>–A newly-defined suite of metrics will be used to demonstrate progress and business outcomes.<br>–Activities to implement improvements to data risks and regulatory reporting continues in parallel to the <br>data strategy, the latter acting as a sustainable and critical complement to drive data quality at scale. The <br>Committee continued to have visibility of updates being presented to the GRC on this topic.<br>|
| **GCOO strategy** | Development of a holistic strategy <br>across all components of the GCOO <br>portfolio.<br>| –The GTO regularly reviewed and challenged the GCOO strategic priorities, including specific key <br>outcomes, proposed timelines, known dependencies and development of metrics to track and measure <br>success. <br>|
| **Location** <br>**strategy**<br>| Significant focus to develop a holistic <br>Group-wide location strategy to <br>progress from previously locally <br>driven, reactive and focused on cost.<br>| –The GTO regularly discussed and oversaw the development of a holistic Group-wide location strategy <br>and operating model. Key components included business growth priorities, workforce needs, customer <br>proximity, risks, financials, regulatory compliance, and macroeconomic conditions. <br>–The GTO received and discussed an independent assessment from a third party on the strategy, <br>progress made and next steps.<br>–The GTO will continue to provide oversight in 2026 on implementation of the new framework and <br>governance model for all location and real estate related decisions.<br>|
| **Third party** <br>**management**<br>| Reliance on third parties is one of the <br>most significant risks faced by the <br>financial services industry given <br>potential impacts on resilience.<br>| –The GTO regularly reviewed and challenged the strategy and updates in relation to third party <br>management, including progress on implementing control and risk assessment standards uplifts, <br>enhancements to continuous risk monitoring, review of risk acceptances and implementation of new <br>systems and technology to drive operational efficiency. <br>–The GTO also considered evolving regulatory expectations in relation to suppliers (including broader <br>consideration of fourth and fifth parties) and other relevant industry activity in relation to third parties.<br>–The GTO will maintain focus on all aspects of third-party management during 2026.<br>|
| **Resource and** <br>**capability**<br>| Having the right skills and resources is <br>critical to achieving our strategic <br>ambitions.<br>| –The GTO reviewed the GCIO and GCOO people and capability plans. <br>–Key resources, dependencies on subject matter experts, and future skills needs were also considered in <br>respect of all programme updates and strategies and will continue to be considered during 2026.<br>|

---

Focus of future activities

The GTO's focus for 2026 aligns broadly with our priorities in 2025,

with continued oversight of the following:

–execution of the technology and GCOO strategies and how they are

aligned with and enabling the business strategies;

–execution of the cybersecurity strategy and progression of the

actions being taken to manage the risks and implications of the

evolving geopolitical environment and to mitigate the increasing

sophistication of threats;

–priority innovation initiatives, including AI and digital assets, given

the rapidly evolving market;

–execution of the holistic data strategy with a focus on future

opportunities, including those enabled by AI;

–execution of the GCOO strategy and its key components, including

metrics to measure performance and alignment with the business

and technology strategies;

–the Group-wide location strategy and framework and the interplay

with real estate and workforce plans;

–all aspects of third-party management, including strategy, risk

management and opportunities to leverage new technology and

tools to simplify processes; and

–embedding of operational resilience across the organisation,

including further automation of manual controls.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **249** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Directors' remuneration report

---

| | |
|:---|:---|
| ![Carolyn_D_SQUARE.jpg](hsbc-20251231_g123.jpg) | "Our remuneration approach is <br>driving a high-performance culture, <br>supporting HSBC's growth as a <br>simpler, more agile, and customer-<br>focused bank." |
| ![Carolyn_D_SQUARE.jpg](hsbc-20251231_g123.jpg) | **Dame Carolyn Fairbairn**<br>**Chair**<br>Group Remuneration Committee |
| For committee membership see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u>. | For committee membership see Board biographies on pages <u>[220](#id42dbec1de4a4a5390289335f1b45526_4246)</u> <br>to <u>[223](#id42dbec1de4a4a5390289335f1b45526_5911)</u>. |
| **Key responsibilities** |  |
| The Committee's key responsibilities include:<br>–making recommendations to the Board, for approval by <br>shareholders, on the Directors' remuneration policy;<br>–setting the overarching principles, parameters and governance <br>framework of the Group's remuneration policy;<br>–approving the scorecard measures, targets and remuneration of <br>executive Directors and other senior Group employees; and<br>–regularly reviewing the effectiveness of the remuneration policy <br>of the Group and its subsidiaries in the context of strategy, <br>culture, conduct and effective risk management. | The Committee's key responsibilities include:<br>–making recommendations to the Board, for approval by <br>shareholders, on the Directors' remuneration policy;<br>–setting the overarching principles, parameters and governance <br>framework of the Group's remuneration policy;<br>–approving the scorecard measures, targets and remuneration of <br>executive Directors and other senior Group employees; and<br>–regularly reviewing the effectiveness of the remuneration policy <br>of the Group and its subsidiaries in the context of strategy, <br>culture, conduct and effective risk management. |
| All disclosures in the Directors' remuneration report are unaudited <br>unless otherwise stated. Disclosures marked as audited should be <br>considered audited in the context of the financial statements taken <br>as a whole. | All disclosures in the Directors' remuneration report are unaudited <br>unless otherwise stated. Disclosures marked as audited should be <br>considered audited in the context of the financial statements taken <br>as a whole. |

---

**Dear shareholders,**

I am pleased to present our 2025 Directors' remuneration report on

behalf of members of the Group Remuneration Committee (the

'Committee'). This report includes details of our Directors'

remuneration arrangements in respect of the year to 31 December

2025 and a summary of how we intend to apply the Directors'

Remuneration Policy in the forthcoming year.

I would like to thank shareholders for their support of our new

Directors' Remuneration Policy with a 96.10% vote in favour at the

2025 Annual General Meeting.

I have set out below a summary of our 2025 performance, key

decisions made by the Committee and how the Committee has applied

the new policy.

Performance in 2025

**Financial performance**

Our financial performance in 2025 demonstrates the intent and

discipline with which we are executing our strategy.

We reported profit before tax of $29.9bn, down $2.4bn compared with

2024, primarily due to a $4.9bn year-on-year net impact from notable

items. In 2025, notable items included the recognition of dilution and

impairment losses of $2.1bn related to our associate BoCom, reserve

recycling losses of $1.5bn following the completion of the sale of our

French retained portfolio of home and certain other loans, legal

provisions of $1.4bn and restructuring and other related costs

associated with our organisational simplification of $1.0bn. Constant

currency profit before tax excluding notable items increased by $2.4bn

to $36.6bn.

Reported revenue of $68.3bn increased by $2.4bn compared with

2024, mainly due to fee and other income growth in Wealth and in

Wholesale Transaction Banking, particularly in Foreign Exchange in CIB.

In 2025, target basis operating expenses grew by 3%, in line with our

targeted growth commitment. This reflected higher planned spend and

investment in technology and included the impact of simplification-

related saves associated with our announced reorganisation.

Our RoTE for 2025 was 13.3%, compared with 14.6% in 2024.

Excluding notable items, RoTE was 17.2%, a 1.6 percentage point

increase on 2024.

The Board approved a fourth quarterly dividend of $0.45 per share,

bringing the total dividend announced for 2025 to $0.75 per share.

Furthermore, in respect of 2025 we announced two share buy-backs

worth a total of $6bn.

**Strategic performance**

We continued to make progress in reshaping the Group. In 2025 we

announced 11 transactions and have commenced strategic reviews of

our retail businesses in Australia, Indonesia and Egypt, and also of

HSBC Life Singapore. We completed the privatisation of Hang Seng

Bank on 26 January 2026, which will deepen our presence in one of our

home markets and position us to outpace market growth.

Our UK and Hong Kong businesses hold leading market positions and

have seen good financial performance in 2025. Our focus on customers

has seen improved net promoter scores ('NPS') in the UK across both

RBW and CMB. Hong Kong RBW recorded its highest ever NPS, up 9

points from 2024. We have also seen improvements in NPS in strategic

IWPB markets and in CIB versus 2024.

I am pleased that our employee engagement index remains strong

despite the significant changes to our businesses. Over 87% of

colleagues participated in our 2025 employee Snapshot survey. Though

falling by two percentage points compared with 2024, employee

engagement measured through the survey remains high at 78%, four

percentage points above the global financial services benchmark.

Key remuneration decisions for executive

Directors

**Annual incentive for 2025 performance**

Scorecards were set at the start of the year to align with our reported

financial performance, excluding the impact of strategic transactions

and one-offs on the Group's financial performance in 2025, consistent

with the approach taken in previous years.

Based on the strong underlying financial performance delivered during

2025 and good progress made on execution of our strategic objectives,

the 2025 scorecard outcome for Georges Elhedery of 80.13% results in

an annual incentive of £3,605,000. This compares with a 2024

scorecard outcome of 78.79% and annual incentive of £1,677,000

when Georges was assessed against both Group CFO and Group CEO

scorecards and pay outcomes were pro-rated accordingly.

Pam Kaur was appointed as an executive Director on 1 January 2025.

Pam's 2025 scorecard outcome of 80.03% results in an annual

incentive of £2,100,000.

**2023–2025 long-term incentive ('LTI') vesting**

Georges Elhedery and Pam Kaur participated in the 2023–2025 LTI that

will vest in March 2026.

The Group exceeded its maximum relative total shareholder return

('TSR') and carbon reduction targets, demonstrating the

outperformance of the Group versus our peers over the period and

progress on sustainability. Group RoTE was above threshold

performance and was assessed at 30.8% of maximum. Targets for

sustainable finance and investment and capital reallocation to Asia

measures were not met. Overall, 45.19% of the original award will vest

and be released on a pro-rata basis over the next five years.

The Committee is comfortable that the pay outcomes for both

executive Directors are appropriate in the context of company and

individual performance for 2025.

**2026 fixed pay**

The Committee considered making a salary increase for the Group CEO

and Group CFO, aligned with the overall increase being considered for

our Group colleagues, noting the strong 2025 performance delivered.

However, taking into account that 2025 has been a significant year of

transformation and to align with our more targeted approach to

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **250** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

awarding fixed pay increases for the wider workforce, there will be no

salary increase for either the Group CEO or Group CFO in 2026.

Therefore, Georges Elhedery's base salary for 2026 will be £1,500,000

and Pam Kaur's base salary will be £875,000.

**2026–2028 LTI awards**

The Committee intends to grant both Georges Elhedery and Pam Kaur

the maximum 2026-2028 LTI award of 600% of base salary (Georges

Elhedery: £9,000,000, Pam Kaur: £5,250,000).

The value realised from the award is subject to performance over the

next three years. The award will vest in five equal annual instalments

after the end of the performance period and shares delivered are

subject to a one-year retention period on vesting.

**Performance measures and targets**

The Committee has reviewed the performance measures used for our

incentive arrangements to ensure that these are aligned to the Group's

priorities and balance delivery of financial and strategic performance.

For the 2026 annual incentive scorecard, we will retain the same

financial measures as 2025, aligned to the Group's priorities, including

our core measures of profit before tax ('PBT'), Group RoTE and costs,

plus a measure on fee income growth (all excluding notable items). We

will assign equal weighting of 15% to all four measures to better

incentivise growth and maintain discipline on costs, while retaining

focus on delivery of RoTE of 17% or better for our shareholders,

excluding notable items.

2026 non-financial measures will consist of our strategic objectives

(10% weighting), customer measures (15% weighting), people &

culture measures (5% weighting) and personal objectives (10%

weighting).

For the 2026-2028 LTI, we will retain Group RoTE and relative TSR and

increase the weighting for each to 42.5% from 40%.

Based on shareholder feedback, we have removed our own emissions

measure, reflecting that this activity is now largely considered business

as usual, and introduced a financed emissions metric, weighted at 5%.

This will assess whether financed emissions for our most carbon-

intensive sectors - Oil & Gas and Power & Utilities - remain within our

defined risk limits to enable the Group to progress towards its 2030

targets. In addition, the sustainable finance and investment measure,

which is a material metric in support of our ESG ambitions, will have a

10% weighting.

Though the overall weighting of the environment measure will reduce

to 15%, this continues to represent a significant proportion of the

increased total LTI opportunity. It also represents the potential for

higher absolute reward than in previous years because of the new

policy. We will keep the weighting under review as we broaden the

scope of the financed emissions to cover other sectors.

Performance targets and ranges continue to balance achievability with

stretch, ensuring they act as an effective incentive for management,

while reflecting the increased pay opportunities of our new policy.

We will continue to utilise a risk modifier and operate a judgement-

based approach to adjustments for all risk and compliance matters.

🡠For further details, see 'Implementation for 2026' on page <u>[257](#id42dbec1de4a4a5390289335f1b45526_7364)</u>.

Rewarding our colleagues

In 2025, we continued to embed our new performance and pay

approach to deliver high performance and increase transparency.

In our Snapshot survey, 86% of colleagues reported a clear

understanding of what is expected of them, and 81% of colleagues

agreed they received feedback that helps improve their performance.

Pay sentiment continues to increase year-on-year in most areas

because of actions taken through 2024.

🡠For further details, see 'Our approach to workforce reward' on page <u>[259](#id42dbec1de4a4a5390289335f1b45526_7148)</u>.

**Fixed pay**

Fixed pay remains the largest part of most colleagues' reward so we

are pleased to be accredited as a global living wage employer for the

third consecutive year. This means we meet or exceed living wage

benchmarks in all our markets. This gives confidence that we provide

core financial security to colleagues through fixed pay.

Fixed pay is primarily reviewed through our annual pay cycle. Effective

in 2026, we have awarded an overall fixed pay increase of 3.2%. The

level of increases vary by market, depending on the economic outlook

and individual roles. The highest increases were made to lower paid

colleagues relative to relevant market benchmarks.

**Variable pay**

The Committee determined total variable pay of $3,930m, up 10%

compared with the $3,570m awarded in 2024 after adjusting for

disposals and organisational changes. This was determined based on a

review of our performance against financial and non-financial metrics.

We considered the strength of our financial performance in 2025 and

the ratio between variable pay and pre-variable pay profit before tax, the

Group's performance against key risk and compliance metrics, and our

total compensation market position and the broader economic outlook.

Total compensation across all our businesses increased relative to

2024, rewarding colleagues for their contribution to our performance.

We strongly differentiated to ensure our highest performers had the

strongest variable pay outcomes compared to prior year. The

Committee extends its appreciation to colleagues across HSBC who

have worked so hard and effectively to deliver our 2025 results.

Other remuneration matters

We welcome the October 2025 changes to the PRA remuneration

rules, which are now simpler and more proportionate compared with

other financial markets. Notably, the reduction in deferral length, the

removal of the post-vesting retention period for deferred awards, and

the removal of the variable-to-fixed pay ratio cap implemented in 2023

present an opportunity to simplify our remuneration structure. These

changes can help enhance our pay competitiveness and allow for a

greater proportion of total compensation to be delivered as variable pay.

During 2025, the Committee undertook a review of the pay structure

for senior employees in light of these changes. It was determined that

no amendments would be made to the deferral or post-vesting

retention periods for executive Directors. In accordance with the

current shareholder-approved policy, executive Directors will continue

to receive LTI awards with a seven-year deferral period, and any shares

awarded as part of variable pay will remain subject to a one-year post-

vesting retention period. The Committee will continue to keep this

matter under review and will engage with major shareholders on any

potential material changes to the deferral structure for our executive

Directors based on the revised PRA remuneration rules.

For Group colleagues subject to the PRA remuneration rules, the

deferral period for variable pay awards relating to the 2025 performance

year has been reduced to four years, the one-year post-vesting

retention period for deferred shares has been removed and the

threshold for the 60% deferral rate has increased from £500,000 to

£660,000. We are also recommencing the payment of dividend

equivalents on deferred share awards for all colleagues where

regulations permit. This includes executive Directors, in alignment with

our shareholder-approved remuneration policy.

Looking ahead to 2026, a key priority will be to review the pay structure

for our senior executives. This review will ensure that our remuneration

approach continues to support a high-performance culture, incentivises

the achievement of our financial and strategic objectives, and promotes

robust risk management and exemplary conduct standards.

Conclusion

On behalf of the Committee, I would like to thank our shareholders

once again for their support of our new policy and their valuable

feedback. We are committed to regular engagement and I look forward

to further dialogue in the year ahead.

As Chair of the Committee, I hope you will support the 2025 Directors'

remuneration report at the 2026 AGM.

**Dame Carolyn Fairbairn**

**Chair**

Group Remuneration Committee

25 February 2026

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **251** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Remuneration at a glance

Our Directors' remuneration policy was approved at the AGM on 2 May 2025. The full policy can be found on pages 285 to 293 of our Annual

Report and Accounts 2024 and in the Directors' Remuneration Policy Supplement, which is available under Group results and reporting in the

'Investors' section of www.hsbc.com.

Remuneration policy summary – executive Directors

---

| | | | |
|:---|:---|:---|:---|
| **Fixed pay** | **Base salary** | –Base salary is paid in cash on a monthly basis.<br>–From 1 March 2026 (unchanged from prior year):<br>–Georges Elhedery: £1,500,000<br>–Pam Kaur: £875,000 | –Base salary is paid in cash on a monthly basis.<br>–From 1 March 2026 (unchanged from prior year):<br>–Georges Elhedery: £1,500,000<br>–Pam Kaur: £875,000 |
| **Fixed pay** | **Benefits** | –Taxable benefits include the provision of medical insurance, accommodation, car, club membership, <br>independent legal advice in relation to matters arising out of the performance of employment duties for <br>HSBC, tax return assistance or preparation, and travel assistance.<br>–Non-taxable benefits include the provision of a health assessment, life assurance and other insurance <br>coverage. | –Taxable benefits include the provision of medical insurance, accommodation, car, club membership, <br>independent legal advice in relation to matters arising out of the performance of employment duties for <br>HSBC, tax return assistance or preparation, and travel assistance.<br>–Non-taxable benefits include the provision of a health assessment, life assurance and other insurance <br>coverage. |
| **Fixed pay** | **Cash in lieu of pension** | –10% of base salary is paid on a monthly basis.<br>–This allowance, as a percentage of salary, is aligned with the maximum contribution rate that HSBC could <br>make for the majority of employees who are defined contribution members of the HSBC Bank (UK) <br>Pension Scheme. | –10% of base salary is paid on a monthly basis.<br>–This allowance, as a percentage of salary, is aligned with the maximum contribution rate that HSBC could <br>make for the majority of employees who are defined contribution members of the HSBC Bank (UK) <br>Pension Scheme. |
| **Variable pay** | **Annual incentive** | Maximum | –300% of base salary. |
| **Variable pay** | **Annual incentive** | Performance measures | –Performance is measured against an annual scorecard of financial and non-<br>financial measures.<br>–Performance measures for the 2026 Group CEO and Group CFO annual <br>scorecards are set out on page 257.<br>|
| **Variable pay** | **Annual incentive** | Operation | –Payout ranges between 25% and 100% for minimum to maximum <br>performance. Performance below minimum target will result in 0% payout.<br>–Awards can be delivered in any combination of cash and shares, with shares <br>normally representing no less than 50% of the award. Shares are normally <br>immediately vested.<br>|
| **Variable pay** | **Long-term incentive ('LTI')** | Maximum | –600% of base salary. |
| **Variable pay** | **Long-term incentive ('LTI')** | Performance measures | –Prior year performance is taken into consideration when assessing the value <br>of the LTI grant.<br>–Award granted is subject to a forward-looking three-year performance period <br>from the start of the financial year in which the awards are granted. Financial <br>measures will generally have a weighting of 60% or more.<br>–Performance measures for the 2026-28 LTI award are set out on page 258.<br>|
| **Variable pay** | **Long-term incentive ('LTI')** | Operation | –At the end of the performance period, the performance outcome will be used <br>to assess the percentage of the awards that will vest. <br>–Awards will vest in five equal instalments, with the first vesting on or around <br>the third anniversary of the grant date and the last instalment vesting on or <br>around the seventh anniversary of the grant date.<br>|
| **Variable pay** | Other policies applicable to <br>variable pay | Retention | –On vesting, the net number of shares that have vested will normally be held <br>for a retention period of up to one year.<br>|
| **Variable pay** | Other policies applicable to <br>variable pay | Malus | –Unvested awards are subject to malus (i.e. reduction and/or cancellation) <br>during any applicable deferral period.<br>|
| **Variable pay** | Other policies applicable to <br>variable pay | Clawback | –Paid or vested awards are subject to clawback (i.e. repayment or recoupment) <br>for a period of seven years from the date of award, extending to 10 years in <br>the event of an ongoing internal/regulatory investigation at the end of the <br>seven-year period. <br>|
| **Shareholding guidelines** | **Shareholding guidelines** | In-employment | –600% of base salary within five years of appointment. |
| **Shareholding guidelines** | **Shareholding guidelines** | Post-employment | –600% of base salary to be held for two years. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **252** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

2025 executive remuneration outcomes

Further details are set out in our annual report on Directors' remuneration on pages <u>[253](#id42dbec1de4a4a5390289335f1b45526_6741)</u> to <u>[256](#id42dbec1de4a4a5390289335f1b45526_136)</u>.

---

| | |
|:---|:---|
| Georges Elhedery | Pam Kaur |
| Group CFO until 1 September 2024; Group CEO from 2 September 2024 | Group CFO from 1 January 2025 |
| **Single total figure of remuneration (£000)** | **Single total figure of remuneration (£000)** |

---

![229797930320300](hsbc-20251231_g124.gif)

**2025**

**2025**

![](hsbc-20251231_g125.gif)

2024

Not an executive Director in 2024

![](hsbc-20251231_g125.gif)

![229797930320302](hsbc-20251231_g126.gif)

![](hsbc-20251231_g127.gif)

![](hsbc-20251231_g128.gif)

&nbsp;&nbsp;&nbsp;&nbsp;

**Annual incentive outcome (£000)**<br>

Georges Elhedery

![228698418697130](hsbc-20251231_g129.gif)

![](hsbc-20251231_g130.gif)

![](hsbc-20251231_g130.gif)

Maximum opportunity

Maximum opportunity

![](hsbc-20251231_g130.gif)

![](hsbc-20251231_g130.gif)

2025 annual incentive

2025 annual incentive

![](hsbc-20251231_g130.gif)

![](hsbc-20251231_g130.gif)

Pam Kaur

![228698418697235](hsbc-20251231_g131.gif)

&nbsp;&nbsp;&nbsp;&nbsp;

**2023-2025 long-term incentive (LTI) outcome (£000)**<br>

Georges Elhedery (received in prior role as Co-CEO, GBM)

![228698418697370](hsbc-20251231_g132.gif)

![](hsbc-20251231_g130.gif)

![](hsbc-20251231_g130.gif)

Maximum opportunity

Maximum opportunity

![](hsbc-20251231_g130.gif)

2023-25 LTI

2023-25 LTI

![](hsbc-20251231_g130.gif)

Pam Kaur (received in prior role as Group Chief Risk & Compliance Officer)

![268830593106687](hsbc-20251231_g133.gif)

![](hsbc-20251231_g130.gif)

![](hsbc-20251231_g130.gif)

&nbsp;&nbsp;&nbsp;&nbsp;

**Executive Directors' shareholding (% of salary)**<br>

Georges Elhedery

![229797930320312](hsbc-20251231_g134.gif)

Pam Kaur

![21440476857655](hsbc-20251231_g135.gif)

![](hsbc-20251231_g136.gif)

![](hsbc-20251231_g136.gif)

Requirement

Requirement

Actual

Actual

![](hsbc-20251231_g136.gif)

![](hsbc-20251231_g136.gif)

![](hsbc-20251231_g136.gif)

![](hsbc-20251231_g136.gif)

&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| **2026 target opportunities versus peers (£000)** |  |  |
| (Stock ticker and ranking by market capitalisation) | Group CEO  | Group CFO |

---

Data source: Deloitte. 2025 total compensation

based on 2024 year-end disclosures. 'Target' value

of total compensation based on 50% of the

maximum value for the annual incentive, or target

value if disclosed; 50% of the maximum value for

performance-based LTI; the maximum value of

restricted shares; and one third of face value for

share options. Market capitalisation ranking shown

in brackets based on 3-month average as at

31 December 2025.

![229797930324797](hsbc-20251231_g137.gif)

![229797930324772](hsbc-20251231_g138.gif)

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **253** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Annual report on Directors' remuneration

This section sets out how our approved Directors' remuneration policy was implemented during 2025.

Single total figure of remuneration

(Audited)

The following table shows the single total figure of remuneration of each executive Director for 2025, together with comparative figures. Georges

Elhedery was appointed Group CFO effective from 1 January 2023 and succeeded Sir Noel Quinn as Group CEO on 2 September 2024. Pam Kaur

was appointed Group CFO and executive Director of the Board on 1 January 2025.

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Single total figure of remuneration | Single total figure of remuneration | Single total figure of remuneration | Single total figure of remuneration | Single total figure of remuneration | Single total figure of remuneration | Single total figure of remuneration |  |  |  |  |  |  |
| (£000) |  | Base <br>salary<br>| Fixed pay <br>allowance <br>('FPA')<br>| Taxable <br>benefits<br>| Non-<br>taxable <br>benefits<br>| Cash in <br>lieu of <br>pension<br>| **Total** <br>**fixed**<br>| Annual <br>incentive<br>| Notional <br>returns<sup>1</sup><br>| Long-term <br>incentive<sup>2,3</sup><br>| **Total** <br>**variable**<sup>4</sup><br>| **Total** <br>**fixed and** <br>**variable**<br>|
| Georges Elhedery | **2025** | **1479** | **—** | **61** | **108** | **148** | **1796** | **3605** | **5** | **1217** | **4827** | **6623** |
| Georges Elhedery | 2024 | 989 | 1288 | 39 | 58 | 99 | 2473 | 1677 | 8 | 1418 | 3103 | 5576 |
| Pam Kaur | **2025** | **863** | **—** | **71** | **66** | **86** | **1086** | **2100** | **11** | **708** | **2819** | **3905** |

---

1Deferred cash awards granted in prior years include a right to receive notional returns for the period between the grant and vesting date. This is determined by

reference to a rate of return specified at the time of grant and paid annually, with the amount disclosed on a paid basis.

2LTI awards were made in February 2023 at a share price of £6.357 for which the performance period ended on 31 December 2025. The value of the awards has been

computed based on a share price of £10.708, the average share price during the three-month period to 31 December 2025. The LTI granted to Georges Elhedery was

in respect of 2022 performance in his role as Co-CEO, Global Banking and Markets ('GBM'), and for Pam Kaur in her role as Group Chief Risk and Compliance Officer.

See the following section for details of the performance assessment, which resulted in 45.19% vesting, and the award value attributable to share price appreciation.

3The value of the 2022-2024 LTI for Georges Elhedery has been restated based on a share price of £8.442 to reflect the value of the award on 11 March 2025,

when the first tranche of the award vested. In 2024, the value was based on the average share price during the three-month period to 31 December 2024 of

£7.184.

4No malus or clawback was applied to executive Directors' 2025 variable pay awards or outstanding deferred awards from prior years.

Fixed pay

(Audited)

Base pay

As set out in the 2024 report, Group CEO base salary was £1,500,000 and Group CFO base salary was £875,000, effective 1 March 2025.

Benefits

Taxable benefits include the provision of medical insurance, car benefit

and tax support. Non-taxable benefits include the provision of life

assurance and other insurance cover.

The values of the significant benefits in the single total figure table are

set out in the following table.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | Significant benefits | Significant benefits | Significant benefits |  | Total <br>taxable <br>and non-<br>taxable <br>benefits |
| (£000) |  | Group <br>income <br>protection <br>(non-taxable)<br>| Medical <br>insurance<br>(taxable)<br>| Car and<br> driver<br>(taxable)<br>| Other <br>benefits<br>| Total <br>taxable <br>and non-<br>taxable <br>benefits |
| Georges <br>Elhedery | **2025** | **102** | **25** | **18** | **24** | **169** |
| Georges <br>Elhedery | 2024 | 49 | 20 | 6 | 22 | 97 |
| Pam Kaur | **2025** | **62** | **10** | **38** | **27** | **137** |

---

Pensions

As per the approved policy, each executive Director receives a payment of 10% of base salary in lieu of pension contributions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **254** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Annual incentive

(Audited)

Both executive Directors met the minimum standard of conduct and

behaviour for an annual incentive award to be made.

The annual incentive award is awarded 50% in cash and 50% in shares.

The shares portion of the award vests immediately at grant and is

subject to a retention period of one year and clawback provisions.

The award is determined by applying the outcome of their annual

scorecard to the maximum opportunity, set at 300% of base salary.

In assessing performance, the Committee considered, and made no

adjustment for, the impact of interest rates, re-confirming that

variations in the macroeconomic environment and their impact on

business outcomes remain for our executives to manage.

The Committee considered carefully the wider context in which

performance was delivered in 2025, including the strong total return

delivered to shareholders over the year. They judged that the overall

scorecard outcomes for both Georges Elhedery and Pam Kaur were

appropriate against the targets set at the start of the year for financial,

strategic and personal measures, and that the application of the risk

and compliance modifier was not required.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value | Executive Director 2025 annual incentive award value |
| (£000) |  | Base salary<br>£000<br>| Maximum <br>opportunity <br>(% of salary)<br>| Scorecard<br>outcome<br>| Risk & compliance <br>modifier<br>| **Annual incentive**<br>**£000**<br>|
| Georges Elhedery | **2025** | 1500 | 300% | 80.13% | Nil | **3605** |
| Pam Kaur | **2025** | 875 | 300% | 80.03% | Nil | **2100** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  | Annual incentive scorecard assessment  |  |
|  |  | **Weighting** <br>**(%)**<br>| **Minimum** <br>**(25% payout)** | **Maximum** <br>**(100% payout)**<br>| **Performance** | **Assessment** <br>**(%)**<br>| **Outcome (%)** | **Outcome (%)** |
| **Financial (60%)**<sup>1</sup> | Group RoTE<sup>2</sup> | 25 | 13.0% | 16.0% | **17.2%** | **100.00** | **25.00** | **25.00** |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> | Target basis operating expenses<sup>2</sup> | 15 | 3.5% | 1.5% | **3.0%** | **43.75** | **6.56** | **6.56** |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> | Profit before tax ($bn)<sup>2</sup> | 10 | $28.3 | $34.6 | **$36.6** | **100.00** | **10.00** | **10.00** |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> |  |  |  |  |  |  |  |  |
| **Financial (60%)**<sup>1</sup> | Fee income growth relative to <br>balance sheet growth<sup>3</sup><br>| 10 | 2.0% | 6.0% | **8.1%** | **100.00** | **10.00** | **10.00** |
| **Strategic (30%)** | Customer satisfaction | 15 | See strategic measures table for commentary | See strategic measures table for commentary | See strategic measures table for commentary | **76.00** | **11.40** | **11.40** |
| **Strategic (30%)** | Deliver benefits of announced <br>organisational changes<br>| 8 | See strategic measures table for commentary | See strategic measures table for commentary | See strategic measures table for commentary | **87.50** | **7.00** | **7.00** |
| **Strategic (30%)** | People and culture | 7 | See strategic measures table for commentary | See strategic measures table for commentary | See strategic measures table for commentary | **50.00** | **3.50** | **3.50** |
| **Personal (10%)** |  | 10 | See personal measures table for commentary | See personal measures table for commentary | See personal measures table for commentary |  | **Georges** <br>**Elhedery**<br>| **Pam** <br>**Kaur**<br>|
| **Personal (10%)** |  | 10 | See personal measures table for commentary | See personal measures table for commentary | See personal measures table for commentary |  | **6.67** | **6.57** |
| **Formulaic scorecard outcome (%)** | **Formulaic scorecard outcome (%)** |  |  |  |  |  | **80.13** | **80.03** |
| **Risk adjustment (%)** | **Risk adjustment (%)** |  |  |  |  |  | **—** | **—** |
| **Scorecard outcome after risk adjustment (%)** | **Scorecard outcome after risk adjustment (%)** |  |  |  |  |  | **80.13** | **80.03** |
| **Maximum opportunity (£000)** | **Maximum opportunity (£000)** |  |  |  |  |  | **4500** | **2625** |
| **Annual incentive awarded (£000)** | **Annual incentive awarded (£000)** |  |  |  |  |  | **3605** | **2100** |

---

1The CET1 capital ratio of 14.9% exceeded the tolerance level in the risk appetite statement as required by the underpin.

2Excluding notable items.

3FY24 excludes net fee income and net loans and advances to customers from our banking business in Canada and our business in Argentina prior to disposal.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **255** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Strategic measures | Strategic measures | Strategic measures | Strategic measures | Strategic measures | Strategic measures |
|  | **Measures** | **Weighting** | **Performance achievement** | **Assessment** | **Outcome** |
| **Customer** <br>**satisfaction**<br>| Maintain and <br>improve NPS <br>scores/rank<br>| **15.0%** | –Performance is assessed against NPS data from external providers, including <br>InMoment sNPS survey for RBW and IWPB, Coalition Greenwich LC and Mid-<br>market study and Savanta MarketVue Business Banking survey for CMB, and <br>Coalition Greenwich Global Corporates Study for CIB.<br>–We maintained market leadership in both RBW and CMB in Hong Kong, <br>reaching a record NPS in RBW.<br>–In the UK we ranked second for mid-market enterprises, improved our SME <br>Business Banking ranking to fifth, and improved RBW NPS by 5 points <br>compared to 2024.<br>–We rose to first place in IWPB in mainland China and Singapore, and our score <br>increased in the UAE. NPS declined slightly in India.<br>–Amongst Corporates, CIB continues to rank first in Hong Kong, and scores rose <br>in the UK, mainland China, Singapore and UAE. <br>| **76.00%** | **11.40%** |
| **Deliver benefits** <br>**of announced** <br>**organisational** <br>**changes**<br>| Benefits <br>realised and <br>reorganisation <br>programme <br>health<br>| **8.0%** | –We identified and achieved $1.2bn annualised savings against a 2025 baseline of <br>$1.0bn. We are on track to have taken actions to deliver our $1.5bn annualised <br>cost reduction by the end of June 2026, which is six months earlier than <br>planned.<br>–Execution is on track with the majority of programme milestones tracking green <br>throughout 2025 with identified gaps quickly remediated.<br>| **87.50%** | **7.00%** |
| **People and** <br>**culture**<br>| Inclusion and <br>retention of <br>high <br>performers<br>| **7.0%** | –Senior leadership representation for women increased by 0.1 percentage points <br>year-on-year to 34.7%, for Asian heritage colleagues it increased by 1.6 <br>percentage points to 40.9%, and for Black heritage colleagues it remained flat at <br>3.0%. These are above the minimum performance thresholds set, partly <br>meeting the targets. <br>–High performer attrition increased by 0.4 percentage points to 4.1%, and was <br>assessed as partly met given the outcome fell within the performance range.<br>–The Inclusion index in our employee Snapshot survey improved by 0.1 <br>percentage points to 78.3%, above the minimum target set and was assessed <br>as partly met.<br>| **50.00%** | **3.50%** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Personal measures  | Personal measures  | Personal measures  |  |  |
| Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. | Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. | Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. | Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. | Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. |
| **Georges Elhedery** | **Weighting** | **Performance achievement** | **Assessment** | **Outcome** |
| **Regulatory** <br>**excellence,** <br>**wealth** <br>**acceleration** <br>**and strategic** <br>**investments,** <br>**Group** <br>**technology** <br>**strategy**<br>| **10.0%** | –Wealth fees and other operating income of $9.39bn exceeded our maximum target of $8.8bn, <br>driven by Hong Kong and IWPB segments. Net New Invested Assets at $80.0bn is below our <br>threshold performance level of $87.6bn. Overall, performance for this measure was assessed as <br>partly achieving our targets.<br>–Strong performance on Net App Demise with over 700 net reductions across the organisation, <br>surpassing the maximum target set.<br>–Good progress has been made on the most material issues on regulatory excellence. However, <br>more could have been done by the Group to improve the pace of progress on long-standing <br>regulatory deliverables and programmes for which Georges had an oversight role.<br>| **66.70%** | **6.67%** |
| **Pam Kaur** | **Weighting** | **Performance achievement** | **Assessment** | **Outcome** |
| **Regulatory** <br>**excellence,** <br>**Group** <br>**Sustainability** <br>**priorities,** <br>**robust liquidity** <br>**and capital** <br>**management**<br>| **10.0%** | –Reviewed and reset the Group's Sustainability strategy, related policies and financed emissions <br>targets and published the revised Net Zero Transition Plan; continued enhancement on ESG <br>disclosures in areas such as financed emissions and climate risk.<br>–Delivered strong capital position throughout the year, with CET1 consistently above target <br>operating range. <br>–Delivered a robust liquidity position with no breaches throughout the year; enhancements were <br>implemented to further strengthen liquidity management. <br>–Good progress has been made on the most material issues on regulatory excellence. However, <br>more could have been done by the Group to improve the pace of progress on long-standing <br>regulatory deliverables and programmes for which Pam had an oversight role.<br>| **65.70%** | **6.57%** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **256** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Long-term incentive ('LTI') awards

LTI awards over 2023 to 2025 performance period

(Audited)

Georges Elhedery and Pam Kaur were each granted a 2023–2025 LTI

award in February 2023 in their capacity as Co-CEO GBM and Group

Chief Risk and Compliance Officer respectively, prior to their

appointment as executive Directors. Sir Noel Quinn was also granted a

2023–2025 LTI award in February 2023 in his capacity as Group CEO.

At the time of grant, the Committee determined that there were no

windfall gains to consider for this award given the share price at grant

(£6.36) was above the share price at the previous LTI grant (£5.38).

The scorecard delivered an outcome of 45.19%, reflecting strong

shareholder returns across the performance period. The Committee

received input from the GRC who assessed that the performance

targets were delivered with appropriate risk management. On this

basis, the Committee considered that no adjustment for risk matters

should be made.

The value of the 2023–2025 LTI shown below is based on the average

share price during the three-month period to 31 December 2025 of

£10.708. The awards will vest in five equal annual instalments

commencing in March 2026. On vesting, shares equivalent to the net

number of shares that have vested (after those sold to cover any

income tax and social security payable) will be held for a retention

period of one year.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values | Executive Director 2025 LTI values |
| (£000) |  | Award | Ordinary <br>shares <br>granted<br>| Prorated for <br>time in <br>employment<br>| Performance <br>outcome<br>| Risk & <br>compliance <br>modifier<br>| Shares to<br>vest <br>| **Value of** <br>**shares to vest** <br>**£000**<br>| Of which: <br>face value<br>£000<br>| Of which: share <br>appreciation<br>£000<br>|
| Georges Elhedery | **2025** | 2023-25 LTI | 251474 | 251474 | 45.19% |  | 113641 | **1217** | 722 | 495 |
| Pam Kaur | **2025** | 2023-25 LTI | 146393 | 146393 | 45.19% |  | 66154 | **708** | 420 | 288 |
| Former director |  |  |  |  |  |  |  |  |  |  |
| Sir Noel Quinn | **2025** | 2023-25 LTI | 861422 | 669995 | 45.19% |  | 302770 | **3242** | 1925 | 1317 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards | Assessment of the 2023–2025 LTI awards |
| **Measures (weighting)**<sup>1</sup> | **Measures (weighting)**<sup>1</sup> | **Minimum** <br>**(25% payout)** | **Target** <br>**(50% payout)**<br>| **Maximum** <br>**(100% payout)**<br>| **Actual** | **Assessment** | **Outcome** |
| RoTE with CET1 capital ratio underpin<sup>2</sup> (25%) | RoTE with CET1 capital ratio underpin<sup>2</sup> (25%) | 13.0% | 14.3% | 15.5% | 13.3% | 30.8% | **7.69%** |
| Capital reallocation to Asia with CET1 capital ratio <br>underpin<sup>3</sup> (25%) | Capital reallocation to Asia with CET1 capital ratio <br>underpin<sup>3</sup> (25%) | 49.0% | 50.5% | 52.0% | 44.8% | 0.0% | **0.00%** |
| Transition to net <br>zero<sup>4</sup> (25%) | Carbon reduction (own <br>emissions)<br>| 64.0% | 68.0% | 72.0% | 84.9% | 100.0% | **12.50%** |
| Transition to net <br>zero<sup>4</sup> (25%) |  |  |  |  |  |  |  |
| Transition to net <br>zero<sup>4</sup> (25%) |  |  |  |  |  |  |  |
| Transition to net <br>zero<sup>4</sup> (25%) | Sustainable finance and <br>investment<br>| $588bn | $700bn | $756bn | $496bn | 0.0% | **0.00%** |
| Relative TSR<sup>5</sup> (25%) | Relative TSR<sup>5</sup> (25%) | At median of the <br>peer group | Straight-line vesting <br>between minimum <br>and maximum<br>| At upper quartile of <br>the peer group<br>| Above upper <br>quartile<br>| 100.0% | **25.00%** |
| **Total** | **Total** | **Total** | **Total** | **Total** | **Total** | **Total** | **45.19%** |

---

1Awards vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set out in this table.

2Assessed based on RoTE in the 2025 financial year. The CET1 capital ratio of 14.9% exceeded the level required by the underpin.

3Assessed based on share of Group tangible equity (on a constant currency basis and excluding associates) allocated to Asia by 31 December 2025.

4Carbon reduction assessed on percentage reduction in total energy and travel emissions achieved by 31 December 2025 using 2019 as the baseline. Sustainable

finance and investment assessed on cumulative financing provided over the performance period.

5The peer group was: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P. Morgan Chase & Co.,

Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group. Credit Suisse Group was removed following its acquisition by UBS Group in June 2023.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **257** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Implementation for 2026

Fixed pay for 2026

There are no changes to the salary with respect to 2026. Taxable

benefits for 2026 will be in line with 2025. Pensions will continue to

be a cash allowance of 10% of base pay.

---

| | | | |
|:---|:---|:---|:---|
| (£000) | Annual base <br>salary at <br>1 January 2026<br>| Increase | **Annual base** <br>**salary at** <br>**1 March 2026**<br>|
| Georges Elhedery | 1500 | —% | **1500** |
| Pam Kaur | 875 | —% | **875** |

---

Annual incentive measures for 2026

The 2026 annual incentive scorecard measures for our executive

Directors have been set to support the achievement of our strategic

objectives.

Financial measures comprise our core metrics of PBT, Group RoTE and

costs, alongside a measure on fee income growth. Each will be

assessed excluding notable items so that outcomes reflect

performance in the control of management. Each measure will be

equally weighted at 15% to better incentivise growth while retaining

focus on investor commitments. The overall weighting of 60% for

financial measures balances alignment with shareholder performance

and regulatory expectations.

Customer NPS has been retained to reflect our ambition to be the most

trusted bank globally, putting customers at the heart of everything we

do.

We have retained a measure focused on delivery of benefits from the

organisational change as we reshape the Group for growth. This will

include a measure focusing on synergies following the privatisation of

Hang Seng Bank.

Our people and culture measures support our strategy to enable a

culture of high performance. The Committee intends to assess this by

considering our 'How We Lead' index score from our all-employee

survey and the retention of high performers.

Personal measures have been set to ensure meaningful weighting for

the most critical goals for each executive Director.

The Committee will continue to retain discretion to adjust the formulaic

outcomes of scorecards, taking into account factors such as Group

profits, wider business performance and stakeholder experience, to

ensure executive reward is aligned with underlying Group performance

and the broader stakeholder experience.

Performance targets have been set to reflect the Group's 2026 plan,

external commitments, scenario testing of upside and downside risks

in the plan while considering macroeconomic uncertainty, including the

interest rate environment and analyst consensus where available. The

Committee is mindful that targets are suitably stretching in this context.

The performance targets are commercially sensitive, and it would be

detrimental to the Group's interests to disclose them at the start of the

financial year. Subject to commercial sensitivity, we will disclose the

targets in the 2026 Directors' remuneration report.

---

| | | |
|:---|:---|:---|
| **2026 annual incentive performance measures**<sup>1</sup> | **2026 annual incentive performance measures**<sup>1</sup> | **Weighting** |
| **Financial** <br>**measures** <br>**(60%)** | Group RoTE (excluding notable items) | **15%** |
| **Financial** <br>**measures** <br>**(60%)** | Profit before tax (excluding notable items) | **15%** |
| **Financial** <br>**measures** <br>**(60%)** | Fee income growth (excluding notable items) | **15%** |
| **Financial** <br>**measures** <br>**(60%)** | Target basis operating expenses (excluding <br>notable items)<br>| **15%** |
| **Strategic** <br>**measures** <br>**(30%)** | Customer satisfaction: <br>Improvement in NPS scores/rank<br>| **15%** |
| **Strategic** <br>**measures** <br>**(30%)** | Deliver benefits of announced organisational <br>changes<br>| **10%** |
| **Strategic** <br>**measures** <br>**(30%)** | People and culture:<br>How We Lead index score and retention of <br>high performers<br>| **5%** |
| **Personal** <br>**measures** <br>**(10%)**<br>| –Group CEO: Deliver enterprise-wide <br>foundational priorities including regulatory <br>excellence and the Group's technology <br>strategy.<br>–Group CFO: Deliver activities relating to <br>regulatory excellence priorities, Group <br>Sustainability priorities, and robust liquidity <br>and capital management.<br>| **10%** |
| **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down <br>the formulaic outcome taking into account performance against risk and <br>compliance factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down <br>the formulaic outcome taking into account performance against risk and <br>compliance factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down <br>the formulaic outcome taking into account performance against risk and <br>compliance factors during the performance period. |

---

1All measures subject to CET1 capital ratio underpin.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **258** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

LTI awards over 2026 to 2028 performance period

After taking into account performance for 2025, the Committee

decided to grant Georges Elhedery an LTI award of £9,000,000 and

Pam Kaur an LTI award of £5,250,000 (both 600% of base salary).

The awards will have a three-year performance period starting on

1 January 2026.

The Committee has reviewed the performance measures considering

feedback from shareholders and the Group's strategic priorities.

For the 2026-2028 LTI, we will retain Group RoTE and relative TSR

measures but increase their weighting to 42.5% to increase focus on

our financial and shareholder return measures.

Group RoTE will be assessed excluding notable items on an average

basis over the performance period and represents a change from our

previous approach of assessing performance only in the final year. Our

new approach better reflects consistent, sustainable performance over

the measurement period, minimises the impact of short-term

fluctuations in the last year of assessment and addresses investor

feedback received in prior years.

The RoTE measure is subject to a CET1 capital ratio underpin. If the

CET1 capital ratio at the end of the performance period is below the

CET1 risk tolerance level set in the risk appetite statement, then the

assessment for this measure will be reduced to nil.

No changes have been made to our relative TSR peer group, which

was revised in 2023 to include more Asian peers to better reflect our

growth and investment focus.

The Committee has also reviewed the environment measures following

shareholder feedback and has made the following changes for the

2026-2028 awards:

–Removed the measure on carbon reduction in our own emissions to

reflect the views of our shareholders that this is now largely

considered business as usual.

–Introduced a financed emissions measure, weighted at 5%. The

performance of this measure will be assessed on the basis of

financed emissions for our Oil & Gas and Power & Utilities sectors,

remaining within our internally defined risk limits, which have been

set to enable the Group to progress towards our 2030 targets.

These two sectors cover most of our reported emissions. We will

keep the weighting of this measure under review in future years as

we bring in other sectors within its scope.

–Retained the sustainable finance and investment measure, which is

a material metric in support of our ESG ambitions, but have reduced

the weighting from 15% to 10%.

The overall weighting for the environment measure will be 15%,

representing a significant proportion of the overall LTI opportunity.

Performance targets have been set to balance stretch and achievability

so that awards act as an effective incentive for management, and

incentivise outperformance. Target ranges continue to be calibrated to

deliver maximum payouts only for outperformance compared to

consensus and our plan.

For 2026-2028 awards:

–RoTE targets have been set taking into account our plan, with the

maximum target reflecting a stretch above plan.

–The minimum target for relative TSR is set 'at the median of our

peer group', which ensures no payout for below median

performance aligned to investor expectations. The maximum is set

'at the upper quartile of our peer group'.

–For the sustainable finance and investment measure, we have set

performance targets to support our ambition announced in 2020 to

provide $750bn to $1tn of sustainable financing and investment by

2030. We reflected on sustainable financing forecasts, market

demand, and regulation in setting the target range.

–The financed emissions measure will track the reduction of on-

balance sheet financed emissions and be assessed on the extent

that target metrics remain within internally defined risk limits.

These limits have been informed by our risk appetite, have been

set in line with our Financed Emissions Metric Pathway and

converge to our 2030 target.

The LTI is subject to a risk and compliance modifier, which gives the

Committee the discretion to ensure performance targets are delivered

with appropriate risk management.

Following changes to the PRA remuneration rules, awards are entitled

to dividend equivalents, in line with our shareholder-approved policy.

To the extent performance conditions are satisfied at the end of the

three-year performance period, the awards will vest in five equal annual

instalments commencing from around the third anniversary of the grant

date. On vesting, shares equivalent to the net number of shares that

have vested (after those sold to cover any income tax and social

security payable) will be held for a retention period of one year.

---

| | | | |
|:---|:---|:---|:---|
| Performance conditions for the 2026–2028 LTI awards  | Performance conditions for the 2026–2028 LTI awards  | Performance conditions for the 2026–2028 LTI awards  | Performance conditions for the 2026–2028 LTI awards  |
| **Measures (weighting)** | **Minimum**<br>**(25% payout)**<br>| **Target**<br>**(50% payout)**<br>| **Maximum**<br>**(100% payout)**<br>|
| Average RoTE (excluding notable items) with CET1 capital <br>ratio underpin<sup>1,2</sup> (42.5%) | 16.5% | 17.5% | 18.0% |
| Relative TSR<sup>1,3</sup> (42.5%) | At the median of the<br>peer group<br>| Straight-line vesting between <br>minimum and maximum<br>| At the upper quartile of the<br>peer group<br>|
| Environment (15%)<br> Sustainable finance and <br>investment<sup>1,4</sup> (10%)<br>| $733bn | $814bn | $896bn |
| Environment (15%)<br> Financed emissions<sup>5</sup> (5%) | On-balance sheet financed <br>emissions within the Oil & Gas <br>and Power & Utilities sectors <br>remain within the established <br>risk tolerance for at least 80% of <br>the performance period<br>| On-balance sheet financed <br>emissions within the Oil & Gas <br>and Power & Utilities sectors <br>remain within the established <br>risk tolerance for at least 90% of <br>the performance period<br>| On-balance sheet financed <br>emissions within the Oil & Gas <br>and Power & Utilities sectors <br>remain within the established <br>risk tolerance for 100% of the <br>performance period<br>|
| **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance <br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance <br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance <br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance <br>factors during the performance period. |

---

1Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.

2To be assessed based on average RoTE excluding notable items over the performance period, subject to the CET1 capital ratio underpin.

3The peer group for the 2025 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P. Morgan

Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.

4The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the performance period starting from 1 January

2020 and ending 31 December 2028.

5Performance against risk tolerance will be assessed on a rolling two consecutive calendar quarter basis due to volatility and measurement lags. In addition, given

inherent uncertainty with financed emissions measurement, mitigating factors for breaches will be considered by the Committee in assessing performance.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **259** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Our approach to workforce reward

Our approach to workforce reward enables a high-performance culture

where colleagues are at their best and focused on excellent customer

outcomes.

Our workforce reward principles and commitments guide our approach,

strengthen our ability to attract, retain and motivate the people we

need and energise colleagues to perform at their best:

–We reward our colleagues responsibly through fixed pay security

and protection through core benefits, a competitive total

compensation opportunity, pay equity, and a more inclusive and

sustainable benefits proposition over time.

–We recognise colleagues' success through our performance

routines, including feedback and recognition, pay for performance,

and all employee share ownership opportunities.

–We support our colleagues to grow through our proposition beyond

pay, with a focus on future skills and development, support for well-

being, and flexibility.

In 2024, we made significant changes to our approach to improve

colleague experience and unlock our performance edge. We introduced

performance routines to support more frequent exchange of feedback

and implemented a 'Target Variable Pay' plan to help improve

transparency on how we make pay decisions. The year-end

performance assessment was simplified to focus less on ratings and

more on dialogue between managers and colleagues.

In 2025, we continued to evolve our approach and made

enhancements based on the lessons learned from the first year of

implementation. We continued to improve our well-being and

recognition offering, which help motivate employees to perform at their

best.

The Committee tracks various metrics to assess how we are doing and

prioritise our action plans. Our approach overall is working. Employee

engagement measured through our employee Snapshot survey

remained high at 78%. While this fell by two percentage points

compared with 2024, it was four percentage points above the financial

services benchmark. This is a notable achievement in the context of

ongoing activities related to our organisational simplification. Further

highlights for our areas of focus in 2025 are outlined below.

Our approach to workforce reward forms part of our broader employee

value proposition and helps us retain and engage the leaders and

people we need to execute our strategy.

In 2026, a key priority will be to review the pay structure for our senior

executives following changes to the PRA remuneration rules

announced in October 2025. This review will ensure that our

remuneration approach continues to support a high-performance

culture, incentivises the achievement of our financial and strategic

objectives, and promotes robust risk management and exemplary

conduct standards.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| We will reward <br>you responsibly | **Living wage** | **Fixed pay** | **Benefits** | **Benefits** | **Benefits** |
| We will reward <br>you responsibly | Global living wage <br>employer<br>| 3.2% (2025: 3.6%) | 5 | percentage <br>points | <br>▲ |
| We will reward <br>you responsibly | Since 2024, we have continued to work <br>with the Fair Wage Network which <br>provides an independent source of wage <br>levels and HSBC has maintained its <br>accreditation as a global living wage <br>employer. We continue to review all <br>wages against local living wage <br>benchmarks.<br>| increase to fixed pay for 2026, targeted <br>towards lower paid colleagues relative to <br>relevant market benchmarks.<br>| increase in the number of colleagues who <br>say their benefits meet their and their <br>family's needs well. | increase in the number of colleagues who <br>say their benefits meet their and their <br>family's needs well. | increase in the number of colleagues who <br>say their benefits meet their and their <br>family's needs well. |
| We will recognise <br>your success | **Feedback** | **Recognition** | **Recognition** | **Recognition** | **Recognition** |
| We will recognise <br>your success | 81% (2024: 78%) | 78% (2024: 78%) | 1.4m | 1.4m |  |
| We will recognise <br>your success | of colleagues say their manager <br>proactively gave them timely and <br>effective feedback on their performance <br>and behaviours.<br>| of colleagues say they are recognised <br>when they do a good job.<br>| recognitions of colleagues by their peers <br>through our recognition platform 'At Our <br>Best' for demonstrating role model <br>behaviours that are linked to our values. | recognitions of colleagues by their peers <br>through our recognition platform 'At Our <br>Best' for demonstrating role model <br>behaviours that are linked to our values. | recognitions of colleagues by their peers <br>through our recognition platform 'At Our <br>Best' for demonstrating role model <br>behaviours that are linked to our values. |
| We will support <br>you to grow | **Mental health** | **Physical well-being** | **Well-being** | **Well-being** | **Well-being** |
| We will support <br>you to grow | #1 (2024: #1) | #1 | 66% (2024: 65%) | 66% (2024: 65%) | 66% (2024: 65%) |
| We will support <br>you to grow | in the Global CCLA Corporate Mental <br>Health Benchmark for the fourth year <br>running.<br>| Over 11,400 colleagues participated in the <br>HSBC Global Activity Challenge in <br>September, an increase of 150% in <br>participation from 2024. We set a new <br>Guinness World Record for the most <br>participants in a 10,000 step challenge in <br>24 hours.<br>| Our Well-being Index, which measures <br>satisfaction, purpose, happiness and <br>stress, increased compared with 2024 <br>and is five percentage points higher than <br>the financial services benchmark. | Our Well-being Index, which measures <br>satisfaction, purpose, happiness and <br>stress, increased compared with 2024 <br>and is five percentage points higher than <br>the financial services benchmark. | Our Well-being Index, which measures <br>satisfaction, purpose, happiness and <br>stress, increased compared with 2024 <br>and is five percentage points higher than <br>the financial services benchmark. |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **260** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Remuneration structure for colleagues

We set out below the key features of our remuneration framework, which applies on a Group-wide basis (excluding executive Directors), subject to

compliance with local laws. Our remuneration framework for the wider workforce is similar to that of the executive Directors given the inclusion of

fixed and variable pay elements, and the application of deferral, retention, malus and clawback policies to variable pay. A summary of the

remuneration policy for executive Directors is provided on page <u>[251](#id42dbec1de4a4a5390289335f1b45526_5226)</u>.

---

| | | |
|:---|:---|:---|
|  | **Remuneration components** <br>**and objectives** | **Application for Group employees** |
| **Fixed pay** | **Salary and allowances** | –We provide market competitive pay for the role, skills and experience required.<br>–In addition to base salary, fixed pay may also include fixed pay allowances, cash in lieu of pension and other cash <br>allowances in accordance with local market practice. <br>–Fixed pay may change to reflect an individual's position, role or grade, cost of living in the country, individual skills, <br>capabilities and experience.<br>|
| **Fixed pay** | **Benefits and pension** | –Benefits may include, but are not limited to, the provision of a pension, medical insurance, life insurance and <br>health assessment in accordance with local market practice.<br>|
| **Variable pay** | **Annual incentive** | –All colleagues are eligible to be considered for a discretionary variable pay award. Individual awards are <br>determined against performance goals set at the start of the year. <br>–Variable pay represents a higher proportion of total compensation for more senior colleagues to strengthen <br>alignment between total compensation and business performance. <br>–Variable pay for employees is limited to 10 times fixed pay, except where local regulations require otherwise. <br>–Awards are generally paid in cash and shares. For material risk takers ('MRTs'), at least 50% of the awards are in <br>shares and/or where required by regulations, in units linked to asset management funds.<br>|
| **Variable pay** | **Long-term incentive** | –Members of the Group Operating Committee and other senior Group employees are also eligible to be considered <br>for a long-term incentive award. This is subject to three-year forward-looking performance measures, similar to <br>the executive Directors.<br>|
| **Policies** <br>**applicable to** <br>**variable pay** | **Deferral** | –A Group-wide deferral approach is applicable to all employees. A portion of annual incentive awards above a specified <br>threshold is deferred in shares vesting annually over a three-year period (33% vesting on the first and second <br>anniversaries of grant and 34% on the third).<br>–Awards for MRTs are paid in line with the PRA and FCA remuneration rules, and in compliance with local regulations. <br>Variable pay for MRTs under the PRA remuneration rules ('Group MRTs'), are subject to a four-year deferral period.<br>–For all Group MRTs and the majority of local MRTs, a minimum 50% of the deferred awards is in HSBC shares with the <br>remaining portion in deferred cash. Local regulatory requirements apply where necessary.<br>–For some employees in our asset management business, where required by the relevant regulations, at least 50% of <br>the deferred award is linked to fund units reflective of funds managed by those entities, with the remaining portion in <br>deferred cash awards.<br>–Variable pay awards made in HSBC shares or linked to relevant fund units granted to MRTs that are immediately vested <br>are generally subject to a one-year retention period post-vesting.<br>|
| **Policies** <br>**applicable to** <br>**variable pay** | **Anti-hedging** | –All employees are subject to an anti-hedging policy, which prohibits employees from entering into any personal <br>hedging strategies in respect of HSBC securities.<br>|
| **Policies** <br>**applicable to** <br>**variable pay** | **Malus and clawback** | –All deferred awards are subject to malus provisions, subject to compliance with local laws. <br>–All awards granted are subject to clawback.<br>|
| **Recruitment** <br>**remuneration** | **Buy-out awards** | –Buy-out awards may be offered if an individual holds any outstanding unvested awards that are forfeited on <br>resignation from the previous employer.<br>–The terms of the buy-out awards will not be more generous than the terms attached to the awards forfeited on <br>cessation of employment with the previous employer.<br>|
| **Recruitment** <br>**remuneration** | **New hire indicative** <br>**variable pay**<br>| –New hire indicative variable pay is awarded in exceptional circumstances, typically involving a critical senior new <br>hire, and is limited to an individual's first year of employment only. The award is subject to a number of factors <br>(such as the respective performance of the Group, business / infrastructure area and individual), and the final value <br>paid remains at the full discretion of HSBC. <br>|
| **Policy for loss** <br>**of office** | **Severance payments** | –Where an individual's employment is terminated involuntarily for gross misconduct then, subject to compliance <br>with local laws, the Group's policy is not to make any severance payment and all outstanding unvested awards <br>are forfeited. <br>–For other cases of involuntary termination of employment, the determination of any severance will take into <br>consideration the contractual notice period, applicable local laws and circumstances of the case.<br>–Severance amounts awarded to MRTs are not considered as variable pay for the purpose of application of the <br>deferral and variable pay cap rules under the PRA and FCA remuneration rules. <br>|
| **Policy for loss** <br>**of office** | **Unvested awards** | –Generally, for good leavers, all outstanding unvested awards will normally continue to vest in line with <br>applicable vesting dates. Where relevant, any performance conditions attached to the awards, and malus and <br>clawback provisions, will remain applicable to those awards.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **261** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Payments on loss of office

The table below sets out the basis on which payments on loss of office may be made. Other than as set out in the table, there are no further

obligations which could give rise to remuneration payments or payments for loss of office.

---

| | |
|:---|:---|
| Payments on loss of office | Payments on loss of office |
| **Component of remuneration** | **Approach taken** |
| Fixed pay and benefits | Executive Directors may be entitled to payments in lieu of:<br>–notice, which may consist of base salary, FPA, pension entitlements and other contractual benefits, or an amount in lieu <br>of; and/or<br>–accrued but untaken holiday entitlement.<br>Payments may be made in instalments or a lump sum, and may be subject to mitigation, and subject to applicable tax and <br>social security deductions.<br>|
| Annual incentive and LTI | In exceptional circumstances, as determined by the Committee, an executive Director may be eligible for the grant of annual <br>and/or long-term incentives under the HSBC Share Plan based on the time worked in the performance year and on the <br>individual's contribution.<br>|
| Unvested awards | All unvested awards will be forfeited when an executive Director ceases employment voluntarily and is not deemed a good <br>leaver. An executive Director may be considered a good leaver, under the HSBC Share Plan, if their employment ceases in <br>specified circumstances which includes:<br>–ill health, injury or disability, as established to the satisfaction of the Committee;<br>–retirement with the agreement and approval of the Committee;<br>–the employee's employer ceasing to be a member of the Group;<br>–redundancy with the agreement and approval of the Committee; or<br>–any other reason at the discretion of the Committee.<br>If an executive Director is considered a good leaver, unvested awards will normally continue to vest in line with the applicable <br>vesting dates, subject to performance conditions, the share plan rules, and malus and clawback provisions.<br>In the event of death, unvested awards will vest and will be released to the executive Director's estate as soon as <br>practicable.<br>In respect of outstanding unvested awards, the Committee may determine that good leaver status is contingent upon the <br>Committee being satisfied that the executive has no current or future intention at the date of leaving HSBC of being <br>employed by any competitor financial services firm. The Committee determines the list of competitor firms from time to <br>time, and the length of time for which this restriction applies. If the Committee becomes aware of any evidence to the <br>contrary before vesting, the award will lapse.<br>|
| Post-departure benefits | Executive Directors can be provided certain benefits for up to a maximum of seven years from date of departure for those <br>who depart under good leaver provisions under the HSBC Share Plan, in accordance with the terms of the policy. Benefits <br>may include, but are not limited to, medical coverage, tax return preparation assistance and legal expenses.<br>The Committee also has the discretion to extend the post-departure benefit of medical coverage to former executive <br>Directors, up to a maximum of seven years from their date of departure.<br>|
| Other | Where an executive Director has been relocated as part of their employment, the Committee retains the discretion to pay the <br>repatriation costs. This may include, but is not restricted to, airfare, accommodation, shipment, storage, utilities, and any tax <br>and social security that may be due in respect of such benefits.<br>Except in the case of gross misconduct or resignation, an executive Director may also receive retirement gifts.<br>|
| Legal claims | The Committee retains the discretion to make payments (including professional and outplacement fees) to mitigate against <br>legal claims, subject to any such payments being made in accordance with the terms of an appropriate settlement agreement <br>waiving all claims against the Group.<br>|
| Change of control | In the event of a change of control, outstanding awards will be treated in line with the provisions set out in the respective <br>plan rules.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **262** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Committee governance

The Group Chairman, Chair of the Group Risk Committee, Group CEO,

Group Chief Risk and Compliance Officer, Group Chief People &

Governance Officer, Group Chief Legal Officer, and Group Head of

Performance and Reward, routinely and selectively attend Committee

meetings.

No Director is present at Committee meetings when their own

remuneration is discussed.

The Chair and members of the Committee hold private meetings with

the Committee's independent adviser, following scheduled Committee

meetings. Outside of formal meetings, the Chair meets regularly with

key stakeholders, including senior management, investors, proxy

advisers and regulators to help inform the broader decision making of

the Committee.

The Chair also meets regularly with the Committee Secretary to ensure

the Committee fulfils its governance responsibilities, to consider input

from stakeholders when finalising meeting agendas and track progress

on actions and priorities.

The Chair hosted the biannual Remuneration Committee Chairs Forum

in October and November 2025, bringing together Committee

members and Chairs of the principal subsidiary remuneration

committees. The forum provided the opportunity for members to

discuss key priorities and challenges in relation to people, performance

and pay matters across the Group.

The Committee received certifications from the principal subsidiary

remuneration committees, confirming that the relevant committee had

discharged its obligations overseeing the implementation and operation

of HSBC's Group Remuneration Framework and escalated all relevant

concerns to the Committee. A regular report is presented to the

Committee highlighting significant remuneration matters from the

Group's subsidiaries.

A copy of the Committee's terms of reference can be found on our

website at www.hsbc.com/who-we-are/our-people/board-of-directors/

board-committees

Advisers

The Committee received input and advice from different advisers on

specific topics during 2025. Deloitte was retained as independent

adviser to the Committee in 2025 having been reappointed in 2022

following a formal tender process. Deloitte also provided tax

compliance and other advisory services to the Group in 2025. Deloitte

is a founding member of the Remuneration Consultants Group and

voluntarily operates under the code of conduct in relation to executive

remuneration consulting in the UK.

The Committee also received advice from Willis Towers Watson and

AON on market data and remuneration trends. Willis Towers Watson

also provides actuarial support to Global Finance, benchmarking data for

the wider workforce and services related to benefits administration for

our Group employees.

The Committee was satisfied the advice provided by Deloitte, Willis

Towers Watson and AON was objective and independent in 2025.

For 2025, total fees of £161,500, £36,437 and £17,080 were incurred in

relation to remuneration advice provided by Deloitte, Willis Towers

Watson and AON, respectively. This was based on pre-agreed fees and

a time-and-materials basis.

Following a full tender process in 2025, Willis Towers Watson will

become the Committee's lead independent adviser from March 2026.

Committee performance review

In 2025, the annual review of the performance of the Committee

concluded that the Committee continued to operate effectively.

The outcomes of the performance review have been reported to the

Board, and the Committee will progress and track those areas identified

for enhancement through 2026.

🡠Further details of the annual review of the Board and committee

performance can be found on page <u>[231](#id42dbec1de4a4a5390289335f1b45526_4259)</u>.

Share plan matters considered by the

Committee

The Committee and its delegates considered various matters relating to

the HSBC share plans during the financial year.

The HSBC International Employee Share Purchase Plan ('ShareMatch')

and The HSBC Holdings Savings-Related Share Option Plan (UK)

('Sharesave') were offered in 2025. The HSBC variable pay deferral

approach for the 2025 performance year was approved, for which

certain updates were made following changes to legal and regulatory

requirements. Other awards with performance conditions were

approved for certain strategically important projects during 2025.

Immediate share awards were granted to executive Directors and

senior managers in compliance with our regulatory requirements to

deliver a portion of non-deferred variable pay in instruments. These

awards vest immediately, and are subject to a retention period and

clawback provisions.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **263** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Additional remuneration disclosures

This section provides further information in relation to executive Director and wider workforce remuneration as required by the UK, Hong Kong, and

Pillar 3 remuneration disclosure requirements. For the purpose of the Pillar 3 remuneration disclosures, executive Directors and non-executive

Directors are considered to be members of the management body. Members of the Group Operating Committee other than the executive

Directors are considered as senior management.

Link between risk, performance and reward

Our remuneration practices promote sound and effective risk management to support our business objectives and the delivery of our strategy. We

set out below the key features of our framework, which enable us to align between risk, performance and reward, subject to compliance with local

laws and regulations:

---

| | |
|:---|:---|
| **Framework** <br>**elements**<br>| **Application** |
| **Variable pay** | –Group variable pay is expected to reflect Group performance, based on a range of financial and non-financial factors. We use a countercyclical <br>funding methodology with a structured payout range for different levels of profitability and guided by a floor and a ceiling. The payout ratio <br>generally reduces as performance increases to avoid pro-cyclicality. The floor recognises that even in challenging times, remaining competitive <br>is important. The ceiling recognises that at higher levels of performance it is not always necessary to continue to increase variable pay, thereby <br>limiting the risk of inappropriate behaviour to drive financial performance.<br>–The main quantitative and qualitative performance and risk metrics used for assessment of performance include:<br>–Group and business unit financial performance, considering contextual factors driving performance, and capital requirements;<br>–current and future risks, taking into consideration performance against the risk appetite, financial resourcing plan and global conduct <br>outcomes; and<br>–fines, penalties and provisions for customer redress, which are automatically included in the Committee's definition of profit for <br>determining the pool.<br>–In the event that the Group was unable to distribute dividends to shareholders for reasons such as capital adequacy, then the Group may <br>determine that as a year of weak performance. In such a year, the Group may withhold some, or all, variable pay for employees including <br>unvested share awards, using the metrics outlined above as a basis for that determination.<br>–The Committee also applies its discretion to adjust the pool either upwards or downwards based on a recommendation by the GRC which <br>takes into account a full assessment of risk performance.<br>|
| **Individual** <br>**performance**<br>| –Assessment of individual performance is made with reference to clear and relevant financial and non-financial goals. Group Operating <br>Committee members have a goal on effective management of enterprise risk, regulatory compliance and financial crime risk responsibilities as <br>well as financial risks. The goal is independently assessed by Risk and Compliance and a risk and compliance rating and assessment is shared <br>with the individual and the Group CEO to consider as part of the year-end review. Direct reports of Group Operating Committee members and <br>other senior executives are assessed on risk, regulatory and financial crime goals identified for their roles. All other employees have a <br>mandatory risk and compliance goal. <br>–Performance assessment for all employees includes a behaviour gateway (if permissible under local laws), and a full assessment of <br>achievement against goals and demonstration of HSBC values aligned behaviours. This ensures that performance is assessed not only on what <br>is achieved but also on how it is achieved.<br>|
| **Control** <br>**function staff**<br>| –Group policy is for control staff to report into their respective infrastructure area. Remuneration decisions for senior infrastructure roles are <br>made by the global infrastructure head.<br>–The performance and reward of individuals in control functions, including risk and compliance colleagues, are assessed according to a balanced <br>scorecard of goals specific to the functional role they undertake. <br>–Their remuneration is determined independent of the performance of the business areas they support.<br>–Remuneration is carefully benchmarked with the market and internally to ensure it is set at an appropriate level.<br>–The Committee is responsible for approving remuneration for the Group Chief Risk and Compliance Officer and Group Head of Internal Audit.<br>|
| **Variable pay** <br>**adjustments** <br>**and conduct** <br>**recognition**<br>| –Variable pay awards may be adjusted upwards or downwards to reflect positive or negative conduct in adherence with the Code of Conduct. <br>Downward adjustments can be made in circumstances including:<br>–detrimental conduct, including conduct that brings HSBC into disrepute;<br>–involvement in events resulting in significant operational losses, or events that have caused or have the potential to cause significant harm <br>to HSBC; and<br>–non-compliance with the values-aligned behaviours and other mandatory requirements or policies.<br>–Rewarding positive conduct can be through use of our global recognition platform, At Our Best, or positive adjustments to variable pay awards.<br>|
| **Malus** | –Malus can be applied to unvested deferred awards (up to 100% of awards) granted in prior years in circumstances including:<br>–detrimental conduct, including conduct that brings the business into disrepute;<br>–past performance being materially worse than originally reported;<br>–restatement, correction or amendment of any financial statements; and<br>–improper or inadequate risk management.<br>|
| **Clawback** | –Clawback can be applied to vested or paid awards granted to MRTs for a period of seven years, extended to 10 years for employees in PRA <br>and FCA designated senior management functions in the event of ongoing internal/regulatory investigation at the end of the seven-year period. <br>Clawback can also be applied to non-MRTs. Clawback may be applied in circumstances including:<br>–participation in, or responsibility for, conduct that results in significant losses;<br>–failing to meet appropriate standards and propriety;<br>–reasonable evidence of misconduct or material error that would justify, or would have justified, summary termination of a contract of <br>employment; and <br>–a material failure of risk management suffered by HSBC or a business unit in the context of Group risk-management standards, policies and <br>procedures.<br>–Clawback can also be applied to vested or paid awards granted to designated Executive Officers as defined by the US Securities and Exchange <br>Commission ('SEC') for a period of three years in the event of an accounting restatement due to material non-compliance with any financial <br>reporting requirement under the US securities laws.<br>|
| **Sales** <br>**incentives**<br>| –We generally do not operate commission-based sales plans, unless aligned with local market practice and with appropriate safeguards to avoid <br>incentivising inappropriate sales behaviours. <br>|
| **Identification** <br>**of MRTs**<br>| –We identify individuals as MRTs based on qualitative and quantitative criteria set out in the PRA's and FCA's remuneration rules. Our <br>identification process is underpinned by the following key principles:<br>–MRTs are identified at Group, HSBC Bank plc (consolidated) and HSBC UK level.<br>–MRTs are also identified at other solo regulated entity level as required by the regulations.<br>–When identifying an MRT, HSBC considers a colleague's role within its matrix management structure. The business and infrastructure area <br>that an individual works within takes precedence, followed by the geographical location in which they work.<br>–We also identify additional MRTs based on our own internal criteria, which include individuals in certain roles and grades who otherwise would <br>not be identified as MRTs under the remuneration rules.<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **264** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Summary of shareholder return and Group CEO remuneration

The graph shows HSBC TSR performance (based on the daily spot

Return Index in sterling) against the FTSE 100 Total Return Index for

the 10-year period ended 31 December 2025.

The FTSE 100 Total Return Index has been chosen as a recognised

broad equity market index of which HSBC Holdings is a member.

The single total figure of remuneration for the Group CEO over the past

10 years, together with the outcomes of the respective

annual incentive and LTI awards, are presented in the following table.

HSBC TSR and FTSE 100 Total Return Index<br>

![568](hsbc-20251231_g139.gif)

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 2016 | 2017 | 2018 | 2018 | 2019 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2024 | **2025** |
| Group CEO | Stuart <br>Gulliver<br>| Stuart <br>Gulliver<br>| Stuart <br>Gulliver<br>| John <br>Flint<br>| John <br>Flint<br>| Sir Noel <br>Quinn<br>| Sir Noel <br>Quinn<br>| Sir Noel <br>Quinn<br>| Sir Noel <br>Quinn<br>| Sir Noel <br>Quinn<br>| Sir Noel <br>Quinn<sup>1,2</sup><br>| Georges <br>Elhedery<sup>2,3</sup><br>| **Georges** <br>**Elhedery**<br>|
| Single total figure £000 | 5675 | 6086 | 2387 | 4582 | 2922 | 1977 | 4154 | 4895 | 5562 | 10396 | 10091 | 1867 | **6623** |
| Annual incentive (% of <br>maximum)<br>| 64% | 80% | 76% | 76% | 61% | 66% | 32% | 57% | 75% | 70% | 78% | 78% | **80%** |
| Long-term incentive (% <br>of maximum)<br>| —% | —% | 100% | —% | —% | —% | —% | —% | —% | 75% | 75% | —% | **45.19%** |

---

1Sir Noel Quinn's 2024 single total figure reflects his total fixed pay, benefits and annual incentive up to and including 1 September 2024 when he stepped down

as Group CEO, plus his vesting 2022-2024 LTI. This single total figure has been restated to reflect the value of the 2022-2024 LTI on 11 March 2025, when the

first tranche of the award vested.

2The 2024 annual incentive figures for Sir Noel Quinn and Georges Elhedery reflect their assessment against the Group CEO scorecard for their periods as Group

CEO.

3Georges Elhedery's 2024 single total figure reflects his total fixed pay, benefits and annual incentive in respect of his period as Group CEO (for the period 2

September 2024 to 31 December 2024). Georges Elhedery's vesting 2022-2024 LTI was granted before his appointment as Group CEO and has been excluded.

Voting results from Annual General Meeting

---

| | | | |
|:---|:---|:---|:---|
| 2025 Annual General Meeting voting results | 2025 Annual General Meeting voting results | 2025 Annual General Meeting voting results | 2025 Annual General Meeting voting results |
|  | **For** | **Against** | **Withheld** |
| Directors' Remuneration Report (votes cast) | **98.34%** | **1.66%** | **––** |
| Directors' Remuneration Report (votes cast) | **8807418532** | **148870299** | **11202665** |
| Directors' Remuneration Policy (votes cast) | **96.10%** | **3.90%** | **––** |
| Directors' Remuneration Policy (votes cast) | **8609641462** | **349032069** | **8780440** |
| Amend rules of the HSBC Share Plan 2011 (votes cast) | **97.33%** | **2.67%** | **––** |
| Amend rules of the HSBC Share Plan 2011 (votes cast) | **8716852849** | **239261675** | **10286595** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **265** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Pay ratio

The following table shows the ratio between the total pay of the Group

CEO and the lower quartile, median and upper quartile pay of our UK

employees.

The median ratio is lower year on year, reflecting the lower value of the

2023-25 LTI for Georges Elhedery, which was granted for his prior role

as Co-CEO, GBM, compared with the value of the 2022-24 LTI for Sir

Noel Quinn, which was received in his capacity as Group CEO.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Total pay ratio | Total pay ratio | Total pay ratio | Total pay ratio | Total pay ratio |
|  | Method | Lower quartile | Median | Upper quartile |
| 2025 | A | 167:1 | 96:1 | 51:1 |
| 2024<sup>1</sup> | A | 307:1 | 179:1 | 94:1 |
| 2023 | A | 285:1 | 165:1 | 86:1 |
| 2022 | A | 167:1 | 95:1 | 49:1 |
| 2021 | A | 154:1 | 90:1 | 46:1 |
| 2020 | A | 139:1 | 85:1 | 43:1 |
| 2019 | A | 169:1 | 105:1 | 52:1 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio | Total pay and benefits amounts used to calculate the ratio |
| (£) | Lower quartile | Lower quartile | Median | Median | Upper quartile | Upper quartile |
| (£) | Total pay <br>and <br>benefits<br>| Total <br>salary<br>| Total pay <br>and <br>benefits<br>| Total <br>salary<br>| Total pay <br>and <br>benefits<br>| Total <br>salary<br>|
| 2025<br> A | 39601 | 30750 | 69207 | 57500 | 130262 | 95078 |
| 2024<br> A | 38995 | 31962 | 66672 | 53945 | 127050 | 91664 |
| 2023<br> A | 36528 | 27680 | 63000 | 45536 | 121223 | 89506 |
| 2022<br> A | 33284 | 24615 | 58257 | 41000 | 113778 | 95000 |
| 2021<br> A | 31727 | 27666 | 54678 | 41500 | 106951 | 84000 |
| 2020<br> A | 29833 | 23264 | 48703 | 36972 | 96386 | 75000 |
| 2019<br> A | 28920 | 24235 | 46593 | 41905 | 93365 | 72840 |

---

1The 2024 pay ratios have been restated to reflect the revised 2024 LTI value

for Sir Noel Quinn.

The total pay and benefits for the median employee for 2025 was

69,207, a 3.8% increase compared with 2024.

Our UK workforce comprises a diverse mix of colleagues across

different businesses and levels of seniority, from junior cashiers in our

retail branches to senior executives managing our global business units.

We aim to deliver market-competitive pay for each role, taking into

consideration the skills and experience required for the business.

Pay structure varies across roles in order to deliver an appropriate mix

of fixed and variable pay. Junior colleagues have a greater portion of

their pay delivered in a fixed component, which does not vary with

performance and allows them to predictably meet their day-to-day

needs. Our senior management, including executive Directors,

generally have a higher portion of their total remuneration opportunity

structured as variable pay and linked to the performance of the Group,

given their role and ability to influence the strategy and performance of

the Group. Executive Directors also have a higher proportion of their

variable pay delivered in shares, which vest over a period of seven

years with a post-vesting retention period of one year. During this

deferral and retention period, the awards are linked to the share price

so the value of award realised by them after the vesting and retention

period will be aligned to the performance of the Group.

We are satisfied that the median pay ratio is consistent with the pay

and progression policies for our UK workforce, taking into account the

diverse mix of our UK employees, the pay mix applicable to each role

and our objective of delivering market competitive pay for each role

subject to Group, business and individual performance.

Our ratios have been calculated using the option 'A' methodology

prescribed under the UK Companies (Miscellaneous Reporting)

Regulations 2018. Under this option, the ratios are calculated using full-

time equivalent pay and benefits of all employees providing services in

the UK at 31 December 2025. We believe this approach provides

accurate information and representation of the ratios. The ratio has

been computed taking into account the pay and benefits of over 33,000

UK employees, other than the Group CEOs. We calculated our pay

quartiles and benefits information for our UK employees using:

–full-time equivalent annualised fixed pay, which includes base salary

and allowances, at 31 December 2025;

–variable pay awards for 2025;

–return on deferred cash awards granted in prior years. The deferred

cash portion of the annual incentive granted in prior years includes a

right to receive notional returns for the period between the grant

date and vesting date, which is determined by reference to a rate of

return specified at the time of grant. A payment of notional return is

made annually and the amount is disclosed on a paid basis in the

year in which the payment is made;

–gains realised from exercising awards from taxable employee share

plans; and

–full-time equivalent value of taxable benefits and pension

contributions.

Full-time equivalent fixed pay and benefits for each employee have

been calculated by using each employee's data as at 31 December

2025. Where an employee works part-time, fixed pay and benefits are

grossed up, where appropriate, to full-time equivalent. One-off benefits

have not been included in calculating the ratios as these are not

permanent in nature and in some cases, depending on individual

circumstances, may not truly reflect a benefit to the employee.

The reported ratios may not be comparable to our international and

listed peers on the FTSE 100, given differences in business mix and

size, employment and compensation practices, methodologies for

computing pay ratios and assumptions used by companies.

Relative importance of spend on pay

The following chart shows the change in:

–total employee pay between 2024 and 2025; and

–dividends and share buy-backs in respect of 2024 and 2025.

In 2025, total spend on pay was up 6% compared with 2024. The

return to shareholders by way of dividends and share buy-backs fell by

22% compared with 2024. In 2024, dividends included the special

dividend of $0.21 per share that was paid following the completion of

the sale of our banking business in Canada. In 2025, we provided $8bn

of capital return to shareholders through share buy-backs, which

included the up to $2bn buy-back announced at our 2024 annual results

in February 2025. Following our announcement to privatise Hang Seng

Bank in October 2025, we announced our intention not to initiate share

buy-backs temporarily. A decision to recommence buy-backs will be

subject to our normal buy-back considerations and process on a

quarterly basis. Dividends include an approximation of the amount

payable in April 2026 in relation to the fourth interim dividend of $0.45

per ordinary share.

Relative importance of spend on pay

![21440476754464](hsbc-20251231_g140.gif)

$12.9bn

$8.0bn

---

| | | |
|:---|:---|:---|
| Distributions <br>to ordinary <br>shareholders | **2025** | ▼ 22% |
| Distributions <br>to ordinary <br>shareholders | 2024 | ▼ 22% |
| Employee <br>pay | **2025** | ▲ 6% |
| Employee <br>pay | 2024 | ▲ 6% |

---

$11.0bn

$15.9bn

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **266** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Comparison of Directors' and employees' pay

The following table compares the changes in each Director's base salary, taxable benefits and annual incentive between 2021 and 2025 with those

for UK-based employees of HSBC Group Management Services Limited, the employing entity of the executive Directors. The underlying single

figures of remuneration used to calculate these figures are on page <u>[253](#id42dbec1de4a4a5390289335f1b45526_130)</u> for executive Directors, and page <u>[270](#id42dbec1de4a4a5390289335f1b45526_172)</u> for non-executive Directors.

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration | Annual percentage change in remuneration |
|  | **Base salary/fees** | **Base salary/fees** | **Base salary/fees** | **Base salary/fees** | **Base salary/fees** | **Benefits** | **Benefits** | **Benefits** | **Benefits** | **Benefits** | **Annual incentive** | **Annual incentive** | **Annual incentive** | **Annual incentive** | **Annual incentive** |
| **Director/employees** | **2025** | 2024 | 2023 | 2022 | 2021 | **2025** | 2024 | 2023 | 2022 | 2021 | **2025** | 2024 | 2023 | 2022 | 2021 |
| **Executive Directors** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Georges Elhedery | **49.5** | 26.7 |  |  |  | **56.4** | 866.0 |  |  |  | **115.0** | 30.3 |  |  |  |
| Pam Kaur | **—** |  |  |  |  | **—** |  |  |  |  | **—** |  |  |  |  |
| **Non-executive** <br>**Directors**<br>|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Geraldine Buckingham | **4.8** | 10.7 | 57.4 |  |  | **366.7** | (40.0) |  |  |  | **—** |  |  |  |  |
| Rachel Duan | **5.1** | 4.5 | 8.4 | 235.8 |  | **333.3** |  | (100.0) |  |  | **—** |  |  |  |  |
| Dame Carolyn Fairbairn | **15.4** | 4.7 | 5.3 | 231.1 |  | **200.0** |  | (100.0) |  |  | **—** |  |  |  |  |
| James Forese | **2.0** | 5.5 | 10.2 | 20.5 | 257.5 | **750.0** | 300.0 |  |  |  | **—** |  |  |  |  |
| Ann Godbehere | **89.5** | 472.1 |  |  |  | **—** |  |  |  |  | **—** |  |  |  |  |
| Steven Guggenheimer | **3.5** | (1.9) | 0.8 | 4.8 | 86.6 | **450.0** | 300.0 | (90.0) |  |  | **—** |  |  |  |  |
| José Antonio Meade <br>Kuribreña<br>| **5.9** | 3.7 | 0.8 | 8.5 | 10.4 | **628.6** | 75.0 | (71.4) |  | (100.0) | **—** |  |  |  |  |
| Kalpana Morparia | **8.1** | 45.9 |  |  |  | **2000.0** |  |  |  |  | **—** |  |  |  |  |
| Eileen Murray | **16.6** | 14.1 | 10.7 | (1.5) | 121.7 | **—** | (100.0) |  |  |  | **—** |  |  |  |  |
| Brendan Nelson | **138.0** | 306.2 |  |  |  | **110.5** | 216.7 |  |  |  | **—** |  |  |  |  |
| Swee Lian Teo | **16.4** | 402.0 |  |  |  | **—** |  |  |  |  | **—** |  |  |  |  |
| Sir Mark Tucker | **(25.0)** |  |  |  |  | **(57.2)** | 184.3 | (54.9) | 242.4 | (36.5) | **—** |  |  |  |  |
| **Employee group**<sup>1</sup> | **3.2** | 3.3 | 5.0 | 3.1 | 1.0 | **5.0** | 4.1 | 5.7 | 7.0 | 1.3 | **7.2** | 2.4 | 11.7 | 3.7 | 25.2 |

---

1Employee group consists of individuals employed by HSBC Group Management Services Ltd, the employing entity of the executive Directors. No individuals are

employed directly by HSBC Holdings.

Scheme interests awarded during 2025

(Audited)

The table below sets out scheme interests granted to executive Directors during 2025 in respect of the 2024 performance year, as disclosed in

the 2024 Directors' remuneration report. No non-executive Directors received scheme interests during the financial year. Details of immediate

shares are disclosed in compliance with Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong

Limited.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 | Scheme awards in 2025 |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | Type of interest <br>awarded<br>| Basis on which <br>award made<br>| **Date of award** | **Face value**<br>**awarded**<br>**£000**<br>| **Percentage**<br> **receivable for** <br>**minimum**<br>**performance**<br>| **Number of**<br>**shares**<br>**awarded**<br>| **End of**<br>**performance** <br>**period**<br>|
| Georges Elhedery | LTI deferred shares<sup>1</sup> | % of base salary | **7 May 2025** | **12407** | **25** | **1367880** | **31 December 2027** |
| Georges Elhedery | Immediate shares<sup>2</sup> | % of base salary | **4 March 2025** | **838** | **N/A** | **92447** | **31 December 2024** |
| Pam Kaur | LTI deferred shares<sup>1</sup> | % of base salary | **7 May 2025** | **7237** | **25** | **797930** | **31 December 2027** |
| Pam Kaur | Immediate shares<sup>2</sup> | % of base salary | **4 March 2025** | **1687** | **N/A** | **186052** | **31 December 2024** |

---

1In accordance with the remuneration policy approved at the 2025 AGM, the LTI award was determined at 600% of base salary for Pam Kaur and 600% of base

salary for Georges Elhedery. The number of shares was determined by taking the average closing price of the week commencing 24 February 2025 (£9.070),

being the same price used for other awards granted in respect of the 2024 performance year, and discounting based on HSBC's expected dividend yield of 6.5%

per annum for the vesting period (£6.580). The fair value of the awards was £3.185 based on IFRS 2 accounting standards. LTI awards are conditional share

awards subject to a three-year forward-looking performance period and vest in five equal annual instalments, between the third and seventh anniversary of the

award date, subject to performance achieved. Awards are subject to clawback for up to 10 years from award date and are not eligible for dividend equivalents.

2Immediate share awards are granted based on previous years' performance as part of the annual incentive and are not subject to forward-looking performance

conditions. On vesting, a one-year retention period applies. The face values of the awards was computed using the average closing price of the week

commencing 24 February 2025, £9.070. The fair value of the awards was £9.163 based on IFRS 2 accounting standards. Awards are subject to clawback for up

to 10 years from the award.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **267** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Performance conditions for the 2025–2027 LTI awards<br>(Audited) | Performance conditions for the 2025–2027 LTI awards<br>(Audited) | Performance conditions for the 2025–2027 LTI awards<br>(Audited) | Performance conditions for the 2025–2027 LTI awards<br>(Audited) | Performance conditions for the 2025–2027 LTI awards<br>(Audited) |
| **Measures (weighting)**<sup>1</sup> | **Measures (weighting)**<sup>1</sup> | **Minimum**<br>**(25% payout)**<br>| **Target**<br>**(50% payout)**<br>| **Maximum**<br>**(100% payout)**<br>|
| RoTE (excluding notable items) with CET1 capital ratio <br>underpin<sup>2</sup> (40%) | RoTE (excluding notable items) with CET1 capital ratio <br>underpin<sup>2</sup> (40%) | **14.0%** | **16.0%** | **18.0%** |
| Environment and <br>sustainability<sup>3</sup> (20%) | Carbon reduction<br>(own emissions) (5%)<br>| **71.0%** | **73.0%** | **78.0%** |
| Environment and <br>sustainability<sup>3</sup> (20%) | Sustainable finance and <br>investment (15%)<br>| **$648.0bn** | **$720.0bn** | **$792.0bn** |
| Relative TSR<sup>4</sup> (40%) |  | **At median of the**<br>**peer group**<br>| **Straight-line vesting between** <br>**minimum and maximum**<br>| **At upper quartile of** <br>**peer group**<br>|
| **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br>factors during the performance period. | **Subject to risk and compliance modifier**<br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br>factors during the performance period. |

---

1Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.

2To be assessed based on RoTE at the end of the performance period, subject to the CET1 capital ratio underpin.

3Carbon reduction will be measured based on percentage reduction in total energy and travel emissions achieved by 31 December 2027 using 2019 as the

baseline. The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the period ending 31 December 2027.

4The peer group for the 2025–2027 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings,

J.P. Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.

Other scheme interests held during 2025

The table below details scheme interests held by executive Directors during 2025, in respect of prior performance years. Vesting of deferred share

awards is normally subject to the Director remaining an employee on the vesting date. The awards may vest at an earlier date in some

circumstances. Under the Securities and Futures Ordinance of Hong Kong, interests in conditional share awards are categorised as the interests of

the beneficial owner.

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  | Other scheme interests in 2025  |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  |  |  |  |  |  |  |  |  | **HSBC Holdings ordinary shares** | **HSBC Holdings ordinary shares** | **HSBC Holdings ordinary shares** | **HSBC Holdings ordinary shares** | **HSBC Holdings ordinary shares** |
| Type of <br>interest held | Dates of <br>award | Award <br>price <br>(£)<sup>1</sup> | Usually vesting | Usually vesting | **Vested** <br>**Tranche** | **Tranche** <br>**vested on** | **Market** <br>**price at** <br>**vest (£)** | **Closing** <br>**price** <br>**before** <br>**vest date** <br>**(£)** | **At** <br>**1 Jan 25** | **Vested** <br>**in** <br>**period** | **Lapsed** <br>**in** <br>**period** | **Cancelled** <br>**in** <br>**period** | **At** <br>**31 Dec 25** |
| Type of <br>interest held | Dates of <br>award | Award <br>price <br>(£)<sup>1</sup> | from | to | **Vested** <br>**Tranche** | **Tranche** <br>**vested on** | **Market** <br>**price at** <br>**vest (£)** | **Closing** <br>**price** <br>**before** <br>**vest date** <br>**(£)** | **At** <br>**1 Jan 25** | **Vested** <br>**in** <br>**period** | **Lapsed** <br>**in** <br>**period** | **Cancelled** <br>**in** <br>**period** | **At** <br>**31 Dec 25** |
| Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery | Georges Elhedery |
| LTI <br>Deferred <br>shares | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | **1** | **11 Mar 25**<sup>2</sup> | **8.4415** | **8.5480** | **223989** | **33597** | **55998** | **—** | **134394** |
| LTI <br>Deferred <br>shares | 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | **—** | **—** | **—** | **—** | **251474** | **—** | **—** | **—** | **251474** |
| LTI <br>Deferred <br>shares | 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | **—** | **—** | **—** | **—** | **569177** | **—** | **—** | **—** | **569177** |
| Deferred <br>shares<sup>3</sup> | 24 Feb 20 | 5.622 | 1 Mar 23 | 31 Mar 27 | **3** | **10 Mar 25** | **8.6138** | **8.7640** | **88597** | **29532** | **—** | **—** | **59065** |
| Deferred <br>shares<sup>3</sup> | 1 Mar 21 | 4.262 | 1 Mar 24 | 31 Mar 28 | **2** | **10 Mar 25** | **8.6138** | **8.7640** | **244419** | **61104** | **—** | **—** | **183315** |
| Deferred <br>shares<sup>3</sup> | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | **1** | **11 Mar 25** | **8.4415** | **8.5480** | **273163** | **54632** | **—** | **—** | **218531** |
| Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur | Pam Kaur |
| LTI <br>Deferred <br>shares | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | **1** | **11 Mar 25**<sup>2</sup> | **8.4415** | **8.5480** | **168077** | **25211** | **42020** | **—** | **100846** |
| LTI <br>Deferred <br>shares | 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | **—** | **—** | **—** | **—** | **146393** | **—** | **—** | **—** | **146393** |
| LTI <br>Deferred <br>shares | 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | **—** | **—** | **—** | **—** | **185889** | **—** | **—** | **—** | **185889** |
| Deferred <br>shares<sup>3</sup> | 26 Feb 18 | 7.234 | 1 Mar 21 | 31 Mar 25 | **5** | **10 Mar 25** | **8.6138** | **8.7640** | **15633** | **15633** | **—** | **—** | **—** |
| Deferred <br>shares<sup>3</sup> | 25 Feb 19 | 6.235 | 1 Mar 22 | 31 Mar 26 | **4** | **10 Mar 25** | **8.6138** | **8.7640** | **37310** | **18655** | **—** | **—** | **18655** |
| Deferred <br>shares<sup>3</sup> | 24 Feb 20 | 5.622 | 1 Mar 23 | 31 Mar 27 | **3** | **10 Mar 25** | **8.6138** | **8.7640** | **58909** | **19635** | **—** | **—** | **39274** |
| Deferred <br>shares<sup>3</sup> | 1 Mar 21 | 4.262 | 1 Mar 24 | 31 Mar 28 | **2** | **10 Mar 25** | **8.6138** | **8.7640** | **169555** | **42388** | **—** | **—** | **127167** |
| Deferred <br>shares<sup>3</sup> | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | **1** | **11 Mar 25** | **8.4415** | **8.5480** | **210542** | **42108** | **—** | **—** | **168434** |
| Deferred <br>shares<sup>3</sup> | 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | **—** | **—** | **—** | **—** | **65843** | **—** | **—** | **—** | **65843** |
| Deferred <br>shares<sup>3</sup> | 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | **—** | **—** | **—** | **—** | **100798** | **—** | **—** | **—** | **100798** |

---

1The award price is the closing price on the day before the grant date for awards made in 2024 and prior years. In all cases the purchase price is nil.

2The performance conditions were assessed and confirmed at 75%. The remaining 25% of the award was forfeited. Shares equivalent in number to those that

vest under the award (net of tax liabilities) must be retained for one year from the vesting date. The award vests in five equal tranches.

3Shares equivalent in number to those that vest under the award (net of tax liabilities) must be retained for one year from vesting. The awards vest in five equal

tranches.

No Directors held any short position (as defined in the Securities and

Futures Ordinance of Hong Kong) in the shares or debentures of HSBC

Holdings and its associated corporations. Save as stated in the tables

above, none of the Directors had an interest in any shares or

debentures of HSBC Holdings or any associates at the beginning or at

the end of the period, and none of the Directors or members of their

immediate families were awarded or exercised any right to subscribe

for any shares or debentures in any HSBC corporation during the

period.

There have been no changes in the shares or debentures of the

Directors from 31 December 2025 to the date of this report.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **268** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Executive Directors' interests in shares

(Audited)

The shareholdings of executive Directors in 2025, including the

shareholdings of their connected persons, are shown in the table below

at 31 December 2025, alongside their shareholding requirement. There

have been no changes in the shareholdings of the executive Directors

from 31 December 2025 to the date of this report.

Executive Directors have five years from their appointment to build up

the required level of shareholding. In line with investor guidance,

unvested shares that are not subject to forward-looking performance

conditions (on a net of tax basis) can count towards their shareholding

requirement.

The Committee reviews compliance with the shareholding

requirement, taking into account shareholder expectations and

guidelines. The Committee also has full discretion in determining any

penalties for non-compliance.

The weighted average holding period of an LTI award within HSBC is

six years, in excess of the five-year holding period typically

implemented by FTSE-listed companies.

HSBC operates a policy under which individuals are not permitted to

enter into any personal hedging strategies in relation to shares subject

to a vesting and/or retention period.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Shares | Shares | Shares | Shares | Shares | Shares | Shares |
| (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) | (Audited) |
|  | Shareholding <br>guidelines<br>(% of salary) | **Shareholding at** <br>**31 Dec 2025**<sup>2</sup><br>**(% of salary)** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | Shareholding <br>guidelines<br>(% of salary) | **Shareholding at** <br>**31 Dec 2025**<sup>2</sup><br>**(% of salary)** |  | **Scheme interests** | **Scheme interests** | **Scheme interests** |
|  | Shareholding <br>guidelines<br>(% of salary) | **Shareholding at** <br>**31 Dec 2025**<sup>2</sup><br>**(% of salary)** | **Share interests**<br>**(number**<br>**of shares)** | **Share options**<sup>3</sup> | **Shares awarded subject to deferral**<sup>1</sup> | **Shares awarded subject to deferral**<sup>1</sup> |
|  | Shareholding <br>guidelines<br>(% of salary) | **Shareholding at** <br>**31 Dec 2025**<sup>2</sup><br>**(% of salary)** | **Share interests**<br>**(number**<br>**of shares)** | **Share options**<sup>3</sup> | **without**<br> **performance** <br>**conditions**<br>| **with**<br>**performance**<br>**conditions**<sup>4</sup><br>|
| **Executive Directors** | **Executive Directors** |  |  |  |  |  |
| Georges Elhedery<sup>5</sup> | 600% | **792%** | **1109810** | **—** | **595305** | **2188531** |
| Pam Kaur<sup>5</sup>  | 600% | **1,207%** | **986625** | **—** | **621017** | **1130212** |

---

1The gross number of shares is disclosed. A portion will be sold at vesting to cover any income tax and social security that falls due at the time of vesting.

2The value of the shareholding is calculated using an average of the daily closing share prices in the three months to 31 December 2025, £10.708, and does not

include any unvested interests.

3At 31 December 2025, Georges Elhedery and Pam Kaur did not hold any options under the HSBC Holdings Savings-Related Share Option Plan (UK).

4LTI awards are subject to performance measures as set out in the relevant Annual Report and Accounts.

5Executive Directors are expected to meet their shareholding guidelines within five years of the date of their appointment.

Service contracts

The service contracts of executive Directors do not have a fixed term.

The notice periods of executive Directors are set at the discretion of

the Committee, taking into account market practice, governance

considerations, and the skills and experience of the particular candidate

at that time.

Service agreements for each executive Director are available for

inspection at HSBC Holdings' registered office. Consistent with the

best interests of the Group, the Committee will seek to minimise

termination payments. Directors may be eligible for a payment in

relation to statutory rights.

---

| | | |
|:---|:---|:---|
|  | Contract date (rolling) | Notice period<br>(Director and HSBC)<br>|
| Georges Elhedery | 2 September 2024 | 12 months |
| Pam Kaur | 1 January 2025 | 12 months |

---

External appointments

During 2025, Georges Elhedery did not receive any fees from external

appointments. Pam Kaur received £38,633 as an independent non-

executive Director for Aberdeen Group plc for the period 1 January

2025 to 8 May 2025.

Total pension entitlements

(Audited)

No employees who served as executive Directors during the year have

a right to amounts under any HSBC final salary pension scheme for

their services as executive Directors or are entitled to additional

benefits in the event of early retirement. There is no retirement age set

for Directors, but the normal retirement age for colleagues is 65.

Payments to past Directors

(Audited)

In line with the terms of his departure disclosed in our Annual Report

and Accounts 2024, Sir Noel Quinn was granted good leaver status. Sir

Noel Quinn is eligible to receive vesting of the 2023–2025 LTI award,

pro-rated for time in employment subject to satisfaction of non-

compete provisions under which he cannot undertake a role with a

defined list of competitor financial services firms for 12 months after

his employment ceases with HSBC. Details of the 2023–2025 LTI

outcome are outlined on page <u>[256](#id42dbec1de4a4a5390289335f1b45526_136)</u>.

No other payments in scope of the remuneration disclosure

requirements were made to, or in respect of, former Directors in the

year in excess of the minimum threshold of £50,000 set for this

purpose.

Payments for loss of office

(Audited)

Sir Noel Quinn left the Group on 30 April 2025.

In accordance with the approved Directors' remuneration policy and

contractual terms agreed for the period between 1 January 2025 and

30 April 2025, Noel received payments totalling £1,232,072. This

included a salary of £458,667, a pension allowance of £45,867 and a

fixed pay allowance of £566,658. The fixed pay allowance was awarded

in immediately vested shares, which are subject to a retention period

and released on a pro-rata basis over five years. In accordance with the

approved Directors' remuneration policy, Noel also received cash in lieu

of unused holiday totalling £123,600 on expiry of his notice period, and

taxable and non-taxable benefits with an aggregate value of £37,280.

Noel's full departure terms were disclosed in the Annual Report and

Accounts 2024. No other payments for loss of office were made to

former or current Directors in the year.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **269** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Directors' emoluments

The details of compensation paid to executive and non-executive Directors for the year ended 31 December 2025 are set out below:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Emoluments | Emoluments | Emoluments | Emoluments | Emoluments | Emoluments | Emoluments |
|  | Georges Elhedery | Georges Elhedery | Pam Kaur<sup>1</sup> | Pam Kaur<sup>1</sup> | Non-executive Directors<sup>2</sup> | Non-executive Directors<sup>2</sup> |
|  | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 |
|  | **£000** | £000 | **£000** | £000 | **£000** | £000 |
| Directors' base salary, allowances and benefits in kind | **1796** | 2473 | **1086** |  |  |  |
| Non-executive Directors' fees and benefits in kind |  |  |  |  | **6252** | 5393 |
| Pension contributions | **—** |  | **—** |  | **—** |  |
| Performance-related pay paid or receivable<sup>3</sup> | **12605** | 10677 | **7350** |  | **—** |  |
| Inducements to join paid or receivable | **—** |  | **—** |  | **—** |  |
| Compensation for loss of office | **—** |  | **—** |  | **—** |  |
| Notional return on deferred cash | **5** | 8 | **11** |  | **—** |  |
| **Total** | **14406** | 13158 | **8447** |  | **6252** | 5393 |
| **Total ($000)** | **18977** | 17333 | **11127** |  | **8236** | 7104 |

---

1Pam Kaur was appointed executive Director and Group CFO effective 1 January 2025.

2Fees and benefits in kind for 2025 reflects the population as per the single total figure table for non-executive Directors.

3Includes the value of the deferred and LTI awards at grant.

The aggregate amount of Directors' emoluments (including both executive Directors and non-executive Directors) for the year ended 31 December

2025 was $38,340,912. The aggregate value of Director retirement benefits for current Directors is nil.

As per our policy, benefits in kind may include, but are not limited to, the provision of medical insurance, income protection insurance, health

assessment, life assurance, club membership, tax assistance, car benefit, travel assistance, provision of company owned-accommodation and

relocation costs (including any tax due, where applicable).

The details of compensation paid to former executive Directors for the year ended 31 December 2025 are set out below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Emoluments to former executive Directors | Emoluments to former executive Directors | Emoluments to former executive Directors | Emoluments to former executive Directors | Emoluments to former executive Directors |
|  | **Stuart Gulliver** | **John Flint** | **Marc Moses** | **Sir Noel Quinn** |
|  | £**$** | £**$** | £**$** | £**$** |
| Post-employment medical insurance benefits<sup>1</sup> | **10305** | **16253** | **31961** | **9599** |
| Tax return support<sup>1</sup> | **—** | **—** | **—** | **2305** |

---

1Amounts are converted into US dollars based on the average exchange rates for the year.

The total aggregate value of benefits provided to former executive Directors in 2025 was £53,460 ($70,423). There were payments under

retirement benefit arrangements to four former Directors of £2,484,882.

The provision at 31 December 2025 in respect of unfunded pension obligations to two former Directors amounted to £345,538. This relates to

unfunded unapproved retirement benefits schemes.

Emoluments of senior management and five highest paid employees

The following tables set out the emoluments paid to senior management, comprising executive Directors and members of the Group Operating

Committee, for the year ended 31 December 2025, or for the period of appointment in 2025 as a Director or member of the Group Operating

Committee. The tables also detail the remuneration paid and share awards granted to the five highest paid employees, comprising Georges

Elhedery, Pam Kaur and three other members of the Group Operating Committee for the year ended 31 December 2025.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) | Five highest paid employees – share awards (HSBC Share Plan 2011) |
| Dates of <br>award | Award<br>price <br>(£)<sup>1</sup> |  |  | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** | **HSBC Holdings ordinary share awards** |
| Dates of <br>award | Award<br>price <br>(£)<sup>1</sup> | Usually vesting | Usually vesting | **At** <br>**1 Jan 2025** | **Granted in** <br>**period** | **Vested in** <br>**period**<sup>2</sup> | **Fair value(s) (£)** | **Lapsed**<br>**in period** | **Cancelled in** <br>**period** | **At** <br>**31 Dec 2025** |
| Dates of <br>award | Award<br>price <br>(£)<sup>1</sup> | from | to | **At** <br>**1 Jan 2025** | **Granted in** <br>**period** | **Vested in** <br>**period**<sup>2</sup> | **Fair value(s) (£)** | **Lapsed**<br>**in period** | **Cancelled in** <br>**period** | **At** <br>**31 Dec 2025** |
| 2015 to 2024 |  | 1 Mar 25 | 30 Mar 31 | **5569957** | **—** | **960545** | **—** | **176633** | **—** | **4432779** |
| 4 Mar 25<sup>3</sup> | 9.070 | 4 Mar 25 | 30 Mar 32 | **—** | **1262453** | **603212** | **3.461 and 9.163** | **—** | **—** | **659241** |
| 7 May 25<sup>3</sup> | 9.070 | 1 Mar 28 | 30 Mar 32 | **—** | **2165810** | **—** | **3.185** | **—** | **—** | **2165810** |
|  |  |  |  | **5569957** | **3428263** | **1563757** | **—** | **176633** | **—** | **7257830** |

---

1The price for awards made in 2025 is the average closing price of the week commencing 24 February 2025. In all cases the purchase price is nil.

2The weighted average closing price of the shares immediately before the dates on which the awards were vested was £8.965.

3The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair values vary based on the length of the vesting period. These

awards include LTI awards which are subject to satisfaction of performance conditions. LTI awards are subject to a combination of financial and non-financial

metrics that are in this report.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **270** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

---

| | | |
|:---|:---|:---|
| Emoluments | Emoluments |  |
| **£000s** | **Five highest paid employees** | **Senior management** |
| Basic salaries, allowances and benefits in kind | **11005** | **25839** |
| Pension contributions | **124** | **492** |
| Performance-related pay paid or receivable<sup>1</sup> | **36685** | **59240** |
| Inducements to join paid or receivable | **—** | **—** |
| Compensation for loss of office<sup>2</sup> | **—** | **348** |
| **Total** | **47814** | **85919** |
| **Total ($000)** | **62987** | **113184** |

---

1Includes the value of deferred share awards at grant.

2Excludes expected payments in 2026 in connection with loss of office for senior management in 2025.

---

| | | | |
|:---|:---|:---|:---|
| Emoluments by bands | Emoluments by bands | Emoluments by bands | Emoluments by bands |
| Hong Kong dollars | US dollars | **Number of highest paid employees** | **Number of senior management** |
| $1000001 – $1500000 | $128267 – $192400 | **—** | **1** |
| $10000001 – $10500000 | $1282664 – $1346797 | **—** | **1** |
| $13500001 – $14000000 | $1731597 – $1795730 | **—** | **1** |
| $41000001 – $41500000 | $5258923 – $5323056 | **—** | **1** |
| $42000001 – $42500000 | $5387190 – $5451323 | **—** | **1** |
| $45500001 – $46000000 | $5836122 – $5900255 | **—** | **1** |
| $57000001 – $57500000 | $7311186 – $7375319 | **—** | **1** |
| $57500001 – $58000000 | $7375319 – $7439452 | **—** | **1** |
| $60500001 – $61000000 | $7760118 – $7824251 | **—** | **1** |
| $61000001 – $61500000 | $7824251 – $7888384 | **—** | **1** |
| $66500001 – $67000000 | $8529717 – $8593850 | **1** | **1** |
| $86500001 – $87000000 | $11095045 – $11159178 | **1** | **1** |
| $91500001 – $92000000 | $11736377 – $11800510 | **1** | **1** |
| $97500001 – $98000000 | $12505976 – $12570109 | **1** | **1** |
| $147500001 – $148000000 | $18919296 – $18983429 | **1** | **1** |

---

Non-executive Directors

(Audited)

The following table shows the total fees and benefits of non-executive Directors for 2025, together with comparative figures for 2024.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Fees and benefits | Fees and benefits | Fees and benefits | Fees and benefits | Fees and benefits | Fees and benefits | Fees and benefits |
| (Audited) | Fees<sup>1</sup> | Fees<sup>1</sup> | Benefits<sup>2</sup> | Benefits<sup>2</sup> | Total | Total |
| (£000) | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 |
| Geraldine Buckingham<sup>3</sup> | **283** | 270 | **14** | 3 | **297** | 273 |
| Rachel Duan | **268** | 255 | **13** | 3 | **281** | 258 |
| Dame Carolyn Fairbairn | **337** | 292 | **15** | 5 | **352** | 297 |
| James Forese<sup>4</sup> | **817** | 801 | **34** | 4 | **851** | 805 |
| Ann Godbehere<sup>5</sup> | **737** | 389 | **44** |  | **781** | 389 |
| Steven Guggenheimer | **268** | 259 | **22** | 4 | **290** | 263 |
| José Antonio Meade Kuribreña | **268** | 253 | **51** | 7 | **319** | 260 |
| Kalpana Morparia | **268** | 248 | **21** | 1 | **289** | 249 |
| Eileen Murray | **386** | 331 | **30** |  | **416** | 331 |
| Brendan Nelson<sup>6</sup> | **783** | 329 | **80** | 38 | **863** | 367 |
| Swee Lian Teo | **298** | 256 | **28** |  | **326** | 256 |
| Sir Mark Tucker<sup>7</sup> | **1125** | 1500 | **62** | 145 | **1187** | 1645 |
| **Total (£000)** | **5838** | 5183 | **414** | 210 | **6252** | 5393 |
| **Total ($000)** | **7691** | 6828 | **545** | 277 | **8236** | 7104 |

---

1Fees are in line with the Directors' remuneration policy approved by the shareholders at the 2025 AGM.

2Benefits include taxable expenses such as accommodation, travel and subsistence relating to attendance at Board and other meetings at HSBC Holdings'

registered offices.

3Stepped down as a member of the Group Remuneration Committee on 31 January 2025.

4Includes fee of £418,000 (2024: £430,000) in relation to his role as Chair of HSBC North America Holdings, Inc.

5Appointed as a non-executive Director of HSBC Bank plc on 1 January 2025 and received a pro rata annual fee of £105,000 until 24 April 2025. Ann was

appointed as Chair of HSBC Bank plc Board and the Nomination, Remuneration and Governance Committee on 25 April 2025 and received a pro rata annual fee

of £300,000.

6Appointed as a non-executive Director of HSBC UK Bank plc on 9 January 2025 and received an annual fee for this appointment of £135,000 pro rata for the

period 9 January 2025 to 30 September 2025. Following his appointment as Group Chairman on 1 October 2025, Brendan received a single total annual fee of

£1.5m pro rata and no other fees were paid in relation to any of his other Group or HSBC UK Bank plc roles from 1 October 2025.

7Stepped down as Group Chairman on 30 September 2025.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **271** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

Non-executive Directors' interests in shares

(Audited)

The shareholdings of persons who were non-executive Directors in

2025, including the shareholdings of their connected persons, at

31 December 2025, or date of cessation as a Director if earlier, are set

out below. There have been no changes in the shareholdings of the

non-executive Directors from 31 December 2025 to the date of this

report. Non-executive Directors are expected to meet the shareholding

guidelines of 15,000 shares within five years of the date of their

appointment. All non-executive Directors who had been appointed for

five years or more at 31 December 2025 met the guidelines.

---

| | | |
|:---|:---|:---|
| Shares | Shares | Shares |
|  | Shareholding <br>guidelines (number of <br>shares)<br>| **Share interests** <br>**(number of shares)**<br>|
| Geraldine Buckingham  | 15000 | **15000** |
| Rachel Duan | 15000 | **15000** |
| Dame Carolyn Fairbairn | 15000 | **15000** |
| James Forese | 15000 | **115000** |
| Ann Godbehere | 15000 | **15000** |
| Steven Guggenheimer | 15000 | **15000** |
| José Antonio Meade Kuribreña | 15000 | **15000** |
| Kalpana Morparia  | 15000 | **15000** |
| Eileen Murray | 15000 | **75000** |
| Brendan Nelson  | 15000 | **15000** |
| Swee Lian Teo | 15000 | **15200** |
| Sir Mark Tucker (retired on 30 September 2025) | 15000 | **307352** |

---

2026 fees for non-executive Directors

The table below sets out the 2026 fees for non-executive Directors. The fees paid to non-executive Directors who are standing for election or re-

election as members of Board committees are set out in the table below (these Board committees' fees and Board fees are pro-rated for part year

service where relevant).

---

| | | |
|:---|:---|:---|
|  |  | **2026 fees** |
| **Position** |  | **£** |
| Non-executive Group Chairman<sup>1</sup> |  | **1500000** |
| Non-executive Director (base fee) |  | **136500** |
| Senior Independent Director |  | **200000** |
| Group Audit Committee, Group Risk Committee, Group Remuneration Committee and Group Technology & <br>Operations Committee<br>| Chair | **150000** |
|  | Member | **50000** |
| Nomination & Corporate Governance Committee | Chair | **––** |
|  | Member | **34650** |
| Sustainability Working Group  | Chair  | **60000** |
|  | Member  | **30000** |
| Designated workforce engagement non-executive Director |  | **50000** |

---

1The Group Chairman does not receive a base fee or any other fee in respect of chairing of the Nomination & Corporate Governance Committee.

As signalled in the Annual Reports and Accounts 2024 and the 2025 Notice of AGM, as part of the 2024 review of fees payable to non-executive

Directors, the Board agreed to align the fees for the role of Board committee chair (excluding the Nomination & Corporate Governance Committee)

to £150,000 per annum in two phases: an initial increase to £125,000 per annum effective 1 January 2025, with a further increase with effect from

1 January 2026.

No further changes have been made to the non-executive Director fees for 2026.

Non-executive Director appointment and re-election

Non-executive Directors and the Group Chairman are appointed for

fixed terms not exceeding three years, which may be renewed subject

to their re-election by shareholders at AGMs. Non-executive Directors

and the Group Chairman do not have service contracts, but are bound

by letters of appointment issued for and on behalf of HSBC Holdings,

which are available for inspection at HSBC Holdings' registered office.

There are no obligations in the non-executive Directors' or Group

Chairman's letters of appointment that could give rise to remuneration

payments or payments for loss of office.

---

| | | |
|:---|:---|:---|
| **2026 AGM** | **2027 AGM** | **2028 AGM** |
| José Antonio Meade Kuribreña | James Forese | Rachel Duan |
| Geraldine Buckingham | Steven Guggenheimer | Dame Carolyn Fairbairn |
| Kalpana Morparia | Eileen Murray |  |
| Wei Sun Christianson<sup>1</sup> | Brendan Nelson |  |
|  | Swee Lian Teo |  |

---

1Wei Sun Christianson was appointed following the 2025 AGM and therefore her initial three-year appointment terms are subject to approval of her election by

shareholders at the 2026 AGM. Her initial three-year term of appointment will end at the conclusion of the 2029 AGM, subject to annual re-election by

shareholders at the relevant AGMs.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **272** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

MRT remuneration disclosures

The following tables set out the remuneration disclosures for

individuals identified as MRTs for HSBC Holdings.

Remuneration information for individuals who are only identified as

MRTs at HSBC Bank plc, HSBC UK Bank plc or other solo-regulated

entity levels is included, where relevant, in those entities' disclosures.

The 2025 variable pay information included in the following tables is

based on the market value of awards. For share awards, the market

value is based on HSBC Holdings' share price at the date of grant

(unless indicated otherwise). For cash awards, it is the value of awards

expected to be paid to the individual over the deferral period.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Remuneration awarded for the financial year (REM1) | Remuneration awarded for the financial year (REM1) | Remuneration awarded for the financial year (REM1) | Remuneration awarded for the financial year (REM1) | Remuneration awarded for the financial year (REM1) | Remuneration awarded for the financial year (REM1) |
|  |  | **Supervisory** <br>**function**<br>| **Management** <br>**function**<br>| **Other senior** <br>**management**<br>| **Other** <br>**identified** <br>**staff**<br>|
| Fixed <br>remuneration | Number of identified staff | **12.0** | **2.0** | **13.0** | **1230.1** |
| Fixed <br>remuneration | **Total fixed pay ($m)** | **8.4** | **3.8** | **27.5** | **685.3** |
| Fixed <br>remuneration | – of which: cash-based ($m)<sup>1</sup> | **8.4** | **3.8** | **27.5** | **685.3** |
| Fixed <br>remuneration | – of which: shares or equivalent ownership interests ($m) | **—** | **—** | **—** | **—** |
| Fixed <br>remuneration | – of which: share-linked instruments or equivalent non-cash instruments ($m) | **—** | **—** | **—** | **—** |
| Fixed <br>remuneration | – of which: other instruments ($m) | **—** | **—** | **—** | **—** |
| Fixed <br>remuneration | – of which: other forms ($m) | **—** | **—** | **—** | **—** |
| Variable <br>remuneration<sup>3</sup> | Number of identified staff | **12.0** | **2.0** | **13.0** | **1230.1** |
| Variable <br>remuneration<sup>3</sup> | **Total variable remuneration ($m)**<sup>4</sup> | **—** | **26.3** | **53.2** | **810.3** |
| Variable <br>remuneration<sup>3</sup> | – of which: cash-based ($m) | **—** | **3.8** | **26.9** | **429.9** |
| Variable <br>remuneration<sup>3</sup> | – of which: deferred ($m) | **—** | **—** | **15.7** | **176.3** |
| Variable <br>remuneration<sup>3</sup> | – of which: shares or equivalent ownership interests ($m)<sup>2</sup> | **—** | **22.5** | **26.3** | **364.9** |
| Variable <br>remuneration<sup>3</sup> | – of which: deferred ($m) | **—** | **18.8** | **15.7** | **198.9** |
| Variable <br>remuneration<sup>3</sup> | – of which: share-linked instruments or equivalent non-cash instruments ($m) | **—** | **—** | **—** | **9.1** |
| Variable <br>remuneration<sup>3</sup> | – of which: deferred ($m) | **—** | **—** | **—** | **4.5** |
| Variable <br>remuneration<sup>3</sup> | – of which: other instruments ($m) | **—** | **—** | **—** | **—** |
| Variable <br>remuneration<sup>3</sup> | – of which: deferred ($m) | **—** | **—** | **—** | **—** |
| Variable <br>remuneration<sup>3</sup> | – of which: other forms ($m) | **—** | **—** | **—** | **6.4** |
| Variable <br>remuneration<sup>3</sup> | – of which: deferred ($m) | **—** | **—** | **—** | **3.9** |
| **Total remuneration ($m)** | **Total remuneration ($m)** | **8.4** | **30.1** | **80.7** | **1495.6** |

---

1Cash-based fixed remuneration is paid immediately.

2Paid in HSBC shares. Vested shares are subject to a retention period of up to one year for executive Directors and where required by regulation.

3Variable pay awarded in respect of 2025. In accordance with shareholder approval received on 3 May 2024 (99% in favour), and where regulations permit, for

each MRT the variable component of remuneration for any one year is limited to 10 times the fixed component of total remuneration, in line with the maximum

pay ratio approved by the Group Remuneration Committee. HSBC Holdings plc continues to provide approval for entities regulated by the European Banking

Authority to operate a maximum variable pay ratio of 200% of the fixed component of total remuneration for each MRT, where permitted to do so.

428 identified staff members were exempt from the application of the remuneration structure requirements for MRTs under the PRA and FCA remuneration rules.

Their total remuneration is $9.3m, of which $8.0m is fixed pay and $1.3m is variable remuneration.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Special payments to staff whose professional activities have a material impact on institutions' risk profile (REM2) | Special payments to staff whose professional activities have a material impact on institutions' risk profile (REM2) | Special payments to staff whose professional activities have a material impact on institutions' risk profile (REM2) | Special payments to staff whose professional activities have a material impact on institutions' risk profile (REM2) | Special payments to staff whose professional activities have a material impact on institutions' risk profile (REM2) |
|  | **Supervisory** <br>**function**<br>| **Management** <br>**function**<br>| **Other senior** <br>**management**<br>| **Other** <br>**identified** <br>**staff**<br>|
| **Guaranteed variable remuneration awards**<sup>1</sup> | **Guaranteed variable remuneration awards**<sup>1</sup> | **Guaranteed variable remuneration awards**<sup>1</sup> | **Guaranteed variable remuneration awards**<sup>1</sup> | **Guaranteed variable remuneration awards**<sup>1</sup> |
| Number of identified staff | ***—*** | ***—*** | ***—*** | ***—*** |
| Total amount ($m) | ***—*** | ***—*** | ***—*** | ***—*** |
| – of which guaranteed variable remuneration awards paid during the financial year, that are not <br>taken into account in the bonus cap ($m)<br>| **—** | **—** | **—** | **—** |
| **Severance payments awarded in previous periods, that have been paid out during the financial year**<sup>2</sup> | **Severance payments awarded in previous periods, that have been paid out during the financial year**<sup>2</sup> | **Severance payments awarded in previous periods, that have been paid out during the financial year**<sup>2</sup> | **Severance payments awarded in previous periods, that have been paid out during the financial year**<sup>2</sup> | **Severance payments awarded in previous periods, that have been paid out during the financial year**<sup>2</sup> |
| Number of identified staff | ***—*** | ***—*** | ***—*** | **9.9** |
| Total amount ($m) | ***—*** | ***—*** | ***—*** | **11.3** |
| **Severance payments awarded during the financial year**<sup>2</sup> | **Severance payments awarded during the financial year**<sup>2</sup> | **Severance payments awarded during the financial year**<sup>2</sup> | **Severance payments awarded during the financial year**<sup>2</sup> | **Severance payments awarded during the financial year**<sup>2</sup> |
| Number of identified staff | **—** | **—** | **1.0** | **134.0** |
| Total amount ($m) | **—** | **—** | **0.5** | **67.5** |
| – of which paid during the financial year ($m) | **—** | **—** | **—** | **60.2** |
| – of which deferred ($m) | **—** | **—** | **—** | **—** |
| – of which severance payments paid during the financial year, that are not taken into account in <br>the bonus cap ($m)<br>| **—** | **—** | **0.5** | **67.5** |
| – of which highest payment that has been awarded to a single person ($m) | **—** | **—** | **0.5** | **1.8** |

---

1No guaranteed variable remuneration was awarded in 2025. HSBC would offer a guaranteed variable remuneration award in exceptional circumstances for new

hires, and for the first year of employment only. It would typically involve a critical new hire, and would also depend on factors such as the seniority of the

individual, whether the new hire candidate has any competing offers and the timing of the hire during the performance year.

2Includes payments such as payment in lieu of notice, statutory severance, outplacement service, legal fees, ex-gratia payments and settlements (excludes pre-

existing benefit entitlements triggered on terminations).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **273** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) | Deferred remuneration at 31 December<sup>1</sup> (REM3) |
| **$m** | **Total amount** <br>**of deferred** <br>**remuneration** <br>**awarded for** <br>**previous** <br>**performance** <br>**periods**<br>| **of which:**<br>**due to** <br>**vest in** <br>**the** <br>**financial** <br>**year**<br>| **of which:** <br>**vesting in** <br>**subsequent** <br>**financial** <br>**years**<br>| **Amount of** <br>**performance** <br>**adjustment** <br>**made in the** <br>**financial year** <br>**to deferred** <br>**remuneration** <br>**that was due** <br>**to vest in the** <br>**financial year**<br>| **Amount of** <br>**performance** <br>**adjustment** <br>**made in the** <br>**financial year** <br>**to deferred** <br>**remuneration** <br>**that was due** <br>**to vest in** <br>**future** <br>**performance** <br>**years**<br>| **Total** <br>**amount of** <br>**adjustment** <br>**during the** <br>**financial year** <br>**due to ex** <br>**post implicit** <br>**adjustments**<br>| **Total amount** <br>**of deferred** <br>**remuneration** <br>**awarded** <br>**before the** <br>**financial year** <br>**actually paid** <br>**out in the** <br>**financial year**<br>| **Total amount** <br>**of deferred** <br>**remuneration** <br>**awarded for** <br>**previous** <br>**performance** <br>**period that** <br>**has vested but** <br>**is subject to** <br>**retention** <br>**periods**<br>|
| **Supervisory function** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Cash-based | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Shares | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Share-linked instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other forms | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Management function** | **82.0** | **5.5** | **76.5** | **(3.4)** | **—** | **21.7** | **5.4** | **6.0** |
| Cash-based | **10.1** | **1.6** | **8.5** | **—** | **—** | **—** | **1.5** | **—** |
| Shares | **71.9** | **3.9** | **68.0** | **(3.4)** | **—** | **21.7** | **3.9** | **6.0** |
| Share-linked instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other forms | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Other senior management** | **147.3** | **20.3** | **127.0** | **(7.9)** | **—** | **32.9** | **20.1** | **9.2** |
| Cash-based | **43.0** | **7.0** | **36.0** | **—** | **—** | **—** | **7.0** | **—** |
| Shares | **104.3** | **13.3** | **91.0** | **(7.9)** | **—** | **32.9** | **13.1** | **9.2** |
| Share-linked instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other forms | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| **Other identified staff** | **1819.6** | **358.4** | **1461.2** | **(12.6)** | **—** | **344.4** | **351.4** | **104.6** |
| Cash-based | **553.2** | **109.7** | **443.5** | **—** | **—** | **—** | **108.3** | **—** |
| Shares | **1226.4** | **240.1** | **986.3** | **(12.6)** | **—** | **334.6** | **234.7** | **98.7** |
| Share-linked instruments | **28.8** | **6.6** | **22.2** | **—** | **—** | **8.2** | **6.5** | **4.2** |
| Other instruments | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other forms | **11.2** | **2.0** | **9.2** | **—** | **—** | **1.6** | **1.9** | **1.7** |
| **Total amount** | **2048.9** | **384.2** | **1664.7** | **(23.9)** | **—** | **399.0** | **376.9** | **119.8** |

---

1This table provides details of balances and movements during performance year 2025. For details of variable pay awards granted for 2025, refer to the

'Remuneration awarded for the financial year' table. Deferred remuneration is made in cash and/or shares. Share-based awards are made in HSBC shares.

---

| | |
|:---|:---|
| Identified staff - remuneration by band<sup>1</sup>(REM4) |  |
|  | **Identified staff that are high** <br>**earners as set out in Article** <br>**450(i) CRR**<br>|
| €1,000,000 – 1,500,000 | **274** |
| €1,500,000 – 2,000,000 | **96** |
| €2,000,000 – 2,500,000 | **43** |
| €2,500,000 – 3,000,000 | **30** |
| €3,000,000 – 3,500,000 | **12** |
| €3,500,000 – 4,000,000 | **7** |
| €4,000,000 – 4,500,000 | **8** |
| €4,500,000 – 5,000,000 | **5** |
| €5,000,000 – 6,000,000 | **3** |
| €6,000,000 – 7,000,000 | **7** |
| €7,000,000 – 8,000,000 | **1** |
| €8,000,000 – 9,000,000 | **—** |
| €9,000,000 – 10,000,000 | **2** |
| €10,000,000 – 11,000,000 | **1** |
| €11,000,000 – 12,000,000 | **—** |
| €12,000,000 – 13,000,000 | **—** |
| €13,000,000 – 14,000,000 | **—** |
| €14,000,000 – 15,000,000 | **—** |
| €15,000,000 – 16,000,000 | **—** |
| €16,000,000 – 17,000,000 | **1** |

---

1Table prepared in euros in accordance with Article 450 of the European Union Capital Requirements Regulation, using the exchange rates published by the

European Commission for financial programming and budget for December of the reported year as published on its website.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **274** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Directors' remuneration report | Directors' remuneration report | Directors' remuneration report |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) | Information on remuneration of staff whose professional activities have a material impact on institutions' risk profile (REM5) |
|  | **Management body** | **Management body** | **Management body** | **Business areas** | **Business areas** | **Business areas** | **Business areas** | **Business areas** | **Business areas** | **Total** |
|  | **Supervisory** <br>**function**<br>| **Management** <br>**function**<br>| **Total** | **Investment** <br>**banking**<br>| **Retail** <br>**banking**<br>| **Asset** <br>**management**<br>| **Corporate** <br>**function**<br>| **Independent** <br>**internal** <br>**control** <br>**function**<br>| **All** <br>**other**<br>| **Total** |
| **Total number of** <br>**identified staff**<br>|  |  |  |  |  |  |  |  |  | **1257.1** |
| –of which members of <br>the Board<br>| **12.0** | **2.0** | **14.0** |  |  |  |  |  |  |  |
| –of which senior <br>management<br>|  |  |  | **—** | **1.0** | **—** | **4.0** | **3.0** | **5.0** |  |
| –of which other <br>identified staff<br>|  |  |  | **510.9** | **276.4** | **35.9** | **160.8** | **174.5** | **71.6** |  |
| **Total remuneration of** <br>**identified staff ($m)**<br>| **8.4** | **30.1** | **38.5** | **717.1** | **311.4** | **47.1** | **220.6** | **136.7** | **143.4** |  |
| –of which variable <br>remuneration ($m)<sup>1</sup><br>| **—** | **26.3** | **26.3** | **418.6** | **166.1** | **25.3** | **117.2** | **57.1** | **79.2** |  |
| –of which fixed <br>remuneration ($m)<br>| **8.4** | **3.8** | **12.2** | **298.5** | **145.3** | **21.8** | **103.4** | **79.6** | **64.2** |  |

---

1Variable pay awarded in respect of 2025. In accordance with shareholder approval received on 3 May 2024 (99% in favour), and where regulations permit, for

each MRT the variable component of remuneration for any one year is limited to 10 times the fixed component of total remuneration, in line with the maximum

pay ratio approved by the Group Remuneration Committee. HSBC Holdings plc continues to provide approval for entities regulated by the European Banking

Authority to operate a maximum variable pay ratio of 200% of the fixed component of total remuneration for each MRT, where permitted to do so.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **275** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

---

Share capital and other governance

disclosures

Share buy-backs

On 31 October 2024, HSBC Holdings commenced a share buy-back of

its ordinary shares of up to a maximum consideration of $3.0bn. The

share buy-back continued in 2025 and was concluded on 11 February

2025, with 53,412,510 ordinary shares repurchased for cancellation on

UK trading venues and 48,119,200 ordinary shares repurchased for

cancellation on HKEx from 1 January to 11 February 2025.

On 21 February 2025, HSBC Holdings commenced a further share buy-

back of its ordinary shares of up to a maximum consideration of $2.0bn.

This share buy-back concluded on 25 April 2025 with 90,226,199

ordinary shares repurchased for cancellation on UK trading venues and

89,362,400 ordinary shares repurchased for cancellation on HKEx.

On 7 May 2025, HSBC Holdings commenced a further share buy-back

of its ordinary shares of up to a maximum consideration of $3.0bn. This

share buy-back concluded on 25 July 2025 with 151,454,350 ordinary

shares repurchased for cancellation on UK trading venues and

101,298,000 ordinary shares repurchased for cancellation on HKEx.

On 1 August 2025, HSBC Holdings commenced a further share buy-

back of its ordinary shares of up to a maximum consideration of $3.0bn.

This share buy-back concluded on 24 October 2025 with 136,301,568

ordinary shares repurchased for cancellation on UK trading venues and

91,040,400 ordinary shares repurchased for cancellation on HKEx.

The purpose of the share buy-backs was to reduce HSBC's number of

outstanding ordinary shares.

As at 31 December 2025, the total number of ordinary shares

repurchased during the year was 761,214,627, representing a nominal

value of $380,607,313.50 and an aggregate consideration paid by HSBC

of £3,875,910,163 on UK trading venues and HK$30,257,041,599 on

HKEx. The ordinary shares repurchased represent 4.43% of the

ordinary shares in issue as at 31 December 2025.

The table that follows outlines details of the ordinary shares purchased

and cancelled on a monthly basis during 2025.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Share buy-back – UK venues | Share buy-back – UK venues | Share buy-back – UK venues | Share buy-back – UK venues | Share buy-back – UK venues | Share buy-back – UK venues |
|  | **Number of shares** <br>**repurchased**<br>| **Highest price**<br>**paid per share** <br>| **Lowest price**<br>**paid per share**<br>| **Average price** <br>**paid per share**<br>| **Aggregate**<br>**price paid**<br>|
|  |  | **£** | **£** | **£** | **£** |
| Jan 2025 | **53412510** | **8.2800** | **7.6770** | **7.9835** | **426418493** |
| Feb 2025 | **17354614** | **9.2790** | **8.7210** | **8.9940** | **156088219** |
| Mar 2025 | **48866970** | **9.4300** | **8.3510** | **8.8567** | **432798143** |
| Apr 2025 | **24004615** | **8.8940** | **6.9890** | **7.8260** | **187859442** |
| May 2025 | **68401165** | **8.9150** | **8.3530** | **8.6873** | **594221858** |
| Jun 2025 | **50911911** | **8.8730** | **8.6010** | **8.7091** | **443397460** |
| Jul 2025 | **32141274** | **9.6800** | **8.6750** | **9.2982** | **298856687** |
| Aug 2025 | **48028511** | **9.7220** | **9.0880** | **9.4473** | **453738250** |
| Sep 2025 | **48365181** | **10.5080** | **9.4670** | **10.0103** | **484152048** |
| Oct 2025 | **39907876** | **10.6740** | **9.6410** | **9.9825** | **398379563** |
| **Total** | **431394627** |  |  |  | **3875910163** |
| Share buy-back – Hong Kong venues | Share buy-back – Hong Kong venues | Share buy-back – Hong Kong venues | Share buy-back – Hong Kong venues | Share buy-back – Hong Kong venues | Share buy-back – Hong Kong venues |
|  | **Number of shares** <br>**repurchased**<br>| **Highest price** <br>**paid per share**<br>| **Lowest price** <br>**paid per share**<br>| **Average price** <br>**paid per share**<br>| **Aggregate** <br>**price paid**<br>|
|  |  | **(HK$)** | **(HK$)** | **(HK$)** | **(HK$)** |
| Jan 2025 | **29455200** | **79.9500** | **74.8000** | **76.9614** | **2266914703** |
| Feb 2025 | **33403600** | **89.8000** | **79.4500** | **84.2625** | **2814671080** |
| Mar 2025 | **54995200** | **92.5500** | **83.9500** | **88.6511** | **4875383400** |
| Apr 2025 | **19627600** | **89.1000** | **70.0500** | **79.7185** | **1564683760** |
| May 2025 | **48790000** | **93.6500** | **86.2500** | **90.6985** | **4425181117** |
| Jun 2025 | **29848800** | **93.9000** | **90.9000** | **92.1917** | **2751810520** |
| Jul 2025 | **22659200** | **102.1000** | **94.4500** | **98.0061** | **2220738939** |
| Aug 2025 | **32520800** | **102.2000** | **95.0500** | **99.1969** | **3225963440** |
| Sep 2025 | **31736800** | **109.2000** | **98.7500** | **104.7238** | **3323597720** |
| Oct 2025 | **26782800** | **112.0000** | **100.6000** | **104.1003** | **2788096920** |
| **Total** | **329820000** |  |  |  | **30257041599** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **276** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Dividends

Dividends for 2025

First, second and third interim dividends for 2025, each of $0.10 per

ordinary share, were paid on 20 June 2025, 26 September 2025 and

18 December 2025. For further details of the dividends approved in

2025, see Note 8 on the financial statements.

On 25 February 2026, the Directors approved a fourth interim dividend

for 2025 of $0.45 per ordinary share, making a total of $0.75 for the

2025 full-year. The fourth interim dividend for 2025 will be payable on

30 April 2026 in cash in US dollars, or in sterling or Hong Kong dollars at

exchange rates to be determined on 20 April 2026. The fourth interim

dividend for 2025 of $2.25 per American Depositary Share, each of

which represents five ordinary shares, will be payable by the depositary

in US dollars. No liability was recorded in the financial statements in

respect of the fourth interim dividend for 2025.

A quarterly dividend of £0.01 per non-cumulative preference share of

£0.01 each was paid on 17 March, 16 June, 15 September and

15 December 2025.

Dividends for 2026

The Group intends to pay quarterly dividends on its ordinary shares

during 2026.

A quarterly dividend of £0.01 per non-cumulative preference share of

£0.01 each is payable on 16 March, 15 June, 15 September and

15 December 2026 for the quarter then ended at the sole and absolute

discretion of the Board of HSBC Holdings plc. Accordingly, the Board of

HSBC Holdings plc has approved a quarterly dividend to be payable on

the non-cumulative preference share on 16 March 2026 to holders of

record on 27 February 2026.

Distributable reserves

The distributable reserves of HSBC Holdings at 31 December 2025

were $46.2bn, a $17.9bn increase since 31 December 2024, primarily

driven by $22.1bn in profits and other reserves movements generated

in 2025, cancellation of $16.6bn standing to the credit of its share

premium and capital redemption reserves pursuant to the Court

approval obtained by HSBC Holdings on 24 June 2025, offset by

$20.8bn dividends on ordinary shares, additional tier 1 coupon and

share buy-back payments.

Share capital

Issued share capital

The nominal value of HSBC Holdings' issued share capital paid up at

31 December 2025 was $8,587,619,931 divided into 17,175,239,862

ordinary shares of $0.50 each and one non-cumulative preference share

of £0.01, representing approximately 100.00% and 0.00% respectively

of the nominal value of HSBC Holdings' total issued share capital paid

up at 31 December 2025.

Rights, obligations and restrictions

attaching to shares

The rights and obligations attaching to each class of ordinary and non-

cumulative preference shares in our share capital are set out in full in

our Articles of Association. The Articles of Association may be

amended by special resolution of the shareholders and can be found on

our website at www.hsbc.com/who-we-are/our-people/board-of-

directors/board-responsibilities.

Ordinary shares

HSBC Holdings has one class of ordinary share, which carries no right

to fixed income. There are no voting restrictions on the issued ordinary

shares, all of which are fully paid. On a show of hands, each member

present has the right to one vote at general meetings. On a poll, each

member present or voting by proxy is entitled to one vote for every

$0.50 nominal value of share capital held.

There are no specific restrictions on transfers of ordinary shares, which

are governed by the general provisions of the Articles of Association

and prevailing legislation.

🡠Information on the policy adopted by the Board for paying interim dividends

on the ordinary shares may be found in the 'Shareholder information'

section on page 382.

Dividend waivers

The Group's employee benefit trusts, which hold shares in HSBC

Holdings in connection with the operation of its share plans, have

lodged standing instructions to waive dividends on shares held by them

that have not been allocated to employees. Shares held by custodians

in connection with the vesting of employee share awards also lodged

instructions to waive dividends. The total amount of dividends waived

during 2025 was $53.7m.

Preference shares

The preference shares, which have preferential rights to income and

capital, do not, in general, confer a right to attend and vote at general

meetings.

There are three classes of preference shares in the share capital of

HSBC Holdings: non-cumulative US dollar preference shares of $0.01

each ('dollar preference shares'); non-cumulative preference shares of

£0.01 each ('sterling preference shares'); and non-cumulative

preference shares of €0.01 ('euro preference shares').

The sterling preference share in issue is a Series A sterling preference

share. There are no dollar preference shares or euro preference shares

in issue.

🡠Information on dividends approved for 2023 and 2024 may be found in

Note 8 on the financial statements.

🡠Further details of the rights and obligations attaching to the HSBC Holdings'

issued share capital may be found in Note 32 on the financial statements.

Compliance with Hong Kong Listing Rule

13.25A(2)

HSBC Holdings has been granted a waiver from strict compliance with

Rule 13.25A(2) of the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited.

Under this waiver, HSBC's obligation to file a Next Day Return

following the issue of new shares, pursuant to the vesting of share

awards granted under its share plans to persons who are not Directors,

would only be triggered where it falls within one of the circumstances

set out under Rule 13.25A(3).

Share capital changes in 2025

HSBC Holdings does not hold any ordinary shares in treasury, and there

were no scrip dividends issued during the year.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **277** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

In addition to the share buy-backs, the following events occurred during the year in relation to the ordinary share capital of HSBC Holdings:

---

| | | | |
|:---|:---|:---|:---|
| All-employee share plans<sup>1</sup> | All-employee share plans<sup>1</sup> | All-employee share plans<sup>1</sup> | All-employee share plans<sup>1</sup> |
|  | **HSBC Holdings**<br>**ordinary shares issued** | **Market value per share** | **Market value per share** |
|  | **HSBC Holdings**<br>**ordinary shares issued** | **from** | **to** |
|  |  | $**£** | **£** |
| HSBC International Employee Share Purchase Plan | **118316** | **10.368** | **10.368** |

---

1In respect of the HSBC Holdings Savings Related Share Option Plan (UK), no new shares were issued under this plan. All exercises were satisfied by market

purchased shares. See page <u>[283](#id42dbec1de4a4a5390289335f1b45526_283)</u> for details of options granted, exercised and lapsed.

---

| | | | |
|:---|:---|:---|:---|
| HSBC share plans | HSBC share plans | HSBC share plans | HSBC share plans |
|  | **HSBC Holdings**<br>**ordinary shares issued** | **Market value per share** | **Market value per share** |
|  | **HSBC Holdings**<br>**ordinary shares issued** | **from** | **to** |
|  |  | $**£** | **£** |
| Vesting of awards under the HSBC Share Plan 2011 | **9819050** | **8.465** | **10.69** |

---

Authorities to allot and to purchase

shares and pre-emption rights

At the AGM in 2025, shareholders renewed the general authority for

the Directors to allot new shares up to 11,869,935,002 ordinary shares,

15,000,000 non-cumulative preference shares of £0.01 each,

15,000,000 non-cumulative preference shares of $0.01 each,

15,000,000 non-cumulative preference shares of €0.01 each.

Shareholders also renewed the authority for the Directors to make

market/off-market purchases of up to 1,780,490,250 ordinary shares.

The Directors exercised their market/off-market purchase authority

from both the 2024 AGM and the 2025 AGM and repurchased

761,214,627 ordinary shares during 2025.

In addition, shareholders gave authority for the Directors to grant rights

to subscribe for, or to convert any security into, no more than

3,560,980,500 ordinary shares in relation to any issue by HSBC

Holdings, or any member of the Group, of contingent convertible

securities that automatically convert into or are exchanged for ordinary

shares in HSBC Holdings in prescribed circumstances. For further

details on the issue of contingent convertible securities, see Note 32 on

the financial statements.

Other than as disclosed in the tables above headed 'Share capital

changes in 2025', the Directors did not allot any shares during 2025.

Debt securities

In 2025, HSBC Holdings issued the equivalent of $33.8bn of debt

securities in the public capital markets in a range of currencies and

maturities, of which $25.7bn were in the form of senior securities to

ensure it meets the current and proposed regulatory rules, including

those relating to the availability of adequate total loss-absorbing

capacity. For details of capital instruments and subordinated bail-inable

debt, see Notes 29 and 32 on pages 359 and 366.

Treasury shares

HSBC Holdings does not hold any ordinary shares in treasury.

Notifiable interests in share capital

During 2025, HSBC Holdings did not receive any notification of major

holdings of voting rights pursuant to the requirements of Rule 5 of the

Disclosure Guidance and Transparency Rules ('Rule 5 of the DTRs').

No notifications had been received between 31 December 2025 and

19 February 2026. Previous notifications received are as follows:

–BlackRock, Inc. gave notice on 3 March 2020 that on 2 March 2020

it had the following: an indirect interest in HSBC Holdings ordinary

shares of 1,235,558,490; qualifying financial instruments with

7,294,459 voting rights that may be acquired if the instruments are

exercised or converted; and financial instruments with a similar

economic effect to qualifying financial instruments, which refer to

2,441,397 voting rights, representing 6.07%, 0.03% and 0.01%,

respectively, of the total voting rights at 2 March 2020.

–Ping An Asset Management Co., Ltd. gave notice on 6 December

2017 that on 4 December 2017 it had an indirect interest in HSBC

Holdings ordinary shares of 1,007,946,172, representing 5.04% of

the total voting rights at that date.

At 31 December 2025, according to the register maintained by HSBC

Holdings pursuant to section 336 of the Securities and Futures

Ordinance of Hong Kong:

–BlackRock, Inc. gave notice on 16 July 2025 that on 11 July 2025 it

had the following interests in HSBC Holdings ordinary shares: a long

position of 1,586,341,122 shares and a short position of 6,856,029

shares, representing 9.09% and 0.04%, respectively, of the ordinary

shares in issue 11 July 2025.

–Ping An Asset Management Co., Ltd. gave notice on 10 May 2024

that on 7 May 2024 it had a long position of 1,502,584,731 in HSBC

Holdings ordinary shares, representing 7.98% of the ordinary shares

in issue at 7 May 2024.

–The Bank of New York Mellon Corporation gave notice on

17 October 2025 that on 15 October 2025 it had the following

interests in HSBC Holdings ordinary shares: a long position of

1,035,915,129 shares, a short position of 551,070,412 shares and a

lending pool of 449,036,061 shares representing 6.01%, 3.20% and

2.61%, respectively, of the ordinary shares in issue at 15 October

2025. The Bank of New York Mellon Corporation is the Depositary

for the HSBC ADSs. Under the SFO, they are required to report the

HSBC ADSs position as both a long and a short position.

No notifications had been received between 31 December 2025 and

19 February 2026.

Sufficiency of float

In compliance with the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited, at least 25% of the total issued

share capital has been held by the public at all times during 2025 and

up to the date of this report.

Dealings in HSBC Holdings listed

securities

The Group has policies and procedures that, except where permitted

by statute and regulation, prohibit specified transactions in respect of

its securities listed on The Stock Exchange of Hong Kong Limited.

Except for dealings as intermediaries or as trustees by subsidiaries of

HSBC Holdings, and purchases by HSBC Holdings under the share buy-

backs, neither HSBC Holdings nor any of its subsidiaries has purchased,

sold or redeemed any of its securities listed on The Stock Exchange of

Hong Kong Limited during the year ended 31 December 2025.

Directors' interests

Pursuant to the requirements of the UK Listing Rules and according to

the register of Directors' interests maintained by HSBC Holdings

pursuant to section 352 of the Securities and Futures Ordinance of

Hong Kong, the Directors of HSBC Holdings at 31 December 2025 had

certain interests, all beneficial unless otherwise stated, in the shares or

debentures of HSBC Holdings and its associated corporations.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **278** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Save as stated in the following table, no further interests were held by

Directors, and no Directors or their connected persons were awarded

or exercised any right to subscribe for any shares or debentures in any

HSBC corporation during the year.

No Directors held any short position as defined in the Securities and

Futures Ordinance of Hong Kong in the shares or debentures of HSBC

Holdings and its associated corporations.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Directors' interests – shares and debentures | Directors' interests – shares and debentures | Directors' interests – shares and debentures | Directors' interests – shares and debentures | Directors' interests – shares and debentures | Directors' interests – shares and debentures | Directors' interests – shares and debentures |
|  |  | **At 31 Dec 2025 or date of cessation, if earlier** | **At 31 Dec 2025 or date of cessation, if earlier** | **At 31 Dec 2025 or date of cessation, if earlier** | **At 31 Dec 2025 or date of cessation, if earlier** | **At 31 Dec 2025 or date of cessation, if earlier** |
|  | **At 1 Jan 2025, or**<br>**date of** <br>**appointment,**<br>**if later**<br>| **Beneficial**<br>**owner**<br>| **Child**<br>**under 18**<br>**or spouse**<br>| **Jointly** <br>**with** <br>**spouse/** <br>**other**<br>| **Trustee** | **Total**<br>**interests**<br>|
| **HSBC Holdings ordinary shares** |  |  |  |  |  |  |
| Geraldine Buckingham<sup>1</sup>  | **15000** | **15000** |  |  |  | **15000** |
| Rachel Duan<sup>1</sup> | **15000** | **15000** |  |  |  | **15000** |
| Georges Elhedery<sup>2</sup> | **966017** | **1109810** |  |  |  | **1109810** |
| Dame Carolyn Fairbairn | **15000** | **15000** |  |  |  | **15000** |
| James Forese<sup>1</sup> | **115000** | **115000** |  |  |  | **115000** |
| Ann Godbehere<sup>1</sup> | **15000** |  |  | **15000** |  | **15000** |
| Steven Guggenheimer<sup>1</sup> | **15000** |  |  | **15000** |  | **15000** |
| Manveen (Pam) Kaur<sup>2</sup>  | **801296** | **986625** |  |  |  | **986625** |
| José Antonio Meade Kuribreña<sup>1</sup> | **15000** | **15000** |  |  |  | **15000** |
| Kalpana Morparia<sup>1</sup>  | **15000** | **15000** |  |  |  | **15000** |
| Eileen Murray<sup>1</sup> | **75000** | **75000** |  |  |  | **75000** |
| Brendan Nelson  | **—** | **15000** |  |  |  | **15000** |
| Swee Lian Teo | **15200** | **15200** |  |  |  | **15200** |
| Sir Mark Tucker (retired on 30 September 2025) | **307352** | **307352** |  |  |  | **307352** |

---

1Geraldine Buckingham has an interest in 3,000, Rachel Duan in 3,000, James Forese in 23,000, Ann Godbehere in 3,000, Steven Guggenheimer in 3,000, José

Antonio Meade Kuribreña in 3,000, Kalpana Morparia in 3,000 and Eileen Murray in 15,000 listed American Depositary Shares ('ADS'), which are categorised as

equity derivatives under Part XV of the Securities and Futures Ordinance of Hong Kong. Each ADS represents five HSBC Holdings ordinary shares.

2Executive Directors' other interests in HSBC Holdings ordinary shares arising from the HSBC Holdings Savings-Related Share Option Plan (UK) and the HSBC

Share Plan 2011 are set out in the Scheme interests in the Directors' remuneration report on page <u>[249](#id42dbec1de4a4a5390289335f1b45526_94)</u>. At 31 December 2025, or date of cessation if earlier, the

aggregate interests under the Securities and Futures Ordinance of Hong Kong in HSBC Holdings ordinary shares, including interests arising through employee

share plans and the interests above were: Georges Elhedery – 3,938,444; and Pam Kaur – 2,771,470, representing approximately 0.02% and 0.02% of the

shares in issue respectively.

There have been no changes in the shares or debentures of the current Directors from 31 December 2024 to the date of this report.

UK Listing Rule 6.6.1

The disclosures required by UKLR 6.6.1 are set out on the following

pages, and other regulatory requirements are incorporated by reference

into this Directors' report:

---

| | |
|:---|:---|
| **Content** | **Page references** |
| Dividends and dividend waiver | <u>[276](#ie29bfdb91c4d4786a9341901bfd3baba_16588)</u>, 382 |
| Share buy-back | <u>[275](#i4d40be5756c44c3481f230a37d8fa5d2_100950)</u> |
| Emissions | 39-46 |
| Energy efficiency | 40, 35-36 |
| Principal activities of HSBC | 7, 12-14, 349 |
| Business review and future developments | 4-31 |
| Risk Review | 30-31, 119-218 |
| Engagement with suppliers, customers and <br>others<br>| 29-29, 33-63 |

---

Board governance

Appointment and re-election of Directors

A rigorous selection process is followed for the appointment of

Directors. Appointments are made on merit and candidates are

considered against objective criteria, and with regard to the benefits of

a diverse Board. Appointments are made in accordance with HSBC

Holdings plc's Articles of Association.

The Board may at any time appoint any person as a Director or

secretary, either to fill a vacancy or as an additional officer. The Board

may appoint any Director or secretary to hold any employment or

executive office and may revoke or terminate any such appointment.

Non-executive Directors are appointed for an initial three-year term and,

subject to continued satisfactory performance based upon an

assessment by the Group Chairman and the Nomination & Corporate

Governance Committee, are proposed for re-election by shareholders

at each AGM. They typically serve two three-year terms, with any

individual's appointment beyond six years to be for a rolling one-year

term and subject to thorough review and challenge with reference to

the needs of the Board. Where non-executive Directors are appointed

beyond six years, an explanation will be provided in the Annual Report

and Accounts.

Shareholders vote at each AGM on whether to elect and re-elect

individual Directors. All Directors that stood for election and re-election

at the 2025 AGM were elected and re-elected by shareholders.

Joint Company Secretary

Hannah Ashdown (48) was appointed as Deputy Group Secretary in

December 2021 and for administrative purposes, in October 2022, was

appointed as Joint Company Secretary. Hannah Ashdown stepped

down from her role as Joint Company Secretary with effect from

31 December 2025 and no Joint Company Secretary was appointed in

her place.

Independence

Independence is a critical component of good corporate governance, and

a principle that is applied consistently at both the HSBC Holdings and

subsidiary level. The Nomination & Corporate Governance Committee has

delegated authority from the Board in relation to the assessment of the

independence of non-executive Directors. In accordance with the UK and

Hong Kong Corporate Governance Codes, as applicable, the Nomination

& Corporate Governance Committee has reviewed and confirmed that all

non-executive Directors, and the Group Chairman, who have submitted

themselves for election and re-election at the AGM are considered to be

independent. This conclusion was reached after consideration of all

relevant circumstances that are likely to impair, or could appear to impair,

independence.

In line with the requirements of the Hong Kong Corporate Governance

Code, the Nomination & Corporate Governance Committee also reviewed

and considered the mechanisms in place to ensure independent views

and inputs are available to the Board. These mechanisms include:

–having the appropriate Board and committee structure in place,

including rules on the appointment and tenure of non-executive

Directors;

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **279** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

–facilitating the option of having brokers and external industry experts

in attendance at Board meetings during 2025, as well as having

representatives from the Group's key regulators attend Board

meetings in relation to specific regulatory items;

–ensuring non-executive Directors are entitled to obtain independent

professional advice relating to their personal responsibilities as a

Director at the Group's expense;

–having terms of reference for each committee and the Board that

provide authority to engage independent professional advisers; and

–holding annual Board and committee performance reviews, with

feedback sought from members on the quality of, and access to,

independent external advice.

Conflicts of interest

The Board has an established policy and set of procedures, which are

reviewed annually, to ensure that the Board's management of Directors'

conflicts of interest is effective. The Board has the power to authorise

conflicts where they arise, in accordance with the Companies Act 2006

and HSBC Holdings' Articles of Association. Details of all Directors'

conflicts of interest are recorded in the register of conflicts. Upon

appointment, new Directors are advised of the policy and procedures for

managing conflicts. Directors are required to notify the Board of any actual

or potential conflicts of interest and to update the Board with any changes

to the facts and circumstances surrounding such conflicts. Directors are

requested to review and confirm their own and their respective closely

associated persons' outside interests and appointments twice each year.

The Board has considered, and authorised (with or without conditions)

where appropriate, potential conflicts as they have arisen during the year

in accordance with its conflicts policy and procedures. All non-executive

Directors are subject to re-vetting by the Group's compliance team on a

triennial basis following appointment. As part of this re-vetting process, all

conflict checks are refreshed.

Non-executive Director commitments

The terms and conditions of the appointments of non-executive

Directors are set out in a letter of appointment, which includes the

expectations of them, and the estimated time required to perform their

role. Letters of appointment of each non-executive Director are

available for inspection at the registered office of HSBC Holdings.

Non-executive Directors serving on the Board and as a member of any

committees are expected to serve up to 75 days per annum. The Senior

Independent Director is expected to serve an additional 30 days per

annum. Those Directors who also chair a large committee are expected to

commit up to 100 days per annum, with the Group Risk Committee Chair

expected to commit up to 150 days per annum. Any additional time

commitment required of non-executive Directors in connection with

Board and committee activities is confirmed to them separately.

Board approval is required for any non-executive Director's external

commitments. When assessing these, consideration is given to the

expected time commitment of the role, their total time commitment,

potential conflicts of interest, the complexity and size of the organisation,

the expectations of the role, and regulatory and investor expectations.

Directors' indemnities

The Articles of Association of HSBC Holdings contain a qualifying third-

party indemnity provision, which entitles Directors and other officers to

be indemnified out of the assets of HSBC Holdings against claims from

third parties in respect of certain liabilities.

HSBC Holdings has granted, by way of deed poll, indemnities to the

Directors, including former Directors, against certain liabilities arising in

connection with their position as a Director of HSBC Holdings or of any

Group company. Directors are indemnified to the maximum extent

permitted by law.

The indemnities that constitute a 'qualifying third-party indemnity

provision', as defined by section 234 of the Companies Act 2006,

remained in force for the whole of the financial year (or, in the case of

Directors appointed during 2025, from the date of their appointment). The

deed poll is available for inspection at the registered office of HSBC

Holdings.

Additionally, Directors and pension trustees have the benefit of both

Directors' and officers' liability insurance and pension trustees' liability

insurance. Qualifying pension scheme indemnities have also been granted

to the trustees of the Group's pension schemes, which were in force for

the whole of the financial year and remain in force as at the date of this

report.

Contracts of significance

During 2025, none of the Directors had a material interest, directly or

indirectly, in any contract of significance with any HSBC company. During

the year, all Directors were reminded of their obligations in respect of

transacting in HSBC securities and, following specific enquiry, all Directors

have confirmed that they have complied with their obligations.

Shareholder engagement and

communication

The Board is directly accountable to, and gives high priority to

communicating with, HSBC's shareholders. Information about HSBC and

its activities is provided to shareholders in its Interim Reports and the

Annual Report and Accounts as well as on www.hsbc.com.

The Board seeks to understand investor needs through ongoing dialogue

between members of the Board and institutional investors throughout the

year, and Committee Chairs seek to engage with major shareholders on

matters within their area of responsibility, where practicable and

appropriate. For examples of such engagements, see the 'Group

Remuneration Committee Chair's letter' on page 249. During 2025,

approximately 612 meetings were held with institutional investors and

analysts globally.

Our shareholder communications policy summarises how we

communicate with our shareholders, including through financial reporting,

general shareholder meetings, investor and analyst meetings and our

website. The policy is reviewed annually, and in 2025 the Board confirmed

that it was satisfied with its implementation and effectiveness. The policy

can be found at www.hsbc.com/who-we-are/our-people/board-of-

directors/board-responsibilities.

We also publish our current and past financial results, investor

presentations and shareholder information such as dividend payments

and shareholder meeting details. Stock exchange announcements are

also accessible on our website along with information for fixed income

investors. For further details, see www.hsbc.com/investors.

Directors are encouraged to develop an understanding of the views of

shareholders. Enquiries from individuals on matters relating to their

shareholdings and HSBC's business are welcomed. Any individual or

institutional investor can make an enquiry by contacting the investor

relations team, Group Chairman, Group CEO, Group CFO and Group

Company Secretary. Our Senior Independent Director is also available to

shareholders if they have concerns that cannot be resolved or for which

the normal channels would not be appropriate. They can be contacted via

the Group Company Secretary at 8 Canada Square, London E14 5HQ.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **280** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Annual General Meeting

The AGM in 2026 is planned to be held in London, UK at 10:00am on

Friday, 8 May 2026. Information on how to vote and participate, online

or in person, both in advance and on the day, can be found in the

Notice of the 2026 AGM, which will be sent to shareholders on

27 March 2026 and be available on www.hsbc.com/agm. Shareholders

can watch a live webcast of the AGM and access a recording of the

proceedings shortly after the event at www.hsbc.com/agm.

Shareholders should monitor our website and announcements for any

changes to these arrangements. Shareholders may send enquiries to

the Board in writing via the Group Company Secretary, at HSBC

Holdings plc, 8 Canada Square, London E14 5HQ or by sending an

email to shareholderquestions@hsbc.com.

General meetings and resolutions

Shareholders may require the Directors to call a general meeting other

than an AGM, as provided by the UK Companies Act 2006. A valid

request to call a general meeting may be made by members

representing at least 5% of the paid-up capital of HSBC Holdings as

carries the right of voting at its general meetings (excluding any paid-up

capital held as treasury shares). A request must state the general

nature of the business to be dealt with at the meeting and may include

the text of a resolution that may properly be moved and is intended to

be moved at the meeting. At any general meeting convened on such

request, no business may be transacted except that stated by the

requisition or proposed by the Board.

Shareholders may request the Directors to send a resolution to

shareholders for consideration at an AGM, as provided by the UK

Companies Act 2006. A valid request must be made by

(i) members representing at least 5% of the paid-up capital of HSBC

Holdings as carries the right of voting at its general meetings (excluding

any paid-up capital held as treasury shares), or (ii) at least 100 members

who have a right to vote on the resolution at the AGM in question and

hold shares in HSBC Holdings on which there has been paid up an

average sum, per member, of at least £100.

The request must be received by HSBC Holdings not later than (i) six

weeks before the AGM in question; or (ii) if later, the time at which the

notice of AGM is published.

A request may be in hard copy form or in electronic form, and must be

authenticated by the person or persons making it. A request may be

made in writing to HSBC Holdings at its UK address, referred to in the

paragraph above or by sending an email to

shareholderquestions@hsbc.com.

Articles of Association

The Articles of Association were last approved at the 2022 AGM. The

Articles of Association can be found at www.hsbc.com/who-we-are/

our-people/board-of-directors/board-responsibilities.

Events after the balance sheet date

For details of events after the balance sheet date, see Note 37 on the

financial statements.

Change of control

The Group is not party to any significant agreements that take effect,

alter or terminate following a change of control of the Group. The Group

does not have agreements with any Director or employee that would

provide compensation for loss of office or employment resulting from a

takeover bid.

Branches

The Group provides a wide range of banking and financial services

through branches and offices in the UK and overseas.

Research and development activities

During the ordinary course of business, the Group develops new

products and services within the global businesses.

Political donations

HSBC does not make any political donations or incur political

expenditure within the ordinary meaning of those words. We have no

intention of altering this policy. However, the definitions of political

donations, political parties, political organisations and political

expenditure used in the UK Companies Act 2006 are very wide. As a

result, they may cover routine activities that form part of the normal

business activities of the Group and are an accepted part of engaging

with stakeholders. To ensure that neither the Group nor any of its

subsidiaries inadvertently breaches the UK Companies Act 2006,

authority is sought from shareholders at the AGM to make political

donations.

HSBC provides administrative support to two political action

committees ('PACs') in the US funded by voluntary political

contributions by eligible employees. We do not control the PACs, and

all decisions regarding the amounts and recipients of contributions are

directed by a voluntary Board Finance Committee, which consists of

contributing eligible employees. The PACs recorded combined political

donations of $134,750 during 2025 (2024: $124,450).

Charitable contributions

For details of charitable contributions, see page 56.

Internal control

The Board is responsible for monitoring the Group's risk management

and internal control systems, determining the level and type of risks the

Group is willing to take in achieving its strategic objectives, and

reviewing the effectiveness of relevant procedures on an annual basis.

Global Internal Audit provides independent and objective assurance to

the Board and assesses whether the design and operational

effectiveness of the Group's risk management, governance and internal

control processes are adequate and effective.

To meet this requirement and to discharge its obligations under the

FCA Handbook and the PRA Rulebook, procedures have been designed

to provide reasonable assurance against material misstatement, errors,

losses or fraud. They are designed to provide effective internal control

within the Group and accord with the Financial Reporting Council's

guidance for Directors, issued in 2014, on risk management, internal

control and related financial and business reporting. The procedures

have been in place throughout the year and up to 25 February 2026, the

date of publication of the Annual Report and Accounts 2025.

The Board, the GRC and the GAC monitor the effectiveness of the

Group's system of risk management and internal control through

regular updates on the operation of the Group's internal controls,

supplemented by reviews of these controls by the Group Chief Control

Oversight Office, second line of defence, internal audit, and the

external auditors.

These reviews enable the Board to perform an annual review of

effectiveness, identifying no material weaknesses as at the year-end.

Areas identified for improvement internally or by the Group's regulators

are prioritised appropriately, with necessary actions taken to remedy

any shortcomings identified.

At a granular level, the risk management and internal control systems

of the Group are continuously monitored and challenged to ensure that

they are designed and operating effectively.

In 2026, continued focus will be placed on control environments

relating to regulatory reporting and technology risk. This will include

work by the GAC to support preparations for the Board's declaration on

the effectiveness of material controls, which HSBC will be required to

include in the Annual Report and Accounts 2026 under the UK and

Hong Kong Corporate Governance Codes.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **281** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Delegation of authority within limits set

by the Board

Subject to certain matters reserved for the Board, the Group CEO has

been delegated authority to manage the day-to-day affairs of the Group.

A delegation of authority framework is in place providing a Group

structure within which the Board and its subsidiaries can manage their

delegated powers related to external commitments. These delegated

authorities can be used for the approval, signing and execution of

specific written agreements and documents such as procurement

contracts.

The delegation of authority framework is adopted on a legal entity basis

via a board resolution which is reviewed annually. Matters not covered

by the delegation of authority framework can be set out in a separate

board resolution, powers of attorney or the relevant Group policy with

clear systems of control that are appropriate to the business or

function. Authorities to enter into credit and market risk exposures are

delegated with limits to line management of Group companies in line

with Group policy. Credit and market risks are measured and reported

at subsidiary company level and aggregated for risk concentration

analysis on a Group-wide basis.

Risk Management

Risk management framework

The Risk Management Framework ('RMF') sets out how we manage

the risks in our ability to operate, grow and meet expectations. It

translates our strategy, values and commitments into practical actions

and risk-aware decisions. It covers all risk types across the organisation

and is underpinned by our culture and values.

Our RMF foundations provide consistency across the Group in

identifying, evaluating and managing significant risks. They are

interconnected and help form an enterprise-wide view of risk which

reflects the relationship between the risks we take in delivering our

strategy and the resources available to manage them. It enables us to

make considered, forward-looking decisions that align with our capacity

and strategic objectives.

Risk identification and monitoring

There are comprehensive systems and procedures to identify,

measure, assess, control and monitor risks. Our risk taxonomy

categorises risks covering all material risks to which the Group is

exposed. It is a multi-level structure that helps organise, assess and

respond to risk in a targeted way. It supports clearer identification of

risks, tailored control design and mitigation and risk-type specific

assessment approaches.

The residual risk which remains after considering our control

environment and the resources available to manage the risks is then

assessed against our risk appetite, which sets out the level of risk the

Group is willing to take in pursuit of its strategy.

Enterprise risk reporting provides a consolidated view of material risks

across the Group, assessed through the risk taxonomy and in relation

to risk appetite. It enables decision-makers to monitor key exposures,

identify emerging themes, and assess whether risks remain aligned

with the Group's strategic objectives. This includes insights from risk-

type reports, thematic reviews, and emerging risks.

The Group employs a top and emerging risks process to provide

forward-looking views of issues with the potential to threaten the

execution of our strategy or operations over the medium to long term.

All employees are responsible for identifying and managing risk within

the scope of their role as part of our three lines of defence model,

which defines clear accountabilities and responsibilities across risk

ownership, oversight and independent assurance. The first line owns

and manages the risks, the second line provides risk oversight and

challenge and the third line delivers independent assurance.

The Board delegates authority to the GAC to annually review the

independence, autonomy and effectiveness of the Group's policies and

procedures on whistleblowing, including the procedures for the

protection of staff who raise concerns of detrimental treatment.

Strategic plans

Strategic plans are prepared for global businesses, global functions and

geographical regions within the framework of the Group's overall

strategy. Financial resource plans, informed by risk appetite are

prepared and adopted by all major Group operating companies and set

out the key business initiatives and the likely financial effects of those

initiatives.

Internal control over financial

reporting

HSBC is required to comply with section 404 of the US Sarbanes-Oxley

Act of 2002 and assess its effectiveness of internal control over

financial reporting at 31 December 2025. In 2014, the GAC endorsed

the adoption of the principles of the Committee of Sponsoring

Organizations of the Treadway Commission ('COSO') 2013 framework

for the monitoring of risk management and internal control systems to

satisfy the requirements of section 404 of the Sarbanes-Oxley Act.

The primary mechanism through which comfort over risk management

and internal control systems is achieved is through annual assessments

of the effectiveness of controls to manage risk, and the reporting of

issues on a regular basis through the various risk management and risk

governance forums, including regular updates to the GAC.

The key risk management and internal control procedures over financial

reporting include the following:

Entity level controls

Entity level controls are a defined suite of internal controls that have a

pervasive influence over the entity as a whole and meet the principles

of the COSO framework. They include controls related to the control

environment, such as the Group's values and ethics, the promotion of

effective risk management and the overarching governance exercised

by the Board and its non-executive committees. The design and

operational effectiveness of entity level controls are assessed on an

ongoing basis. If issues are significant to the Group, they are escalated

to the GRC and/or the GAC.

Process level transactional controls

Key process level controls that mitigate the risk of financial

misstatement are identified, recorded and monitored in accordance

with the risk framework. This includes the identification and

assessment of relevant control issues against which action plans are

tracked through to remediation. Further details of HSBC's approach to

risk management can be found on page 119.

Financial reporting controls

The Group's financial reporting process is controlled using documented

accounting policies and reporting formats, supported by detailed

instructions and guidance on reporting requirements, issued to all

reporting entities within the Group in advance of each reporting period

end. The submission of financial information from each reporting entity

is supported by a certification by the responsible financial officer and

analytical review procedures at reporting entity and Group levels.

Group Disclosure Committee

Chaired by the Group CFO, the Group Disclosure Committee supports

the discharge of the Group's obligations under applicable legislation and

regulation including the UK and Hong Kong Listing Rules, UK Market

Abuse Regulation and US Securities and Exchange Commission rules.

In so doing, the Group Disclosure Committee is empowered to

determine whether a new event or circumstance should be disclosed,

including the form and timing of such disclosure, and review and

endorse certain material disclosures made or to be made by the Group.

The membership of the Group Disclosure Committee consists of senior

management, including the Group CFO, Group Chief Risk and

Compliance Officer, Group Chief Legal Officer and Group Company

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **282** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Secretary. The Group's external auditors are standing attendees, while

the Group's brokers and external legal counsel are consulted on

relevant matters and attend as required. The integrity of disclosures is

underpinned by structures and processes within the Global Finance and

Group Risk and Compliance functions that support rigorous analytical

review of financial reporting and the maintenance of proper accounting

records. As required by the Sarbanes-Oxley Act, the Group CEO and

the Group CFO have certified that the Group's disclosure controls and

procedures were effective as at the end of the period covered by the

Annual Report and Accounts 2025.

The annual review of the effectiveness of the Group's system of risk

management and internal control over financial reporting was

conducted with reference to the COSO 2013 framework. Based on the

assessment performed, the Directors concluded that for the year

ended 31 December 2025, the Group's internal control over financial

reporting was effective.

PwC has audited the effectiveness of HSBC's internal control over

financial reporting and has given an unqualified opinion.

Going concern

The Directors considered it appropriate to prepare the financial

statements on a going concern basis.

In making the going concern assessment, the Directors have

considered a wide range of detailed information relating to present and

future conditions, including future projections for profitability, liquidity,

capital requirements and capital resources.

In carrying out their assessment of the principal risks (as detailed on

page 121 of this annual report on Form 20-F), the Directors considered

a wide range of information including:

–details of the Group's business and operating models, and strategy

(see page 12 in this annual report on Form 20-F);

–details of the Group's approach to managing risk and allocating

capital;

–a summary of the Group's financial position considering

performance, its ability to maintain minimum levels of regulatory

capital, liquidity funding and the minimum requirements for own

funds and eligible liabilities over the period of the assessment.

Notable are the risks which the Directors believe could adversely

impact the Group's future results or operations;

–enterprise risk reports, including the Group's risk appetite profile

(see page 119 of this annual report on Form 20-F) and top and

emerging risks (see page 121 of this annual report on Form 20-F);

–the impact on the Group due to the Russia-Ukraine war and further

conflict or military action in the Middle East, Venezuela or

elsewhere; uncertainty around Hong Kong and mainland China's

CRE sectors; ongoing and potential trade restrictions; cross-border

investment restrictions; changes to tariff rates; and heightened

strategic competition between the US and China;

–reports and updates regarding regulatory and internal stress testing.

On 24 March 2025, the Bank of England ('BoE') launched the Bank

Capital Stress Test ('BCST') exercise to assess the resilience of the

UK banking system to a range of adverse shocks. The exercise

involved determining projected capital and liquidity metrics under a

severe but plausible stress scenario. The BoE published the results

of the 2025 BCST as part of the Financial Stability Report on 2

December 2025. HSBC demonstrated a strong CET1 performance,

highlighting its resilience in stress. Internal stress tests, including

the 2026 Group-wide internal stress test performed in December

2025, together with additional scenario analysis examining the

potential outcomes from ongoing geopolitical uncertainty, supported

adequate capitalisation. We also conduct reverse stress tests each

year at Group level and, where required at subsidiary entity level, to

understand potential extreme conditions that would make our

business model non-viable. Reverse stress testing identifies

potential stresses and vulnerabilities we might face, and helps

inform early warning triggers, management actions and contingency

plans designed to mitigate risks

–we conduct internal climate scenario analysis to evaluate our

resilience to climate change, with a particular focus on both climate-

related physical and transition risks. The findings indicate that the

Group does not anticipate any material impacts arising from climate

change, at least for the next three years. Furthermore, our capital

position is robust enough to absorb severe climate-related stresses.

Nonetheless, it is recognised that climate-related risks are likely to

increase beyond this timeframe. Further details of our modelling

approach, modelling limitations and insights from our 2025 climate

scenario analysis are explained from page 206 of this annual report

on Form 20-F;

–reports and updates from management on risk-related issues

selected for in-depth consideration;

–reports and updates on regulatory developments;

–legal proceedings and regulatory matters set out in Note 35 of the

financial statements in this annual report on Form 20-F; and

–reports and updates from management on the operational resilience

of the Group.

Employees

At 31 December 2025, HSBC had a total workforce equivalent to

209,000 full-time employees compared with 211,000 at the end of

2024. Our main centres of employment were India with approximately

47,000 employees, the UK with 33,000, mainland China with 33,000,

Hong Kong with 26,000, and Mexico with 16,000.

Our business spans many cultures, communities and continents. We

aspire to provide a high-performing environment where our colleagues

can fulfil their potential by building their skills and capabilities while

focusing on the development of a diverse and inclusive culture. We use

employee surveys to assess progress and make changes. We want our

colleagues to feel connected and supported to speak up, and our

leaders to encourage and use feedback. Where we make organisational

changes, we support our colleagues, particularly where jobs are

impacted.

Employee relations

We consult with and, where appropriate, negotiate with employee

representative bodies where we have them. It is our policy to maintain

well-developed communications and consultation programmes with all

employee representative bodies. There have been no material

disruptions to our operations from labour disputes during the past five

years.

We are committed to complying with the applicable employment laws

and regulations in the jurisdictions in which we operate, including in

relation to working hours and rest periods. HSBC's employment

practices and relations policy provides the framework and controls

through which we seek to uphold that commitment.

Inclusion

Our customers, colleagues and communities span many cultures and

continents. We value difference and believe that an inclusive culture

makes us stronger. We are dedicated to building a connected

workforce where everyone feels a sense of belonging.

We expect all colleagues at HSBC to treat each other with dignity and

respect to ensure an inclusive environment. Our policies make it clear

that we do not tolerate unlawful discrimination, bullying or harassment

on any grounds. We are transparent in sharing our data through

external disclosures and we participate in benchmarking to measure

our progress across the industry.

Our approach to inclusion is set out on page 51 alongside our ambitions

and progress.

🡠For further details of our representation data, pay gap data, and actions, see

www.hsbc.com/who-we-are/our-people/inclusion-at-hsbc and the ESG Data

Pack at www.hsbc.com/esg.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **283** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|
|  |  |  |  | Share capital & other disclosures | Share capital & other disclosures | Share capital & other disclosures |

---

Employment of people with a

disability

We strongly believe in providing equal opportunities for our employees.

The employment of people with a disability is included in this

commitment. We are committed to retaining disabled employees in the

workplace and to providing reasonable adjustments to enable this.

Employee development

Employee development energises our colleagues for growth and helps

to equip them with the skills they need today whilst also preparing

them to meet future challenges. We remain committed to delivering a

high-quality learning experience by adopting a data-driven approach that

targets our learning investment to meet the most critical skill needs.

By leveraging our strategic workforce blueprints, we have focused our

efforts on critical skill shifts, including digitally enabling our frontline

colleagues and developing the sustainability and wealth expertise of our

relationship managers, providing a variety of learning opportunities

through our Enterprise Skills Academies.

We have launched our new AI Academy to support advanced skills

development aligned with HSBC's AI strategy, expanded our 'Doing

Business in India and China' programmes to include Saudi Arabia, and

increased our focus on building capabilities beyond foundational skills

through our Sustainability Academy. In our global Wealth and Personal

Banking business we have focused our attention on developing

customer centricity and product expertise, and we have created

opportunities for colleagues to develop new skills and collaborate more

broadly through our transition to a value stream delivery model as part

of our bank wide Digital Acceleration Programme.

We remain committed to our global mandatory training being

completed annually, as it is essential for shaping our culture and

maintaining a focus on critical issues, such as sustainability and

financial crime risk. In line with this commitment, we have maintained

our focus on senior leaders by launching new programmes centred on

Enterprise Risk Leadership, which are designed to equip them with the

skills necessary to navigate an evolving risk environment.

Health and safety

We are dedicated to maintaining a safe and healthy working

environment for all. Our global policies, mandatory procedures, and

incident reporting systems across the organisation reflect our core

values and comply with international standards. Chief Operating

Officers are responsible for local implementation of all legal

requirements and ensuring ongoing adherence. We continuously

monitor and assure our health and safety performance to remain

compliant with relevant regulations.

In 2025, we advanced our Health & Safety agenda through several

key initiatives:

–Achieved the WELL Health and Safety Rating at 100 global offices,

demonstrating our commitment to safe workplaces for

employees, customers, and stakeholders.

–Delivered mandatory health and safety training globally, increasing

awareness of roles and responsibilities among employees and

contractors.

–Conducted annual safety inspections across all buildings

worldwide, identifying opportunities for improvement and

enhancing safety standards.

–Expanded our Workplace Adjustments programme to eight

markets, to provide additional tailored support to employees with

disabilities, long-term health conditions, or neurodiversity. Further

expansion is planned.

–Held our 2025 Global Health and Safety Campaign, combining

education and interactive experiences on slips and trips, moving

objects, ergonomics, and emergency arrangements.

–Provided targeted guidance and training for construction partners,

with over 6,300 workers receiving safety passport training across

nine countries.

–Implemented robust controls to protect colleagues and operations

from natural disasters; in 2025, 33 named storms affected 2,222

buildings, with no injuries or impact reported.

These actions reinforce our commitment to safeguarding our people

and operations, while continuously improving our health and safety

standards.

---

| | | | |
|:---|:---|:---|:---|
| Employee health and safety | Employee health and safety | Employee health and safety | Employee health and safety |
|  | **2025** | 2024 | 2023 |
| Rate of workplace fatalities per 100,000 employees | **—** |  |  |
| Number of major injuries to employees<sup>1</sup> | **10** | 14 | 12 |
| All injury rate per 100,000 employees | **96** | 91 | 110 |
| Lost days due to work injury | **331** | 335 | 594 |

---

1Fractures, dislocation, concussion, loss of consciousness, overnight

admission to hospital.

Remuneration

HSBC's pay and performance strategy is designed to reward

competitively the achievement of long-term sustainable performance

and attract and motivate the very best people, regardless of gender,

ethnicity, age, disability or any other factor unrelated to performance or

experience with the Group, while performing their role in the long-term

interests of our stakeholders.

🡠For further details of the Group's approach to remuneration, see page <u>[259](#id42dbec1de4a4a5390289335f1b45526_7148)</u>.

Employee share plans

Summaries of the share options and share awards granted, exercised/

vested or lapsed during the year and other details required to be

disclosed pursuant to Chapter 17 of the Rules Governing the Listing of

Securities on The Stock Exchange of Hong Kong Limited, including

detailed summaries of the HSBC share plans, are available on our

website at www.hsbc.com/investors/results-and-announcements and

on the website of The Stock Exchange of Hong Kong Limited at

www.hkex.com.hk, or can be obtained upon request from the Group

Company Secretary, 8 Canada Square, London E14 5HQ.

🡠Particulars of options held by Directors of HSBC Holdings are set out on

page <u>[268](#id42dbec1de4a4a5390289335f1b45526_160)</u>.

🡠Note 5 on the financial statements gives details of share-based payments,

including discretionary awards of shares granted under HSBC share plans.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **284** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | **Corporate** <br>**Governance Report**<br>| Financial <br>statements<br>| Additional <br>information<br>|

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Statement of compliance

The statement of corporate governance practices set out on pages <u>[219](#id42dbec1de4a4a5390289335f1b45526_4)</u> 

to <u>[284](#i97e44fe399c1448885c8e8acf2e40d83_96)</u> and the information referred to therein constitutes the Corporate

governance report and Directors' report of HSBC Holdings plc for 2025.

Further details of the relevant corporate governance codes, role profiles

and policies can be obtained from the websites referenced in the table

below. The websites referenced here do not form part of this report.

---

| | |
|:---|:---|
| Relevant corporate governance codes, role profiles and policies | Relevant corporate governance codes, role profiles and policies |
| UK Corporate Governance Code | www.frc.org.uk |
| Hong Kong Corporate Governance <br>Code (set out in Appendix C1 to <br>the Rules Governing the Listing of <br>Securities on the Stock Exchange <br>of Hong Kong Limited ('HKEx'))<br>| www.hkex.com.hk |
| Descriptions of the roles and <br>responsibilities of the:<br>– Group Chairman <br>– Group Chief Executive Officer<br>– Senior Independent Director<br>– Board<br>| www.hsbc.com/who-we-are/our-<br>people/board-of-directors/board-<br>responsibilities<br>|
| Board and senior management | www.hsbc.com/who-we-are/our-<br>people<br>|
| Roles and responsibilities of the <br>Board's committees<br>| www.hsbc.com/who-we-are/our-<br>people/board-of-directors/board-<br>committees<br>|
| Board's policies on:<br>– diversity and inclusion<br>– shareholder communication<br>– human rights<br>– remuneration practices and <br>governance<br>| www.hsbc.com/who-we-are/our-<br>people/board-of-directors/board-<br>responsibilities<br>|
| Global Internal Audit Charter | www.hsbc.com/who-we-are/esg-and-<br>responsible-business/governance/<br>internal-control<br>|

---

The Board considers that, during 2025, HSBC fully complied with both

the UK and Hong Kong Corporate Governance Codes, with the

exception of Provision 24 of the UK Corporate Governance Code in

relation to the Group Chairman being a member of the Group Audit

Committee.

Brendan Nelson has served as the Chair of the Group Audit Committee

since February 2024, and on 1 October 2025, was appointed as Group

Chairman on an interim basis. Due to the interim nature of this

appointment, and to provide continuity, the Board determined that

Brendan should continue to Chair the Group Audit Committee until a

permanent Group Chairman was appointed.

The Board subsequently took the decision to appoint Brendan as a

permanent successor to the role of Group Chairman on 3 December

2025, and determined that it was in the best interests of the Group for

Brendan to continue in his role as Chair of the Group Audit Committee

to provide continuity of oversight for the 2025 audit process and until a

permanent successor had been identified and appointed.

These decisions reflect Brendan's extensive experience on UK-listed

boards and his previous roles as an auditor and audit committee chair. It

was also agreed that Brendan had sufficient capacity to fulfil these

roles given that HSBC is Brendan's only significant board commitment.

Under the Hong Kong Corporate Governance Code, the audit

committee should be responsible for the oversight of all risk

management and internal control systems. The Group Audit

Committee's responsibilities cover oversight of the effectiveness of all

internal controls. The Group Risk Committee has responsibility for

oversight of internal controls relating to risk management and risk

management systems and provides input to the Group Audit

Committee on these.

HSBC Holdings plc has codified obligations for transactions in Group

securities in accordance with the requirements of the UK Market

Abuse Regulation and the rules governing the listing of securities on

HKEx. The Group has been granted certain waivers by HKEx from strict

compliance with the rules that take into account accepted practices in

the UK, particularly in respect of employee share plans. During the year,

all Directors were reminded of their obligations in respect of transacting

in HSBC Group securities. Following specific enquiry all Directors have

confirmed that they have complied with their obligations.

The Group Audit Committee has reviewed and provided assurance to

support the HSBC Holdings Board's approval and publication of the

Annual Report and Accounts 2025.

On behalf of the Board

**Brendan Nelson**

**Group Chairman**

HSBC Holdings plc

Registered number 617987

25 February 2026

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **285** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

Financial

statements

The financial statements provide detailed

information and notes on our income, balance

sheet, cash flows and changes in equity,

alongside a report from our independent auditors.

---

| | |
|:---|:---|
| **[286](#i52a8ac564f2d4799b4150f1cfdffa9d2_5600)** | Report of Independent Registered Public <br>Accounting Firm<br>|
| **[288](#i52a8ac564f2d4799b4150f1cfdffa9d2_6746)** | Financial statements |
| **[288](#i52a8ac564f2d4799b4150f1cfdffa9d2_10)** | – Consolidated income statement |
| **[289](#i52a8ac564f2d4799b4150f1cfdffa9d2_13)** | – Consolidated statement of comprehensive income |
| **[290](#i52a8ac564f2d4799b4150f1cfdffa9d2_16)** | – Consolidated balance sheet |
| **[291](#i52a8ac564f2d4799b4150f1cfdffa9d2_22)** | – Consolidated statement of changes in equity |
| **[294](#i52a8ac564f2d4799b4150f1cfdffa9d2_19)** | – Consolidated statement of cash flows |
| **[296](#i52a8ac564f2d4799b4150f1cfdffa9d2_25)** | – HSBC Holdings financial statements |
| **[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_6731)** | Notes on the financial statements |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **286** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Independent auditors report | Independent auditors report |

---

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of HSBC Holdings plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of HSBC Holdings plc and its subsidiaries (the "Group") as of 31 December 2025

and 2024, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes

in equity and consolidated statement of cash flows for each of the three years in the period ended 31 December 2025, including the related notes

(collectively referred to as the "consolidated financial statements"). We also have audited the Group's internal control over financial reporting as of

31 December 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as

of 31 December 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended 31 December

2025 in conformity with (i) International Financial Reporting Standards as issued by the International Accounting Standards Board, (ii) UK-adopted

International Accounting Standards and (iii) International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it

applies in the European Union. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial reporting

as of 31 December 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Group's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial

reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's

assessment of internal controls over financial reporting on page 111 of this Form 20-F. Our responsibility is to express opinions on the Group's

consolidated financial statements and on the Group's internal control over financial reporting based on our audits. We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the

Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and

the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and

whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the

consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included

examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over

financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal

control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A

company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that

transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,

and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the

company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were

communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the

consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit

matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

**Measurement of expected credit losses**

As described in Note 1.2 (j) to the consolidated financial statements, expected credit losses ('ECL') are recognised for loans and advances to banks

and customers, non-trading reverse repurchase agreements, other financial assets held at amortised cost, debt instruments measured at fair value

through other comprehensive income and certain loan commitments and financial guarantee contracts. As disclosed by management, the Group's

allowance for ECL was $11.2bn at 31 December 2025. The assessment of credit risk and the estimation of ECL are probability-weighted and

incorporate information about past events, current conditions and forecasts of future economic conditions at the reporting date. Management

calculates ECL using three main components: a probability of default ('PD'), a loss given default ('LGD') and the exposure at default ('EAD'). As

disclosed by management, the recognition and measurement of ECL involves the use of significant judgement and estimation. Management form

multiple economic scenarios based on economic forecasts, apply these to credit risk models to estimate future credit losses, and probability

weight the results to determine an ECL estimate.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **287** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Report of Independent Registered Public <br>Accounting Firm | Report of Independent Registered Public <br>Accounting Firm |

---

The principal considerations for our determination that performing procedures relating to the measurement of ECL is a critical audit matter are: (i)

the significant judgement by management in developing the assumptions for multiple economic scenarios and the weighting of those scenarios;

(ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence obtained; and (iii) the audit

effort involved the use of professionals with specialised skills and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements. These procedures included testing the effectiveness of controls relating to the measurement of ECL. These

procedures also included, amongst others, testing management's process for estimating ECL through: (i) evaluating the appropriateness of the

ECL model methodologies applied by management; (ii) evaluating the reasonableness of certain economic scenarios and weightings used; (iii)

evaluating the reasonableness of discounted cash flow projections for a sample of credit impaired exposures; (iv) testing the completeness and

accuracy of critical input data that is used by management to determine ECL; and (v) evaluating the disclosures made in the consolidated financial

statements in relation to the measurement of ECL. Professionals with specialised skills and knowledge assisted in testing the appropriateness of

model methodologies and assessing the reasonableness of the selection and weighting of economic scenarios.

**Impairment assessment of investment in Bank of Communications co., Limited ('BoCom')**

As described in Note 1.2(a) and 18 to the consolidated financial statements, the carrying value of the Group's investment in BoCom is $22.5bn at

31 December 2025. At 30 June 2025, management performed an impairment test on the carrying amount, which resulted in an impairment of

$1.0bn, as the recoverable amount as determined by a value-in-use ('VIU') calculation was lower than the carrying amount. No further impairment

(or reversal) was required for the period from 1 July 2025 to 31 December 2025 based on results of the quarterly impairment tests performed.

The VIU calculation uses discounted cash flow projections based on management's best estimates of future earnings available to ordinary

shareholders. As disclosed by management, there is significant judgement in determining the VIU, particularly in estimating the present value of

cash flows expected to arise from continuing to hold the investment, based on a number of assumptions. The significant assumptions used were

discount rate, operating income growth rate, cost-income ratio, expected credit losses as a percentage of loans and advances to customers, risk-

weighted assets as a percentage of total assets, loans and advances to customers growth rate, capital adequacy ratio and tier 1 capital adequacy

ratio, and long-term effective tax rate, long-term profit growth rate and long-term asset growth rate.

The principal considerations for our determination that performing procedures relating to the impairment assessment of investment in BoCom is a

critical audit matter are: (i) the significant judgement by management when determining significant assumptions for discount rate, operating

income growth rate, cost-income ratio, expected credit losses as a percentage of loans and advances to customers, risk-weighted assets as a

percentage of total assets, loans and advances to customers growth rate, capital adequacy ratio and tier 1 capital adequacy ratio, and long-term

effective tax rate, long-term profit growth rate and long-term asset growth rate ; (ii) a high degree of auditor judgement, subjectivity and effort in

performing procedures and evaluating management's estimate of the VIU and evaluating audit evidence; and (iii) the audit effort involved the use

of professionals with specialised skills and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's impairment

assessment of the investment in BoCom. These procedures also included, amongst others: (i) evaluating management's VIU determination and

aforementioned underlying significant assumptions; (ii) developing an independent range for discount rate; (iii) evaluating the appropriateness of

the methodology used to estimate the VIU; (iv) testing inputs used in the determination of the significant assumptions; and (v) evaluating the

disclosures made in the consolidated financial statements in relation to BoCom. Professionals with specialised skill and knowledge were used to

assist in assessing the VIU methodology and developing an independent range for discount rate.

/s/ PricewaterhouseCoopers LLP

London, United Kingdom

26 February 2026

We have served as the Group's auditor since 2015.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **288** |

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---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

Financial statements

---

| | | | | |
|:---|:---|:---|:---|:---|
| Consolidated income statement | Consolidated income statement | Consolidated income statement | Consolidated income statement | Consolidated income statement |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  |  | **2025** | 2024 | 2023 |
|  | Notes<sup>\*</sup> | **$m** | $m | $m |
| Net interest income |  | **34794** | 32733 | 35796 |
| – interest income<sup>1,2</sup> |  | **97872** | 108631 | 100868 |
| – interest expense<sup>3</sup> |  | **(63078)** | (75898) | (65072) |
| Net fee income | 2 | **13343** | 12301 | 11845 |
| – fee income |  | **17608** | 16266 | 15616 |
| – fee expense |  | **(4265)** | (3965) | (3771) |
| Net income from financial instruments held for trading or managed on a fair value basis<sup>4</sup> | 3 | **19682** | 21116 | 16661 |
| Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, <br>measured at fair value through profit or loss<br>| 3 | **11175** | 5901 | 7887 |
| Insurance finance expense | 4 | **(11197)** | (5978) | (7809) |
| Insurance service result | 4 | **1825** | 1310 | 1078 |
| – insurance service revenue |  | **3228** | 2752 | 2259 |
| – insurance service expense |  | **(1403)** | (1442) | (1181) |
| Gain on acquisition<sup>5</sup> |  | **—** |  | 1591 |
| Losses recognised on sale of business operations<sup>6</sup> |  | **(47)** | (1752) | (61) |
| Other operating income/(expense)<sup>7,8</sup> |  | **(1301)** | 223 | (930) |
| **Net operating income before change in expected credit losses and other credit impairment charges**<sup>9</sup> |  | **68274** | 65854 | 66058 |
| Change in expected credit losses and other credit impairment charges |  | **(3850)** | (3414) | (3447) |
| **Net operating income** |  | **64424** | 62440 | 62611 |
| Employee compensation and benefits | 5 | **(19553)** | (18465) | (18220) |
| General and administrative expenses |  | **(11959)** | (10498) | (10383) |
| Depreciation and impairment of property, plant and equipment and right-of-use assets<sup>10</sup> |  | **(1971)** | (1845) | (1640) |
| Amortisation and impairment of intangible assets |  | **(2945)** | (2235) | (1827) |
| **Total operating expenses** |  | **(36428)** | (33043) | (32070) |
| **Operating profit** |  | **27996** | 29397 | 30541 |
| Share of profit in associates and joint ventures | 18 | **2911** | 2912 | 2807 |
| Impairment of interest in associate<sup>8</sup> | 18 | **(1000)** |  | (3000) |
| **Profit before tax** |  | **29907** | 32309 | 30348 |
| Tax expense | 7 | **(6776)** | (7310) | (5789) |
| **Profit for the year** |  | **23131** | 24999 | 24559 |
| Attributable to: |  |  |  |  |
| – ordinary shareholders of the parent company |  | **21102** | 22917 | 22432 |
| – other equity holders |  | **1183** | 1062 | 1101 |
| – non-controlling interests |  | **846** | 1020 | 1026 |
| **Profit for the year** |  | **23131** | 24999 | 24559 |
|  |  | **$** | $| $|
| Basic earnings per ordinary share | 9 | **1.21** | 1.25 | 1.15 |
| Diluted earnings per ordinary share | 9 | **1.20** | 1.24 | 1.14 |

---

For Notes on the financial statements, see page 300.

1Includes $83.3bn (2024: $93.4bn; 2023: $88.7bn) of interest recognised on financial assets measured at amortised cost and $14.5bn (2024: $15.3bn; 2023:

$12.1bn) of interest recognised on financial assets measured at fair value through other comprehensive income. In 2024, it also includes a net $0.2bn loss

related to the early redemption of legacy securities.

2Interest income is calculated using the effective interest method and comprises interest recognised on financial assets measured at either amortised cost or fair

value through other comprehensive income.

3Interest expense includes $60.1bn (2024: $72.6bn; 2023: $62.1bn) of interest on financial instruments, excluding interest on debt instruments issued by HSBC

for funding purposes that are designated under the fair value option to reduce an accounting mismatch and on derivatives managed in conjunction with those

debt instruments included in interest expense.

4In 2025, the amounts include a $0.1bn (2024: $0.1bn gain) mark-to-market gain on interest rate hedging of the portfolio of retained loans post sale of our retail banking

operations in France and a $0.1bn fair value loss on Grupo Financiero Galicia's ('Galicia') American Depositary Receipts ('ADRs') received as purchase consideration

from the sale of our business in Argentina. In 2024, the amounts include a $0.3bn gain (2023: $0.3bn loss) on the foreign exchange hedging of the proceeds from the

sale of our banking business in Canada.

5Gain recognised in respect of the acquisition of SVB UK.

6 In 2024, the amount includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves

arising on sale of our business in Argentina. This was partly offset by a gain of $4.6bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve

losses and $0.4bn of other reserves losses but excluding the $0.3bn gain on the foreign exchange hedging (see footnote 4 above) on the sale of our banking

business in Canada. The amount in 2023 primarily reflected losses due to restrictions impacting the recoverability of assets in Russia, partly offset by a gain on

sale of our retail banking operations in France.

7Includes a loss on net monetary positions of $0.2bn (2024: $1.2bn; 2023: $1.7bn) as a result of applying IAS 29 'Financial Reporting in Hyperinflationary Economies'.

8 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans

following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the

dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment loss following an impairment test on the carrying value of the Group's

investment in BoCom in 'Impairment of interest in associate'. See Note 18 on pages 345 to 348.

9Also referred to as revenue.

10Includes depreciation of the right-of-use assets of $0.7bn (2024: $0.7bn, 2023: $0.7bn).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **289** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| Consolidated statement of comprehensive income | Consolidated statement of comprehensive income | Consolidated statement of comprehensive income | Consolidated statement of comprehensive income |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Profit for the year | **23131** | 24999 | 24559 |
| **Other comprehensive income/(expense)** |  |  |  |
| **Items that will be reclassified subsequently to profit or loss when specific conditions are met:** |  |  |  |
| Debt instruments at fair value through other comprehensive income | **3036** | 163 | 2599 |
| – fair value gains/(losses) | **1525** | 41 | 2381 |
| – fair value losses/(gains) transferred to the income statement on disposal | **1328** | 69 | 905 |
| – expected credit (recoveries)/losses recognised in the income statement | **(19)** | (6) | 59 |
| – disposal of subsidiary | **745** | 85 |  |
| – income taxes | **(543)** | (26) | (746) |
| Cash flow hedges | **1773** | (52) | 2953 |
| – fair value gains/(losses) | **749** | (282) | 2534 |
| – fair value (gains)/losses reclassified to the income statement | **1611** | (135) | 1463 |
| – disposal of subsidiary | **—** | 262 |  |
| – income taxes | **(587)** | 103 | (1044) |
| Share of other comprehensive income/(expense) of associates and joint ventures  | **54** | 462 | 47 |
| – share for the year | **110** | 462 | 47 |
| – fair value gains transferred to the income statement on disposal | **—** |  |  |
| – other comprehensive income reclassified to the income statement on disposal of interest in an associate | **(56)** |  |  |
| Net finance income/(expenses) from insurance contracts | **(682)** | (142) | (364) |
| – net finance expenses | **7** | (191) | (491) |
| – disposal of subsidiary | **(687)** |  |  |
| – income taxes | **(2)** | 49 | 127 |
| Exchange differences | **6771** | 833 | (204) |
| – foreign exchange losses reclassified to the income statement on disposal or dilution of a foreign operation | **208** | 5816 |  |
| – other exchange differences | **6563** | (4983) | (204) |
| **Items that will not be reclassified subsequently to profit or loss:** |  |  |  |
| Fair value gains on property revaluation | **14** | 5 | 1 |
| – fair value gains | **14** | 5 | 1 |
| – income taxes | **—** |  |  |
| Remeasurement of defined benefit asset/(liability) | **(184)** | (228) | (314) |
| – before income taxes | **(190)** | (342) | (413) |
| – income taxes | **6** | 114 | 99 |
| Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in <br>own credit risk<br>| **(479)** | (439) | (1219) |
| – before income taxes | **(642)** | (579) | (1617) |
| – income taxes | **163** | 140 | 398 |
| Equity instruments designated at fair value through other comprehensive income | **98** | 99 | (120) |
| – fair value gains/(losses) | **127** | 141 | (120) |
| – income taxes | **(29)** | (42) |  |
| Effects of hyperinflation | **140** | 1239 | 1604 |
| **Other comprehensive income/(expense) for the year, net of tax** | **10541** | 1940 | 4983 |
| **Total comprehensive income/(expense) for the year** | **33672** | 26939 | 29542 |
| Attributable to: |  |  |  |
| – ordinary shareholders of the parent company | **31478** | 24833 | 27397 |
| – other equity holders | **1183** | 1062 | 1101 |
| – non-controlling interests  | **1011** | 1044 | 1044 |
| **Total comprehensive income/(expense) for the year** | **33672** | 26939 | 29542 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **290** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

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---

| | | | |
|:---|:---|:---|:---|
| Consolidated balance sheet | Consolidated balance sheet | Consolidated balance sheet | Consolidated balance sheet |
| at 31 December 2025 | at 31 December 2025 | at 31 December 2025 | at 31 December 2025 |
|  |  | At | At |
|  |  | **31 Dec 2025** | 31 Dec 2024 |
|  | Notes<sup>\*</sup> | **$m** | $m |
| **Assets** |  |  |  |
| Cash and balances at central banks |  | **242859** | 267674 |
| Hong Kong Government certificates of indebtedness |  | **44063** | 42293 |
| Trading assets | 11 | **366153** | 314842 |
| Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 14 | **133063** | 115769 |
| Derivatives | 15 | **237740** | 268637 |
| Loans and advances to banks |  | **108462** | 102039 |
| Loans and advances to customers |  | **988399** | 930658 |
| Reverse repurchase agreements – non-trading |  | **298392** | 252549 |
| Financial investments | 16 | **567211** | 493166 |
| Assets held for sale | 23 | **11115** | 27234 |
| Prepayments, accrued income and other assets | 22 | **184794** | 152740 |
| Current tax assets |  | **864** | 1313 |
| Interests in associates and joint ventures | 18 | **29577** | 28909 |
| Goodwill and intangible assets | 21 | **13107** | 12384 |
| Deferred tax assets | 7 | **7235** | 6841 |
| **Total assets** |  | **3233034** | 3017048 |
| **Liabilities** |  |  |  |
| Hong Kong currency notes in circulation |  | **44063** | 42293 |
| Deposits by banks |  | **97952** | 73997 |
| Customer accounts |  | **1786828** | 1654955 |
| Repurchase agreements – non-trading |  | **204974** | 180880 |
| Trading liabilities | 24 | **72122** | 65982 |
| Financial liabilities designated at fair value | 25 | **158456** | 138727 |
| Derivatives | 15 | **237854** | 264448 |
| Debt securities in issue | 26 | **99675** | 105785 |
| Liabilities of disposal groups held for sale | 23 | **23382** | 29011 |
| Accruals, deferred income and other liabilities | 27 | **142123** | 130340 |
| Current tax liabilities |  | **3037** | 1729 |
| Insurance contract liabilities | 4 | **122955** | 107629 |
| Provisions | 28 | **3441** | 1724 |
| Deferred tax liabilities | 7 | **2100** | 1317 |
| Subordinated liabilities | 29 | **28406** | 25958 |
| **Total liabilities** |  | **3027368** | 2824775 |
| **Equity** |  |  |  |
| Called up share capital | 32 | **8588** | 8973 |
| Share premium account | 32 | **111** | 14810 |
| Other equity instruments |  | **20716** | 19070 |
| Other reserves |  | **(795)** | (10282) |
| Retained earnings |  | **169605** | 152402 |
| **Total shareholders' equity** |  | **198225** | 184973 |
| Non-controlling interests | 19 | **7441** | 7300 |
| **Total equity** |  | **205666** | 192273 |
| **Total liabilities and equity** |  | **3233034** | 3017048 |

---

\*For Notes on the financial statements, see page <u>[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_6731)</u>.

The accompanying notes on pages [300](#i52a8ac564f2d4799b4150f1cfdffa9d2_6731) to 381 and the audited sections in the Risk review on pages 118 to 218 and 'Directors' remuneration

report' on pages 249 to 274 form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 25 February 2026 and signed on its behalf by:

---

| | |
|:---|:---|
| **Brendan Nelson** | **Pam Kaur** |
| Group Chairman | Group Chief Financial Officer |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **291** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity | Consolidated statement of changes in equity |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  |  |  | **Other reserves** | **Other reserves** | **Other reserves** | **Other reserves** | **Other reserves** |  |  |  |  |
|  | **Called up**<br>**share** <br>**capital**<br>**and share**<br>**premium**<br>| **Other**<br>**equity**<br>**instru-**<br>**ments**<br>| **Financial**<br>**assets at**<br>**FVOCI**<br>**reserve**<br>| **Cash**<br>**flow**<br>**hedging**<br>**reserve**<br>| **Foreign**<br>**exchange**<br>**reserve**<br>| **Merger**<br>**and other**<br>**reserves**<br>| **Insurance**<br>**finance**<br>**reserve**<sup>1</sup><br>| **Retained** <br>**earnings**<br>| **Total**<br>**share-**<br>**holders'**<br>**equity**<br>| **Non-**<br>**controlling**<br>**interests**<br>| **Total**<br>**equity**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **23783** | **19070** | **(3246)** | **(1079)** | **(32887)** | **26328** | **602** | **152402** | **184973** | **7300** | **192273** |
| Profit for the year | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **22285** | **22285** | **846** | **23131** |
| Other comprehensive income <br>(net of tax)<br>| **—** | **—** | **2926** | **1649** | **6863** | **14** | **(602)** | **(474)** | **10376** | **165** | **10541** |
| – debt instruments at fair value <br>through other <br>comprehensive income<sup>2</sup><br>| **—** | **—** | **2267** | **—** | **—** | **—** | **—** | **—** | **2267** | **24** | **2291** |
| – equity instruments <br>designated at fair value <br>through other <br>comprehensive income<br>| **—** | **—** | **84** | **—** | **—** | **—** | **—** | **—** | **84** | **14** | **98** |
| – cash flow hedges | **—** | **—** | **—** | **1700** | **—** | **—** | **—** | **—** | **1700** | **73** | **1773** |
| – changes in fair value of <br>financial liabilities designated <br>at fair value upon initial <br>recognition arising from <br>changes in own credit risk<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **(479)** | **(479)** | **—** | **(479)** |
| – property revaluation | **—** | **—** | **—** | **—** | **—** | **14** | **—** | **—** | **14** | **—** | **14** |
| – remeasurement of defined <br>benefit asset/liability<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **(189)** | **(189)** | **5** | **(184)** |
| – share of other <br>comprehensive income of <br>associates and joint ventures<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **110** | **110** | **—** | **110** |
| – effects of hyperinflation | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **140** | **140** | **—** | **140** |
| – foreign exchange reclassified <br>to income statement on <br>disposal or dilution of a <br>foreign operation<sup>3</sup><br>| **—** | **—** | **—** | **—** | **208** | **—** | **—** | **—** | **208** | **—** | **208** |
| – other reserves reclassified to <br>income statement on <br>disposal or dilution of a <br>foreign operation<sup>4</sup><br>| **—** | **—** | **745** | **—** | **—** | **—** | **(687)** | **(56)** | **2** | **—** | **2** |
| – insurance finance income/<br>(expense) recognised in <br>other comprehensive income<br>| **—** | **—** | **—** | **—** | **—** | **—** | **5** | **—** | **5** | **—** | **5** |
| – exchange differences | **—** | **—** | **(170)** | **(51)** | **6655** | **—** | **80** | **—** | **6514** | **49** | **6563** |
| **Total comprehensive income** <br>**for the year**<br>| **—** | **—** | **2926** | **1649** | **6863** | **14** | **(602)** | **21811** | **32661** | **1011** | **33672** |
| Shares issued under employee <br>remuneration and share plans<br>| **116** | **—** | **—** | **—** | **—** | **—** | **—** | **(116)** | **—** | **—** | **—** |
| Share premium reclassification <br>to retained earnings<sup>5</sup><br>| **(14810)** | **—** | **—** | **—** | **—** | **—** | **—** | **14810** | **—** | **—** | **—** |
| Capital redemption reserves <br>reclassification to retained <br>earnings<sup>5</sup><br>| **—** | **—** | **—** | **—** | **—** | **(1755)** | **—** | **1755** | **—** | **—** | **—** |
| Capital securities issued<sup>6</sup> | **—** | **4096** | **—** | **—** | **—** | **—** | **—** | **—** | **4096** | **—** | **4096** |
| Dividends to shareholders | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **(12764)** | **(12764)** | **(718)** | **(13482)** |
| Redemption of securities<sup>7</sup> | **—** | **(2450)** | **—** | **—** | **—** | **—** | **—** | **—** | **(2450)** | **—** | **(2450)** |
| Cost of share-based payment <br>arrangements<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **621** | **621** | **—** | **621** |
| Transfers | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Share buy-back<sup>9</sup> | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **(8039)** | **(8039)** | **—** | **(8039)** |
| Cancellation of shares | **(390)** | **—** | **—** | **—** | **—** | **390** | **—** | **—** | **—** | **—** | **—** |
| Other movements<sup>10</sup> | **—** | **—** | **1** | **—** | **—** | **1** | **—** | **(875)** | **(873)** | **(152)** | **(1025)** |
| **At 31 Dec 2025** | **8699** | **20716** | **(319)** | **570** | **(26024)** | **24978** | **—** | **169605** | **198225** | **7441** | **205666** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **292** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) |
| for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 | for the year ended 31 December 2024 |
|  |  |  | Other reserves | Other reserves | Other reserves | Other reserves | Other reserves |  |  |  |  |
|  | Called up <br>share <br>capital<br> and share <br>premium<br>| Other<br>equity<br>instru-<br>ments<br>| Financial <br>assets at <br>FVOCI <br>reserve<br>| Cash <br>flow<br>hedging<br>reserve<br>| Foreign<br>exchange<br>reserve<br>| Merger <br>and other <br>reserves<br>| Insurance<br>finance<br>reserve<sup>1</sup><br>| Retained<br>earnings<br>| Total<br>share-<br>holders'<br>equity<br>| Non- <br>controlling<br>interests<br>| Total<br>equity<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 24369 | 17719 | (3507) | (1033) | (33753) | 28601 | 785 | 152148 | 185329 | 7281 | 192610 |
| Profit for the year |  |  |  |  |  |  |  | 23979 | 23979 | 1020 | 24999 |
| Other comprehensive income <br>(net of tax)<br>|  |  | 259 | (46) | 863 | 5 | (183) | 1018 | 1916 | 24 | 1940 |
| – debt instruments at fair value <br>through other <br>comprehensive income<br>|  |  | 62 |  |  |  |  |  | 62 | 16 | 78 |
| – equity instruments <br>designated at fair value <br>through other <br>comprehensive income<br>|  |  | 75 |  |  |  |  |  | 75 | 24 | 99 |
| – cash flow hedges |  |  |  | (312) |  |  |  |  | (312) | (2) | (314) |
| – changes in fair value of <br>financial liabilities designated <br>at fair value upon initial <br>recognition arising from <br>changes in own credit risk<br>|  |  |  |  |  |  |  | (439) | (439) |  | (439) |
| – property revaluation |  |  |  |  |  | 5 |  |  | 5 |  | 5 |
| – remeasurement of defined <br>benefit asset/liability<br>|  |  |  |  |  |  |  | (244) | (244) | 16 | (228) |
| – share of other <br>comprehensive income of <br>associates and joint ventures<br>|  |  |  |  |  |  |  | 462 | 462 |  | 462 |
| – effects of hyperinflation |  |  |  |  |  |  |  | 1239 | 1239 |  | 1239 |
| – foreign exchange reclassified <br>to income statement on <br>disposal or dilution of a <br>foreign operation<br>|  |  |  |  | 5816 |  |  |  | 5816 |  | 5816 |
| – other reserves reclassified to <br>income statement on <br>disposal or dilution of a <br>foreign operation<br>|  |  | 85 | 262 |  |  |  |  | 347 |  | 347 |
| – insurance finance income/<br>(expense) recognised in <br>other comprehensive income<br>|  |  |  |  |  |  | (142) |  | (142) |  | (142) |
| – exchange differences |  |  | 37 | 4 | (4953) |  | (41) |  | (4953) | (30) | (4983) |
| Total comprehensive income <br>for the year<br>|  |  | 259 | (46) | 863 | 5 | (183) | 24997 | 25895 | 1044 | 26939 |
| Shares issued under employee <br>remuneration and share plans<br>| 77 |  |  |  |  |  |  | (77) |  |  |  |
| Share premium reclassification <br>to retained earnings<br>|  |  |  |  |  |  |  |  |  |  |  |
| Capital redemption reserves <br>reclassification to retained <br>earnings<br>|  |  |  |  |  |  |  |  |  |  |  |
| Capital securities issued |  | 3601 |  |  |  |  |  |  | 3601 |  | 3601 |
| Dividends to shareholders |  |  |  |  |  |  |  | (16410) | (16410) | (690) | (17100) |
| Redemption of securities |  | (2250) |  |  |  |  |  |  | (2250) |  | (2250) |
| Transfers<sup>8</sup> |  |  |  |  |  | (2945) |  | 2945 |  |  |  |
| Cost of share-based payment <br>arrangements<br>|  |  |  |  |  |  |  | 529 | 529 |  | 529 |
| Share buy-back |  |  |  |  |  |  |  | (11043) | (11043) |  | (11043) |
| Cancellation of shares | (663) |  |  |  |  | 663 |  |  |  |  |  |
| Other movements |  |  | 2 |  | 3 | 4 |  | (687) | (678) | (335) | (1013) |
| At 31 Dec 2024 | 23783 | 19070 | (3246) | (1079) | (32887) | 26328 | 602 | 152402 | 184973 | 7300 | 192273 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **293** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) | Consolidated statement of changes in equity (continued) |
| for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 | for the year ended 31 December 2023 |
|  |  |  | Other reserves | Other reserves | Other reserves | Other reserves | Other reserves |  |  |  |  |
|  | Called up<br>share<br>capital<br> and share<br>premium<br>| Other<br>equity<br>instru-<br>ments<br>| Financial<br>assets at<br>FVOCI<br>reserve<br>| Cash<br>flow<br>hedging<br>reserve<br>| Foreign<br>exchange<br>reserve<br>| Merger<br>and other<br>reserves<br>| Insurance<br>finance<br>reserve<sup>1</sup><br>| Retained<br>earnings<br>| Total<br>share-<br>holders'<br>equity<br>| Non-<br>controlling<br>interests<br>| Total<br>equity<br>|
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2023 | 24811 | 19746 | (7038) | (3808) | (32575) | 33209 | 1079 | 142409 | 177833 | 7364 | 185197 |
| Profit for the year |  |  |  |  |  |  |  | 23533 | 23533 | 1026 | 24559 |
| Other comprehensive income <br>(net of tax)<br>|  |  | 2402 | 3030 | (211) | 1 | (371) | 114 | 4965 | 18 | 4983 |
| – debt instruments at fair value <br>through other <br>comprehensive income<br>|  |  | 2574 |  |  |  |  |  | 2574 | 25 | 2599 |
| – equity instruments <br>designated at fair value <br>through other <br>comprehensive income<br>|  |  | (93) |  |  |  |  |  | (93) | (27) | (120) |
| – cash flow hedges |  |  |  | 2919 |  |  |  |  | 2919 | 34 | 2953 |
| – changes in fair value of <br>financial liabilities designated <br>at fair value upon initial <br>recognition arising from <br>changes in own credit risk<br>|  |  |  |  |  |  |  | (1220) | (1220) | 1 | (1219) |
| – property revaluation |  |  |  |  |  | 1 |  |  | 1 |  | 1 |
| – remeasurement of defined <br>benefit asset/liability<br>|  |  |  |  |  |  |  | (317) | (317) | 3 | (314) |
| – share of other <br>comprehensive income of <br>associates and joint ventures<br>|  |  |  |  |  |  |  | 47 | 47 |  | 47 |
| – effects of hyperinflation |  |  |  |  |  |  |  | 1604 | 1604 |  | 1604 |
| – insurance finance income/ <br>(expense) recognised in <br>other comprehensive income<br>|  |  |  |  |  |  | (364) |  | (364) |  | (364) |
| – exchange differences |  |  | (79) | 111 | (211) |  | (7) |  | (186) | (18) | (204) |
| Total comprehensive income <br>for the year<br>|  |  | 2402 | 3030 | (211) | 1 | (371) | 23647 | 28498 | 1044 | 29542 |
| Shares issued under employee <br>remuneration and share plans<br>| 79 |  |  |  |  |  |  | (79) |  |  |  |
| Share premium reclassification <br>to retained earnings<br>|  |  |  |  |  |  |  |  |  |  |  |
| Capital redemption reserves <br>reclassification to retained <br>earnings<br>|  |  |  |  |  |  |  |  |  |  |  |
| Capital securities issued |  | 1996 |  |  |  |  |  |  | 1996 |  | 1996 |
| Dividends to shareholders |  |  |  |  |  |  |  | (11593) | (11593) | (603) | (12196) |
| Redemption of securities |  | (4023) |  |  |  |  |  | 20 | (4003) |  | (4003) |
| Transfers<sup>8</sup> |  |  |  |  |  | (5130) |  | 5130 |  |  |  |
| Cost of share-based payment <br>arrangements<br>|  |  |  |  |  |  |  | 482 | 482 |  | 482 |
| Share buy-back |  |  |  |  |  |  |  | (7025) | (7025) |  | (7025) |
| Cancellation of shares | (521) |  |  |  |  | 521 |  |  |  |  |  |
| Other movements |  |  | 1129 | (255) | (967) |  | 77 | (843) | (859) | (524) | (1383) |
| At 31 Dec 2023 | 24369 | 17719 | (3507) | (1033) | (33753) | 28601 | 785 | 152148 | 185329 | 7281 | 192610 |

---

1The insurance finance reserve reflects the impact of the adoption of the other comprehensive income option for our insurance business in France. Underlying

assets supporting these contracts are measured at fair value through other comprehensive income. Under this option, only the amount that matches income or

expenses recognised in profit or loss on underlying items is included in finance income or expenses, resulting in the elimination of income statement accounting

mismatches. The remaining amount of finance income or expenses for these insurance contracts is recognised in other comprehensive income ('OCI'). At

31 December 2025, the entire balance was reclassified to income statement following completion of the sale of the insurance business in France.

2Includes recycling of fair value losses of $1.5bn following completion of the sale of our retail banking operations in France.

3Includes the recycling of a $0.2bn foreign currency translation reserves loss as a result of the dilution of our shareholding in BoCom.

4Includes insurance finance income reclassification of $0.7bn and $0.7bn fair value losses reclassification following completion of the sale of our insurance business in

France.

5On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings' share

premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings' Annual General Meeting held on

2 May 2025 (the 'Capital Reduction'). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting

in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.

6HSBC Holdings issued $1.5bn 6.950% contingent convertible securities in February 2025, SGD0.8bn 5.000% contingent convertible securities in March 2025

and $2.0bn 7.050% contingent convertible securities in June 2025. All instruments were recorded net of issuance costs.

7In March 2025, HSBC Holdings redeemed its $2.45bn 6.375% contingent convertible securities.

8At 31 December 2024, an impairment of $11.4bn (2023: $5.5bn) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of

$2.9bn (2023: $5.1bn) from the remaining historical associated merger reserve to retained earnings.

9HSBC Holdings announced the following share buy-backs during the year: a share buy-back of up to $2.0bn in February 2025, which was completed in April

2025; a share buy-back of up to $3.0bn in May 2025, which was completed in July 2025 and a share buy-back of up to $3.0bn in July 2025, which was

completed in October 2025.

10Includes $1.1bn (2024: $0.5bn; 2023: $0.6bn) of shares bought by HSBC Holdings Employee Benefit Trust to satisfy obligation to deliver shares under employee

share plans.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **294** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| Consolidated statement of cash flows | Consolidated statement of cash flows | Consolidated statement of cash flows | Consolidated statement of cash flows |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Profit before tax** | **29907** | 32309 | 30348 |
| **Adjustments for non-cash items:** |  |  |  |
| Depreciation, amortisation and impairment | **4916** | 4080 | 3466 |
| Net loss from investing activities | **2614** | 180 | 1213 |
| Share of profit in associates and joint ventures | **(2911)** | (2912) | (2807) |
| Impairment of interest in associate | **1000** |  | 3000 |
| (Gain)/loss on acquisition/disposal of subsidiaries, businesses, associates and joint ventures | **93** | 1704 | (1775) |
| Change in expected credit losses gross of recoveries and other credit impairment charges | **4170** | 3674 | 3717 |
| Provisions including pensions | **2103** | 299 | 266 |
| Share-based payment expense | **621** | 529 | 482 |
| Other non-cash items included in profit before tax | **(4690)** | (5290) | (4299) |
| Elimination of exchange differences<sup>1</sup> | **(34682)** | 26734 | (10678) |
| **Changes in operating assets and liabilities** |  |  |  |
| Change in net trading securities and derivatives | **(38630)** | (41385) | (63247) |
| Change in loans and advances to banks and customers | **(74071)** | 7275 | (14145) |
| Change in reverse repurchase agreements – non-trading | **(32342)** | (4227) | (2095) |
| Change in financial assets designated and otherwise mandatorily measured at fair value | **(23393)** | (20662) | (9994) |
| Change in other assets | **(38389)** | 7685 | (10254) |
| Change in deposits by banks and customer accounts | **168907** | 44237 | 45021 |
| Change in repurchase agreements – non-trading | **24094** | 8700 | 43366 |
| Change in debt securities in issue | **(5613)** | 11942 | 11945 |
| Change in financial liabilities designated at fair value | **46129** | (2248) | 10097 |
| Change in other liabilities | **4098** | (1603) | 8742 |
| Dividends received from associates | **1040** | 1062 | 1067 |
| Contributions paid to defined benefit plans | **(147)** | (167) | (208) |
| Tax paid | **(5058)** | (6611) | (4117) |
| **Net cash from operating activities** | **29766** | 65305 | 39111 |
| Purchase of financial investments | **(502391)** | (523454) | (563561) |
| Proceeds from the sale and maturity of financial investments<sup>2</sup> | **470309** | 453502 | 504174 |
| Net cash flows from the purchase and sale of property, plant and equipment | **(1447)** | (1344) | (1145) |
| Net cash flows from disposal of loan portfolio and customer accounts | **—** |  | 623 |
| Net investment in intangible assets | **(3214)** | (2542) | (2550) |
| Net cash inflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures<sup>3</sup> | **1126** | 9891 | 1239 |
| Net cash outflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures<sup>4</sup> | **(1451)** | (12617) | (1692) |
| **Net cash from investing activities** | **(37068)** | (76564) | (62912) |
| Issue of ordinary share capital and other equity instruments | **4096** | 3602 | 1996 |
| Share buy-back | **(9091)** | (11348) | (5812) |
| Net purchases of own shares for market-making and investment purposes | **(1123)** | (541) | (614) |
| Net cash flow from change in stake of subsidiaries | **(154)** |  | (19) |
| Redemption of preference shares and other equity instruments | **(2450)** | (3433) | (4003) |
| Subordinated loan capital issued | **3834** | 4361 | 5237 |
| Subordinated loan capital repaid<sup>5</sup> | **(3591)** | (2000) | (2147) |
| Dividends paid to shareholders of the parent company and non-controlling interests | **(13482)** | (17100) | (12196) |
| **Net cash from financing activities** | **(21961)** | (26459) | (17558) |
| **Net decrease in cash and cash equivalents** | **(29263)** | (37718) | (41359) |
| Cash and cash equivalents at 1 Jan | **434940** | 490933 | 521671 |
| Exchange differences in respect of cash and cash equivalents | **27210** | (18275) | 10621 |
| **Cash and cash equivalents at 31 Dec**<sup>6</sup> | **432887** | 434940 | 490933 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **295** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| Consolidated statement of cash flows (continued) | Consolidated statement of cash flows (continued) | Consolidated statement of cash flows (continued) | Consolidated statement of cash flows (continued) |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Cash and cash equivalents comprise:** |  |  |  |
| – cash and balances at central banks | **242859** | 267674 | 285868 |
| – loans and advances to banks of one month or less<sup>9</sup> | **74404** | 69803 | 76620 |
| – reverse repurchase agreements with banks of one month or less | **71790** | 58290 | 64341 |
| – treasury bills, other bills and certificates of deposit less than three months<sup>8</sup> | **41232** | 27307 | 33303 |
| – cash collateral, net settlement accounts and items in course of collection from/transmission to other banks | **2214** | 9827 | 14866 |
| – cash and cash equivalents held for sale<sup>7</sup> | **387** | 2039 | 15935 |
| **Cash and cash equivalents at 31 Dec**<sup>6</sup> | **432887** | 434940 | 490933 |

---

Interest received was $99.6bn (2024: $110.1bn; 2023: $98.9bn), interest paid was $68.8bn (2024: $81.7bn; 2023: $66.0bn) and dividends received

(excluding dividends received from associates, which are presented separately above) were $2.7bn (2024: $2.8bn; 2023: $1.9bn).

1Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be

determined without unreasonable expense.

2This includes $5.8bn from the sale of our retained portfolio of home and certain other loans in France.

3In 2025, this includes $1bn from the sale of our French life insurance business, and in 2024 this includes $9.3bn from the sale of our banking business in

Canada.

4In 2025, this includes $1bn from sale of our private banking business in Germany and $0.4bn from sale of our retail banking operations in Bahrain and in 2024,

this includes $10.6bn from the sale of our retail banking operations in France and $1.8bn from the sale of our business in Argentina.

5Subordinated liabilities changes during the year are attributable to repayments of $(3.6)bn (2024: $(2.0)bn; 2023: $(2.1)bn) of securities. Non-cash changes

during the year included foreign exchange gains/losses of $1.4bn gain (2024: $1.6bn gain; 2023: $0.6bn loss) and fair value gains/losses of $0.7bn gain (2024:

$1.0bn gain; 2023: $0.8bn loss).

6At 31 December 2025, $66.6bn (2024: $50.4bn; 2023: $61.8bn) was not available for use by HSBC due to a range of restrictions, including currency exchange.

This includes $9.6bn (2024: Nil; 2023: Nil) segregated for Hang Seng Bank privatisation funding purposes. Refer to Note 37 for more details.

7Includes $0.3bn (2024: $1.9bn, 2023: $5.6bn) of cash and balances at central banks and $0.04bn (2024: $0.1bn, 2023: $10.5bn) of loans and advances to banks

of one month or less. There is nil balance in 2025 for reverse repurchase agreements with banks of one month or less (2024: nil, 2023: $0.2bn) and cash

collateral, net settlement accounts and items in course of collection from/transmission to other banks (2024: nil, 2023: $(0.4)bn).

8The amount in this line is included in the 'Financial investments' and 'Financial assets designated and otherwise mandatorily measured at fair value through

profit or loss' line items in the Consolidated balance sheet on page 290.

9The amount in this line is included in the 'Loans and advances to banks', 'Financial investments' and 'Financial assets designated and otherwise mandatorily

measured at fair value through profit or loss' line items in the Consolidated balance sheet on page 290.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **296** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| HSBC Holdings income statement  | HSBC Holdings income statement  | HSBC Holdings income statement  | HSBC Holdings income statement  | HSBC Holdings income statement  |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  |  | **2025** | 2024 | 2023 |
|  | Notes<sup>\*</sup> | **$m** | $m | $m |
| Net interest expense |  | **(5455)** | (5758) | (5339) |
| – interest income |  | **2632** | 3053 | 2864 |
| – interest expense |  | **(8087)** | (8811) | (8203) |
| Net fee (expense)/income |  | **(2)** | (10) | 2 |
| Net income from financial instruments held for trading or managed on a fair value basis | 3 | **182** | 2899 | 1063 |
| Changes in fair value of designated debt and related derivatives<sup>1</sup> | 3 | **(1041)** | (125) | (1468) |
| Changes in fair value of other financial instruments mandatorily measured at fair value through <br>profit or loss<br>| 3 | **2835** | 2086 | 3692 |
| Gains less losses from financial investments |  | **(3)** | 2 | 45 |
| Dividend income from subsidiaries<sup>2</sup> |  | **23816** | 33846 | 16824 |
| Other operating income |  | **228** | 276 | 332 |
| **Total operating income** |  | **20560** | 33216 | 15151 |
| Employee compensation and benefits | 5 | **(31)** | (29) | (15) |
| General and administrative expenses |  | **(1277)** | (1148) | (1327) |
| (Impairment) of subsidiaries/reversal of impairment<sup>2</sup> | 19 | **2720** | (11490) | (5574) |
| **Total operating expenses** |  | **1412** | (12667) | (6916) |
| **Profit before tax** |  | **21972** | 20549 | 8235 |
| Tax credit |  | **639** | 499 | 977 |
| **Profit for the year** |  | **22611** | 21048 | 9212 |

---

\*For Notes on the financial statements, see page <u>[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_6731)</u>.

1The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch.

2The amounts recorded within profit before tax with respect to dividend income from subsidiaries and impairment/reversal of impairment of subsidiaries are not

subject to tax.

---

| | | | |
|:---|:---|:---|:---|
| HSBC Holdings statement of comprehensive income | HSBC Holdings statement of comprehensive income | HSBC Holdings statement of comprehensive income | HSBC Holdings statement of comprehensive income |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Profit for the year | **22611** | 21048 | 9212 |
| **Other comprehensive income/(expense)** |  |  |  |
| **Items that will not be reclassified subsequently to profit or loss:** |  |  |  |
| Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes <br>in own credit risk<br>| **90** | 21 | (124) |
| – before income taxes | **117** | 32 | (166) |
| – income taxes | **(27)** | (11) | 42 |
| **Other comprehensive income/(expense) for the year, net of tax** | **90** | 21 | (124) |
| **Total comprehensive income for the year** | **22701** | 21069 | 9088 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **297** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| HSBC Holdings balance sheet | HSBC Holdings balance sheet | HSBC Holdings balance sheet | HSBC Holdings balance sheet |
|  |  | **31 Dec 2025** | 31 Dec 2024 |
|  | Notes<sup>\*</sup> | **$m** | $m |
| **Assets** |  |  |  |
| Cash and balances with HSBC undertakings |  | **5079** | 2548 |
| Financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value |  | **67217** | 61286 |
| Derivatives | 15 | **1942** | 3054 |
| Loans and advances to HSBC undertakings |  | **40500** | 37677 |
| Trading Assets |  | **—** | 709 |
| Financial investments | 16 | **15470** | 10328 |
| Prepayments, accrued income and other assets |  | **3583** | 4353 |
| Current tax assets |  | **419** | 305 |
| Investments in subsidiaries | 19 | **157728** | 152337 |
| Intangible assets |  | **140** | 162 |
| Deferred tax assets |  | **942** | 1498 |
| **Total assets at 31 Dec** |  | **293020** | 274257 |
| **Liabilities and equity** |  |  |  |
| **Liabilities** |  |  |  |
| Amounts owed to HSBC undertakings |  | **89** | 231 |
| Financial liabilities designated at fair value | 25 | **52907** | 41582 |
| Derivatives | 15 | **3451** | 5340 |
| Debt securities in issue | 26 | **69024** | 64320 |
| Accruals, deferred income and other liabilities |  | **2286** | 3097 |
| Subordinated liabilities | 29 | **26114** | 23548 |
| **Total liabilities** |  | **153871** | 138118 |
| **Equity** |  |  |  |
| Called up share capital | 32 | **8588** | 8973 |
| Share premium account | 32 | **111** | 14810 |
| Other equity instruments | 32 | **20635** | 19024 |
| Merger and other reserves |  | **32299** | 33664 |
| Retained earnings |  | **77516** | 59668 |
| **Total equity** |  | **139149** | 136139 |
| **Total liabilities and equity at 31 Dec** |  | **293020** | 274257 |

---

\*For Notes on the financial statements, see page <u>[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_6731)</u>.

The accompanying notes on pages <u>[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_43)</u> to 381, the audited sections in the Risk review on pages 118 to 218 and 'Directors' remuneration report'

on pages 249 to 274 form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 25 February 2026 and signed on its behalf by:

---

| | |
|:---|:---|
| **Brendan Nelson** | **Pam Kaur** |
| Group Chairman | Group Chief Financial Officer  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **298** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  | HSBC Holdings statement of changes in equity  |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **Called up**<br>**share**<br>**capital**<br>| **Share**<br>**premium**<br>| **Other**<br>**equity**<br>**instruments**<br>| **Retained**<br>**earnings**<sup>1,2</sup><br>| **Merger and** <br>**other**<br>**reserves**<br>| **Total**<br>**shareholders'**<br>**equity**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **8973** | **14810** | **19024** | **59668** | **33664** | **136139** |
| Profit for the year | **—** | **—** | **—** | **22611** | **—** | **22611** |
| Other comprehensive income (net of tax) | **—** | **—** | **—** | **90** | **—** | **90** |
| – changes in fair value of financial liabilities designated at fair value due to <br>movement in own credit risk <br>| **—** | **—** | **—** | **90** | **—** | **90** |
| **Total comprehensive income for the year** | **—** | **—** | **—** | **22701** | **—** | **22701** |
| Shares issued and purchased under employee share plans | **5** | **111** | **—** | **(635)** | **—** | **(519)** |
| Capital securities issued<sup>3</sup> | **—** | **—** | **4061** | **—** | **—** | **4061** |
| Purchase and cancellation of shares<sup>4</sup> | **(390)** | **—** | **—** | **(8039)** | **390** | **(8039)** |
| Share premium reclassification to retained earnings<sup>5</sup> | **—** | **(14810)** | **—** | **14810** | **—** | **—** |
| Capital redemption reserves reclassification to retained earnings<sup>5</sup> | **—** | **—** | **—** | **1755** | **(1755)** | **—** |
| Dividends to shareholders | **—** | **—** | **—** | **(12764)** | **—** | **(12764)** |
| Redemption of capital securities<sup>6</sup> | **—** | **—** | **(2450)** | **—** | **—** | **(2450)** |
| Other movements | **—** | **—** | **—** | **20** | **—** | **20** |
| **At 31 Dec 2025** | **8588** | **111** | **20635** | **77516** | **32299** | **139149** |
| At 1 Jan 2024 | 9631 | 14738 | 17703 | 63288 | 35946 | 141306 |
| Profit for the year |  |  |  | 21048 |  | 21048 |
| Other comprehensive income (net of tax) |  |  |  | 21 |  | 21 |
| – changes in fair value of financial liabilities designated at fair value due to <br>movement in own credit risk<br>|  |  |  | 21 |  | 21 |
| Total comprehensive income for the year |  |  |  | 21069 |  | 21069 |
| Shares issued and purchased under employee share plans | 5 | 72 |  | (181) |  | (104) |
| Capital securities issued |  |  | 3571 |  |  | 3571 |
| Purchase and cancellation of shares | (663) |  |  | (11043) | 663 | (11043) |
| Dividends to shareholders |  |  |  | (16410) |  | (16410) |
| Redemption of capital securities |  |  | (2250) |  |  | (2250) |
| Transfers<sup>7</sup> |  |  |  | 2945 | (2945) |  |
| Other movements |  |  |  |  |  |  |
| At 31 Dec 2024 | 8973 | 14810 | 19024 | 59668 | 33664 | 136139 |
| At 1 Jan 2023 | 10147 | 14664 | 19746 | 67996 | 40555 | 153108 |
| Profit for the year |  |  |  | 9212 |  | 9212 |
| Other comprehensive income (net of tax) |  |  |  | (124) |  | (124) |
| – changes in fair value of financial liabilities designated at fair value due to <br>movement in own credit risk<br>|  |  |  | (124) |  | (124) |
| Total comprehensive income for the year |  |  |  | 9088 |  | 9088 |
| Shares issued and purchased under employee share plans | 5 | 74 |  | (328) |  | (249) |
| Capital securities issued |  |  | 1980 |  |  | 1980 |
| Purchase and cancellation of shares | (521) |  |  | (7025) | 521 | (7025) |
| Dividends to shareholders |  |  |  | (11593) |  | (11593) |
| Redemption of capital securities  |  |  | (4023) | 20 |  | (4003) |
| Transfers<sup>7</sup> |  |  |  | 5130 | (5130) |  |
| Other movements |  |  |  |  |  |  |
| At 31 Dec 2023 | 9631 | 14738 | 17703 | 63288 | 35946 | 141306 |

---

Dividends per ordinary share at 31 December 2025 were $0.66 (2024: $0.82; 2023: $0.53).

1Retained earnings include unrealised profits from intercompany transactions and share-based payment reserves, which are excluded from distributable

reserves. Distributable reserves include the distributable portions of retained earnings and the merger reserve. Distributable reserves are reduced by ordinary

dividend payments, distributions on additional tier 1 instruments, share buy-backs and impairments in investments in subsidiaries. They are increased by profits

and the realisation of retained earnings or merger reserves upon impairment of an associated investment in subsidiary.

2At 31 December 2025, retained earnings included 35,354,337 own shares held. These include own shares held by HSBC Holdings for the benefit of

beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or bonus plans.

3HSBC Holdings issued $1.5bn 6.950% contingent convertible securities in February 2025, SGD0.8bn 5.000% contingent convertible securities in March 2025

and $2.0bn 7.050% contingent convertible securities in June 2025. All instruments were recorded net of issuance cost.

4HSBC Holdings announced the following share buy-backs during the year: a share buy-back of up to $2.0bn in February 2025, which was completed in April

2025; a share buy-back of up to $3.0bn in May 2025, which was completed in July 2025 and a share buy-back of up to $3.0bn in July 2025, which was

completed in October 2025.

5On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings' share

premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings' Annual General Meeting held on

2 May 2025 (the 'Capital Reduction'). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting

in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.

6In March 2025, HSBC Holdings redeemed its $2.45bn 6.375% contingent convertible securities.

7At 31 December 2024, an impairment of $11.4bn (2023: $5.5bn) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of

$2.9bn (2023: $5.1bn) from the remaining historical associated merger reserve to retained earnings.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **299** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| HSBC Holdings statement of cash flows  | HSBC Holdings statement of cash flows  | HSBC Holdings statement of cash flows  | HSBC Holdings statement of cash flows  |
| for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 | for the year ended 31 December 2025 |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Profit before tax** | **21972** | 20549 | 8235 |
| Adjustments for non-cash items | **(2777)** | 11721 | 5611 |
| – depreciation, amortisation and impairment/expected credit losses | **(2669)** | 11552 | 5629 |
| – share-based payment expense | **1** | 1 |  |
| – other non-cash items included in profit before tax | **(220)** | 53 | (38) |
| – elimination of exchange differences | **111** | 115 | 20 |
| **Changes in operating assets and liabilities** |  |  |  |
| Change in loans and advances to HSBC undertakings | **(2927)** | (2753) | (1267) |
| Change in financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value | **(4657)** | (1978) | (7767) |
| Change in net trading securities and net derivatives | **600** | (1537) | (529) |
| Change in other assets | **631** | 603 | 363 |
| Change in debt securities in issue | **883** | 469 | 1964 |
| Change in financial liabilities designated at fair value | **1288** | 292 | 3096 |
| Change in other liabilities | **639** | (1897) | 1947 |
| Tax received | **1071** | 1691 | 577 |
| **Net cash from operating activities** | **16723** | 27160 | 12230 |
| Purchase of financial investments | **(22636)** | (29812) | (7803) |
| Proceeds from the sale and maturity of financial investments  | **22638** | 31779 | 20074 |
| Net cash outflow from acquisition of or increase in stake of subsidiaries | **(5148)** | (7473) | (2517) |
| Repayment of capital from subsidiaries | **2252** | 2963 | 4993 |
| Net investment in intangible assets | **(29)** | (43) | (46) |
| **Net cash from investing activities** | **(2923)** | (2586) | 14701 |
| Issue of ordinary share capital and other equity instruments | **4177** | 3648 | 2059 |
| Redemption of preference shares and other equity instruments | **(2450)** | (2250) | (4003) |
| Purchase of own shares | **(1118)** | (532) | (855) |
| Share buy-backs | **(9091)** | (11204) | (5812) |
| Subordinated loan capital issued | **3834** | 4268 | 5270 |
| Subordinated loan capital repaid | **(3284)** | (3994) |  |
| Debt securities issued | **25469** | 16102 | 17180 |
| Debt securities repaid | **(14349)** | (18179) | (13047) |
| Dividends paid on ordinary shares | **(11581)** | (15348) | (10492) |
| Dividends paid to holders of other equity instruments | **(1183)** | (1062) | (1101) |
| **Net cash from financing activities** | **(9576)** | (28551) | (10801) |
| **Net increase/(decrease) in cash and cash equivalents** | **4224** | (3977) | 16130 |
| Cash and cash equivalents at 1 January | **18693** | 22814 | 6756 |
| Exchange differences in respect of cash and cash equivalents | **99** | (144) | (72) |
| **Cash and cash equivalents at 31 Dec** | **23016** | 18693 | 22814 |
| Cash and cash equivalents comprise: |  |  |  |
| – cash at bank with HSBC undertakings | **5079** | 2548 | 7029 |
| – cash collateral and net settlement accounts | **1702** | 2544 | 3422 |
| – loans and advances to HSBC undertakings of one month or less | **6250** | 8500 |  |
| – treasury and other eligible bills | **9985** | 5101 | 12363 |

---

Interest received was $6,059m (2024: $6,624m; 2023: $5,695m), interest paid was $7,766m (2024: $8,800m; 2023: $7,754m) and dividends

received were $23,816m (2024: $33,846m; 2023: $16,824m).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **300** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|

---

Notes on the financial statements

---

| | | |
|:---|:---|:---|
| Contents | Contents | Contents |
| **[300](#i52a8ac564f2d4799b4150f1cfdffa9d2_43)** | 1 | Basis of preparation and material accounting policies |
| **[312](#i52a8ac564f2d4799b4150f1cfdffa9d2_55)** | 2 | Net fee income |
| **[313](#i52a8ac564f2d4799b4150f1cfdffa9d2_58)** | 3 | Net income/(expense) from financial instruments measured at <br>fair value through profit or loss<br>|
| **[313](#i52a8ac564f2d4799b4150f1cfdffa9d2_64)** | 4 | Insurance business |
| **[320](#i52a8ac564f2d4799b4150f1cfdffa9d2_73)** | 5 | Employee compensation and benefits |
| **[325](#i52a8ac564f2d4799b4150f1cfdffa9d2_157)** | 6 | Auditor's remuneration |
| **[326](#i52a8ac564f2d4799b4150f1cfdffa9d2_166)** | 7 | Tax |
| **[328](#i52a8ac564f2d4799b4150f1cfdffa9d2_184)** | 8 | Dividends |
| **[329](#i52a8ac564f2d4799b4150f1cfdffa9d2_202)** | 9 | Earnings per share |
| **[329](#i52a8ac564f2d4799b4150f1cfdffa9d2_211)** | 10 | Segmental analysis |
| **[332](#i52a8ac564f2d4799b4150f1cfdffa9d2_214)** | 11 | Trading assets |
| **[332](#i52a8ac564f2d4799b4150f1cfdffa9d2_217)** | 12 | Fair values of financial instruments carried at fair value |
| **[337](#i52a8ac564f2d4799b4150f1cfdffa9d2_262)** | 13 | Fair values of financial instruments not carried at fair value |
| **[339](#i52a8ac564f2d4799b4150f1cfdffa9d2_274)** | 14 | Financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>|
| **[339](#i52a8ac564f2d4799b4150f1cfdffa9d2_277)** | 15 | Derivatives |
| **[343](#i52a8ac564f2d4799b4150f1cfdffa9d2_313)** | 16 | Financial investments |
| **[344](#i52a8ac564f2d4799b4150f1cfdffa9d2_319)** | 17 | Assets pledged, collateral received and assets transferred |
| **[345](#i52a8ac564f2d4799b4150f1cfdffa9d2_337)** | 18 | Interests in associates and joint ventures |
| **[349](#i52a8ac564f2d4799b4150f1cfdffa9d2_379)** | 19 | Investments in subsidiaries |

---

---

| | | |
|:---|:---|:---|
| **[351](#i52a8ac564f2d4799b4150f1cfdffa9d2_397)** | 20 | Structured entities |
| **[353](#i52a8ac564f2d4799b4150f1cfdffa9d2_412)** | 21 | Goodwill and intangible assets |
| **[355](#i52a8ac564f2d4799b4150f1cfdffa9d2_448)** | 22 | Prepayments, accrued income and other assets |
| **[355](#i52a8ac564f2d4799b4150f1cfdffa9d2_6575)** | 23 | Assets held for sale, liabilities of disposal groups held for sale <br>and business acquisitions<br>|
| **[357](#i52a8ac564f2d4799b4150f1cfdffa9d2_454)** | 24 | Trading liabilities |
| **[357](#i52a8ac564f2d4799b4150f1cfdffa9d2_457)** | 25 | Financial liabilities designated at fair value |
| **[358](#i52a8ac564f2d4799b4150f1cfdffa9d2_472)** | 26 | Debt securities in issue |
| **[358](#i52a8ac564f2d4799b4150f1cfdffa9d2_481)** | 27 | Accruals, deferred income and other liabilities |
| **[358](#i52a8ac564f2d4799b4150f1cfdffa9d2_487)** | 28 | Provisions |
| **[359](#i52a8ac564f2d4799b4150f1cfdffa9d2_502)** | 29 | Subordinated liabilities |
| **[360](#i52a8ac564f2d4799b4150f1cfdffa9d2_529)** | 30 | Maturity analysis of assets, liabilities and off-balance sheet <br>commitments<br>|
| **[365](#i52a8ac564f2d4799b4150f1cfdffa9d2_550)** | 31 | Offsetting of financial assets and financial liabilities |
| **[366](#i52a8ac564f2d4799b4150f1cfdffa9d2_556)** | 32 | Called up share capital and other equity instruments |
| **[368](#i52a8ac564f2d4799b4150f1cfdffa9d2_592)** | 33 | Contingent liabilities, contractual commitments and guarantees |
| **[369](#i52a8ac564f2d4799b4150f1cfdffa9d2_601)** | 34 | Finance lease receivables |
| **[369](#i52a8ac564f2d4799b4150f1cfdffa9d2_6710)** | 35 | Legal proceedings and regulatory matters |
| **[371](#i52a8ac564f2d4799b4150f1cfdffa9d2_613)** | 36 | Related party transactions |
| **[373](#i52a8ac564f2d4799b4150f1cfdffa9d2_649)** | 37 | Events after the balance sheet date |
| **[373](#i52a8ac564f2d4799b4150f1cfdffa9d2_649)** | 38 | HSBC Holdings' subsidiaries, joint ventures and associates |

---

---

| | |
|:---|:---|
| 1 | Basis of preparation and material accounting policies |

---

1.1Basis of preparation

(a)Compliance with International Financial Reporting Standards

The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings comply with UK-adopted international

accounting standards and with the requirements of the Companies Act 2006, and have also applied international financial reporting standards

adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are also prepared in accordance

with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IFRS Accounting Standards'),

including interpretations issued by the IFRS Interpretations Committee, as there are no applicable differences from IFRS Accounting Standards for

the periods presented. There were no unendorsed standards effective for the year ended 31 December 2025 affecting these consolidated and

separate financial statements.

**IFRS Accounting Standards adopted during the year ended 31 December 2025**

There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting policies

have been applied consistently.

(b)Differences between IFRS Accounting Standards and Hong Kong Financial Reporting

Standards

There are no significant differences between IFRS Accounting Standards and Hong Kong Financial Reporting Standards in terms of their application

to HSBC, and consequently there would be no significant differences had the financial statements been prepared in accordance with Hong Kong

Financial Reporting Standards. The 'Notes on the financial statements', taken together with the 'Report of the Directors', include the aggregate of

all disclosures necessary to satisfy IFRS Accounting Standards and Hong Kong Financial Reporting Standards.

(c)Future accounting developments

**Minor amendments to IFRS Accounting Standards**

The International Accounting Standards Board ('IASB') has published a number of minor amendments to IFRS Accounting Standards that are

effective from 1 January 2026. HSBC expects they will have an insignificant effect, when adopted, on the consolidated financial statements of

HSBC and the separate financial statements of HSBC Holdings.

**Other amendments and new IFRS Accounting Standards**

Amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial Instruments: Disclosures'

In May 2024, the IASB issued amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial Instruments: Disclosures', effective for annual

reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed settled when

using an electronic payment system, the amendments also provide further clarification regarding the classification of financial assets that contain

contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related contingencies, and financial

assets with certain non-recourse features. The Group does not expect any material impact from these amendments.

IFRS 18 'Presentation and Disclosure in Financial Statements'

In April 2024, the IASB issued IFRS 18 'Presentation and Disclosure in Financial Statements', effective for annual reporting periods beginning on or

after 1 January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable information about

an entity's financial performance. It will replace IAS 1 'Presentation of Financial Statements' but carries over many requirements from that IFRS

Accounting Standard unchanged. In addition, there are three sets of new requirements relating to the structure of the income statement,

management-defined performance measures and the aggregation and disaggregation of financial information.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **301** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

While IFRS 18 will not change recognition criteria or measurement bases, it will have an impact on presenting information in the financial

statements, in particular the income statement and to a lesser extent the cash flow statement. HSBC are currently evaluating impacts and

ensuring data readiness is adequate in anticipation of implementation.

(d)Foreign currencies

HSBC's consolidated financial statements are presented in US dollars because the US dollar and currencies linked to it form the major currency

bloc in which HSBC transacts and funds its business. The US dollar is also HSBC Holdings' functional currency because the US dollar and

currencies linked to it are the most significant currencies relevant to the underlying transactions, events and conditions of its subsidiaries, as well

as representing a significant proportion of its funds generated from financing activities.

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in foreign

currencies are translated at the rate of exchange at the balance sheet date, except non-monetary assets and liabilities measured at historical cost,

which are translated using the rate of exchange at the initial transaction date. Exchange differences are recognised in the income statement

except where otherwise required such as exchange components of gains and losses on non-monetary items which are recognised in the income

statement or other comprehensive income depending on where the gain or loss on the underlying item is presented.

Except for subsidiaries operating in hyperinflationary economies, in the consolidated financial statements, the assets and liabilities of branches,

subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group's presentation currency at the

rate of exchange at the balance sheet date, while their results are translated into US dollars at the average rates of exchange for the reporting

period. Exchange differences arising are recognised in other comprehensive income. On disposal of a foreign operation, exchange differences

previously recognised in other comprehensive income are reclassified to the income statement.

(e)Presentation of information

Certain disclosures required by IFRS Accounting Standards have been included in the sections marked as ('Audited') in the Annual Report and

Accounts 2025 as follows:

–Disclosures concerning the nature and extent of risks relating to insurance contracts and financial instruments are included in the 'Risk review'

on pages 118 to 218.

–The 'Own funds disclosure' is included in the 'Risk review' on page 192.

HSBC follows the UK Finance Disclosure Code. The UK Finance Disclosure Code aims to increase the quality and comparability of UK banks'

disclosures and sets out five disclosure principles together with supporting guidance agreed in 2010. In line with the principles of the UK Finance

Disclosure Code, HSBC assesses good practice recommendations issued from time to time by relevant regulators and standard setters, and will

assess the applicability and relevance of such guidance, enhancing disclosures where appropriate.

(f)Critical estimates and judgements

The preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent uncertainties

and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the 'critical estimates and judgements' in

section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management's estimates are based.

This could result in materially different estimates and judgements from those reached by management for the purposes of these financial

statements. Management's selection of HSBC's accounting policies that contain critical estimates and judgements reflects the materiality of the

items to which the policies are applied and the high degree of judgement and estimation uncertainty involved.

Management has considered the impact of climate-related risks on HSBC's financial position and performance. While the effects of climate

change are a source of uncertainty, as at 31 December 2025 management did not consider there to be a material impact on our critical judgements

and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular, management has considered

the known and observable potential impacts of climate-related risks of associated judgements and estimates in our value in use calculations.

(g)Going concern

The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the

resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of

information relating to present and future conditions, including future projections of profitability, cash flows, capital requirements and capital

resources.

These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment, including ongoing supply chain

disruptions, uncertain inflation, rapidly changing interest rates, the impact of the Russia-Ukraine war and further conflict or military action in the

Middle East, Venezuela or elsewhere; uncertainty around Hong Kong and mainland China's CRE sectors; heightened strategic competition

between the US and China, ongoing and potential cross-border investment and trade restrictions, changes to tariff rates, as well as the potential

impacts from other top and emerging risks, including climate change, as well as the related impacts on profitability, capital and liquidity.

1.2Summary of material accounting policies

(a)Consolidation and related policies

**Consolidation**

HSBC consolidates entities that it controls as demonstrated by power over the investee, exposure to variable returns, and the ability to use its

power to affect the amount of its returns. Where an entity is governed by voting rights, HSBC generally has power leading to control when it holds

– directly or indirectly – the necessary voting rights to pass resolutions by the governing body. In all other cases, the assessment of control is more

complex and requires judgement of other factors, including contractual arrangements.

Business combinations are accounted for using the acquisition method. The amount of non-controlling interest is measured either at fair value or at

the non-controlling interest's proportionate share of the acquiree's identifiable net assets. This election is made for each business combination.

**Investments in subsidiaries**

HSBC Holdings' investments in subsidiaries are stated at cost less impairment losses. Where the investment in a subsidiary is designated in a fair

value hedging relationship for foreign currency risk, the carrying value is adjusted for any associated hedge adjustment arising therefrom.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **302** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Impairment testing of investments in subsidiaries is performed where there is an indication of impairment. Indicators of impairment include both

external and internal sources of information. Similarly, assessments are made as to whether an impairment loss recognised in prior periods may no

longer exist or may have decreased. Where this is the case, such an impairment loss is reversed if there has been a change in the estimate used

to determine the relevant recoverable amount since the last impairment loss was recognised.

**Critical estimates and judgements** 

---

| | |
|:---|:---|
| Investments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves estimations of value in use <br>reflecting management's best estimate of the future cash flows of the investment and the rates used to discount these cash flows, both of which are subject to <br>uncertain factors as follows: | Investments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves estimations of value in use <br>reflecting management's best estimate of the future cash flows of the investment and the rates used to discount these cash flows, both of which are subject to <br>uncertain factors as follows: |
| **Judgements** | **Estimates** |
| –The accuracy of forecast cash flows is subject to a high <br>degree of uncertainty in volatile market conditions. <br>Where such circumstances are determined to exist, <br>management re-tests for impairment or reversal more <br>frequently than once a year when indicators exist. This <br>ensures that the assumptions on which the cash flow <br>forecasts are based continue to reflect current market <br>conditions and management's best estimate of future <br>business prospects.<br>| –The future cash flows of each investment are sensitive to the cash flows projected for the periods <br>for which detailed forecasts are available and to assumptions regarding the long-term pattern of <br>sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable <br>economic data, but they reflect management's view of future business prospects at the time of the <br>assessment.<br>–The rates used to discount future expected cash flows can have a significant effect on their <br>valuation, and are based on the costs of equity assigned to the investment. The cost of equity <br>percentage is generally derived from a capital asset pricing model and the market implied cost of <br>equity, which incorporates inputs reflecting a number of financial and economic variables, including <br>the risk-free interest rate in the country concerned and a premium for the risk of the business being <br>evaluated. These variables are subject to fluctuations in external market rates and economic <br>conditions beyond management's control.<br>–Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are <br>described in Note 19. <br>|

---

**Interests in associates and joint arrangements**

Joint arrangements are investments in which HSBC, together with one or more parties, has joint control. Depending on HSBC's rights and

obligations, the joint arrangement is classified as either a joint operation or a joint venture.

HSBC classifies investments in entities over which it has significant influence but not control or joint control as associates and accounts for them

using the equity method. Under this method, the attributable share of net assets, results and reserves are included in the consolidated financial

statements based on either financial statements made up to 31 December or pro-rated amounts adjusted for any material transactions or events

occurring between the date the financial statements are available and 31 December.

Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the

investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisition of

interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the investment.

Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have decreased. Any

reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the extent that it does not

increase the carrying amount above that had no impairment loss been previously recognised.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited <br>('BoCom'), which involves estimations of value in use: | The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited <br>('BoCom'), which involves estimations of value in use: |
| **Judgements** | **Estimates** |
|  | –The value in use calculation uses discounted cash flow projections based on management's best <br>estimate of future earnings available to ordinary shareholders prepared in accordance with IAS 36 <br>'Impairment of Assets'. Those cash flows use estimates based on BoCom's current condition and <br>so do not include estimated cash flows arising from uncommitted future actions that may affect <br>the performance of the investment which will be considered at the relevant time should they <br>arise.<br>–Key assumptions used in estimating BoCom's value in use and the sensitivity of the value in use <br>calculations to different assumptions are described in Note 18.<br>|

---

(b)Impairment of goodwill and other non-financial assets

**Goodwill**

Goodwill is allocated to cash-generating units ('CGUs') for the purpose of impairment testing, which is undertaken at the lowest level at which

goodwill is monitored for internal management purposes.

Impairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of a

CGU with its carrying amount.

Goodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a CGU.

The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the portion of

the CGU retained.

**Other non-financial assets**

Software under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible

assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of

impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition, impairment

is also tested at the CGU level when there is indication of impairment at that level.

Impairment testing compares the carrying amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair

value less costs of disposal or the value in use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities, including

non-financial assets that are directly attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent basis. Non-

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **303** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

financial assets that cannot be allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs. The recoverable

amount of the CGU is the higher of the fair value less costs of disposal of the CGU, which is determined by independent and qualified valuers

where relevant, and the value in use, which is calculated based on appropriate inputs (see Note 21).

When the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognised in the income statement to the extent

that the impairment can be allocated on a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of their

respective individual recoverable amount or nil. Impairment is not allocated to the financial assets in a CGU.

Impairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to

determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would not

exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior

periods.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The review of goodwill and non-financial assets for impairment reflects management's best estimate of the future cash flows of the CGUs and the rates used to <br>discount these cash flows, both of which are subject to uncertain factors as follows: | The review of goodwill and non-financial assets for impairment reflects management's best estimate of the future cash flows of the CGUs and the rates used to <br>discount these cash flows, both of which are subject to uncertain factors as follows: |
| **Judgements** | **Estimates** |
| –The accuracy of forecast cash flows is subject to a <br>high degree of uncertainty in volatile market <br>conditions. Where such circumstances are <br>determined to exist, management re-tests goodwill <br>for impairment more frequently than once a year <br>when indicators of impairment exist. This ensures <br>that the assumptions on which the cash flow <br>forecasts are based continue to reflect current <br>market conditions and management's best estimate <br>of future business prospects.<br>| –The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which <br>detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash <br>flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but <br>they reflect management's view of future business prospects at the time of the assessment.<br>–The rates used to discount future expected cash flows can have a significant effect on their valuation, <br>and are based on the costs of equity assigned to individual CGUs. The cost of equity percentage is <br>generally derived from a capital asset pricing model and market implied cost of equity, which <br>incorporates inputs reflecting a number of financial and economic variables, including the risk-free <br>interest rate in the country concerned and a premium for the risk of the business being evaluated. <br>These variables are subject to fluctuations in external market rates and economic conditions beyond <br>management's control.<br>–Key assumptions used in estimating goodwill and non-financial asset impairment are described in <br>Note 21.<br>|

---

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but

does consider this to be an area that is inherently judgemental.

(c)Net operating income

**Interest income and expense**

Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value, is recognised in

'Interest income' and 'Interest expense' in the income statement using the effective interest method. However, as an exception to this, interest

on debt instruments issued by HSBC for funding purposes that are designated under the fair value option to reduce an accounting mismatch and

on derivatives managed in conjunction with those debt instruments is included in interest expense.

Interest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount of

the asset less allowance for expected credit losses).

**Non-interest income and expense**

HSBC generates fee income from services provided over time, such as account service and card fees, or when HSBC delivers a specific

transaction at a point in time, such as broking services and import/export services. Where fees are variable, for example certain fund management

and performance fees, such fees are recognised when the associated uncertainties are resolved and to the extent that it is highly probable that a

significant reversal will not occur.

HSBC acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, HSBC acts

as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.

HSBC recognises fees earned on transaction-based arrangements at a point in time when it has provided the service to the customer. Where the

contract requires services to be provided over time, income is recognised on a systematic basis over the life of the agreement.

Where HSBC offers a package of services that contains multiple non-distinct performance obligations, such as those included in account service

packages, the promised services are treated as a single performance obligation. If a package of services contains distinct performance obligations,

the corresponding transaction price is allocated to each performance obligation based on the estimated stand-alone selling prices.

Dividend income is recognised when the right to receive payment is established.

Gains and losses from financial instruments measured as at fair value through profit or loss includes the following:

–'Net income from financial instruments held for trading or managed on a fair value basis': This comprises net trading activities, which includes

all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial instruments

managed on a fair value basis, together with the related interest income, interest expense and dividend income, excluding the effect of

changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair value of

derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss.

–'Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or

loss': This includes all gains and losses from changes in the fair value, together with related interest income, interest expense and dividend

income in respect of financial assets and liabilities measured at fair value through profit or loss, and those derivatives managed in conjunction

with the above that can be separately identifiable from other trading derivatives.

–Other gains and losses from financial instruments measured as at fair value through profit or loss include changes in the fair value of

designated debt instruments under the fair value option and related derivatives where such designation reduces an accounting mismatch.

Interest on such debt instruments and interest cash flows on related derivatives is presented in interest expense. Also included are the

changes in fair value of other financial instruments mandatorily measured as at fair value through profit or loss which includes interest on

instruments that fail the solely payments of principal and interest test, see (e) below.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **304** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

**Insurance income and expense**

Insurance service result

Insurance revenue reflects the consideration to which the Group expects to be entitled in exchange for the provision of coverage and other insurance

contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other incurred insurance

service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such losses.

Insurance finance income and expenses

Insurance finance income and expense comprises the change in the carrying amount of the group of insurance contracts arising from the effects

of the time value of money, financial risk and changes therein. For contracts using the variable fee approach ('VFA') measurement model, changes

in the fair value of underlying items (excluding additions and withdrawals) are recognised in insurance finance income or expenses.

(d)Valuation of financial instruments

Financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in

an orderly transaction between market participants at the measurement date and on initial recognition is generally the transaction price. However, if

there is a difference between the transaction price and the fair value of financial instruments whose fair value is based on a quoted price in an active

market or a valuation technique that uses only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception

(a 'day 1 gain or loss'). In all other cases, the entire day 1 gain or loss is deferred and recognised in the income statement over the life of the

transaction until the transaction matures, is closed out, the valuation inputs become observable or HSBC enters into an offsetting transaction.

The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC manages a group of financial

assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial instruments is measured on a net basis

but the underlying financial assets and liabilities are presented separately in the financial statements, unless they satisfy the IFRS offsetting criteria.

Financial instruments are classified into one of three fair value hierarchy levels, described in Note 12, 'Fair values of financial instruments carried at

fair value'.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of valuation techniques <br>that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is more judgemental: | The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of valuation techniques <br>that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is more judgemental: |
| **Judgements** | **Estimates** |
| –An instrument in its entirety is classified as valued using significant unobservable <br>inputs if, in the opinion of management, greater than 5% of the instrument's valuation <br>is driven by unobservable inputs.<br>–'Unobservable' in this context means that there is little or no current market data <br>available from which to determine the price at which an arm's length transaction would <br>be likely to occur. It generally does not mean that there is no data available at all upon <br>which to base a determination of fair value (consensus pricing data may, for example, <br>be used).<br>| –Details on the Group's Level 3 financial instruments and the <br>sensitivity of their valuation to the effect of applying reasonably <br>possible alternative assumptions in determining their fair value are <br>set out in Note 12.<br>|

---

(e)Financial instruments measured at amortised cost

Financial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash

flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances to

banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. HSBC accounts for regular

way amortised cost financial instruments using trade date accounting. The carrying amount of these financial assets at initial recognition includes

any directly attributable transactions costs.

HSBC may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising from the lending

commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When HSBC intends to hold the

loan, the loan commitment is generally not recognised but is subject to expected credit loss considerations.

Financial assets are reclassified only when the business model for their management changes. Such changes, which are expected to be

infrequent, are determined by senior management as a result of external or internal changes and must be significant to operations and

demonstrable to external parties. Reclassifications are applied prospectively from the first day of the first reporting period following the change of

business model. Where a financial asset is reclassified out of the amortised cost measurement category and into the fair value through other

comprehensive income measurement category its fair value is measured at the date of reclassification. Any gain or loss arising from a difference

between the previous amortised cost and fair value is recognised in other comprehensive income. The effective interest rate and the

measurement of expected credit losses are not adjusted as a result of the reclassification.

**Non-trading reverse repurchase, repurchase and similar agreements**

When securities are sold subject to a commitment to repurchase them at a predetermined price ('repos'), they remain on the balance sheet and a

liability is recorded in respect of the consideration received. Securities purchased under commitments to resell ('reverse repos') are not recognised

on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos are measured at

amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as interest and

recognised in net interest income over the life of the agreement.

Contracts that are economically equivalent to reverse repo or repo agreements (such as sales or purchases of securities entered into together with

total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse repo or repo agreements.

(f)Financial assets measured at fair value through other comprehensive income

Financial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain

contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at fair value

through other comprehensive income ('FVOCI'). These comprise primarily debt securities. They are generally recognised on trade date when

HSBC enters into contractual arrangements to purchase and are generally derecognised when they are either sold or redeemed. They are

subsequently remeasured at fair value with changes therein (except for those relating to impairment, interest income and foreign currency

exchange gains and losses) recognised in other comprehensive income until the assets are sold. Upon disposal, the cumulative gains or losses in

other comprehensive income are recognised in the income statement. Financial assets measured at FVOCI are included in impairment calculations

and impairment is recognised in profit or loss.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **305** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

(g)Equity securities measured at fair value with fair value movements presented in other

comprehensive income

Equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar investments

where HSBC holds the investments other than to generate a capital return. Dividends from such investments are recognised in profit or loss.

Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise, equity securities are measured at

fair value through profit or loss.

(h)Financial instruments designated at fair value through profit or loss

Financial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and are

so designated irrevocably at inception:

–The use of the designation removes or significantly reduces an accounting mismatch.

–A group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in

accordance with a documented risk management or investment strategy.

–A financial liability that contains one or more non-closely related embedded derivatives.

Designated financial assets are recognised when HSBC enters into contracts with counterparties, which is generally on trade date, and are

normally derecognised when the rights to the cash flows expire or are transferred.

Designated financial liabilities are recognised when HSBC enters into contracts with counterparties, which is generally on settlement date, and are

normally derecognised when extinguished. Subsequent changes in fair values are recognised in the income statement except for the effect of

changes in the liabilities' credit risk, which is presented in 'Other comprehensive income', unless that treatment would create or enlarge an

accounting mismatch in profit or loss.

Under the above criteria, the main classes of financial instruments designated by HSBC are:

–Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange exposure

on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps as part of a

documented risk management strategy.

–Financial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept

significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary

participation features ('DPF'), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment

contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation

method. The related financial assets and liabilities are managed and reported to management on a fair value basis. Designation at fair value of

the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and presented in the same line.

–Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance evaluated

on a fair value basis.

(i)Derivatives

Derivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices.

Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when

their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities, which are

bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.

Where the derivatives are managed with debt securities issued by HSBC that are designated at fair value where doing so reduces an accounting

mismatch, the contractual interest is shown in 'Interest expense' together with the interest payable on the issued debt.

**Hedge accounting**

When derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge accounting

relationships where the required criteria for documentation and hedge effectiveness are met. HSBC uses these derivatives or, where allowed,

other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in foreign operations as appropriate

to the risk being hedged.

Fair value hedge

Fair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in

recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in

the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued and the

cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income

statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income

statement immediately.

Cash flow hedge

The effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of the

change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the income

statement. The accumulated gains and losses recognised in other comprehensive income are reclassified to the income statement in the same

periods in which the hedged item affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any cumulative gain or

loss recognised in other comprehensive income remains in equity until the forecast transaction is recognised in the income statement. When a

forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is

reclassified to the income statement.

Net investment hedge

Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and losses

on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the income

statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the disposal, or

part-disposal, of the foreign operation.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **306** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

(j)Impairment of amortised cost and FVOCI financial assets

Expected credit losses ('ECL') are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other

financial assets held at amortised cost, debt instruments measured at FVOCI, and certain loan commitments and financial guarantee contracts. At

initial recognition, an allowance (or provision in the case of some loan commitments and financial guarantees) is recognised for ECL resulting from

possible default events within the next 12 months, or less, where the remaining life is less than 12 months ('12-month ECL'). In the event of a

significant increase in credit risk, an allowance (or provision) is recognised for ECL resulting from all possible default events over the expected life

of the financial instrument ('lifetime ECL'). Financial assets where 12-month ECL is recognised are considered to be 'stage 1'; financial assets

which are considered to have experienced a significant increase in credit risk are in 'stage 2'; and financial assets for which there is objective

evidence of impairment, and so are considered to be in default or otherwise credit impaired are in 'stage 3'. Purchased or originated credit-

impaired financial assets ('POCI') are treated differently as set out below.

**Unimpaired and without significant increase in credit risk (stage 1)**

ECL resulting from default events that are possible within the next 12 months ('12-month ECL') are recognised for financial instruments that

remain in stage 1.

**Significant increase in credit risk (stage 2)**

An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering the

change in the risk of default occurring over the remaining life of the financial instrument.

The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition, taking

into account reasonable and supportable information, including information about past events, current conditions and future economic conditions.

The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that used in the

measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its weight compared

with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the geographical region.

Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant increase in credit risk, and

these criteria will differ for different types of lending, particularly between retail and wholesale. However, unless identified at an earlier stage, all

financial assets are deemed to have suffered a significant increase in credit risk when 30 days past due. In addition, wholesale loans that are

individually assessed, which are typically corporate and commercial customers, and included on a watch or worry list, are included in stage 2.

For wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default ('PD'), which encompasses a wide

range of information including the obligor's customer risk rating ('CRR'), macroeconomic condition forecasts and credit transition probabilities. For

origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term estimated at

origination with the equivalent estimation at the reporting date.

The quantitative measure of significance varies depending on the credit quality at origination as follows:

---

| | |
|:---|:---|
| **Origination CRR** | **Significance trigger – PD to increase by** |
| 0.1–1.2 | 15bps |
| 2.1–3.3 | 30bps |

---

For CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has

doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to relative

changes in external market rates.

For loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future

macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be

approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument's underlying modelling

approach and the CRR at origination.

The quantitative comparison is supplemented with additional CRR deterioration-based thresholds, as set out in the table below:

---

| | |
|:---|:---|
| **Origination CRR** | **Additional significance criteria – number of CRR grade notches** <br>**deterioration required to identify as significant credit deterioration (stage** <br>**2) (> or equal to)** <br>|
| 0.1 | 5 notches |
| 1.1–4.2 | 4 notches |
| 4.3–5.1 | 3 notches |
| 5.2–7.1 | 2 notches |
| 7.2–8.2 | 1 notch |
| 8.3 | 0 notches |

---

For retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available

information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is

considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios, generally

by country, product and brand. Within each portfolio, the stage 2 accounts include accounts with an adjusted 12-month PD greater than the

average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk judgement is that no prior

increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than would be expected from loans

that are performing as originally expected and higher than that which would have been acceptable at origination. It therefore approximates a

comparison of origination to reporting date PDs.

We have implemented in the UK and continue to refine the retail transfer criteria approach to utilise a more relative approach for certain portfolios

as additional data becomes available. These enhancements take advantage of the increase in origination-related data in the assessment of

significant increases in credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on

portfolio-specific origination segments.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **307** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

**Credit impaired (stage 3)**

HSBC determines that a financial instrument is credit impaired and in stage 3 by considering relevant objective evidence, primarily whether

contractual payments of either principal or interest are past due for more than 90 days, there are other indications that the borrower is unlikely to

pay such as that a concession has been granted to the borrower for economic or legal reasons relating to the borrower's financial condition, or the

loan is otherwise considered to be in default.

If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the

definitions of credit impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or

otherwise credit impaired.

Interest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).

**Write-off**

Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of

recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security. In circumstances where the net

realisable value of any collateral has been determined and there is no reasonable expectation of further recovery, write-off may be earlier.

**Forbearance**

Loans are identified as forborne and classified as either performing or non-performing when HSBC modifies the contractual terms due to financial

difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the curing criteria, as

specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default have been present for

at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering forbearance would not be reversed.

The Group applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk policies and our

reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details are provided under

'Forborne loans and advances' on page 141.

Performing forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they

continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either stage

1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms) and the risk

of a default occurring at initial recognition (based on the original, unmodified contractual terms).

A forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the

terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that arise

following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as forborne.

**Loan modifications other than forborne loans**

Loan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results in

a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC's rights to

the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The rights to

cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related concession has

been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition, having regard to changes in contractual

terms that either individually or in combination are judged to result in a substantially different financial instrument. Mandatory and general offer loan

modifications that are not borrower specific, for example market-wide customer relief programmes, generally do not result in derecognition, but

their stage allocation is determined considering all available and supportable information under our ECL impairment policy.

**Purchased or originated credit impaired ('POCI')**

Financial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This

population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in

lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount of

ECL included in the estimated cash flows on initial recognition.

**Movement between stages**

Financial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since initial

recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased since initial

recognition based on the assessments described above. In the case of non-performing forborne loans, such financial instruments are transferred

out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.

**Measurement of ECL**

The assessment of credit risk and the estimation of ECL are unbiased and probability-weighted, and incorporate all available information which is

relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future events

and economic conditions at the reporting date. In addition, the estimation of ECL takes into account the time value of money and considers other

factors such as climate-related risks.

In general, HSBC calculates ECL using three main components: a probability of default ('PD'), a loss given default ('LGD') and the exposure at

default ('EAD').

The 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated using the lifetime PD instead. The 12-

month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument

respectively.

The EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to

the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the

event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and

the time value of money.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **308** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC makes use of the IRB framework where possible, with recalibration to meet the differing IFRS 9 requirements as set out in the following

table:

---

| | | |
|:---|:---|:---|
| **Model**  | **Regulatory capital** | **IFRS 9** |
| PD | –Represents long-run average PD throughout a full economic cycle <br>(for mortgage portfolios a hybrid approach, which sits between the <br>extremes of point in time and through the cycle, is used for <br>calculating long-run averages as required by the PRA)<br>–Default backstop of 90+ days past due for all portfolios (includes <br>unlikely to pay ('UTP') criteria in line with internal policy)<br>–May be subject to a sovereign cap <br>| –Represents current portfolio quality and performance, adjusted for <br>the impact of multiple forward-looking macroeconomic scenarios<br>–Default backstop of 90+ days past due for all portfolios (includes <br>UTP criteria in line with internal policy)<br>|
| EAD | –Cannot be lower than current balance | –Amortisation captured for term products<br>–Future drawdown captured for revolving products<br>|
| LGD | –Downturn LGD (consistent with losses we would expect to suffer <br>during a severe but plausible economic downturn)<br>–Regulatory floors may apply to mitigate risk of underestimating <br>downturn LGD due to lack of historical data <br>–Discounted using appropriate index (minimum 9%)<br>–All collection costs included<br>| –LGD based on recent portfolio performance data and includes the <br>expected impact of future economic conditions such as change in <br>the value of collateral<br>–No floors applied, discounted using the original effective interest rate<br>–Only costs associated with selling collateral and certain third-party <br>costs are included<br>|
| Other |  | –Discounted back from point of default to balance sheet date |

---

While 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a

term structure. For the wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the CRR

bands over its life.

The ECL for wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow ('DCF') methodology. The expected

future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future

recoveries and expected future receipts of interest.

Collateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its estimated

fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.

The cash flows are discounted at the original effective interest rate. For significant cases, cash flows under up to four different scenarios are

probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by the Group and judgement in

relation to the likelihood of the work-out strategy succeeding or receivership being required. For less significant cases where an individual

assessment is undertaken, the effect of different economic scenarios and work-out strategies results in an ECL calculation based on a most likely

outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For certain less significant cases, the bank may use

an LGD-based modelled approach to ECL assessment, which factors in a range of economic scenarios.

**Period over which ECL is measured**

Expected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it 12-

month or lifetime ECL) is the maximum contractual period over which HSBC is exposed to credit risk. However, where the financial instrument

includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the undrawn commitment does not

serve to limit HSBC's exposure to credit risk to the contractual notice period, the contractual period does not determine the maximum period

considered. Instead, ECL is measured over the period HSBC remains exposed to credit risk that is not mitigated by credit risk management

actions. This applies to retail overdrafts and credit cards, where the period is the average time taken to realise the material losses for an account,

determined on a portfolio basis. In addition, for these facilities it is not possible to identify the ECL on the loan commitment component separately

from the financial asset component. As a result, the total ECL is recognised in the loss allowance for the financial asset unless the total ECL

exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision. For wholesale overdraft facilities,

credit risk management actions are taken no less frequently than on an annual basis.

**Forward-looking economic inputs**

HSBC applies multiple forward-looking global economic scenarios determined with reference to external forecast distributions representative of its

view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected credit losses in most economic

environments. In certain economic environments, additional analysis may be necessary and may result in additional scenarios or adjustments, to

reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed methodology is disclosed in 'Measurement

uncertainty and sensitivity analysis of ECL estimates' on page 148.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The calculation of the Group's ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set <br>out below: | The calculation of the Group's ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set <br>out below: |
| **Judgements** | **Estimates** |
| –Defining what is considered to be a significant increase in credit risk<br>–Determining the lifetime and point of initial recognition of overdrafts and credit cards<br>–Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including <br>making reasonable and supportable judgements about how models react to current and future <br>economic conditions<br>–Selecting model inputs and economic forecasts, including determining whether sufficient and <br>appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss<br>–Making management adjustments to account for late-breaking events, model and data limitations and <br>deficiencies, and expert credit judgements <br>–Selecting applicable recovery strategies for certain wholesale credit-impaired loans<br>| –The section 'Measurement uncertainty and <br>sensitivity analysis of ECL estimates', marked as <br>audited from page 148, sets out the assumptions <br>used in determining ECL, and provides an indication <br>of the sensitivity of the result to the application of <br>different weightings being applied to different <br>economic assumptions<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **309** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

(k)Insurance contracts

A contract is classified as an insurance contract where the Group accepts significant insurance risk from another party by agreeing to compensate

that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but is accounted for

as an insurance contract if the insurance risk is significant. In addition, the Group issues investment contracts with discretionary participation

features ('DPF'), which are also accounted under IFRS 17 'Insurance Contracts'.

**Aggregation of insurance contracts**

Individual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed

together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or similar

product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the contract is

used to assess whether the contract features similar risks. Each portfolio is further separated by the contract's expected profitability. The portfolios

are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant

possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue date, with most

contracts the Group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of contracts, the Group

considers its groups of contracts as being denominated in a single currency.

The measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will include

fulfilment cash flows as well as the contractual service margin ('CSM') representing the unearned profit. The Group's accounting policy is to

update the estimates used in the measurement on a year-to-date basis.

**Fulfilment cash flows**

The fulfilment cash flows comprise the following:

Best estimates of future cash flows

The cash flows within the contract boundary of each contract in the Group include amounts expected to be collected from premiums and payouts

for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way based on the Group's

demographic and operating experience along with external mortality data where the Group's own experience data is not sufficiently large in size to

be credible.

Adjustment for the time value of money and financial risks associated with the future cash flows

The estimates of future cash flows are adjusted to reflect the time value of money (i.e. discounting) and the financial risks to derive an expected

present value. The Group generally makes use of stochastic modelling techniques in the estimation for products with options and guarantees.

A bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash flows. This is derived as the sum

of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market data, where such markets are

considered to be deep, liquid and transparent. When information is not available, management judgement is applied to determine the appropriate

risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance contracts.

Risk adjustment for non-financial risk

The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises

from non-financial risk.

The Group does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance revenue and insurance

service expense) and insurance finance income or expenses. All changes are included in the insurance service result.

**Measurement models**

The variable fee approach ('VFA') measurement model is used for most of the contracts issued by the Group, which is mandatory upon meeting

the following eligibility criteria at inception:

–the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

–the Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The Group considers that a

substantial share is a majority of returns; and

–the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of

the underlying items. The Group considers that a substantial proportion is a majority proportion of change on a present value probability-

weighted average of all scenarios.

For some contracts measured under VFA, the other comprehensive income ('OCI') option is used. The OCI option is applied where the underlying

items held by the Group are not accounted for at fair value through profit or loss. Under this option, only the amount that matches income or

expenses recognised in profit or loss on underlying items is included in finance income or expenses for these insurance contracts, and hence

results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts issued

for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets against the instruments that

meet specific requirements.

The remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model ('GMM').

**CSM and coverage units**

The CSM represents the unearned profit and results in no income or expense at initial recognition when the group of contracts is profitable. The

CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (for example, changes in non-

economic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of

contracts become onerous subsequently, losses are recognised in insurance service expense immediately.

For groups of contracts measured using the VFA, changes in the Group's share of the underlying items, and economic experience and economic

assumption changes adjust the CSM. However, under the risk mitigation option for VFA contracts, the changes in the fulfilment cash flows and

the changes in the Group's share in the fair value return on underlying items that the instruments mitigate are not adjusted in CSM but recognised

in profit or loss. The risk mitigating instruments are primarily reinsurance contracts held.

For groups of contracts measured using the GMM, changes in economic experience and economic assumption do not adjust the CSM, but are

recognised in profit or loss as they arise.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **310** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

The CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of the

group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.

The Group identifies the quantity of the benefits provided as follows:

–Insurance coverage: This is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where net

policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value.

–Investment services (including both investment-return service and investment-related service): This is based on a constant measure basis

which reflects the provision of access for the policyholder to the facility.

For contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present value

of the future cash outflows for each service.

(l)Employee compensation and benefits

**Share-based payments**

HSBC enters into both equity-settled and cash-settled share-based payment arrangements with its employees as compensation for the provision

of their services.

The vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect of

the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are

recognised when the employee starts to render service to which the award relates.

Cancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting

recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the

amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.

**Post-employment benefit plans**

HSBC operates a number of pension schemes including defined benefit, defined contribution and other post-employment benefit schemes.

Payments to defined contribution schemes are charged as an expense as the employees render service.

Defined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly

comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses.

Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets (excluding interest)

and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net defined benefit

asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets, after applying the asset ceiling

test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future contributions to the plan.

The costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal <br>plan. | The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal <br>plan. |
| **Judgements** | **Estimates** |
|  | –A range of assumptions could be applied, and different assumptions could <br>significantly alter the defined benefit obligation and the amounts <br>recognised in profit or loss or OCI.<br>–The calculation of the defined benefit pension obligation includes <br>assumptions with regard to the discount rate, inflation rate, pension <br>payments and deferred pensions, pay and mortality. Management <br>determines these assumptions in consultation with the plan's actuaries.<br>–Key assumptions used in calculating the defined benefit pension <br>obligation for the principal plan and the sensitivity of the calculation to <br>different assumptions are described in Note 5.<br>|

---

(m)Tax

Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items

recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement as the related item

appears.

Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years.

HSBC provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax authorities.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the amounts

attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods in which the

assets will be realised or the liabilities settled.

In assessing the probability and sufficiency of future taxable profit, management considers the availability of evidence to support the recognition of

deferred tax assets, taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers of recent history of

tax losses where applicable. Management also considers the future reversal of existing taxable temporary differences and tax planning strategies,

including corporate reorganisations. The Group has applied the exception available under IAS 12 to recognising and disclosing information about

deferred tax assets and liabilities related to Pillar Two income taxes.

Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **311** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The recognition of deferred tax assets depends on judgements and estimates. | The recognition of deferred tax assets depends on judgements and estimates. |
| **Judgements** | **Estimates** |
| –Specific judgements supporting deferred tax assets are described in Note 7. | –The recognition of deferred tax assets is sensitive to estimates of future <br>cash flows projected for periods for which detailed forecasts are available <br>and to assumptions regarding the long-term pattern of cash flows <br>thereafter, on which forecasts of future taxable profit are based, and <br>which affect the expected recovery periods and the pattern of utilisation <br>of tax losses and tax credits. See Note 7 for further detail. <br>|

---

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next

financial year, but does consider this to be an area that is inherently judgemental.

(n)Provisions, contingent liabilities and guarantees

**Provisions**

Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive

obligation that has arisen as a result of past events and for which a reliable estimate can be made.

**Critical estimates and judgements**

---

| | |
|:---|:---|
| The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out <br>below: | The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out <br>below: |
| **Judgements** | **Estimates** |
| –Determining whether a present obligation exists. Professional advice is taken on <br>the assessment of litigation and similar obligations.<br>–Provisions for legal proceedings and regulatory matters typically require a higher <br>degree of judgement than other types of provisions. When matters are at an <br>early stage, accounting judgements can be difficult because of the high degree of <br>uncertainty associated with determining whether a present obligation exists, and <br>estimating the probability and amount of any outflows that may arise. As matters <br>progress, management and legal advisers evaluate on an ongoing basis whether <br>provisions should be recognised, revising previous estimates as appropriate. At <br>more advanced stages, it is typically easier to make estimates around a better <br>defined set of possible outcomes.<br>| –Provisions for legal proceedings and regulatory matters remain very <br>sensitive to the assumptions used in the estimate. There could be a wider <br>range of possible outcomes for any pending legal proceedings, <br>investigations or inquiries. As a result it is often not practicable to quantify <br>a range of possible outcomes for individual matters. It is also not <br>practicable to meaningfully quantify ranges of potential outcomes in <br>aggregate for these types of provisions because of the diverse nature and <br>circumstances of such matters and the wide range of uncertainties <br>involved.<br>|

---

**Contingent liabilities, contractual commitments and guarantees** 

Contingent liabilities

Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to legal

proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is remote.

Financial guarantee contracts

Liabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is generally

the fee received or present value of the fee receivable. Subsequently, they are measured at the higher of the amount determined in accordance

with IFRS 9 for ECL and the amount initially recognised less, where appropriate, any cumulative income recognised in accordance with IFRS 15.

(o)Non-current assets and disposal groups held for sale

HSBC classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying amounts will be

recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or disposal group

must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or

disposal groups), and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be committed

to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been initiated. Further,

the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale

should be expected to qualify as a completed sale within one year from the date of classification and actions required to complete the plan should

indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Held for sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those

assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset (or

disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write-down of the asset or disposal

group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in scope of

IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group, and then to the other non-current

assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any impairment loss in

excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total assets of the disposal

group.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **312** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

2Net fee income

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Net fee income by global business | Net fee income by global business | Net fee income by global business | Net fee income by global business | Net fee income by global business | Net fee income by global business | Net fee income by global business |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong Kong** | **UK** | **CIB** | **IWPB** | **Corporate** <br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Funds under management | **122** | **68** | **612** | **2008** | **—** | **2810** |
| Cards | **933** | **812** | **174** | **1009** | **—** | **2928** |
| Credit facilities | **54** | **239** | **1098** | **62** | **—** | **1453** |
| Broking income | **587** | **34** | **674** | **237** | **—** | **1532** |
| Account services | **181** | **338** | **732** | **218** | **—** | **1469** |
| Unit trusts | **424** | **—** | **2** | **936** | **—** | **1362** |
| Underwriting | **—** | **—** | **752** | **—** | **—** | **752** |
| Global custody | **104** | **—** | **823** | **37** | **—** | **964** |
| Remittances | **214** | **40** | **586** | **41** | **—** | **881** |
| Imports/exports | **158** | **43** | **374** | **—** | **—** | **575** |
| Insurance agency commission | **64** | **18** | **2** | **331** | **—** | **415** |
| Other | **858** | **699** | **3469** | **1093** | **(3652)** | **2467** |
| **Fee income** | **3699** | **2291** | **9298** | **5972** | **(3652)** | **17608** |
| Less: fee expense | **(923)** | **(487)** | **(4809)** | **(1709)** | **3663** | **(4265)** |
| **Net fee income**  | **2776** | **1804** | **4489** | **4263** | **11** | **13343** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| Funds under management | 108 | 68 | 511 | 1752 |  | 2439 |
| Cards | 907 | 754 | 156 | 1026 |  | 2843 |
| Credit facilities | 62 | 207 | 1093 | 66 |  | 1428 |
| Broking income | 322 | 33 | 723 | 212 |  | 1290 |
| Account services | 177 | 354 | 721 | 247 |  | 1499 |
| Unit trusts | 382 |  | 1 | 688 |  | 1071 |
| Underwriting |  |  | 691 |  |  | 691 |
| Global custody | 90 |  | 707 | 34 |  | 831 |
| Remittances | 196 | 43 | 544 | 42 |  | 825 |
| Imports/exports | 158 | 38 | 449 |  |  | 645 |
| Insurance agency commission | 66 | 20 | 2 | 259 |  | 347 |
| Other | 699 | 728 | 3199 | 899 | (3168) | 2357 |
| Fee income | 3167 | 2245 | 8797 | 5225 | (3168) | 16266 |
| Less: fee expense | (862) | (424) | (4452) | (1368) | 3141 | (3965) |
| Net fee income | 2305 | 1821 | 4345 | 3857 | (27) | 12301 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
| Funds under management | 98 | 64 | 551 | 1660 |  | 2373 |
| Cards | 888 | 724 | 152 | 1012 |  | 2776 |
| Credit facilities | 83 | 182 | 1240 | 69 |  | 1574 |
| Broking income | 271 | 34 | 609 | 163 |  | 1077 |
| Account services | 173 | 337 | 728 | 299 |  | 1537 |
| Unit trusts | 281 |  | 1 | 456 |  | 738 |
| Underwriting |  |  | 586 |  |  | 586 |
| Global custody | 86 |  | 732 | 46 |  | 864 |
| Remittances | 183 | 40 | 544 | 55 | 1 | 823 |
| Imports/exports | 155 | 35 | 434 |  |  | 624 |
| Insurance agency commission | 76 | 13 | 2 | 207 |  | 298 |
| Other | 555 | 696 | 2893 | 908 | (2706) | 2346 |
| Fee income | 2849 | 2125 | 8472 | 4875 | (2705) | 15616 |
| Less: fee expense | (818) | (353) | (3988) | (1325) | 2713 | (3771) |
| Net fee income | 2031 | 1772 | 4484 | 3550 | 8 | 11845 |

---

Net fee income included $6.8bn of fees earned on financial assets that were not at fair value through profit or loss, other than amounts included in

determining the effective interest rate (2024: $6.8bn; 2023: $7.0bn), $2.0bn of fees payable on financial liabilities that were not at fair value through

profit or loss, other than amounts included in determining the effective interest rate (2024: $2.0bn; 2023: $1.9bn), $4.0bn of fees earned on trust

and other fiduciary activities (2024: $3.5bn; 2023: $3.5bn) and $0.5bn of fees payable relating to trust and other fiduciary activities (2024: $0.4bn;

2023: $0.3bn).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **313** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

3Net income/(expense) from financial instruments measured at fair value

through profit or loss

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Net income/(expense) arising on:** |  |  |  |
| Net trading activities | **24345** | 23186 | 20391 |
| Other instruments managed on a fair value basis | **(4663)** | (2070) | (3730) |
| **Net income from financial instruments held for trading or managed on a fair value basis** | **19682** | 21116 | 16661 |
| Financial assets held to meet liabilities under insurance and investment contracts | **11612** | 6210 | 8086 |
| Liabilities to customers under investment contracts | **(437)** | (309) | (199) |
| **Net income/(expense) from assets and liabilities of insurance businesses, including related** <br>**derivatives, measured at fair value through profit or loss**<br>| **11175** | 5901 | 7887 |

---

HSBC Holdings

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Net income/(expense) arising on:** |  |  |  |
| Net trading activities | **(1709)** | 984 | (546) |
| Other instruments managed on a fair value basis | **1891** | 1915 | 1609 |
| **Net income from financial instruments held for trading or managed on a fair value basis** | **182** | 2899 | 1063 |
| Derivatives managed in conjunction with HSBC Holdings-issued debt securities | **212** | 93 | 426 |
| Other changes in fair value | **(1253)** | (218) | (1894) |
| **Changes in fair value of designated debt and related derivatives** | **(1041)** | (125) | (1468) |
| **Changes in fair value of other financial instruments mandatorily measured at fair value through profit** <br>**or loss**<br>| **2835** | 2086 | 3692 |
| **Year ended 31 Dec** | **1976** | 4860 | 3287 |

---

---

| | |
|:---|:---|
| 4 | Insurance business |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Insurance service result | Insurance service result | Insurance service result | Insurance service result | Insurance service result | Insurance service result | Insurance service result |  |  |  |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Life direct** <br>**participating** <br>**and** <br>**investment** <br>**DPF contracts**<sup>1</sup><br>| **Life other** <br>**contracts**<sup>2</sup><br>| **Total** | Life direct <br>participating <br>and <br>investment <br>DPF contracts<sup>1</sup><br>| Life other <br>contracts<sup>2</sup><br>| Total | Life direct <br>participating <br>and <br>investment <br>DPF contracts<sup>1</sup><br>| Life other <br>contracts<sup>2</sup><br>| Total |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m |
| **Insurance revenue** |  |  |  |  |  |  |  |  |  |
| Amounts relating to changes in <br>liabilities for remaining coverage<br>| **2212** | **619** | **2831** | 1890 | 566 | 2456 | 1626 | 470 | 2096 |
| – Contractual service margin <br>recognised for services provided<br>| **1428** | **165** | **1593** | 1143 | 188 | 1331 | 975 | 151 | 1126 |
| – Change in risk adjustment for <br>non-financial risk for risk expired<br>| **46** | **19** | **65** | 46 | 20 | 66 | 21 | 15 | 36 |
| – Expected incurred claims and <br>other insurance service expenses<br>| **734** | **435** | **1169** | 698 | 358 | 1056 | 594 | 304 | 898 |
| – Other | **4** | **—** | **4** | 3 |  | 3 | 36 |  | 36 |
| Recovery of insurance acquisition <br>cash flows<br>| **285** | **112** | **397** | 195 | 101 | 296 | 109 | 54 | 163 |
| **Total insurance revenue** | **2497** | **731** | **3228** | 2085 | 667 | 2752 | 1735 | 524 | 2259 |
| **Insurance service expenses** |  |  |  |  |  |  |  |  |  |
| Incurred claims and other insurance <br>service expenses<br>| **(488)** | **(418)** | **(906)** | (616) | (428) | (1044) | (615) | (292) | (907) |
| Losses and reversal of losses on <br>onerous contracts<br>| **(36)** | **(51)** | **(87)** | (50) | (73) | (123) | (32) | (77) | (109) |
| Amortisation of insurance <br>acquisition cash flows<br>| **(285)** | **(112)** | **(397)** | (195) | (101) | (296) | (109) | (54) | (163) |
| Adjustments to liabilities for incurred <br>claims<br>| **(7)** | **(6)** | **(13)** | (6) | 27 | 21 | (1) | (1) | (2) |
| **Total insurance service expenses** | **(816)** | **(587)** | **(1403)** | (867) | (575) | (1442) | (757) | (424) | (1181) |
| **Total insurance service result**<sup>3</sup> | **1681** | **144** | **1825** | 1218 | 92 | 1310 | 978 | 100 | 1078 |

---

1'Life direct participating and investment DPF contracts' are substantially measured under the variable fee approach measurement model.

2'Life other contracts' are measured under the general measurement model.

3'Total insurance service result' includes $0.2bn (2024: nil; 2023: nil) earned by HSBC Life (UK) Limited and HSBC Assurances Vie (France) while they were

classified as held for sale. For further details, see Note 23.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **314** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Net investment return | Net investment return | Net investment return | Net investment return | Net investment return | Net investment return | Net investment return |  |  |  |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Life direct** <br>**participating** <br>**and** <br>**investment** <br>**DPF contracts**<br>| **Life other** <br>**contracts**<br>| **Total** | Life direct <br>participating<br>and <br>investment <br>DPF contracts<br>| Life other <br>contracts<br>| Total | Life direct <br>participating<br>and <br>investment <br>DPF contracts<br>| Life other <br>contracts<br>| Total |
|  | **$m** | **$m** | **$m** | $m | $m | $m | $m | $m | $m |
| **Investment return** |  |  |  |  |  |  |  |  |  |
| Amounts recognised in profit or loss<sup>1</sup> | **11097** | **79** | **11176** | 5644 | 273 | 5917 | 7663 | 214 | 7877 |
| Amounts recognised in OCI | **(7)** | **—** | **(7)** | 185 |  | 185 | 493 |  | 493 |
| **Total investment return** <br>**(memorandum)**<br>| **11090** | **79** | **11169** | 5829 | 273 | 6102 | 8156 | 214 | 8370 |
| **Net finance expense** |  |  |  |  |  |  |  |  |  |
| Changes in fair value of underlying <br>items of direct participating contracts<br>| **(11020)** | **—** | **(11020)** | (5805) |  | (5805) | (7995) |  | (7995) |
| Effect of risk mitigation option | **(175)** | **—** | **(175)** | 44 |  | 44 | (35) |  | (35) |
| Interest accreted | **—** | **(112)** | **(112)** |  | (110) | (110) |  | (127) | (127) |
| Effect of changes in interest rates and <br>other financial assumptions<br>| **—** | **124** | **124** |  | (298) | (298) | (12) | (121) | (133) |
| Effect of measuring changes in <br>estimates at current rates and adjusting <br>the CSM at rates on initial recognition<br>| **—** | **(7)** | **(7)** |  |  |  |  | (10) | (10) |
| **Total net finance expense from** <br>**insurance contracts**<sup>2</sup><br>| **(11195)** | **5** | **(11190)** | (5761) | (408) | (6169) | (8042) | (258) | (8300) |
| **Represented by:** |  |  |  |  |  |  |  |  |  |
| Amounts recognised in profit or loss | **(11202)** | **5** | **(11197)** | (5570) | (408) | (5978) | (7551) | (258) | (7809) |
| Amounts recognised in OCI | **7** | **—** | **7** | (191) |  | (191) | (491) |  | (491) |
| **Total net investment return** | **(105)** | **84** | **(21)** | 68 | (135) | (67) | 114 | (44) | 70 |
| **Represented by:** |  |  |  |  |  |  |  |  |  |
| Amounts recognised in profit or loss | **(105)** | **84** | **(21)** | 74 | (135) | (61) | 112 | (44) | 68 |
| Amounts recognised in OCI | **—** | **—** | **—** | (6) |  | (6) | 2 |  | 2 |

---

1Total Group 'Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss' of

$11.2bn gain (2024: $5.9bn gain; 2023: $7.9bn gain) includes returns on assets and liabilities supporting insurance policies of $11.0bn (2024: $5.7bn gain; 2023:

$7.6bn gain) and on shareholder assets of $0.2bn (2024: $0.2bn gain; 2023: $0.3bn gain).

2'Total net finance expense from insurance contracts' includes $1.4bn (2024: nil; 2023: nil) incurred by HSBC Life (UK) Limited and HSBC Assurances Vie (France)

while they were classified as held for sale. For further details, see Note 23.

---

| | | |
|:---|:---|:---|
| Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive <br>income – assets supporting contracts measured under the modified retrospective approach | Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive <br>income – assets supporting contracts measured under the modified retrospective approach | Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive <br>income – assets supporting contracts measured under the modified retrospective approach |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Balance at 1 Jan** | **(736)** | (670) |
| Net change in fair value | **(13)** | (153) |
| Net amount reclassified to profit or loss | **—** | 3 |
| Related income tax | **4** | 39 |
| Disposal of subsidiary<sup>1</sup> | **592** |  |
| Foreign exchange and other | **153** | 45 |
| **Balance at 31 Dec** | **—** | (736) |

---

1HSBC Assurances Vie (France) was sold on 31 October 2025. For further details, see Note 23.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **315** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Life direct participating and investment DPF** <br>**contracts** | **Life direct participating and investment DPF** <br>**contracts** | **Life direct participating and investment DPF** <br>**contracts** | **Life direct participating and investment DPF** <br>**contracts** | **Life other contracts** | **Life other contracts** | **Life other contracts** | **Life other contracts** |  |
|  | **Liabilities for remaining** <br>**coverage:** | **Liabilities for remaining** <br>**coverage:** |  |  | **Liabilities for remaining** <br>**coverage:** | **Liabilities for remaining** <br>**coverage:** |  |  |  |
|  | **Excluding** <br>**loss** <br>**component**<br>| **Loss** <br>**component**<br>| **Incurred** <br>**claims**<br>| **Total** | **Excluding** <br>**loss** <br>**component**<br>| **Loss** <br>**component**<br>| **Incurred** <br>**claims**<br>| **Total** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Opening assets | **(16)** | **1** | **1** | **(14)** | **(177)** | **(13)** | **72** | **(118)** | **(132)** |
| Opening liabilities | **103045** | **146** | **223** | **103414** | **3748** | **224** | **243** | **4215** | **107629** |
| **Net opening balance at 1 Jan** | **103029** | **147** | **224** | **103400** | **3571** | **211** | **315** | **4097** | **107497** |
| **Changes in the consolidated income** <br>**statement and statement of** <br>**comprehensive income**<sup>1</sup><br>|  |  |  |  |  |  |  |  |  |
| **Insurance revenue** |  |  |  |  |  |  |  |  |  |
| Contracts under the fair value approach<sup>2</sup> | **(668)** | **—** | **—** | **(668)** | **(153)** | **—** | **—** | **(153)** | **(821)** |
| Contracts under the modified <br>retrospective approach<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Other contracts<sup>3</sup> | **(1573)** | **—** | **—** | **(1573)** | **(478)** | **—** | **—** | **(478)** | **(2051)** |
| **Total insurance revenue** | **(2241)** | **—** | **—** | **(2241)** | **(631)** | **—** | **—** | **(631)** | **(2872)** |
| **Insurance service expenses** |  |  |  |  |  |  |  |  |  |
| Incurred claims and other insurance <br>service expenses<br>| **—** | **(8)** | **413** | **405** | **—** | **(34)** | **377** | **343** | **748** |
| Amortisation of insurance acquisition <br>cash flows<br>| **281** | **—** | **—** | **281** | **103** | **—** | **—** | **103** | **384** |
| Losses and reversal of losses on <br>onerous contracts<br>| **—** | **39** | **—** | **39** | **—** | **41** | **—** | **41** | **80** |
| Adjustments to liabilities for incurred <br>claims<br>| **—** | **—** | **7** | **7** | **—** | **—** | **18** | **18** | **25** |
| **Total insurance service expenses** | **281** | **31** | **420** | **732** | **103** | **7** | **395** | **505** | **1237** |
| Investment components | **(7864)** | **—** | **7864** | **—** | **(893)** | **—** | **893** | **—** | **—** |
| **Insurance service result** | **(9824)** | **31** | **8284** | **(1509)** | **(1421)** | **7** | **1288** | **(126)** | **(1635)** |
| Net finance expense from insurance <br>contracts<sup>4</sup><br>| **9812** | **—** | **—** | **9812** | **(7)** | **2** | **—** | **(5)** | **9807** |
| Effect of movements in exchange rates | **999** | **10** | **8** | **1017** | **115** | **10** | **27** | **152** | **1169** |
| **Total changes in the consolidated** <br>**income statement and statement of** <br>**comprehensive income**<br>| **987** | **41** | **8292** | **9320** | **(1313)** | **19** | **1315** | **21** | **9341** |
| **Cash flows** |  |  |  |  |  |  |  |  |  |
| Premiums received | **19125** | **—** | **—** | **19125** | **2001** | **—** | **—** | **2001** | **21126** |
| Claims, other insurance service <br>expenses paid and other cash flows<br>| **53** | **—** | **(8430)** | **(8377)** | **3** | **—** | **(1278)** | **(1275)** | **(9652)** |
| Insurance acquisition cash flows | **(1109)** | **—** | **—** | **(1109)** | **(106)** | **—** | **—** | **(106)** | **(1215)** |
| **Total cash flows** | **18069** | **—** | **(8430)** | **9639** | **1898** | **—** | **(1278)** | **620** | **10259** |
| Other movements<sup>5</sup> | **(4128)** | **(13)** | **4** | **(4137)** | **(48)** | **(3)** | **(72)** | **(123)** | **(4260)** |
| **Net closing balance at 31 Dec** | **117957** | **175** | **90** | **118222** | **4108** | **227** | **280** | **4615** | **122837** |
| Closing assets | **(12)** | **—** | **—** | **(12)** | **(193)** | **47** | **40** | **(106)** | **(118)** |
| Closing liabilities | **117969** | **175** | **90** | **118234** | **4301** | **180** | **240** | **4721** | **122955** |
| **Net closing balance at 31 Dec** | **117957** | **175** | **90** | **118222** | **4108** | **227** | **280** | **4615** | **122837** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **316** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | Life direct participating and investment DPF <br>contracts | Life direct participating and investment DPF <br>contracts | Life direct participating and investment DPF <br>contracts | Life direct participating and investment DPF <br>contracts | Life other contracts | Life other contracts | Life other contracts | Life other contracts |  |
|  | Liabilities for remaining <br>coverage: | Liabilities for remaining <br>coverage: |  |  | Liabilities for remaining <br>coverage: | Liabilities for remaining <br>coverage: |  |  |  |
|  | Excluding <br>loss <br>component<br>| Loss <br>component<br>| Incurred <br>claims<br>| Total | Excluding <br>loss <br>component<br>| Loss <br>component<br>| Incurred <br>claims<br>| Total | Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Opening assets | (15) | 1 | 1 | (13) | (279) | (16) | 56 | (239) | (252) |
| Opening liabilities | 116546 | 121 | 370 | 117037 | 3400 | 191 | 223 | 3814 | 120851 |
| Net opening balance at 1 Jan | 116531 | 122 | 371 | 117024 | 3121 | 175 | 279 | 3575 | 120599 |
| Changes in the consolidated income <br>statement and statement of comprehensive <br>income<sup>1</sup><br>|  |  |  |  |  |  |  |  |  |
| Insurance revenue |  |  |  |  |  |  |  |  |  |
| Contracts under the fair value approach<sup>2</sup> | (715) |  |  | (715) | (217) |  |  | (217) | (932) |
| Contracts under the modified retrospective <br>approach<br>| (141) |  |  | (141) | (18) |  |  | (18) | (159) |
| Other contracts<sup>3</sup> | (1229) |  |  | (1229) | (432) |  |  | (432) | (1661) |
| Total insurance revenue | (2085) |  |  | (2085) | (667) |  |  | (667) | (2752) |
| Insurance service expenses |  |  |  |  |  |  |  |  |  |
| Incurred claims and other insurance service <br>expenses<br>|  | (7) | 623 | 616 |  | (49) | 477 | 428 | 1044 |
| Amortisation of insurance acquisition cash <br>flows<br>| 195 |  |  | 195 | 101 |  |  | 101 | 296 |
| Losses and reversal of losses on onerous <br>contracts<br>|  | 50 |  | 50 |  | 73 |  | 73 | 123 |
| Adjustments to liabilities for incurred claims |  |  | 6 | 6 |  |  | (27) | (27) | (21) |
| Total insurance service expenses | 195 | 43 | 629 | 867 | 101 | 24 | 450 | 575 | 1442 |
| Investment components | (8284) |  | 8284 |  | (1058) |  | 1058 |  |  |
| Insurance service result | (10174) | 43 | 8913 | (1218) | (1624) | 24 | 1508 | (92) | (1310) |
| Net finance expense from insurance <br>contracts<sup>4</sup><br>| 5720 | 41 |  | 5761 | 405 | 3 |  | 408 | 6169 |
| Effect of movements in exchange rates | (1162) | (5) | (9) | (1176) | (76) | 1 | (24) | (99) | (1275) |
| Total changes in the consolidated income <br>statement and statement of comprehensive <br>income<br>| (5616) | 79 | 8904 | 3367 | (1295) | 28 | 1484 | 217 | 3584 |
| Cash flows |  |  |  |  |  |  |  |  |  |
| Premiums received | 16442 |  |  | 16442 | 1950 |  |  | 1950 | 18392 |
| Claims, other insurance service expenses <br>paid and other cash flows<br>| 2 |  | (9020) | (9018) | 2 |  | (1508) | (1506) | (10524) |
| Insurance acquisition cash flows | (835) |  |  | (835) | (260) |  |  | (260) | (1095) |
| Total cash flows | 15609 |  | (9020) | 6589 | 1692 |  | (1508) | 184 | 6773 |
| Other movements<sup>5</sup> | (23495) | (54) | (31) | (23580) | 53 | 8 | 60 | 121 | (23459) |
| Net closing balance at 31 Dec | 103029 | 147 | 224 | 103400 | 3571 | 211 | 315 | 4097 | 107497 |
| Closing assets | (16) | 1 | 1 | (14) | (177) | (13) | 72 | (118) | (132) |
| Closing liabilities | 103045 | 146 | 223 | 103414 | 3748 | 224 | 243 | 4215 | 107629 |
| Net closing balance at 31 Dec | 103029 | 147 | 224 | 103400 | 3571 | 211 | 315 | 4097 | 107497 |

---

1'Changes in the consolidated income statement and statement of comprehensive income' excludes 'insurance service result' gains of $0.2bn (2024: nil) and 'net

insurance finance expense' losses of $1.4bn (2024: nil) reported in the consolidated income statement and statement of comprehensive income in respect of

businesses classified as held for sale.

2On transition to IFRS 17 the Group applied the full retrospective approach to new business written from 2018 at the earliest. Where applying the full

retrospective approach was impracticable, the Group primarily applied the fair value approach.

3'Other contracts' are those contracts measured by applying IFRS 17 from inception of the contracts. These include contracts measured under the full

retrospective approach at transition and contracts incepted after transition.

4'Net finance expense from insurance contracts' expense of $9.8bn (2024: $6.2bn expense) comprises expense of $9.8bn (2024: $6.0bn expense) recognised in

the income statement and expense of nil (2024: $0.2bn expense) recognised in other comprehensive income.

5The 'Other movements' reduction of $4.3bn (2024: $23.5bn reduction) in insurance contracts includes $4.4bn in respect of HSBC Life (UK) Limited which was

classified as held for sale in 2025 (2024: $21.8bn in respect of HSBC Assurances Vie (France), which was classified as held for sale in 2024 with the sale

completing on 31 October 2025). For further details, see Note 23.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **317** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component | Movements in carrying amounts of insurance contracts – analysis by measurement component |  |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Life direct participating and investment DPF contracts** | **Life direct participating and investment DPF contracts** | **Life direct participating and investment DPF contracts** | **Life direct participating and investment DPF contracts** | **Life direct participating and investment DPF contracts** | **Life other contracts** | **Life other contracts** | **Life other contracts** | **Life other contracts** | **Life other contracts** |  |
|  | **Estimates of** <br>**present** <br>**value of** <br>**future cash** <br>**flows and** <br>**risk** <br>**adjustment** | **Contractual service margin** | **Contractual service margin** | **Contractual service margin** |  | **Estimates of** <br>**present** <br>**value of** <br>**future cash** <br>**flows and** <br>**risk** <br>**adjustment** | **Contractual service margin** | **Contractual service margin** | **Contractual service margin** |  |  |
|  | **Estimates of** <br>**present** <br>**value of** <br>**future cash** <br>**flows and** <br>**risk** <br>**adjustment** | **Contracts** <br>**under the** <br>**fair value** <br>**approach**<br>| **Contracts** <br>**under the** <br>**modified** <br>**retros-**<br>**pective** <br>**approach**<br>| **Other** <br>**contracts**<br>| **Total** | **Estimates of** <br>**present** <br>**value of** <br>**future cash** <br>**flows and** <br>**risk** <br>**adjustment** | **Contracts** <br>**under the** <br>**fair value** <br>**approach**<br>| **Contracts** <br>**under the** <br>**modified** <br>**retros-**<br>**pective** <br>**approach** <br>| **Other** <br>**contracts**<br>| **Total** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Opening assets | **(27)** | **3** | **—** | **10** | **(14)** | **(359)** | **73** | **—** | **168** | **(118)** | **(132)** |
| Opening liabilities | **91498** | **4500** | **—** | **7416** | **103414** | **3669** | **280** | **—** | **266** | **4215** | **107629** |
| **Net opening balance at** <br>**1 Jan**<br>| **91471** | **4503** | **—** | **7426** | **103400** | **3310** | **353** | **—** | **434** | **4097** | **107497** |
| **Changes in the** <br>**consolidated income** <br>**statement and statement** <br>**of comprehensive income**<br>|  |  |  |  |  |  |  |  |  |  |  |
| **Changes that relate to** <br>**current services**<br>|  |  |  |  |  |  |  |  |  |  |  |
| Contractual service margin <br>recognised for services <br>provided<br>| **—** | **(502)** | **—** | **(846)** | **(1348)** | **—** | **(38)** | **—** | **(106)** | **(144)** | **(1492)** |
| Change in risk adjustment for <br>non-financial risk expired<br>| **(36)** | **—** | **—** | **—** | **(36)** | **(17)** | **—** | **—** | **—** | **(17)** | **(53)** |
| Experience adjustments | **(167)** | **—** | **—** | **—** | **(167)** | **(24)** | **—** | **—** | **—** | **(24)** | **(191)** |
| Other movements <br>recognised in insurance <br>service result<br>| **—** | **17** | **—** | **(21)** | **(4)** | **—** | **—** | **—** | **—** | **—** | **(4)** |
| **Changes that relate to** <br>**future services**<br>|  |  |  |  | **—** |  |  |  |  | **—** |  |
| Contracts initially recognised <br>in the year<br>| **(3556)** | **—** | **—** | **3564** | **8** | **(183)** | **—** | **—** | **189** | **6** | **14** |
| Changes in estimates that <br>adjust the contractual service <br>margin<sup>1</sup><br>| **(578)** | **285** | **—** | **293** | **—** | **(31)** | **(20)** | **—** | **51** | **—** | **—** |
| Changes in estimates that <br>result in losses and reversal <br>of losses on onerous <br>contracts<br>| **31** | **—** | **—** | **—** | **31** | **35** | **—** | **—** | **—** | **35** | **66** |
| **Changes that relate to past** <br>**services**<br>|  |  |  |  |  |  |  |  |  |  |  |
| Adjustments to liabilities for <br>incurred claims<br>| **7** | **—** | **—** | **—** | **7** | **18** | **—** | **—** | **—** | **18** | **25** |
| **Insurance service result** | **(4299)** | **(200)** | **—** | **2990** | **(1509)** | **(202)** | **(58)** | **—** | **134** | **(126)** | **(1635)** |
| Net finance expense from <br>insurance contracts<br>| **9812** | **—** | **—** | **—** | **9812** | **(35)** | **6** | **—** | **24** | **(5)** | **9807** |
| Other movements <br>recognised in the statement <br>of profit or loss<br>| **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Effect of movements in <br>exchange rates<br>| **934** | **43** | **—** | **40** | **1017** | **106** | **17** | **—** | **29** | **152** | **1169** |
| **Total changes in the** <br>**consolidated income** <br>**statement and statement** <br>**of comprehensive income**<br>| **6447** | **(157)** | **—** | **3030** | **9320** | **(131)** | **(35)** | **—** | **187** | **21** | **9341** |
| **Cash flows** |  |  |  |  |  |  |  |  |  |  |  |
| Premiums received  | **19125** | **—** | **—** | **—** | **19125** | **2001** | **—** | **—** | **—** | **2001** | **21126** |
| Claims, other insurance <br>service expenses paid and <br>other cash flows<br>| **(8377)** | **—** | **—** | **—** | **(8377)** | **(1275)** | **—** | **—** | **—** | **(1275)** | **(9652)** |
| Insurance acquisition cash <br>flows<br>| **(1109)** | **—** | **—** | **—** | **(1109)** | **(106)** | **—** | **—** | **—** | **(106)** | **(1215)** |
| **Total cash flows** | **9639** | **—** | **—** | **—** | **9639** | **620** | **—** | **—** | **—** | **620** | **10259** |
| Other movements | **(4058)** | **4** | **—** | **(83)** | **(4137)** | **(1)** | **(71)** | **—** | **(51)** | **(123)** | **(4260)** |
| **Net closing balance at** <br>**31 Dec**<br>| **103499** | **4350** | **—** | **10373** | **118222** | **3798** | **247** | **—** | **570** | **4615** | **122837** |
| Closing assets | **(21)** | **2** | **—** | **7** | **(12)** | **(253)** | **27** | **—** | **120** | **(106)** | **(118)** |
| Closing liabilities | **103520** | **4348** | **—** | **10366** | **118234** | **4051** | **220** | **—** | **450** | **4721** | **122955** |
| **Net closing balance at** <br>**31 Dec**<br>| **103499** | **4350** | **—** | **10373** | **118222** | **3798** | **247** | **—** | **570** | **4615** | **122837** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **318** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) |  |
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | Life direct participating and investment DPF contracts | Life direct participating and investment DPF contracts | Life direct participating and investment DPF contracts | Life direct participating and investment DPF contracts | Life direct participating and investment DPF contracts | Life other contracts | Life other contracts | Life other contracts | Life other contracts | Life other contracts |  |
|  | Estimates <br>of present <br>value of <br>future cash <br>flows and <br>risk <br>adjustment | Contractual service margin | Contractual service margin | Contractual service margin |  | Estimates <br>of present <br>value of <br>future cash <br>flows and <br>risk <br>adjustment | Contractual service margin | Contractual service margin | Contractual service margin |  |  |
|  | Estimates <br>of present <br>value of <br>future cash <br>flows and <br>risk <br>adjustment | Contracts <br>under the <br>fair value <br>approach<br>| Contracts <br>under the <br>modified <br>retros-<br>pective <br>approach<br>| Other <br>contracts<br>| Total | Estimates <br>of present <br>value of <br>future cash <br>flows and <br>risk <br>adjustment | Contracts <br>under the <br>fair value <br>approach<br>| Contracts <br>under the <br>modified <br>retros-<br>pective <br>approach <br>| Other <br>contracts<br>| Total | Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Opening assets | (30) | 3 |  | 14 | (13) | (339) | 36 |  | 64 | (239) | (252) |
| Opening liabilities | 106440 | 4679 | 715 | 5203 | 117037 | 3113 | 361 | 19 | 321 | 3814 | 120851 |
| Net opening balance at 1 Jan | 106410 | 4682 | 715 | 5217 | 117024 | 2774 | 397 | 19 | 385 | 3575 | 120599 |
| Changes in the consolidated income <br>statement and statement of <br>comprehensive income<br>|  |  |  |  |  |  |  |  |  |  |  |
| Changes that relate to current <br>services<br>|  |  |  |  |  |  |  |  |  |  |  |
| Contractual service margin <br>recognised for services provided<br>|  | (488) | (59) | (596) | (1143) |  | (77) | (6) | (105) | (188) | (1331) |
| Change in risk adjustment for non-<br>financial risk expired<br>| (46) |  |  |  | (46) | (20) |  |  |  | (20) | (66) |
| Experience adjustments | (82) |  |  |  | (82) | 70 |  |  |  | 70 | (12) |
| Other movements recognised in <br>insurance service result<br>|  | 52 |  | (55) | (3) |  |  |  |  |  | (3) |
| Changes that relate to future <br>services<br>|  |  |  |  |  |  |  |  |  |  |  |
| Contracts initially recognised in the <br>year<br>| (2384) |  |  | 2400 | 16 | (201) |  |  | 220 | 19 | 35 |
| Changes in estimates that adjust <br>contractual service margin<sup>1</sup><br>| (914) | 229 | (6) | 691 |  | (7) | 30 | 7 | (30) |  |  |
| Changes in estimates that result in <br>losses and reversal of losses on <br>onerous contracts<br>| 34 |  |  |  | 34 | 54 |  |  |  | 54 | 88 |
| Changes that relate to past services |  |  |  |  |  |  |  |  |  |  |  |
| Adjustments to liabilities for incurred <br>claims<br>| 6 |  |  |  | 6 | (27) |  |  |  | (27) | (21) |
| Insurance service result | (3386) | (207) | (65) | 2440 | (1218) | (131) | (47) | 1 | 85 | (92) | (1310) |
| Net finance expense from insurance <br>contracts<br>| 5761 |  |  |  | 5761 | 380 | 12 |  | 16 | 408 | 6169 |
| Other movements recognised in the <br>statement of profit or loss<br>|  |  |  |  |  |  |  |  |  |  |  |
| Effect of movements in exchange <br>rates<br>| (1167) | 51 | (24) | (36) | (1176) | (50) | (11) |  | (38) | (99) | (1275) |
| Total changes in the consolidated <br>income statement and statement of <br>comprehensive income<br>| 1208 | (156) | (89) | 2404 | 3367 | 199 | (46) | 1 | 63 | 217 | 3584 |
| Cash flows |  |  |  |  |  |  |  |  |  |  |  |
| Premiums received  | 16442 |  |  |  | 16442 | 1950 |  |  |  | 1950 | 18392 |
| Claims, other insurance service <br>expenses paid and other cash flows<br>| (9018) |  |  |  | (9018) | (1506) |  |  |  | (1506) | (10524) |
| Insurance acquisition cash flows | (835) |  |  |  | (835) | (260) |  |  |  | (260) | (1095) |
| Total cash flows | 6589 |  |  |  | 6589 | 184 |  |  |  | 184 | 6773 |
| Other movements | (22736) | (23) | (626) | (195) | (23580) | 153 | 2 | (20) | (14) | 121 | (23459) |
| Net closing balance at 31 Dec | 91471 | 4503 |  | 7426 | 103400 | 3310 | 353 |  | 434 | 4097 | 107497 |
| Closing assets | (27) | 3 |  | 10 | (14) | (359) | 73 |  | 168 | (118) | (132) |
| Closing liabilities | 91498 | 4500 |  | 7416 | 103414 | 3669 | 280 |  | 266 | 4215 | 107629 |
| Net closing balance at 31 Dec | 91471 | 4503 |  | 7426 | 103400 | 3310 | 353 |  | 434 | 4097 | 107497 |

---

1'Changes in estimates that adjust contractual service margin' increase of $0.6bn (2024: $0.9bn increase) includes an increase of $1.0bn (2024: $0.7bn increase)

from economic factors and a decrease of $0.4bn (2024: $0.3bn increase) from non-economic factors.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **319** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year | Effect of insurance contracts initially recognised in the year |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Profitable** <br>**contracts** <br>**issued**<br>| **Onerous** <br>**contracts** <br>**issued**<br>| **Total** | Profitable <br>contracts <br>issued<br>| Onerous <br>contracts <br>issued<br>| Total |
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| **Life direct participating and investment DPF contracts** |  |  |  |  |  |  |
| Estimates of present value of cash outflows | **19675** | **295** | **19970** | 16878 | 495 | 17373 |
| – insurance acquisition cash flows | **984** | **29** | **1013** | 805 | 38 | 843 |
| – claims and other insurance service expenses payable | **18691** | **266** | **18957** | 16073 | 457 | 16530 |
| Estimates of present value of cash inflows | **(23290)** | **(288)** | **(23578)** | (19326) | (481) | (19807) |
| Risk adjustment for non-financial risk | **51** | **1** | **52** | 48 | 2 | 50 |
| Contractual service margin | **3564** | **—** | **3564** | 2400 |  | 2400 |
| **Losses recognised on initial recognition** | **—** | **(8)** | **(8)** |  | (16) | (16) |
| **Life other contracts** |  |  |  |  |  |  |
| Estimates of present value of cash outflows | **1465** | **183** | **1648** | 1484 | 476 | 1960 |
| – insurance acquisition cash flows | **48** | **19** | **67** | 125 | 65 | 190 |
| – claims and other insurance service expenses payable | **1417** | **164** | **1581** | 1359 | 411 | 1770 |
| Estimates of present value of cash inflows | **(1669)** | **(180)** | **(1849)** | (1731) | (460) | (2191) |
| Risk adjustment for non-financial risk | **15** | **3** | **18** | 27 | 3 | 30 |
| Contractual service margin | **189** | **—** | **189** | 220 |  | 220 |
| **Losses recognised on initial recognition** | **—** | **(6)** | **(6)** |  | (19) | (19) |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin | Present value of expected future cash flows of insurance contract liabilities and contractual service margin |
|  | **Less than** <br>**1 year**<br>| **1–2** <br>**years**<br>| **2–3** <br>**years**<br>| **3–4** <br>**years**<br>| **4–5** <br>**years**<br>| **5–10** <br>**years**<br>| **10–20** <br>**years**<br>| **Over 20** <br>**years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **2025** |  |  |  |  |  |  |  |  |  |
| **Insurance liability future cash flows**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Life direct participating and investment DPF contracts | **(3766)** | **(197)** | **3701** | **3086** | **3567** | **12420** | **17439** | **66799** | **103049** |
| Life other contracts | **70** | **164** | **252** | **45** | **680** | **184** | **103** | **2476** | **3974** |
| **Insurance liability future cash flows at 31 Dec 2025** | **(3696)** | **(33)** | **3953** | **3131** | **4247** | **12604** | **17542** | **69275** | **107023** |
| **Remaining contractual service margin**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Life direct participating and investment DPF contracts | **1312** | **1205** | **1112** | **1024** | **941** | **3631** | **3602** | **1896** | **14723** |
| Life other contracts | **121** | **94** | **77** | **65** | **54** | **173** | **150** | **83** | **817** |
| **Remaining contractual service margin at 31 Dec 2025** | **1433** | **1299** | **1189** | **1089** | **995** | **3804** | **3752** | **1979** | **15540** |
| 2024 |  |  |  |  |  |  |  |  |  |
| Insurance liability future cash flows |  |  |  |  |  |  |  |  |  |
| Life direct participating and investment DPF contracts | (3526) | (455) | 2464 | 2968 | 3219 | 11332 | 22005 | 53120 | 91127 |
| Life other contracts | 971 | (96) | (101) | (53) | 7 | 63 | 279 | 2529 | 3599 |
| Insurance liability future cash flows at 31 Dec 2024 | (2555) | (551) | 2363 | 2915 | 3226 | 11395 | 22284 | 55649 | 94726 |
| Remaining contractual service margin |  |  |  |  |  |  |  |  |  |
| Life direct participating and investment DPF contracts | 1052 | 961 | 880 | 810 | 746 | 2892 | 2954 | 1634 | 11929 |
| Life other contracts | 128 | 104 | 85 | 69 | 53 | 159 | 127 | 62 | 787 |
| Remaining contractual service margin at 31 Dec 2024 | 1180 | 1065 | 965 | 879 | 799 | 3051 | 3081 | 1696 | 12716 |

---

1'Insurance liability future cash flows' and 'Remaining contractual service margin' exclude insurance businesses classified as held for sale (2025: HSBC Life (UK)

Limited; 2024: HSBC Assurances Vie (France)). For further details, see Note 23.

Discount rates

The discount rates applied to expected future cash flows are determined through a bottom-up approach as set out in Note 1.2(k) 'Summary of

material accounting policies – Insurance contracts' on page <u>[301](#i52a8ac564f2d4799b4150f1cfdffa9d2_52)</u>. The blended average of discount rates used within our most material

manufacturing entities are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **HSBC Life (International) Ltd** | **Hang Seng Insurance Co Ltd** | **Hang Seng Insurance Co Ltd** |
|  | **HK$** | $**HK$** | **$** |
| **At 31 Dec 2025** |  |  |  |
| 10-year discount rate (%) | **3.74** | **3.85** | **4.82** |
| 20-year discount rate (%) | **4.09** | **4.20** | **5.59** |
| At 31 Dec 2024 |  |  |  |
| 10-year discount rate (%) | 4.32 | 4.43 | 5.25 |
| 20-year discount rate (%) | 4.42 | 4.53 | 5.60 |

---

Risk adjustment for non-financial risk

The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arise

from non-financial risk. It is calculated as a 75th percentile level of stress over a one-year period. The level of the stress is determined with

reference to external regulatory stresses and internal economic capital stresses.

For the main insurance manufacturing entity in these locations, the one-year 75th percentile level of stress corresponds to the following

percentiles based on an ultimate view of risk over all future years:

–Asia-Pacific (Hong Kong): 59th percentile (2024: 60th percentile).

–Europe (UK): 64th percentile (2024: 60th percentile, for HSBC Assurances Vie (France) that was sold during 2025).

–Latin America (Mexico): 63rd percentile (2024: 64th percentile).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **320** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

5Employee compensation and benefits

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Employee compensation and benefits<sup>1</sup> | **19553** | 18465 | 18220 |
| Capitalised wages and salaries<sup>2</sup> | **1959** | 1688 | 1403 |
| **Gross employee compensation and benefits for the year ended 31 Dec** | **21512** | 20153 | 19623 |
| Consists of: |  |  |  |
| Wages and salaries | **19048** | 17815 | 17359 |
| Social security costs | **1638** | 1487 | 1507 |
| Post-employment benefits | **826** | 851 | 757 |
| **Year ended 31 Dec** | **21512** | 20153 | 19623 |

---

1Employee compensation and benefits are presented in the income statement net of software capitalisation costs and costs included in the insurance contract

fulfilment cash flow liabilities under IFRS 17.

2Comprises $1.4bn (2024: $1.1bn; 2023: $1.0bn) software capitalisation costs and $0.6bn (2024: $0.6bn; 2023: $0.4bn) costs included in the insurance contract

fulfilment cash flow liabilities under IFRS 17.

---

| | | | |
|:---|:---|:---|:---|
| Average number of persons employed by HSBC during the year by business segment<sup>1</sup> | Average number of persons employed by HSBC during the year by business segment<sup>1</sup> | Average number of persons employed by HSBC during the year by business segment<sup>1</sup> | Average number of persons employed by HSBC during the year by business segment<sup>1</sup> |
|  | **2025** | 2024 | 2023 |
| Hong Kong | **33111** | 33820 | 34818 |
| UK | **32177** | 32791 | 32391 |
| Corporate and Institutional Banking | **81940** | 75327 | 75141 |
| International Wealth and Premier Banking | **70674** | 78616 | 84855 |
| Corporate Centre | **369** | 374 | 347 |
| **Year ended 31 Dec** | **218271** | 220928 | 227552 |

---

---

| | | | |
|:---|:---|:---|:---|
| Average number of persons employed by HSBC during the year by legal entity<sup>1</sup> | Average number of persons employed by HSBC during the year by legal entity<sup>1</sup> | Average number of persons employed by HSBC during the year by legal entity<sup>1</sup> | Average number of persons employed by HSBC during the year by legal entity<sup>1</sup> |
|  | **2025** | 2024 | 2023 |
| HSBC UK Bank plc | **19841** | 20034 | 20415 |
| HSBC Bank plc | **10210** | 11456 | 14809 |
| The Hongkong and Shanghai Banking Corporation Limited | **52756** | 54478 | 54321 |
| HSBC Bank Middle East Limited | **3424** | 3344 | 3316 |
| HSBC North America Holdings Inc. | **5680** | 5928 | 6046 |
| HSBC Bank Canada | **—** | 758 | 4354 |
| Grupo Financiero HSBC, S.A. de C.V. | **13382** | 13928 | 14412 |
| Other trading entities<sup>2</sup> | **5419** | 8393 | 9247 |
| Holding companies, shared service centres and intra-Group eliminations | **107559** | 102609 | 100632 |
| **Year ended 31 Dec** | **218271** | 220928 | 227552 |

---

1Average number of persons employed represents the number of persons with contracts of service with the Group. This includes an average number of

temporary persons employed of 6,147 (2024: 6,390; 2023: 7,207). Persons employed comprises individuals in front-line roles, those providing dedicated support

services managed by business segments and an allocation of Corporate Centre individuals in proportion to business usage of shared support services and global

infrastructure. During 2025, certain Operations individuals were transferred from Corporate Centre to business segments for which they provide dedicated

services.

2Other trading entities includes entities located in Türkiye, Egypt and Saudi Arabia.

---

| | | | |
|:---|:---|:---|:---|
| Reconciliation of total incentive awards granted to income statement charge | Reconciliation of total incentive awards granted to income statement charge | Reconciliation of total incentive awards granted to income statement charge | Reconciliation of total incentive awards granted to income statement charge |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Total incentive awards approved for the current year** | **3930** | 3800 | 3774 |
| Less: deferred bonuses awarded, expected to be recognised in future periods | **(430)** | (381) | (353) |
| **Total incentives awarded and recognised in the current year** | **3500** | 3419 | 3421 |
| Add: current year charges for deferred bonuses from previous years | **478** | 439 | 375 |
| Other | **(11)** | (97) | (56) |
| **Income statement charge for incentive awards** | **3967** | 3761 | 3740 |

---

Share-based payments

'Wages and salaries' includes the effect of share-based payments arrangements, of which $608m (2024: $529m; 2023: $482m) was equity

settled, as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Conditional share awards | **650** | 551 | 499 |
| Savings-related and other share award option plans | **18** | 27 | 23 |
| **Year ended 31 Dec** | **668** | 578 | 522 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **321** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| HSBC share awards | HSBC share awards |
| **Award** | **Policy** |
| **Deferred share awards** <br>**(including annual incentive** <br>**awards, long-term incentive** <br>**('LTI') awards delivered in** <br>**shares)** <br>| An assessment of performance over the relevant period ending on 31 December is used to determine the amount of the award <br>to be granted.<br>–Deferred awards generally require employees to remain in employment over the vesting period and are generally not subject <br>to performance conditions after the grant date. An exception to these are LTI awards, which are subject to performance <br>conditions.<br>–Deferred share awards generally vest over a period of three, four, five or seven years.<br>–Vested shares may be subject to a retention requirement post-vesting. <br>–Awards are generally subject to malus and clawback provisions.<br>–LTI is subject to performance conditions.<br>|
| **International Employee Share** <br>**Purchase Plan ('ShareMatch')**<br>| The plan was first introduced in Hong Kong in 2013 and now includes employees based in 30 jurisdictions.<br>–Shares are purchased in the market each quarter up to a maximum value of £750, or the equivalent in local currency.<br>–Matching awards are added at a ratio of one free share for every three purchased. In mainland China, matching awards are <br>settled in cash.<br>–Matching awards vest subject to continued employment and the retention of the purchased shares for a maximum period of <br>two years and nine months.<br>|

---

---

| | | |
|:---|:---|:---|
| Movement on HSBC share awards | Movement on HSBC share awards | Movement on HSBC share awards |
|  | **2025** | 2024 |
|  | **Number** | Number |
|  | **(000s)** | (000s) |
| **Conditional share awards outstanding at 1 Jan** | **133643** | 125023 |
| Additions during the year | **55411** | 84930 |
| Released in the year | **(63652)** | (71849) |
| Forfeited in the year | **(5756)** | (4461) |
| **Conditional share awards outstanding at 31 Dec** | **119646** | 133643 |
| Weighted average fair value of awards granted ($) | **7.11** | 6.08 |

---

---

| | |
|:---|:---|
| HSBC share option plans | HSBC share option plans |
| **Main plans** | **Policy** |
| **Savings-related share option** <br>**plans ('Sharesave')**<br>| –From 2014, employees eligible for the UK plan could save up to £500 per month with the option to use the savings to acquire <br>shares.<br>–These are generally exercisable within six months following either the third or fifth anniversary of the commencement of a <br>three-year or five-year contract, respectively.<br>–The exercise price is set at a 20% (2024: 20%) discount to the market value immediately preceding the date of invitation.<br>|

---

Calculation of fair values

The fair value of a share award is based on the share price at the grant date, adjusted for expected dividend yield (2025: 6.5%; 2024: 6.25%), risk-

free rate (2025: 4.2% p.a.; 2024: 4.2% p.a.) and a simulated market condition factor. The fair values of share options are calculated using a Black-

Scholes model.

---

| | | |
|:---|:---|:---|
| Movement on HSBC share option plans | Movement on HSBC share option plans | Movement on HSBC share option plans |
|  | **Savings-related**<br>**share option plans** | **Savings-related**<br>**share option plans** |
|  | **Number** | **WAEP**<sup>1</sup> |
|  | **(000s)** | **£** |
| **Outstanding at 1 Jan 2025** | **75335** | **3.81** |
| Granted during the year<sup>2</sup> | **11901** | **7.61** |
| Exercised during the year<sup>3</sup> | **(25388)** | **3.00** |
| Expired during the year | **(1633)** | **4.85** |
| Forfeited during the year | **(1313)** | **4.37** |
| **Outstanding at 31 Dec 2025** | **58902** | **4.84** |
| – of which exercisable | **13352** | **2.90** |
| Weighted average remaining contractual life (years) | **1.93** |  |
| Outstanding at 1 Jan 2024 | 83994 | 3.42 |
| Granted during the year<sup>2</sup> | 11845 | 5.30 |
| Exercised during the year<sup>3</sup> | (16776) | 2.94 |
| Expired during the year | (2454) | 4.20 |
| Forfeited during the year | (1274) | 3.48 |
| Outstanding at 31 Dec 2024 | 75335 | 3.81 |
| – of which exercisable | 1446 | 3.34 |
| Weighted average remaining contractual life (years) | 2.10 |  |

---

1Weighted average exercise price.

2The weighted average fair value of options granted during the year was $1.90 (2024: $1.66).

3The weighted average share price at the date the options were exercised was $13.88 (2024: $8.54).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **322** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Post-employment benefit plans

The Group operates pension plans throughout the world for its employees. 'Pension risk management processes' on page 191 contains details of

the policies and practices associated with these pension plans, some of which are defined benefit plans. The largest defined benefit plan is the

HSBC UK section of the HSBC Bank (UK) Pension Scheme ('the principal plan'), created as a result of the HSBC Bank (UK) Pension Scheme being

fully sectionalised in 2018 to meet the requirements of the Banking Reform Act. For further details of how the trustee of the HSBC Bank (UK)

Pension Scheme manages climate risk, see 'Managing climate risk' on page 49.

HSBC holds on its balance sheet the net surplus or deficit, which is the difference between the fair value of plan assets and the discounted value

of scheme liabilities at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable through reduced

contributions in the future or through potential future refunds from the schemes. In assessing whether a surplus is recoverable, HSBC has

considered its current right to obtain a future refund or a reduction in future contributions together with the rights of third parties such as trustees.

The principal plan

The principal plan has a defined benefit section and a defined contribution section. The defined benefit section was closed to future benefit accrual

in 2015, with defined benefits earned by employees at that date continuing to be linked to their salary while they remain employed by HSBC. The

plan is overseen by an independent corporate trustee, who has a fiduciary responsibility for the operation of the plan. Its assets are held separately

from the assets of the Group.

The investment strategy of the plan is to hold the majority of assets in bonds, with the remainder in a diverse range of investments. It also

includes some interest rate swaps to reduce interest rate risk, inflation swaps to reduce inflation risk and longevity swaps to reduce the impact of

longer life expectancy.

The principal plan is subject to the statutory funding objective requirements of the UK Pensions Act 2004, which requires that it be funded to at

least the level of technical provisions (an actuarial estimate of the assets needed to provide for the benefits already built up under the plan). Where

a funding valuation is carried out and identifies a deficit, the employer and trustee are required to agree to a deficit recovery plan.

The latest funding valuation of the plan at 31 December 2022 was carried out by Towers Watson Limited, using the projected unit credit method.

At that date, the market value of the plan's assets was £23.9bn ($28.8bn) and this exceeded the value placed on its liabilities on an ongoing basis

by £3.7bn ($4.4bn), giving a funding level of 118%. These figures include defined contribution assets amounting to £3.0bn ($3.6bn). The main

differences between the assumptions used for assessing the defined benefit liabilities for this funding valuation and those used for IAS 19 are that

an element of prudence is contained in the funding valuation assumptions for discount rate, inflation rate and life expectancy. The funding valuation

is used to judge the amount of cash contributions the Group needs to put into the pension scheme. It will always be different to the IAS 19

accounting surplus, which is an accounting rule concerning employee benefits and shown on the balance sheet of our financial statements. The

next funding valuation will be performed in 2026, with an effective date of 31 December 2025.

The actuary also assessed the value of the liabilities if the plan were to have been stopped and an insurance company asked to secure all future

pension payments. This is generally larger than the amount needed on the ongoing basis described above because an insurance company would

use more prudent assumptions, which would allow for reserves and include an explicit allowance for the future administrative expenses of the

plan. Under this approach, the amount of assets needed was estimated to be £21.3bn ($25.7bn) at 31 December 2022.

The trust deed gives the ability for HSBC UK to take a refund of surplus assets after the plan has been run down such that no further beneficiaries

remain. In assessing whether a surplus is recoverable, HSBC UK has considered its right to obtain a future refund together with the rights of third

parties such as trustees. On this basis, any net surplus in the HSBC UK section of the plan is recognised in HSBC UK's financial statements and

the Group's financial statements.

---

| | | | |
|:---|:---|:---|:---|
| Income statement charge/(credit) | Income statement charge/(credit) | Income statement charge/(credit) | Income statement charge/(credit) |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Defined benefit pension plans | **(227)** | (116) | (151) |
| Defined contribution pension plans | **1015** | 933 | 874 |
| **Pension plans** | **788** | 817 | 723 |
| Defined benefit and contribution healthcare plans | **38** | 34 | 34 |
| **Year ended 31 Dec** | **826** | 851 | 757 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans | Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans | Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans | Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans | Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans |
|  | **Fair value of**<br>**plan assets**<br>| **Present value of defined** <br>**benefit obligations**<br>| **Effect of limit on plan** <br>**surpluses**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** |
| Defined benefit pension plans | **32352** | **(24858)** | **—** | **7494** |
| Defined benefit healthcare plans | **120** | **(439)** | **—** | **(319)** |
| **At 31 Dec 2025** | **32472** | **(25297)** | **—** | **7175** |
| Total employee benefit liabilities (within Note 27 'Accruals, deferred <br>income and other liabilities')<br>|  |  |  | **(1071)** |
| **Total employee benefit assets (within Note 22 'Prepayments,** <br>**accrued income and other assets')**<br>|  |  |  | **8246** |
| Defined benefit pension plans | 30758 | (23959) |  | 6799 |
| Defined benefit healthcare plans | 80 | (348) |  | (268) |
| At 31 Dec 2024 | 30838 | (24307) |  | 6531 |
| Total employee benefit liabilities (within Note 27 'Accruals, deferred <br>income and other liabilities')<br>|  |  |  | (1017) |
| Total employee benefit assets (within Note 22 'Prepayments, <br>accrued income and other assets')<br>|  |  |  | 7548 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **323** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC Holdings

Employee compensation and benefit expense in respect of HSBC Holdings' employees in 2025 amounted to $31m (2024: $29m; 2023: $15m). The

average number of persons employed during 2025 was 23 (2024: 28; 2023: 29). One employee is a member of a defined benefit pension plan. This

employee is a member of the HSBC Bank (UK) Pension Scheme. HSBC Holdings pays contributions to this plan for its own employee in accordance

with the schedules of contributions determined by the trustees of the plan and recognises these contributions as an expense as they fall due.

Defined benefit pension plans

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  | Net asset/(liability) under defined benefit pension plans  |
|  | **Fair value of plan** <br>**assets** | **Fair value of plan** <br>**assets** | **Present value of** <br>**defined benefit** <br>**obligations** | **Present value of** <br>**defined benefit** <br>**obligations** | **Effect of the asset** <br>**ceiling** | **Effect of the asset** <br>**ceiling** | **Net defined benefit** <br>**asset/(liability)** | **Net defined benefit** <br>**asset/(liability)** |
|  | **Principal**<sup>1</sup><br>**plan**<br>| **Other**<br>**plans**<br>| **Principal**<sup>1</sup><br>**plan**<br>| **Other**<br>**plans**<br>| **Principal**<sup>1</sup><br>**plan**<br>| **Other**<br>**plans**<br>| **Principal**<sup>1</sup><br>**plan**<br>| **Other**<br>**plans**<br>|
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **23652** | **7106** | **(17223)** | **(6736)** | **—** | **—** | **6429** | **370** |
| Service cost | **—** | **—** | **(12)** | **(127)** | **—** | **—** | **(12)** | **(127)** |
| – current service cost | **—** | **—** | **(11)** | **(112)** | **—** | **—** | **(11)** | **(112)** |
| – past service cost and gains/(losses) from settlements | **—** | **—** | **(1)** | **(15)** | **—** | **—** | **(1)** | **(15)** |
| Net interest income/(cost) on the net defined benefit asset/<br>(liability)<br>| **1344** | **312** | **(970)** | **(281)** | **—** | **—** | **374** | **31** |
| Remeasurement effects recognised in other <br>comprehensive income<br>| **(469)** | **75** | **324** | **(65)** | **—** | **—** | **(145)** | **10** |
| – return on plan assets (excluding interest income) | **(469)** | **75** | **—** | **—** | **—** | **—** | **(469)** | **75** |
| – actuarial gains/(losses) financial assumptions | **—** | **—** | **464** | **(57)** | **—** | **—** | **464** | **(57)** |
| – actuarial gains/(losses) demographic assumptions | **—** | **—** | **22** | **3** | **—** | **—** | **22** | **3** |
| – actuarial gains/(losses) experience adjustments | **—** | **—** | **(162)** | **(11)** | **—** | **—** | **(162)** | **(11)** |
| – other changes | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Exchange differences | **1631** | **241** | **(1183)** | **(218)** | **—** | **—** | **448** | **23** |
| Benefits paid | **(1116)** | **(530)** | **1116** | **608** | **—** | **—** | **—** | **78** |
| Other movements<sup>2</sup> | **(19)** | **125** | **(20)** | **(71)** | **—** | **—** | **(39)** | **54** |
| **At 31 Dec 2025** | **25023** | **7329** | **(17968)** | **(6890)** | **—** | **—** | **7055** | **439** |
| At 1 Jan 2024 | 26590 | 7307 | (19782) | (7229) |  |  | 6808 | 78 |
| Service cost |  | (1) | (35) | (144) |  |  | (35) | (145) |
| – current service cost |  |  | (9) | (140) |  |  | (9) | (140) |
| – past service cost and losses from settlements |  | (1) | (26) | (4) |  |  | (26) | (5) |
| Net interest income/(cost) on the net defined benefit asset/<br>(liability)<br>| 1213 | 277 | (896) | (265) |  |  | 317 | 12 |
| Remeasurement effects recognised in other <br>comprehensive income<br>| (2665) | (6) | 2156 | 186 |  |  | (509) | 180 |
| – return on plan assets (excluding interest income) | (2665) | (6) |  |  |  |  | (2665) | (6) |
| – actuarial gains/(losses) financial assumptions |  |  | 1771 | 204 |  |  | 1771 | 204 |
| – actuarial gains/(losses) demographic assumptions |  |  | 161 | (5) |  |  | 161 | (5) |
| – actuarial gains/(losses) experience adjustments |  |  | 224 | (13) |  |  | 224 | (13) |
| – other changes |  |  |  |  |  |  |  |  |
| Exchange differences | (387) | (145) | 281 | 191 |  |  | (106) | 46 |
| Benefits paid | (1082) | (496) | 1082 | 561 |  |  |  | 65 |
| Other movements<sup>2</sup> | (17) | 170 | (29) | (36) |  |  | (46) | 134 |
| At 31 Dec 2024 | 23652 | 7106 | (17223) | (6736) |  |  | 6429 | 370 |

---

1For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

2Other movements include contributions by HSBC, contributions by employees, administrative costs and taxes paid by plan.

HSBC expects to make $109m of contributions to defined benefit pension plans during 2026, consisting of $nil for the principal plan and $109m for

other plans. Benefits expected to be paid from the plans to retirees over each of the next five years, and in aggregate for the five years thereafter,

are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Benefits expected to be paid from plans | Benefits expected to be paid from plans | Benefits expected to be paid from plans | Benefits expected to be paid from plans | Benefits expected to be paid from plans | Benefits expected to be paid from plans | Benefits expected to be paid from plans |
|  | 2026 | 2027 | 2028 | 2029 | 2030 | 2031-2035 |
|  | $m | $m | $m | $m | $m | $m |
| The principal plan<sup>1,2</sup> | 1170 | 1203 | 1239 | 1275 | 1313 | 7175 |
| Other plans<sup>1</sup> | 436 | 436 | 437 | 433 | 437 | 2259 |

---

1The duration of the defined benefit obligation is 11.4 years for the principal plan under the disclosure assumptions adopted (2024: 11.8 years) and 9.7 years for

all other plans combined (2024: 9.8 years).

2For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **324** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes | Fair value of plan assets by asset classes |
|  | **31 Dec 2025** | **31 Dec 2025** | **31 Dec 2025** | **31 Dec 2025** | 31 Dec 2024 | 31 Dec 2024 | 31 Dec 2024 | 31 Dec 2024 |
|  | **Value** | **Quoted**<br>**market price**<br>**in active**<br>**market**<br>| **No quoted**<br>**market price**<br>**in active**<br>**market**<br>| **Thereof**<br>**HSBC**<sup>1</sup><br>| Value | Quoted<br>market price<br>in active<br>market<br>| No quoted<br>market price<br>in active<br>market<br>| Thereof<br>HSBC<sup>1</sup><br>|
|  | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **The principal plan**<sup>2</sup> |  |  |  |  |  |  |  |  |
| Fair value of plan assets | **25023** | **13768** | **11255** | **350** | 23652 | 13903 | 9749 | 421 |
| – equities | **58** | **—** | **58** | **—** | 65 |  | 65 |  |
| – bonds fixed income | **5964** | **5471** | **493** | **—** | 5864 | 5372 | 492 |  |
| – bonds index-linked | **7863** | **7863** | **—** | **—** | 8253 | 8253 |  |  |
| – bonds other | **—** | **—** | **—** | **—** |  |  |  |  |
| – derivatives | **300** | **—** | **300** | **350** | 295 |  | 295 | 421 |
| – property | **855** | **—** | **855** | **—** | 833 |  | 833 |  |
| – pooled investment vehicles | **9549** | **—** | **9549** | **—** | 8064 |  | 8064 |  |
| – other | **434** | **434** | **—** | **—** | 278 | 278 |  |  |
| **Other plans** |  |  |  |  |  |  |  |  |
| Fair value of plan assets | **7329** | **5717** | **1612** | **16** | 7106 | 6407 | 699 | 19 |
| – equities | **608** | **608** | **—** | **4** | 587 | 587 |  | 4 |
| – bonds fixed income | **3742** | **3741** | **1** | **3** | 3671 | 3671 |  | 4 |
| – bonds index-linked | **47** | **47** | **—** | **—** | 33 | 33 |  |  |
| – bonds other | **561** | **534** | **27** | **—** | 473 | 473 |  |  |
| – derivatives | **(61)** | **—** | **(61)** | **—** | 2 | (3) | 5 |  |
| – property | **140** | **135** | **5** | **—** | 103 | 98 | 5 |  |
| – other | **2292** | **652** | **1640** | **9** | 2237 | 1548 | 689 | 11 |

---

1The fair value of plan assets includes derivatives entered into with HSBC Bank plc as detailed in Note 36.

2For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

Post-employment defined benefit plans' principal actuarial financial assumptions

HSBC determines the discount rates to be applied to its obligations in consultation with the plans' local actuaries, on the basis of current average

yields of high-quality (AA-rated or equivalent) debt instruments with maturities consistent with those of the defined benefit obligations.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Key actuarial assumptions for the principal plan<sup>1</sup> | Key actuarial assumptions for the principal plan<sup>1</sup> | Key actuarial assumptions for the principal plan<sup>1</sup> | Key actuarial assumptions for the principal plan<sup>1</sup> | Key actuarial assumptions for the principal plan<sup>1</sup> | Key actuarial assumptions for the principal plan<sup>1</sup> |
|  | **Discount**<br> **rate**<br>| **Inflation**<br> **rate (RPI)**<br>| **Inflation**<br> **rate (CPI)**<br>| **Rate of increase**<br> **for pensions**<br>| **Rate of pay**<br> **increase**<br>|
|  | **%** | **%** | **%** | **%** | **%** |
| **UK** |  |  |  |  |  |
| **At 31 Dec 2025** | **5.51** | **3.02** | **2.34** | **2.96** | **3.09** |
| At 31 Dec 2024 | 5.54 | 3.33 | 2.88 | 3.22 | 3.63 |

---

1For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Mortality tables and average life expectancy at age 60 for the principal plan<sup>1</sup> | Mortality tables and average life expectancy at age 60 for the principal plan<sup>1</sup> | Mortality tables and average life expectancy at age 60 for the principal plan<sup>1</sup> | Mortality tables and average life expectancy at age 60 for the principal plan<sup>1</sup> | Mortality tables and average life expectancy at age 60 for the principal plan<sup>1</sup> |
|  | **Life expectancy at age 60 for**<br>**a male member currently:** | **Life expectancy at age 60 for**<br>**a male member currently:** | **Life expectancy at age 60 for**<br>**a female member currently:** | **Life expectancy at age 60 for**<br>**a female member currently:** |
|  | **Aged 60** | **Aged 40** | **Aged 60** | **Aged 40** |
| **UK** |  |  |  |  |
| **At 31 Dec 2025**<br> **SAPS S3**<sup>2</sup> | **26.4** | **28.0** | **28.4** | **30.0** |
| At 31 Dec 2024<br> SAPS S3<sup>3</sup> | 26.1 | 27.7 | 28.3 | 29.9 |

---

1For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

2 Self-administered pension scheme ('SAPS') S3 table, with different tables and multipliers adopted based on gender, pension amount and member status,

reflecting the Scheme's actual mortality experience. Improvements are projected in accordance with the Continuous Mortality Investigation's CMI 2024 core

projection model with an initial addition to improvement of 0.25% per annum, and a long-term rate of improvement of 1.25% per annum, with other parameters

set in line with the model default values.

3 Self-administered pension scheme ('SAPS') S3 table, with different tables and multipliers adopted based on gender, pension amount and member status,

reflecting the Scheme's actual mortality experience. Improvements are projected in accordance with the Continuous Mortality Investigation's CMI 2023 core

projection model with an initial addition to improvement of 0.25% per annum and a long-term rate of improvement of 1.25% per annum and with a 0%

weighting to 2020 and 2021, mortality experience and a 15% weighting to 2022 and 2023, reflecting long-term view on mortality improvements post-pandemic.

---

| | | | | |
|:---|:---|:---|:---|:---|
| The effect of changes in key assumptions on the principal plan<sup>1</sup> | The effect of changes in key assumptions on the principal plan<sup>1</sup> | The effect of changes in key assumptions on the principal plan<sup>1</sup> | The effect of changes in key assumptions on the principal plan<sup>1</sup> | The effect of changes in key assumptions on the principal plan<sup>1</sup> |
|  | Impact on HSBC UK section of the <br>HSBC Bank (UK) Pension Scheme obligation | Impact on HSBC UK section of the <br>HSBC Bank (UK) Pension Scheme obligation | Impact on HSBC UK section of the <br>HSBC Bank (UK) Pension Scheme obligation | Impact on HSBC UK section of the <br>HSBC Bank (UK) Pension Scheme obligation |
|  | Financial impact of increase | Financial impact of increase | Financial impact of decrease | Financial impact of decrease |
|  | **2025** | 2024 | **2025** | 2024 |
|  | **$m** | $m | **$m** | $m |
| Discount rate – increase/decrease of 0.25% | **(477)** | (473) | **496** | 496 |
| Inflation rate (RPI and CPI) – increase/decrease of 0.25% | **408** | 389 | **(391)** | (391) |
| Pension payments and deferred pensions – increase/decrease of 0.25% | **504** | 487 | **(478)** | (478) |
| Pay – increase/decrease of 0.25% | **7** | 6 | **(6)** | (6) |
| Change in mortality – increase/decrease of 1 year | **486** | 483 | **(464)** | (464) |

---

1For further details of the principal plan, see page <u>[322](#i52a8ac564f2d4799b4150f1cfdffa9d2_106)</u>.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **325** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant

actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end

of the reporting period) has been applied as when calculating the defined benefit asset recognised in the balance sheet. The methods and types of

assumptions used in preparing the sensitivity analysis did not change compared with the prior period.

Directors' emoluments

Details of Directors' emoluments, pensions and their interests are disclosed in the Directors' remuneration report on page 249.

---

| | |
|:---|:---|
| 6 | Auditor's remuneration |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Audit fees payable to PwC<sup>1</sup> | **108.9** | 102.8 | 109.8 |
| Other audit fees payable | **2.8** | 1.6 | 2.2 |
| **Year ended 31 Dec** | **111.7** | 104.4 | 112.0 |

---

---

| | | | |
|:---|:---|:---|:---|
| Fees payable by HSBC to PwC | Fees payable by HSBC to PwC | Fees payable by HSBC to PwC | Fees payable by HSBC to PwC |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Fees for HSBC Holdings' statutory audit<sup>2</sup> | **25.1** | 22.0 | 24.1 |
| Fees for other services provided to HSBC | **134.0** | 124.6 | 131.8 |
| – audit of HSBC's subsidiaries | **83.8** | 80.8 | 85.7 |
| – audit-related assurance services<sup>3</sup> | **28.2** | 25.0 | 26.0 |
| – other assurance services<sup>4,5</sup> | **22.0** | 18.8 | 20.1 |
| **Year ended 31 Dec** | **159.1** | 146.6 | 155.9 |

---

1Audit fees payable to PwC in 2025 included adjustments made to the prior year audit fee after finalisation of the 2024 financial statements. In addition, $2.1m in

expenses were reimbursed to PwC in 2025.

2Fees payable to PwC for the statutory audit of the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings. They

include amounts payable for services relating to the consolidation returns of HSBC Holdings' subsidiaries, which are clearly identifiable as being in support of the

Group audit opinion.

3Including services for assurance and other services that relate to statutory and regulatory filings, including interim reviews.

4Including permitted services relating to attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users,

including comfort letters.

5Includes reviews of PRA regulatory reporting returns.

No fees were payable by HSBC to PwC as principal auditor for the following types of services: internal audit services and services related to

litigation, recruitment and remuneration.

---

| | | | |
|:---|:---|:---|:---|
| Fees payable by HSBC's associated pension schemes to PwC | Fees payable by HSBC's associated pension schemes to PwC | Fees payable by HSBC's associated pension schemes to PwC | Fees payable by HSBC's associated pension schemes to PwC |
|  | **2025** | 2024 | 2023 |
|  | **$000** | $000 | $000 |
| Audit of HSBC's associated pension schemes | **256** | 320 | 297 |
| **Year ended 31 Dec** | **256** | 320 | 297 |

---

No fees were payable by HSBC's associated pension schemes to PwC as principal auditor for the following types of services: internal audit

services, other assurance services, services related to corporate finance transactions, valuation and actuarial services, litigation, recruitment and

remuneration, and information technology.

In addition to the above, the estimated fees paid to PwC by third parties associated with HSBC amounted to $7.1m (2024: $9.9m; 2023: $12.3m).

In these cases, HSBC was connected with the contracting party and may therefore have been involved in appointing PwC. These fees arose from

services such as auditing mutual funds managed by HSBC and reviewing the financial position of corporate concerns that borrow from HSBC.

Fees payable for non-audit services for HSBC Holdings are not disclosed separately because such fees are disclosed on a consolidated basis for

the Group.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **326** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| 7 | Tax |

---

---

| | | | |
|:---|:---|:---|:---|
| Tax expense | Tax expense | Tax expense | Tax expense |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Current tax<sup>1</sup> | **6978** | 6115 | 5718 |
| – for this year | **6606** | 5863 | 5737 |
| – adjustments in respect of prior periods<sup>3</sup> | **324** | 31 | (19) |
| – Pillar 2 and qualifying domestic top-up taxes | **48** | 221 |  |
| Deferred tax | **(202)** | 1195 | 71 |
| – origination and reversal of temporary differences | **173** | 1288 | 19 |
| – effect of changes in tax rates | **35** | (2) | 17 |
| – adjustments in respect of prior periods<sup>3</sup> | **(410)** | (91) | 35 |
| **Year ended 31 Dec**<sup>2</sup> | **6776** | 7310 | 5789 |

---

1Current tax included Hong Kong profits tax of $2,351m (2024: $1,615m; 2023: $1,328m). The Hong Kong tax rate applying to the profits of subsidiaries

assessable in Hong Kong was 16.5% (2024: 16.5%; 2023: 16.5%).

2In addition to amounts recorded in the income statement, a tax charge of $136m (2024: credit of $12m) was recorded directly to equity.

3Adjustments in respect of prior periods includes deferred tax credits in Hong Kong arising on temporary differences between IFRS and the regulatory basis of

accounting on which the tax returns are prepared, and in the UK on tax losses, both of which arise from the finalisation of 2024 tax returns and are offset by

corresponding charges in current tax.

Tax reconciliation

The tax charged to the income statement differs from the tax charge that would apply if all profits had been taxed at the UK corporation tax rate as

follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
|  | **$m** | **%** | $m | % | $m | % |
| Profit before tax | **29907** |  | 32309 |  | 30348 |  |
| **Tax expense** |  |  |  |  |  |  |
| Taxation at UK corporation tax rate of 25.0% (2024: 25.0%, 2023: 23.5%) | **7477** | **25.0** | 8077 | 25.0 | 7132 | 23.5 |
| Impact of differently taxed overseas profits in overseas locations | **(1316)** | **(4.4)** | (1351) | (4.2) | (612) | (2.0) |
| UK banking surcharge | **179** | **0.6** | 215 | 0.7 | 350 | 1.2 |
| **Items increasing tax charge in 2025:** |  |  |  |  |  |  |
| – local taxes and overseas withholding taxes | **692** | **2.3** | 584 | 1.8 | 419 | 1.4 |
| – movements in unrecognised deferred tax | **314** | **1.0** | 259 | 0.7 | (22) | (0.1) |
| – fines and provisions for legal settlements | **294** | **1.0** |  |  |  |  |
| – impairment of investment in BoCom | **250** | **0.8** |  |  | 705 | 2.3 |
| – other permanent disallowables | **237** | **0.8** | 344 | 1.0 | 227 | 0.7 |
| – dilution loss on the Group's investment in BoCom | **128** | **0.4** |  |  |  |  |
| – movements in provisions for uncertain tax positions | **118** | **0.4** | 38 | 0.1 | (472) | (1.6) |
| – impact of business disposals | **100** | **0.3** |  |  |  |  |
| – non-deductible bank levy expense | **75** | **0.3** | 73 | 0.2 | 112 | 0.4 |
| – impact of global and domestic minimum taxes | **48** | **0.2** | 221 | 0.7 |  |  |
| – impact of changes in tax rates | **35** | **0.1** | 6 |  | 17 | 0.1 |
| – impact of hyperinflation | **32** | **0.1** | 327 | 1.0 | 348 | 1.1 |
| – tax impact of sale of HSBC Argentina | **—** | **—** | 1536 | 4.8 |  |  |
| **Items reducing tax charge in 2025:** |  |  |  |  |  |  |
| – non-taxable income and gains | **(970)** | **(3.2)** | (1079) | (3.3) | (1189) | (3.9) |
| – effect of profits in associates and joint ventures | **(582)** | **(1.9)** | (456) | (1.4) | (571) | (1.9) |
| – deductions for AT1 coupon payments | **(249)** | **(0.8)** | (249) | (0.8) | (229) | (0.7) |
| – adjustments in respect of prior periods  | **(86)** | **(0.3)** | (46) | (0.1) | 16 | 0.1 |
| – non-taxable gain on disposal of HSBC Canada | **—** | **—** | (1174) | (3.6) |  |  |
| – impact of sale of French retail banking business  | **—** | **—** | (15) |  |  |  |
| – accounting gain on acquisition of SVB UK | **—** | **—** |  |  | (442) | (1.5) |
| **Year ended 31 Dec** | **6776** | **22.7** | 7310 | 22.6 | 5789 | 19.1 |

---

The Group's profits are taxed at different rates depending on the country or territory in which the profits arise. The key applicable tax rates for 2025

include Hong Kong (16.5%), the US (21.0%) and the UK (25.0%). If the Group's profits were taxed at the statutory rates of the countries in which

the profits arose, then the tax rate for the year would have been 21.2% (2024: 21.4%).

The effective tax rate for the year of 22.7% was higher than in the previous year (2024: 22.6%). The effective tax rate for the year was increased

by 1.2% by the dilution loss and non-deductible impairment of the Group's investment in BoCom, increased by 1.0% by movements in

unrecognised deferred tax, primarily relating to French tax losses, and increased by 1.0% by the impact of fines and provisions for legal

settlements on which no tax benefit is recorded. The effective tax rate for the year was reduced by 0.3% by adjustments in respect of prior

periods, mainly arising from the finalisation of prior year tax returns in India and Hong Kong. The effective tax rate for 2024 was reduced by 3.6%

by the non-taxable gain arising on the disposal of HSBC Canada, increased by 4.8% by the non-deductible loss arising on the disposal of HSBC

Argentina, increased by 0.7% by movements in unrecognised deferred tax, primarily relating to French tax losses, and increased by 0.7% by the

Group's Pillar 2 global minimum tax charge.

The UK adopted the 'Pillar Two' global minimum tax model rules of the OECD's Inclusive Framework on Base Erosion and Profit-Shifting ('BEPS')

with effect from 1 January 2024. Many jurisdictions adopted similar rules, as well as domestic minimum tax regimes, from 1 January 2025 and

some jurisdictions, such as Bermuda, introduced new or amended corporate income tax regimes effective from that date. These changes have the

effect of increasing local overseas tax liabilities in 2025 and reducing the UK top-up tax liability.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **327** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Accounting for taxes involves some estimation because tax law is uncertain and its application requires a degree of judgement, which authorities

may dispute. Liabilities are recognised based on best estimates of the probable outcome, taking into account external advice where appropriate.

Exposures to additional tax liabilities arising from uncertain tax positions were reassessed during 2025, resulting in a charge of $118m to the

income statement. We do not expect significant liabilities to arise in excess of the amounts provided. HSBC only recognises current and deferred

tax assets where recovery is probable.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities | Movement of deferred tax assets and liabilities |
|  | **Loan**<br>**impairment**<br>**provisions**<br>| **Unused tax**<br>**losses and**<br>**tax credits**<br>| **Financial** <br>**assets at** <br>**FVOCI**<br>| **Cash flow** <br>**hedges**<br>| **Retirement** <br>**obligations**<br>| **Other** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Assets | **1070** | **3864** | **616** | **442** | **—** | **2906** | **8898** |
| Liabilities | **—** | **—** | **—** | **—** | **(1767)** | **(1607)** | **(3374)** |
| **At 1 Jan 2025** | **1070** | **3864** | **616** | **442** | **(1767)** | **1299** | **5524** |
| Income statement | **11** | **(466)** | **226** | **10** | **(96)** | **517** | **202** |
| Other comprehensive income | **—** | **—** | **(564)** | **(587)** | **6** | **161** | **(984)** |
| Foreign exchange and other adjustments | **(25)** | **74** | **221** | **23** | **(100)** | **200** | **393** |
| **At 31 Dec 2025** | **1056** | **3472** | **499** | **(112)** | **(1957)** | **2177** | **5135** |
| Assets<sup>1</sup> | **1056** | **3472** | **499** | **—** | **—** | **3503** | **8530** |
| Liabilities<sup>1</sup> | **—** | **—** | **—** | **(112)** | **(1957)** | **(1326)** | **(3395)** |
| Assets | 1158 | 4544 | 876 | 419 |  | 2933 | 9930 |
| Liabilities |  |  |  |  | (1814) | (1600) | (3414) |
| At 1 Jan 2024 | 1158 | 4544 | 876 | 419 | (1814) | 1333 | 6516 |
| Income statement | (74) | (640) | 100 |  | (85) | (431) | (1130) |
| Other comprehensive income |  |  | (49) | 84 | 114 | 189 | 338 |
| Foreign exchange and other adjustments | (14) | (40) | (311) | (61) | 18 | 208 | (200) |
| At 31 Dec 2024 | 1070 | 3864 | 616 | 442 | (1767) | 1299 | 5524 |
| Assets<sup>1</sup> | 1070 | 3864 | 616 | 442 |  | 2906 | 8898 |
| Liabilities<sup>1</sup> |  |  |  |  | (1767) | (1607) | (3374) |

---

1After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets of $7,235m (2024: $6,841m) and

deferred tax liabilities of $2,100m (2024: $1,317m).

In applying judgement in recognising deferred tax assets, management has assessed all relevant information, including future business profit

projections and the track record of meeting forecasts. Management's assessment of the likely availability of future taxable profits against which to

recover deferred tax assets is based on the most recent financial forecasts approved by management, which cover a five-year period and are

extrapolated where necessary, and takes into consideration the reversal of existing taxable temporary differences and past business performance.

When forecasts are extrapolated beyond five years, a number of different scenarios are considered, reflecting different downward risk

adjustments, in order to assess the sensitivity of our recognition and measurement conclusions in the context of such longer-term forecasts.

The Group's net deferred tax asset of $5.1bn (2024: $5.5bn) included $1.5bn (2024: $2.6bn) of deferred tax assets relating to the UK, $2.8bn

(2024: $3.0bn) of deferred tax assets relating to the US and a net deferred asset of $0.8bn (2024: $0.5bn) in France.

The UK deferred tax asset of $1.5bn excluded a $2.0bn deferred tax liability arising on the UK pension scheme surplus, the reversal of which is not

taken into account when estimating future taxable profit due to the level of uncertainty as to the timing and manner of its reversal. The UK

deferred tax assets are supported by forecasts of taxable profit, also taking into consideration the history of profitability in the relevant businesses.

The majority of the deferred tax asset relates to tax attributes which do not expire and are forecast to be recovered within two years and as such

are less sensitive to changes in long-term profit forecasts.

The net US deferred tax asset of $2.8bn included $1.0bn related to US tax losses, of which $0.7bn expire in 9 to 12 years. Management expects

the US deferred tax asset to be substantially recovered within 13 years, with the majority recovered in the first five years.

The net deferred tax asset in France of $0.8bn included $0.7bn related to tax losses, which are expected to be substantially recovered within 10

years. An additional $0.1bn of deferred tax asset relating to French tax losses was recognised during the year, supported by the business's

improved performance and outlook. Unused tax losses with a tax value of $0.3bn have not been recognised due to the absence of convincing

evidence regarding the availability of sufficient future taxable profits against which to recover them.

Unrecognised deferred tax

The amount of gross temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance sheet

was $13.8bn (2024: $11.0bn). This amount included unused US state tax losses of $3.8bn (2024: $3.8bn) which are forecast to expire before they

are recovered, unused French tax losses of $1.4bn (2024: $0.7bn) for which there is insufficient evidence of future taxable profits to support

recognition, and unused UK tax losses of $3.4bn (2024: $3.5bn), which arose prior to 1 April 2017 and can only be recovered against future taxable

profits of HSBC Holdings. No deferred tax was recognised on these losses due to the absence of convincing evidence regarding the availability of

sufficient future taxable profits against which to recover them. Deferred tax asset recognition is reassessed at each balance sheet date based on

the available evidence. Of the total amounts on which deferred tax was not recognised, $7.6bn (2024: $6.0bn) had no expiry date, $1.3bn (2024:

$1.0bn) was scheduled to expire within 10 years and the remaining balance is expected to expire after 10 years.

Deferred tax is not recognised in respect of the Group's investments in subsidiaries and branches where HSBC is able to control the timing of

remittance or other realisation and where remittance or realisation is not probable in the foreseeable future. The aggregate temporary differences

relating to unrecognised deferred tax liabilities arising on investments in subsidiaries and branches was $15.9bn (2024: $15.2bn) and the

corresponding unrecognised deferred tax liability was $0.8bn (2024: $0.7bn).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **328** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| 8 | Dividends |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Dividends to shareholders of the parent company | Dividends to shareholders of the parent company | Dividends to shareholders of the parent company | Dividends to shareholders of the parent company | Dividends to shareholders of the parent company | Dividends to shareholders of the parent company | Dividends to shareholders of the parent company |
|  | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
|  | **Per**<br>**share**<br>| **Total** | Per<br>share<br>| Total | Per<br>share<br>| Total |
|  | **$** | **$m** | $| $m | $| $m |
| **Dividends paid on ordinary shares** |  |  |  |  |  |  |
| In respect of previous year: |  |  |  |  |  |  |
| – second interim dividend | **—** | **—** |  |  | 0.23 | 4589 |
| – fourth interim dividend | **0.36** | **6397** | 0.31 | 5872 |  |  |
| In respect of current year: |  |  |  |  |  |  |
| – first interim dividend | **0.10** | **1750** | 0.10 | 1877 | 0.10 | 2001 |
| – special dividend | **—** | **—** | 0.21 | 3942 |  |  |
| – second interim dividend | **0.10** | **1717** | 0.10 | 1852 | 0.10 | 1956 |
| – third interim dividend | **0.10** | **1717** | 0.10 | 1805 | 0.10 | 1946 |
| **Total** | **0.66** | **11581** | 0.82 | 15348 | 0.53 | 10492 |
| Total coupons on capital securities classified as equity  |  | **1183** |  | 1062 |  | 1101 |
| **Dividends to shareholders**  |  | **12764** |  | 16410 |  | 11593 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Total coupons on capital securities classified as equity  | Total coupons on capital securities classified as equity  | Total coupons on capital securities classified as equity  | Total coupons on capital securities classified as equity  | Total coupons on capital securities classified as equity  | Total coupons on capital securities classified as equity  |
|  |  |  | **2025** | 2024 | 2023 |
|  |  | **Per**<br> **security** | **Total** | Total | Total |
|  | First call date | **Per**<br> **security** | **$m** | $m | $m |
| **Perpetual subordinated contingent convertible securities**<sup>1</sup> |  |  |  |  |  |
| $2,250m issued at 6.375%<sup>2</sup> | Sep 2024 | **$63.750** | **—** | 122 | 143 |
| $2,450m issued at 6.375%<sup>3</sup> | Mar 2025 | **$63.750** | **55** | 156 | 156 |
| $3,000m issued at 6.000% | May 2027 | **$60.000** | **180** | 180 | 180 |
| $2,350m issued at 6.250%<sup>4</sup> | Mar 2023 | **$62.500** | **—** |  | 52 |
| $1,800m issued at 6.500% | Mar 2028 | **$65.000** | **117** | 117 | 117 |
| $1,500m issued at 4.600% | Dec 2030 | **$46.000** | **69** | 69 | 69 |
| $1,000m issued at 4.000% | Mar 2026 | **$40.000** | **40** | 40 | 40 |
| $1,000m issued at 4.700% | Mar 2031 | **$47.000** | **47** | 47 | 47 |
| $2,000m issued at 8.000%<sup>5</sup> | Mar 2028 | **$80.000** | **160** | 160 | 80 |
| $1,350m issued at 6.875%<sup>6</sup> | Sep 2029 | **$68.750** | **93** |  |  |
| $1,150m issued at 6.950%<sup>7</sup> | Mar 2034 | **$69.500** | **80** |  |  |
| $1,500m issued at 6.950%<sup>8</sup> | Aug 2031 | **$69.500** | **52** |  |  |
| $2,000m issued at 7.050%<sup>9</sup> | Jun 2030 | **$70.500** | **71** |  |  |
| €1,000m issued at 6.000%<sup>10</sup> | Sep 2023 | **€60.000** | **—** |  | 56 |
| €1,250m issued at 4.750% | Jul 2029 | **€47.500** | **65** | 65 | 64 |
| £1,000m issued at 5.875% | Sep 2026 | **£58.750** | **77** | 77 | 72 |
| SGD750m issued at 5.000%<sup>11</sup> | Sep 2023 | **SGD50.000** | **—** |  | 25 |
| SGD1,500m issued at 5.250%<sup>12</sup> | Jun 2029 | **SGD52.500** | **61** | 29 |  |
| SGD800m issued at 5.000%<sup>13</sup> | Mar 2030 | **SGD50.000** | **16** |  |  |
| **Total** |  |  | **1183** | 1062 | 1101 |

---

1Discretionary coupons are paid semi-annually, based on the denominations of each security.

2This security was called by HSBC Holdings on 23 July 2024 and was redeemed and cancelled on 17 September 2024.

3This security was called by HSBC Holdings on 7 February 2025 and was redeemed and cancelled on 31 March 2025.

4This security was called by HSBC Holdings on 30 January 2023 and was redeemed and cancelled on 23 March 2023.

5This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six calendar months prior to the reset date of 7 September 2028.

6This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of

11 March 2030.

7This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of

11 September 2034.

8This security was issued by HSBC Holdings on 27 February 2025. The first call period commences six calendar months prior to the reset date of

27 February 2032.

9This security was issued by HSBC Holdings on 5 June 2025. The first call period commences six calendar months prior to the reset date of 5 December 2030.

10This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 29 September 2023.

11This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 25 September 2023.

12This security was issued by HSBC Holdings on 14 June 2024. The first call period commences six calendar months prior to the reset date of 14 December 2029.

13This security was issued by HSBC Holdings on 24 March 2025. The first call period commences six calendar months prior to the reset date of 24 September

2030. On 25 February 2026, the Directors approved a fourth interim dividend in respect of the financial year ended 31 December 2025 of $0.45 per

ordinary share (the 'dividend'), an expected distribution of approximately $7.71bn. The dividend will be payable on 30 April 2026 to holders of

record on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on

13 March 2026. No liability was recorded in the financial statements in respect of the fourth interim dividend for 2025.

On 5 January 2026, HSBC paid a coupon on its €1,250m subordinated capital securities, representing a total distribution of €30m ($35m). No

liability was recorded on the balance sheet at 31 December 2025 in respect of this coupon payment.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **329** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

9Earnings per share

Basic earnings per ordinary share is calculated by dividing the profit attributable to ordinary shareholders of the parent company by the weighted

average number of ordinary shares outstanding, after deducting own shares held. Diluted earnings per ordinary share is calculated by dividing the

basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average number of ordinary

shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be issued on conversion of

dilutive potential ordinary shares.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share | Basic and diluted earnings per share |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Profit** | **Number** <br>**of shares**<br>| **Per**<br> **share**<br>| Profit | Number<br>of shares<br>| Per<br>share<br>| Profit | Number<br>of shares<br>| Per<br>share<br>|
|  | **$m** | **(millions)** | **$** | $m | (millions) | $| $m | (millions) | $|
| Basic<sup>1</sup> | **21102** | **17427** | **1.21** | 22917 | 18357 | 1.25 | 22432 | 19478 | 1.15 |
| Effect of dilutive potential <br>ordinary shares<br>|  | **120** |  |  | 128 |  |  | 122 |  |
| **Diluted**<sup>1</sup> | **21102** | **17547** | **1.20** | 22917 | 18485 | 1.24 | 22432 | 19600 | 1.14 |

---

1Weighted average number of ordinary shares outstanding (basic) or assuming dilution (diluted) after deducting own shares held.

The number of anti-dilutive employee share options excluded from the weighted average number of dilutive potential ordinary shares was

12 million (2024: Nil; 2023: 23 million).

---

| | |
|:---|:---|
| 10 | Segmental analysis |

---

The Group Operating Committee is considered to be the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's

reportable segments. Business segments results were assessed by the CODM on the basis of constant currency performance that removes the

effects of currency translation from reported results. Therefore, we disclose these results on a constant currency basis as required by IFRS

Accounting Standards. The 2024 and 2023 income statements are converted at the average rates of exchange for 2025, and the balance sheets at

31 December 2024 and 31 December 2023 at the prevailing rates of exchange on 31 December 2025.

Our operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and

expense. These allocations include the costs of certain support services and global infrastructures to the extent that they can be meaningfully

attributed to business segments. While such allocations have been made on a systematic and consistent basis, they involve a certain degree of

subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.

Interest income is reported net as the CODM primarily relies on the net amount as a performance measure. Where relevant, income and expense

amounts presented include the results of inter-segment funding along with inter-company and inter-business line transactions. All such

transactions are undertaken on arm's length terms. Measurement of segmental assets, liabilities, income and expenses is in accordance with the

Group's accounting policies. Shared costs are included in segments on the basis of actual recharges. The intra-group elimination items for the

business segments are presented in Corporate Centre.

Our business segments

Following our organisational announcement in October 2024, effective from 1 January 2025, the Group's reportable segments under IFRS 8

'Operating Segments' comprise four business along with Corporate Centre. These replace our previously reported operating segments up to

31 December 2024. All segmental comparative data have been re-presented to reflect the Group's revised segment structure.

–Hong Kong: The Hong Kong business comprises Retail Banking and Wealth and Commercial Banking of HSBC Hong Kong and Hang Seng

Bank.

–UK: The UK business comprises UK Personal Banking (including first direct and M&S Bank) and UK Commercial Banking including HSBC

Innovation Bank.

–Corporate and Institutional Banking ('CIB'): CIB is formed from the integration of our Commercial Banking business (outside the UK and Hong

Kong) with our Global Banking and Markets business.

–International Wealth and Premier Banking ('IWPB'): IWPB comprises Premier banking outside of Hong Kong and the UK, our Private Bank, and

our wealth manufacturing businesses of Asset Management and Insurance.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **330** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data | HSBC constant currency profit before tax and balance sheet data |
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Hong Kong** | **UK** | **CIB** | **IWPB** | **Corporate**<br>**Centre**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Net operating income/(expense) before change in expected** <br>**credit losses and other credit impairment charges**<sup>1</sup><br>| **15878** | **12938** | **27637** | **14520** | **(2699)** | **68274** |
| – external | **10157** | **13856** | **39098** | **12458** | **(7295)** | **68274** |
| – inter-segment | **5721** | **(918)** | **(11461)** | **2062** | **4596** | **—** |
| – of which: net interest income/(expense)<sup>2</sup> | **12082** | **11096** | **14532** | **7397** | **(10313)** | **34794** |
| Change in expected credit losses and other credit impairment <br>charges<br>| **(1476)** | **(696)** | **(696)** | **(892)** | **(90)** | **(3850)** |
| **Net operating income/(expense)** | **14402** | **12242** | **26941** | **13628** | **(2789)** | **64424** |
| Total operating expenses | **(4826)** | **(5537)** | **(15556)** | **(9285)** | **(1224)** | **(36428)** |
| **Operating profit/(loss)** | **9576** | **6705** | **11385** | **4343** | **(4013)** | **27996** |
| Share of profit in associates and joint ventures less impairment<sup>3</sup> | **—** | **—** | **1** | **24** | **1886** | **1911** |
| **Constant currency profit before tax** | **9576** | **6705** | **11386** | **4367** | **(2127)** | **29907** |
|  | **%** | **%** | **%** | **%** | **%** | **%** |
| Share of HSBC's constant currency profit before tax | **32.0** | **22.4** | **38.1** | **14.6** | **(7.1)** | **100.0** |
| Constant currency cost efficiency ratio | **30.4** | **42.8** | **56.3** | **63.9** | **(45.4)** | **53.4** |
| **Constant currency balance sheet data** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Loans and advances to customers (net) | **229491** | **303698** | **305022** | **150047** | **141** | **988399** |
| Interests in associates and joint ventures | **—** | **—** | **83** | **522** | **28972** | **29577** |
| Total external assets | **437933** | **451492** | **1793162** | **416332** | **134115** | **3233034** |
| Customer accounts | **543381** | **364323** | **597719** | **281058** | **347** | **1786828** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| Net operating income/(expense) before change in expected <br>credit losses and other credit impairment charges<br>| 15047 | 12342 | 26772 | 13817 | (1969) | 66009 |
| – external | 9704 | 13060 | 39012 | 11175 | (6942) | 66009 |
| – inter-segment | 5343 | (718) | (12240) | 2642 | 4973 |  |
| – of which: net interest income/(expense)<sup>2</sup> | 11997 | 10355 | 14519 | 8081 | (12497) | 32455 |
| Change in expected credit losses and other credit impairment <br>charges<br>| (1077) | (415) | (878) | (993) | (29) | (3392) |
| Net operating income/(expense) | 13970 | 11927 | 25894 | 12824 | (1998) | 62617 |
| Total operating expenses | (4841) | (5104) | (14612) | (8900) | 311 | (33146) |
| Operating profit/(loss) | 9129 | 6823 | 11282 | 3924 | (1687) | 29471 |
| Share of profit/(loss) in associates and joint ventures |  |  | 1 | 45 | 2867 | 2913 |
| Constant currency profit/(loss) before tax | 9129 | 6823 | 11283 | 3969 | 1180 | 32384 |
|  | % | % | % | % | % | % |
| Share of HSBC's constant currency profit before tax | 28.2 | 21.1 | 34.8 | 12.3 | 3.6 | 100.0 |
| Constant currency cost efficiency ratio | 32.2 | 41.4 | 54.6 | 64.4 | 15.8 | 50.2 |
| Constant currency balance sheet data | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | 235053 | 285778 | 297877 | 144027 | 8043 | 970778 |
| Interests in associates and joint ventures |  |  | 132 | 557 | 29039 | 29728 |
| Total external assets | 433588 | 432683 | 1729531 | 414734 | 129265 | 3139801 |
| Customer accounts | 506557 | 352833 | 587926 | 271588 | 336 | 1719240 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2023 | 2023 | 2023 | 2023 | 2023 | 2023 |
| Net operating income/(expense) before change in expected <br>credit losses and other credit impairment charges<br>| 14532 | 13439 | 24723 | 12385 | (39) | 65040 |
| – external | 10093 | 13749 | 36111 | 10112 | (5025) | 65040 |
| – inter-segment | 4439 | (310) | (11388) | 2273 | 4986 |  |
| – of which: net interest income/(expense)<sup>2</sup> | 12108 | 9903 | 13399 | 7753 | (8951) | 34212 |
| Change in expected credit losses and other credit impairment <br>charges<br>| (1494) | (545) | (524) | (686) | (1) | (3250) |
| Net operating income/(expense) | 13038 | 12894 | 24199 | 11699 | (40) | 61790 |
| Total operating expenses | (4514) | (4829) | (13755) | (8549) | (44) | (31691) |
| Operating profit/(loss) | 8524 | 8065 | 10444 | 3150 | (84) | 30099 |
| Share of profit/(loss) in associates and joint ventures<sup>4</sup> |  |  | (1) | 62 | (358) | (297) |
| Constant currency profit/(loss) before tax | 8524 | 8065 | 10443 | 3212 | (442) | 29802 |
|  | % | % | % | % | % | % |
| Share of HSBC's constant currency profit before tax | 28.6 | 27.1 | 35.0 | 10.8 | (1.5) | 100.0 |
| Constant currency cost efficiency ratio | 31.1 | 35.9 | 55.6 | 69.0 | (112.8) | 48.7 |
| Constant currency balance sheet data | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | 240173 | 278225 | 290227 | 146805 | 276 | 955706 |
| Interests in associates and joint ventures |  |  | 128 | 539 | 26965 | 27632 |
| Total external assets | 419890 | 423648 | 1648421 | 460545 | 142628 | 3095132 |
| Customer accounts | 486873 | 347570 | 548275 | 257664 | 618 | 1641000 |

---

1Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. See Note 18 on pages 345 to 348.

2Includes $9.7bn (2024: $11.4bn; 2023: $8.7bn) of interest expense in Corporate Centre for the internal cost to fund our Markets Treasury function.

3Includes an impairment loss of $1.0bn recognised in respect of the Group's investment in BoCom. See Note 18 on pages 345 to 348.

4Includes an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **331** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Reported external net operating income is attributed to countries and territories on the basis of the location of the branch responsible for reporting

the results or advancing the funds:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Reported external net operating income by country/territory** | **68274** | 65854 | 66058 |
| – UK<sup>1</sup> | **13677** | 12307 | 11027 |
| – Hong Kong | **22527** | 20811 | 20185 |
| – US | **4797** | 4233 | 3816 |
| – France | **1839** | 3804 | 4208 |
| – other countries/territories | **25434** | 24699 | 26822 |

---

1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately

incorporated group of service companies ('ServCo Group').

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation | Constant currency results reconciliation |
|  | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Reported and** <br>**constant currency**<br>| Constant <br>currency<br>| Currency <br>translation<br>| Reported | Constant <br>currency<br>| Currency <br>translation<br>| Reported |
|  | **$m** | $m | $m | $m | $m | $m | $m |
| Revenue | **68274** | 66009 | 155 | 65854 | 65040 | (1018) | 66058 |
| ECL | **(3850)** | (3392) | 22 | (3414) | (3250) | 197 | (3447) |
| Operating expenses | **(36428)** | (33146) | (103) | (33043) | (31691) | 379 | (32070) |
| Share of profit/(loss) in associates and <br>joint ventures less impairment<br>| **1911** | 2913 | 1 | 2912 | (297) | (104) | (193) |
| **Profit before tax** | **29907** | 32384 | 75 | 32309 | 29802 | (546) | 30348 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation | Constant currency balance sheet reconciliation |
|  | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Reported and** <br>**constant currency**<br>| Constant <br>currency<br>| Currency <br>translation<br>| Reported | Constant <br>currency<br>| Currency <br>translation<br>| Reported |
|  | **$m** | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | **988399** | 970778 | 40120 | 930658 | 955706 | 17171 | 938535 |
| Interests in associates and joint ventures | **29577** | 29728 | 819 | 28909 | 27632 | 288 | 27344 |
| Total external assets | **3233034** | 3139801 | 122753 | 3017048 | 3095132 | 56455 | 3038677 |
| Customer accounts | **1786828** | 1719240 | 64285 | 1654955 | 1641000 | 29353 | 1611647 |

---

---

| | | | |
|:---|:---|:---|:---|
| Notable items | Notable items | Notable items | Notable items |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| **Year ended 31 Dec** |  |  |  |
| **Notable items** |  |  |  |
| **Revenue** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs<sup>1,2,3</sup> | **(1642)** | (1343) | 1298 |
| Dilution loss of interest in BoCom associate<sup>4</sup> | **(1104)** |  |  |
| Fair value movements on financial instruments<sup>5</sup> | **—** |  | 14 |
| Disposal losses on Markets Treasury repositioning | **—** |  | (977) |
| Early redemption of legacy securities | **—** | (237) |  |
| **Operating expenses** |  |  |  |
| Disposals, wind-downs, acquisitions and related costs | **(502)** | (199) | (321) |
| Restructuring and other related costs<sup>6</sup> | **(1030)** | (34) | 136 |
| Legal provision<sup>7</sup> | **(1432)** |  |  |
| **Impairment losses of interest in BoCom associate**<sup>4</sup> | **(1000)** |  | (3000) |

---

1Includes recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of its sale

to a consortium comprising Rothesay Life plc and CCF.

2Amounts in 2024 include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on

sale of our business in Argentina. This was partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of foreign exchange hedging

of the sales proceeds and the recycling of reserves losses.

3Amounts in 2023 include the gain of $1.6bn recognised in respect of the acquisition of SVB UK, and the impact of the sale of our retail banking operations in

France.

4Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment

loss following an impairment test on the carrying value of the Group's investment in BoCom in 'Impairment losses of interest in BoCom associate'. See Note 18

on pages 345 to 348.

5Fair value movements on non-qualifying hedges in HSBC Holdings.

6Amounts in 2025 include restructuring provisions recognised in 2025. Amounts in 2024 relate to restructuring provisions recognised in 2024 and reversals of

restructuring provisions recognised during 2022. Amounts in 2023 relate to reversals of restructuring provisions recognised during 2022.

7Includes a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff

Investment Securities LLC fraud and a $0.3bn provision in connection with certain historical trading activities in HSBC Bank plc.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **332** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

11Trading assets

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| Treasury and other eligible bills | **34433** | 32022 |
| Debt securities | **116837** | 97275 |
| Equity securities | **176312** | 155194 |
| **Trading securities** | **327582** | 284491 |
| Loans and advances to banks<sup>1</sup> | **10913** | 6123 |
| Loans and advances to customers<sup>1</sup> | **27658** | 24228 |
| **At 31 Dec** | **366153** | 314842 |

---

1Loans and advances to banks and customers include reverse repos, stock borrowing and other accounts.

12Fair values of financial instruments carried at fair value

Control framework

Fair values are subject to a control framework designed to ensure that they are either determined or validated by a function independent of the risk

taker.

Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination

or validation is used. For inactive markets, HSBC sources alternative market information, with greater weight given to information that is

considered to be more relevant and reliable. Examples of the factors considered are price observability, instrument comparability, consistency of

data sources, underlying data accuracy and timing of prices.

For fair values determined using valuation models, the control framework includes development or validation by independent support functions of

the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming operational

and are calibrated against external market data on an ongoing basis. Fair value adjustments are applied where additional factors are not

incorporated into the primary product valuation model.

The majority of financial instruments measured at fair value are in MSS. MSS's fair value governance structure comprises its Finance function and

Valuation Committees. Finance is responsible for establishing procedures governing valuation and ensuring fair values are in compliance with

accounting standards. The fair values are reviewed by the Valuation Committees, which consist of independent support functions.

Financial liabilities measured at fair value

In certain circumstances, HSBC records its own debt in issue at fair value, based on quoted prices in an active market for the specific instrument.

When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for which are either based on

quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active market for similar

instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to HSBC's liabilities. The change in fair

value of issued debt securities attributable to the Group's own credit spread is computed as follows: for each security at each reporting date, an

externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer. Then, using discounted

cash flow, each security is valued using an appropriate market discount curve. The difference in the valuations is attributable to the Group's own

credit spread. This methodology is applied consistently across all securities.

Structured notes issued and certain other hybrid instruments are reported as financial liabilities designated at fair value. The credit spread applied

to these instruments is derived from the spreads at which HSBC issues structured notes.

Gains and losses arising from changes in the credit spread of liabilities issued by HSBC, recorded in other comprehensive income, reverse over the

contractual life of the debt, provided that the debt is not repaid at a premium or a discount.

Fair value hierarchy

Fair values of financial assets and liabilities are determined according to the following hierarchy:

–Level 1 – valuation technique using quoted market price. These are financial instruments with quoted prices for identical instruments in active

markets that HSBC can access at the measurement date.

–Level 2 – valuation technique using observable inputs. These are financial instruments with quoted prices for similar instruments in active

markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all

significant inputs are observable.

–Level 3 – valuation technique with significant unobservable inputs. These are financial instruments valued using valuation techniques where

one or more significant inputs are unobservable.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **333** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation | Financial instruments carried at fair value and bases of valuation |
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** | Level 1 | Level 2 | Level 3 | Total |
|  | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Recurring fair value measurements at 31 Dec** |  |  |  |  |  |  |  |  |
| **Assets** |  |  |  |  |  |  |  |  |
| Trading assets | **267638** | **92418** | **6097** | **366153** | 236593 | 71574 | 6675 | 314842 |
| Financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| **46436** | **61267** | **25360** | **133063** | 39331 | 56694 | 19744 | 115769 |
| Derivatives | **1798** | **233759** | **2183** | **237740** | 1859 | 264629 | 2149 | 268637 |
| Financial investments | **300795** | **81522** | **2805** | **385122** | 258371 | 78088 | 2734 | 339193 |
| **Liabilities** |  |  |  |  |  |  |  |  |
| Trading liabilities | **46579** | **25476** | **67** | **72122** | 42038 | 23160 | 784 | 65982 |
| Financial liabilities designated at fair value | **1370** | **146353** | **10733** | **158456** | 2152 | 127458 | 9117 | 138727 |
| Derivatives | **1853** | **232559** | **3442** | **237854** | 1088 | 260518 | 2842 | 264448 |

---

There were no material transfers between Level 1 and Level 2 during the reporting period.

The table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale in

accordance with IFRS 5. For further details, see Note 23.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale |
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** | Level 1 | Level 2 | Level 3 | Total |
|  | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| **Recurring fair value measurements at 31 Dec** |  |  |  |  |  |  |  |  |
| **Assets** |  |  |  |  |  |  |  |  |
| Trading assets | **26** | **87** | **—** | **113** |  |  |  |  |
| Financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| **6327** | **24** | **—** | **6351** | 2967 | 9018 | 2575 | 14560 |
| Derivatives | **—** | **9** | **5** | **14** |  | 36 |  | 36 |
| Financial investments | **157** | **44** | **—** | **201** | 2651 | 5345 | 504 | 8500 |
| **Liabilities** |  |  |  |  |  |  |  |  |
| Trading liabilities | **—** | **—** | **—** | **—** |  |  |  |  |
| Financial liabilities designated at fair value | **1345** | **—** | **—** | **1345** |  | 130 |  | 130 |
| Derivatives | **—** | **13** | **3** | **16** |  | 19 |  | 19 |

---

Fair value valuation bases

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 |
|  | **Assets** | **Assets** | **Assets** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Liabilities** | **Liabilities** |
|  | **Financial** <br>**investments**<br>| **Trading** <br>**assets**<br>| **Designated and** <br>**otherwise mandatorily** <br>**measured at fair value** <br>**through profit or loss**<br>| **Derivatives** | **Total** | **Trading** <br>**liabilities**<br>| **Designated** <br>**at fair value**<br>| **Derivatives** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Private equity including <br>strategic investments <br>| **595** | **1** | **20364** | **—** | **20960** | **—** | **1** | **—** | **1** |
| Structured notes  | **—** | **—** | **—** | **—** | **—** | **—** | **10617** | **—** | **10617** |
| Other derivatives  | **—** | **—** | **—** | **2183** | **2183** | **—** | **—** | **3442** | **3442** |
| Bonds | **2111** | **3356** | **2008** | **—** | **7475** | **41** | **—** | **—** | **41** |
| Loans | **21** | **1667** | **1565** | **—** | **3253** | **11** | **—** | **—** | **11** |
| Other portfolios | **78** | **1073** | **1423** | **—** | **2574** | **15** | **115** | **—** | **130** |
| **At 31 Dec 2025** | **2805** | **6097** | **25360** | **2183** | **36445** | **67** | **10733** | **3442** | **14242** |
| Private equity including <br>strategic investments <br>| 552 | 1 | 17705 |  | 18258 |  | 1 |  | 1 |
| Structured notes  |  |  | 3 |  | 3 |  | 9113 |  | 9113 |
| Other derivatives  |  |  |  | 2149 | 2149 |  |  | 2842 | 2842 |
| Bonds | 1978 | 2173 | 758 |  | 4909 | 27 |  |  | 27 |
| Loans | 22 | 2383 | 1277 |  | 3682 | 3 |  |  | 3 |
| Other portfolios | 182 | 2118 | 1 |  | 2301 | 754 | 3 |  | 757 |
| At 31 Dec 2024 | 2734 | 6675 | 19744 | 2149 | 31302 | 784 | 9117 | 2842 | 12743 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **334** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Private equity including strategic investments

The fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee's financial

position and results, risk profile, prospects and other factors; by reference to market valuations for similar entities quoted in an active market; the

price at which similar companies have changed ownership; or from published net asset values ('NAV') received. If necessary, adjustments are

made to the NAV of funds to obtain the best estimate of fair value.

Structured notes

The fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded derivative is

determined as described in the paragraph below on derivatives. These structured notes comprise principally equity-linked notes issued by HSBC,

which provide the counterparty with a return linked to the performance of equity securities and other portfolios. Examples of the unobservable

parameters include long-dated equity volatilities and correlations between equity prices, and interest and foreign exchange rates.

Derivatives

OTC derivative valuation models calculate the present value of expected future cash flows, based upon 'no arbitrage' principles. For many vanilla

derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may be some

differences in market practice. Inputs to valuation models are determined from observable market data wherever possible, including prices

available from exchanges, dealers, brokers or providers of consensus pricing. Certain inputs may not be observable in the market directly, but can

be determined from observable prices via model calibration procedures or estimated from historical data or other sources.

Bonds and loans

The fair value input for bonds and secondary market loans is price, determined utilising market standard valuation techniques such as price-based,

discounted cash flows, and internal models. Where uncertainty of inputs and assumptions exist in the determination of a fair value price and are

significant, the position will be considered Level 3. Examples of such inputs are credit spreads, interest rate spreads, choice of comparables,

earning projections and liquidity/observability of the underlying currency.

Reconciliation of fair value measurements in Level 3 of the fair value hierarchy

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments | Movement in Level 3 financial instruments |
|  | **Assets** | **Assets** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Liabilities** |
|  | **Financial** <br>**investments**<br>| **Trading** <br>**assets**<br>| **Designated and** <br>**otherwise** <br>**mandatorily** <br>**measured at fair** <br>**value through** <br>**profit or loss**<br>| **Derivatives** | **Trading** <br>**liabilities**<br>| **Designated** <br>**at fair value**<br>| **Derivatives** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 1 Jan 2025** | **2734** | **6675** | **19744** | **2149** | **784** | **9117** | **2842** |
| Total gains/(losses) recognised in profit or loss  | **4** | **154** | **1487** | **1291** | **(4)** | **919** | **2210** |
| – net income/(losses) from financial instruments <br>held for trading or managed on a fair value basis<br>| **—** | **154** | **—** | **1291** | **(4)** | **919** | **2210** |
| – net income from assets and liabilities of insurance <br>businesses, including related derivatives, <br>measured at fair value through profit or loss<br>| **—** | **—** | **1478** | **—** | **—** | **—** | **—** |
| – other income/(losses) | **4** | **—** | **9** | **—** | **—** | **—** | **—** |
| Total gains/(losses) recognised in other <br>comprehensive income ('OCI')<sup>1</sup><br>| **255** | **236** | **84** | **150** | **21** | **608** | **174** |
| Purchases<sup>2</sup>  | **2100** | **4151** | **4673** | **—** | **83** | **—** | **—** |
| New issuances  | **—** | **181** | **—** | **—** | **—** | **8542** | **—** |
| Sales  | **(195)** | **(2679)** | **(389)** | **—** | **(19)** | **—** | **—** |
| Settlements | **(347)** | **(1814)** | **(1727)** | **(1073)** | **(331)** | **(5352)** | **(1632)** |
| Transfers out | **(2008)** | **(2018)** | **(1312)** | **(901)** | **(498)** | **(5282)** | **(831)** |
| Transfers in<sup>3</sup> | **262** | **1211** | **2800** | **567** | **31** | **2181** | **679** |
| **At 31 Dec 2025** | **2805** | **6097** | **25360** | **2183** | **67** | **10733** | **3442** |
| Unrealised gains/(losses) recognised in profit or loss <br>relating to assets and liabilities held at 31 Dec 2025<br>| **—** | **309** | **309** | **1320** | **(19)** | **(1034)** | **(2304)** |
| – net income/(losses) from financial instruments <br>held for trading or managed on a fair value basis<br>| **—** | **309** | **—** | **1320** | **(19)** | **—** | **(2304)** |
| – net income from assets and liabilities of insurance <br>businesses, including related derivatives, <br>measured at fair value through profit or loss<br>| **—** | **—** | **302** | **—** | **—** | **—** | **—** |
| – other income/(losses) | **—** | **—** | **7** | **—** | **—** | **(1034)** | **—** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **335** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) | Movement in Level 3 financial instruments (continued) |
|  | Assets | Assets | Assets | Assets | Liabilities | Liabilities | Liabilities |
|  | Financial <br>investments<br>| Trading <br>assets<br>| Designated and <br>otherwise <br>mandatorily <br>measured at fair <br>value through<br> profit or loss<br>| Derivatives | Trading <br>liabilities<br>| Designated <br>at fair value<br>| Derivatives |
|  | $m | $m | $m | $m | $m | $m | $m |
| At 1 Jan 2024 | 2618 | 4306 | 19788 | 2069 | 478 | 10928 | 2569 |
| Total gains/(losses) recognised in profit or loss  | (9) | 280 | 896 | 1037 | 18 | 496 | 1268 |
| – net income/(losses) from financial instruments <br>held for trading or managed on a fair value basis<br>|  | 280 |  | 1037 | 18 | 496 | 1268 |
| – net income from assets and liabilities of insurance <br>businesses, including related derivatives, <br>measured at fair value through profit or loss<br>|  |  | 684 |  |  |  |  |
| – other income/(losses) | (9) |  | 212 |  |  |  |  |
| Total gains/(losses) recognised in other <br>comprehensive income ('OCI')<sup>1</sup> <br>| (78) | (115) | (39) | (36) | (18) | (45) | (53) |
| Purchases  | 1670 | 4170 | 6261 |  | 924 |  |  |
| New issuances  |  |  |  |  |  | 6521 |  |
| Sales  | (97) | (1477) | (649) |  | (295) |  |  |
| Settlements  | (1011) | (967) | (6476) | (897) | (307) | (4750) | (568) |
| Transfers out  | (438) | (429) | (278) | (777) | (29) | (6048) | (1346) |
| Transfers in  | 79 | 907 | 241 | 753 | 13 | 2015 | 972 |
| At 31 Dec 2024 | 2734 | 6675 | 19744 | 2149 | 784 | 9117 | 2842 |
| Unrealised gains/(losses) recognised in profit or loss <br>relating to assets and liabilities held at 31 Dec 2024<br>|  | (150) | 11 | (1377) | (6) | (94) | (1343) |
| – net income/(losses) from financial instruments <br>held for trading or managed on a fair value basis<br>|  | (150) |  | (1377) | (6) |  | (1343) |
| – net income from assets and liabilities of insurance <br>businesses, including related derivatives, <br>measured at fair value through profit or loss<br>|  |  | (38) |  |  |  |  |
| – other income/(losses) |  |  | 49 |  |  | (94) |  |

---

1Included in 'financial investments: fair value gains/(losses)' in the year and 'exchange differences' in the consolidated statement of comprehensive income.

2Purchases were predominantly due to the growth of the Insurance business over the period.

3Includes $2.3bn of transfers in representing enhancements to the application of the levelling methodology, primarily impacting the Insurance business.

Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily

attributable to changes in price transparency and in the assessment of observability.

Effect of changes in significant unobservable assumptions to reasonably possible

alternatives

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions | Sensitivity of fair values to reasonably possible alternative assumptions |
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Reflected in profit or loss** | **Reflected in profit or loss** | **Reflected in OCI** | **Reflected in OCI** | Reflected in profit or loss | Reflected in profit or loss | Reflected in OCI | Reflected in OCI |
|  | **Favourable**<br>**changes**<br>| **Un-**<br>**favourable**<br>**changes**<br>| **Favourable**<br>**changes**<br>| **Un-**<br>**favourable**<br>**changes**<br>| Favourable<br>changes<br>| Un-<br>favourable<br>changes<br>| Favourable<br>changes<br>| Un-<br>favourable<br>changes<br>|
|  | **$m** | **$m** | **$m** | **$m** | $m | $m | $m | $m |
| Derivatives, trading assets and trading <br>liabilities<sup>1</sup> <br>| **483** | **(295)** | **—** | **—** | 481 | (313) |  |  |
| Financial assets and liabilities designated <br>and otherwise mandatorily measured at <br>fair value through profit or loss<br>| **1750** | **(1434)** | **—** | **—** | 1434 | (1141) |  |  |
| Financial investments | **—** | **—** | **49** | **(49)** | 21 | (21) | 47 | (50) |
| **At 31 Dec** | **2233** | **(1729)** | **49** | **(49)** | 1936 | (1475) | 47 | (50) |

---

1'Derivatives, trading assets and trading liabilities' are presented as one category to reflect the manner in which these instruments are risk-managed.

The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95% confidence interval. Methodologies take

account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and historical data.

When the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most favourable

or the most unfavourable change from varying the assumptions individually.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **336** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Key unobservable inputs to Level 3 financial instruments

The following table lists key unobservable inputs to Level 3 financial instruments and provides the range of those inputs at 31 December 2025.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  | Quantitative information about significant unobservable inputs in Level 3 valuations  |
|  | **Fair value** | **Fair value** |  |  | **2025** | **2025** | 2024 | 2024 |
|  | **Assets** | **Liabilities** | **Key valuation**<br>**techniques** | **Key unobservable**<br>**inputs** | **Full range**<br>**of inputs** | **Full range**<br>**of inputs** | Full range<br>of inputs | Full range<br>of inputs |
|  | **$m** | **$m** | **Key valuation**<br>**techniques** | **Key unobservable**<br>**inputs** | **Lower** | **Higher** | Lower | Higher |
| Private equity including strategic <br>investments<sup>1</sup><br>| **20960** | **1** | **Price – Net asset value** | **Current Value/Cost** | **0** | **75** | 0 | 291 |
| Structured notes | **—** | **10617** |  |  |  |  |  |  |
| – equity-linked notes | **—** | **7773** | **Model – Option model** | **Equity volatility** | **5%** | **132%** | 6% | 70% |
| – equity-linked notes | **—** | **7773** | **Model – Option model** | **Equity correlation** | **10%** | **100%** | 15% | 100% |
| – Foreign exchange-linked notes | **—** | **862** | **Model – Option model**  | **Foreign exchange** <br>**volatility** <br>| **3%** | **56%** | 3% | 35% |
| – other structured notes | **—** | **1982** |  |  |  |  |  |  |
| Derivatives | **2183** | **3442** |  |  |  |  |  |  |
| – interest rate derivatives | **745** | **966** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;securitisation swaps | **98** | **358** | **Model - Discounted cash flow** | **Prepayment rate** | **5%** | **10%** | 5% | 10% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;long-dated swaptions | **4** | **3** | **Model – Option model** | **Interest rate** <br>**volatility**<br>| **5%** | **20%** | 9% | 30% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;other interest rate derivatives | **643** | **605** |  |  |  |  |  |  |
| – Foreign exchange derivatives | **678** | **640** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange options | **320** | **299** | **Model – Option model** | **Foreign exchange** <br>**volatility**<br>| **0%** | **22%** | 1% | 26% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;other foreign exchange derivatives | **358** | **341** |  |  |  |  |  |  |
| – equity derivatives | **584** | **1315** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;long-dated single stock options | **110** | **476** | **Model – Option model** | **Equity volatility** | **5%** | **100%** | 6% | 118% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;other equity derivatives | **474** | **839** |  |  |  |  |  |  |
| – credit derivatives | **146** | **498** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;total return swaps | **56** | **345** | **Market proxy** | **Price** | **68** | **102** | 0 | 104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;other credit derivatives | **90** | **153** |  |  |  |  |  |  |
| – other derivatives | **30** | **23** |  |  |  |  |  |  |
| Bonds | **7475** | **41** | **Market proxy** | **Price** | **0** | **3342** | 0 | 140 |
| Loans | **3253** | **11** | **Market proxy** | **Price** | **0** | **112** | 0 | 103 |
| Other portfolios<sup>2</sup> | **2574** | **130** |  |  |  |  |  |  |
| **At 31 Dec 2025** | **36445** | **14242** |  |  |  |  |  |  |

---

1'Private equity including strategic investments' includes private equity, private credit and private equity fund, primarily held as part of our Insurance business and

for strategic investments.

2'Other portfolios' includes a range of smaller asset holdings.

The range of values above shows the highest and lowest unobservable inputs that have been used to value significant Level 3 exposures and

reflects the diversity of the underlying financial instruments in scope and subsequent differentiation in pricing.

Private equity including strategic investments

The 'private equity' holdings include private equity investments and private equity funds held as limited partners. The key unobservable input is the

current value of the underlying positions, determined using valuation techniques in line with the International Private Equity and Venture Capital

Valuation Guidelines. The inputs represented are an appropriate range of inputs normalised across different exposure types.

Prepayment rates

Prepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary

according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence, such

as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.

Market proxy

Market proxy pricing may be used for an instrument when specific market pricing is not available but there is evidence from instruments with

common characteristics. In some cases it might be possible to identify a specific proxy, but more generally evidence across a wider range of

instruments will be used to understand the factors that influence current market pricing and the manner of that influence.

Volatility

Volatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and

maturity of the option. Certain volatilities, typically those of a longer-dated nature, are unobservable and are estimated from observable data. The

range of unobservable volatilities reflects the wide variation in volatility inputs by reference market price.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **337** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Correlation

Correlation is a measure of the inter-relationship between two market variables and is expressed as a number between minus one and one. It is

used to value more complex instruments where the payout is dependent upon more than one market variable. There is a wide range of

instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is used.

In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations.

Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC trade prices, proxy

correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table reflects the wide variation

in correlation inputs by market variable pair.

Inter-relationships between key unobservable inputs

Key unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be

correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events. Furthermore,

the effect of changing market variables on the HSBC portfolio will depend on HSBC's net risk position in respect of each variable.

HSBC Holdings

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value | Basis of valuing HSBC Holdings' financial assets and liabilities measured at fair value |
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Level 1** | **Level 2** | **Total** | Level 1 | Level 2 | Total |
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| **Recurring fair value measurement** |  |  |  |  |  |  |
| **Assets at 31 Dec** |  |  |  |  |  |  |
| Trading assets | **—** | **—** | **—** | 709 |  | 709 |
| Financial assets with HSBC undertakings designated and <br>otherwise mandatorily measured at fair value<br>| **—** | **67217** | **67217** |  | 61286 | 61286 |
| Derivatives | **—** | **1942** | **1942** |  | 3054 | 3054 |
| **Liabilities at 31 Dec** |  |  |  |  |  |  |
| Financial liabilities designated at fair value | **—** | **52907** | **52907** |  | 41582 | 41582 |
| Derivatives | **—** | **3451** | **3451** |  | 5340 | 5340 |

---

---

| | |
|:---|:---|
| 13 | Fair values of financial instruments not carried at fair value |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Fair values of financial instruments not carried at fair value and bases of valuation | Fair values of financial instruments not carried at fair value and bases of valuation | Fair values of financial instruments not carried at fair value and bases of valuation | Fair values of financial instruments not carried at fair value and bases of valuation | Fair values of financial instruments not carried at fair value and bases of valuation | Fair values of financial instruments not carried at fair value and bases of valuation |
|  |  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Carrying**<br>**amount**<br>| **Quoted market**<br>**price Level 1**<br>| **Observable**<br>**inputs Level 2**<br>| **Significant**<br>**unobservable**<br>**inputs Level 3**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 31 Dec 2025** |  |  |  |  |  |
| **Assets** |  |  |  |  |  |
| Loans and advances to banks | **108462** | **—** | **107906** | **546** | **108452** |
| Loans and advances to customers<sup>1</sup> | **988399** | **—** | **14363** | **966429** | **980792** |
| Reverse repurchase agreements – non-trading | **298392** | **—** | **298545** | **—** | **298545** |
| Financial investments – at amortised cost | **182089** | **148925** | **31475** | **1283** | **181683** |
| **Liabilities** |  |  |  |  |  |
| Deposits by banks | **97952** | **—** | **97981** | **—** | **97981** |
| Customer accounts | **1786828** | **—** | **1787070** | **—** | **1787070** |
| Repurchase agreements – non-trading | **204974** | **—** | **204966** | **—** | **204966** |
| Debt securities in issue | **99675** | **—** | **99530** | **1490** | **101020** |
| Subordinated liabilities | **28406** | **—** | **31617** | **—** | **31617** |
| At 31 Dec 2024 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Loans and advances to banks | 102039 |  | 101007 | 1048 | 102055 |
| Loans and advances to customers | 930658 |  | 11435 | 906208 | 917643 |
| Reverse repurchase agreements – non-trading | 252549 |  | 252598 |  | 252598 |
| Financial investments – at amortised cost | 153973 | 120843 | 29493 | 724 | 151060 |
| Liabilities |  |  |  |  |  |
| Deposits by banks | 73997 |  | 74025 |  | 74025 |
| Customer accounts | 1654955 |  | 1655151 |  | 1655151 |
| Repurchase agreements – non-trading | 180880 |  | 180873 |  | 180873 |
| Debt securities in issue | 105785 |  | 105689 | 954 | 106643 |
| Subordinated liabilities | 25958 |  | 28262 |  | 28262 |

---

1Includes loans and advances to customers with observable inputs and short maturities.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **338** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale |
|  |  | **Fair value** | **Fair value** | **Fair value** | **Fair value** |
|  | **Carrying** <br>**amount**<br>| **Quoted market** <br>**price Level 1**<br>| **Observable** <br>**inputs Level 2**<br>| **Significant** <br>**unobservable** <br>**inputs Level 3**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| **At 31 Dec 2025** |  |  |  |  |  |
| **Assets** |  |  |  |  |  |
| Loans and advances to banks | **45** | **—** | **45** | **—** | **45** |
| Loans and advances to customers | **3493** | **—** | **1303** | **2190** | **3493** |
| Reverse repurchase agreements – non-trading | **—** | **—** | **—** | **—** | **—** |
| Financial investments – at amortised cost | **93** | **84** | **9** | **—** | **93** |
| **Liabilities** |  |  |  |  |  |
| Deposits by banks | **131** | **—** | **131** | **—** | **131** |
| Customer accounts | **16173** | **—** | **16173** | **—** | **16173** |
| Repurchase agreements – non-trading | **—** | **—** | **—** | **—** | **—** |
| Debt securities in issue | **495** | **—** | **495** | **—** | **495** |
| Subordinated liabilities | **—** | **—** | **—** | **—** | **—** |
| At 31 Dec 2024 |  |  |  |  |  |
| Assets |  |  |  |  |  |
| Loans and advances to banks | 144 |  | 144 |  | 144 |
| Loans and advances to customers | 977 |  | 11 | 966 | 977 |
| Reverse repurchase agreements – non-trading |  |  |  |  |  |
| Financial investments – at amortised cost |  |  |  |  |  |
| Liabilities |  |  |  |  |  |
| Deposits by banks |  |  |  |  |  |
| Customer accounts | 5399 |  | 5399 |  | 5399 |
| Repurchase agreements – non-trading |  |  |  |  |  |
| Debt securities in issue |  |  |  |  |  |
| Subordinated liabilities |  |  |  |  |  |

---

Other financial instruments not carried at fair value are typically short term in nature and reprice to current market rates frequently. Accordingly,

their carrying amount is a reasonable approximation of fair value. They include cash and balances at central banks, Hong Kong Government

certificates of indebtedness and Hong Kong currency notes in circulation, all of which are measured at amortised cost.

Valuation

Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. This may be different from the theoretical economic value attributed from an instrument's cash flows over

its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market prices are

available may differ from those of other companies.

Loans and advances to banks and customers

To determine the fair value of loans and advances to banks and customers, loans are segregated into portfolios of similar characteristics. Fair

values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation models

incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting over-the-counter

trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using assumptions that

HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination pricing for similar

loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time, we may engage a

third-party valuation specialist to measure the fair value of a pool of loans.

The fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants' expectations of credit losses

over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit-impaired loans, fair value

is estimated by discounting the future cash flows over the time period they are expected to be recovered.

Financial investments

The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are

determined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.

Deposits by banks and customer accounts

The fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are

estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.

Debt securities in issue and subordinated liabilities

Fair values in debt securities in issue and subordinated liabilities are determined using quoted market prices at the balance sheet date where

available, or by reference to quoted market prices for similar instruments.

Repurchase and reverse repurchase agreements – non-trading

Carrying amounts of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate fair values. This is

due to the fact that balances are generally short dated.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **339** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC Holdings

The methods used by HSBC Holdings to determine fair values of financial instruments for the purposes of measurement and disclosure are

described above.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Fair values of HSBC Holdings' financial instruments not carried at fair value on the balance sheet | Fair values of HSBC Holdings' financial instruments not carried at fair value on the balance sheet | Fair values of HSBC Holdings' financial instruments not carried at fair value on the balance sheet | Fair values of HSBC Holdings' financial instruments not carried at fair value on the balance sheet | Fair values of HSBC Holdings' financial instruments not carried at fair value on the balance sheet |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Carrying amount** | **Fair value**<sup>1</sup> | Carrying amount | Fair value<sup>1</sup> |
|  | **$m** | **$m** | $m | $m |
| **Assets at 31 Dec** |  |  |  |  |
| Loans and advances to HSBC undertakings  | **40500** | **41288** | 37677 | 38359 |
| Financial investments – at amortised cost | **15470** | **15470** | 10328 | 10335 |
| **Liabilities at 31 Dec** |  |  |  |  |
| Debt securities in issue  | **69024** | **70533** | 64320 | 65123 |
| Subordinated liabilities  | **26114** | **29073** | 23548 | 25911 |

---

1Fair values (other than Financial investments which are Level 1) were determined using valuation techniques with observable inputs (Level 2).

14Financial assets designated and otherwise mandatorily measured at fair

value through profit or loss

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** |  | 2024 |  |
|  | **Designated at** <br>**fair value**<br>| **Mandatorily** <br>**measured at** <br>**fair value**<br>| **Total** | Designated <br>at fair value<br>| Mandatorily <br>measured at <br>fair value<br>| Total |
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| Securities | **2820** | **119381** | **122201** | 2406 | 104093 | 106499 |
| – treasury and other eligible bills | **778** | **212** | **990** | 732 | 393 | 1125 |
| – debt securities  | **2042** | **68728** | **70770** | 1674 | 59904 | 61578 |
| – equity securities  | **—** | **50441** | **50441** |  | 43796 | 43796 |
| Loans and advances to banks and customers | **1122** | **7047** | **8169** | 951 | 6120 | 7071 |
| Other | **—** | **2693** | **2693** |  | 2199 | 2199 |
| **At 31 Dec** | **3942** | **129121** | **133063** | 3357 | 112412 | 115769 |

---

---

| | |
|:---|:---|
| 15 | Derivatives |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC | Notional contract amounts and fair values of derivatives by product contract type held by HSBC |
|  | **Notional contract amount** | **Notional contract amount** | **Fair value – Assets** | **Fair value – Assets** | **Fair value – Assets** | **Fair value – Liabilities** | **Fair value – Liabilities** | **Fair value – Liabilities** |
|  | **Trading** | **Hedging** | **Trading** | **Hedging** | **Total** | **Trading** | **Hedging** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Foreign exchange  | **13639520** | **108585** | **111012** | **1233** | **112245** | **110786** | **662** | **111448** |
| Interest rate  | **17272408** | **423761** | **190296** | **4946** | **195242** | **182569** | **4565** | **187134** |
| Equities  | **908649** | **—** | **15660** | **—** | **15660** | **21311** | **—** | **21311** |
| Credit  | **164160** | **—** | **1294** | **—** | **1294** | **2212** | **—** | **2212** |
| Commodity and other  | **191761** | **—** | **10542** | **—** | **10542** | **12992** | **—** | **12992** |
| **Gross total fair values** | **32176498** | **532346** | **328804** | **6179** | **334983** | **329870** | **5227** | **335097** |
| Offset (Note 31) |  |  |  |  | **(97243)** |  |  | **(97243)** |
| **At 31 Dec 2025** | **32176498** | **532346** | **328804** | **6179** | **237740** | **329870** | **5227** | **237854** |
| Foreign exchange  | 11706591 | 82161 | 142055 | 2738 | 144793 | 133910 | 75 | 133985 |
| Interest rate  | 17316173 | 406109 | 209794 | 4790 | 214584 | 212980 | 4930 | 217910 |
| Equities  | 768732 |  | 17116 |  | 17116 | 20643 |  | 20643 |
| Credit  | 143136 |  | 1756 |  | 1756 | 1769 |  | 1769 |
| Commodity and other  | 118180 |  | 3134 |  | 3134 | 2887 |  | 2887 |
| Gross total fair values | 30052812 | 488270 | 373855 | 7528 | 381383 | 372189 | 5005 | 377194 |
| Offset (Note 31) |  |  |  |  | (112746) |  |  | (112746) |
| At 31 Dec 2024 | 30052812 | 488270 | 373855 | 7528 | 268637 | 372189 | 5005 | 264448 |

---

The notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the

nominal value of transactions outstanding at the balance sheet date. They do not represent amounts at risk.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries |
|  | **Notional contract amount** | **Notional contract amount** | **Assets** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Liabilities** |
|  | **Trading** | **Hedging** | **Trading** | **Hedging** | **Total** | **Trading** | **Hedging** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Foreign exchange  | **48660** | **681** | **570** | **10** | **580** | **941** | **—** | **941** |
| Interest rate  | **21304** | **91600** | **801** | **561** | **1362** | **358** | **2152** | **2510** |
| **At 31 Dec 2025** | **69964** | **92281** | **1371** | **571** | **1942** | **1299** | **2152** | **3451** |
| Foreign exchange  | 51437 |  | 796 |  | 796 | 1015 |  | 1015 |
| Interest rate  | 30535 | 90074 | 1544 | 714 | 2258 | 487 | 3838 | 4325 |
| At 31 Dec 2024 | 81972 | 90074 | 2340 | 714 | 3054 | 1502 | 3838 | 5340 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **340** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Use of derivatives

For details regarding the use of derivatives, see page 202 under 'Market risk'.

Trading derivatives

Most of HSBC's derivative transactions relate to sales and trading activities. Sales activities include the structuring and marketing of derivative

products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities include market-making and

risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of generating revenue based on

spread and volume. Risk management activity is undertaken to manage the risk arising from client transactions, with the principal purpose of

retaining client margin. Other derivatives classified as held for trading include non-qualifying hedging derivatives.

Substantially all of HSBC Holdings' derivatives entered into with subsidiaries are managed in conjunction with financial liabilities.

Hedge accounting derivatives

HSBC applies hedge accounting to manage the following risks: interest rate and foreign exchange risks. Further details of how these risks arise

and how they are managed by the Group can be found in the 'Risk review'.

Hedged risk components

HSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign currency

risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise separately

identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are regarded as

being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition where HSBC

designates alternative benchmark rates as the hedged risk which may not have been separately identifiable upon initial designation, provided

HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated risk components account

for a significant portion of the overall changes in fair value or cash flows of the hedged items.

HSBC uses net investment hedges to hedge the structural foreign exchange risk related to net investments in foreign operations including

subsidiaries and branches whose functional currencies are different from that of the parent. When hedging with foreign exchange forward

contracts, the spot rate component of the foreign exchange risk is designated for an amount of net assets as the hedged risk.

Sources of hedge ineffectiveness may arise from basis risk, including but not limited to the discount rates used for calculating the fair value of

derivatives, hedges using instruments with a non-zero fair value, and notional and timing differences between the hedged items and hedging

instruments.

Fair value hedges

HSBC enters into fixed-for-floating interest rate swaps to manage the exposure to changes in fair value caused by movements in market interest

rates on certain fixed-rate financial instruments that are not measured at fair value through profit or loss, including debt securities held and issued.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| HSBC hedging instrument by hedged risk | HSBC hedging instrument by hedged risk | HSBC hedging instrument by hedged risk | HSBC hedging instrument by hedged risk | HSBC hedging instrument by hedged risk | HSBC hedging instrument by hedged risk |
|  | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** |
|  |  | **Carrying amount** | **Carrying amount** |  |  |
|  | **Notional amount**<sup>1,2</sup> | **Assets** | **Liabilities** | **Balance sheet** <br>**presentation** | **Change in fair value**<sup>3</sup> |
| **Hedged risk** | **$m** | **$m** | **$m** | **Balance sheet** <br>**presentation** | **$m** |
| Interest rate<sup>4</sup> | **233741** | **3851** | **4283** | **Derivatives** | **(661)** |
| **At 31 Dec 2025** | **233741** | **3851** | **4283** |  | **(661)** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Interest rate<sup>4</sup> | 190332 | 4180 | 4411 | Derivatives | (449) |
| At 31 Dec 2024 | 190332 | 4180 | 4411 |  | (449) |

---

1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at

the balance sheet date. They do not represent amounts at risk.

2The notional amount of non-dynamic fair value hedges is equal to $76,349m (2024: $71,916m), of which the weighted-average maturity date is April 2032 and

the weighted-average swap rate is 3.15% (2024: 3.24%).

3Used in effectiveness testing, which uses the full fair value change of the hedging instrument not excluding any component.

4The hedged risk 'interest rate' includes inflation risk.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **341** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk | HSBC hedged item by hedged risk |
|  | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Ineffectiveness** | **Ineffectiveness** |
|  | **Carrying amount** | **Carrying amount** | **Accumulated fair value** <br>**hedge adjustments included** <br>**in carrying amount**<sup>1</sup> | **Accumulated fair value** <br>**hedge adjustments included** <br>**in carrying amount**<sup>1</sup> |  | **Change in fair** <br>**value**<sup>2</sup> | **Recognised** <br>**in profit and** <br>**loss** |  |
|  | **Assets** | **Liabilities** | **Assets** | **Liabilities** | **Balance sheet** <br>**presentation** | **Change in fair** <br>**value**<sup>2</sup> | **Recognised** <br>**in profit and** <br>**loss** | **Profit and loss** <br>**presentation** |
| **Hedged risk** | **$m** | **$m** | **$m** | **$m** | **Balance sheet** <br>**presentation** | **$m** | **$m** | **Profit and loss** <br>**presentation** |
| Interest rate<sup>3</sup> | **115156** |  | **(1091)** |  | **Financial investments -** <br>**measured at fair value** <br>**through other** <br>**comprehensive income**<br>| **1513** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> | **2845** |  | **31** |  | **Financial investments -** <br>**measured at amortised** <br>**cost**<br>| **18** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> | **26052** |  | **62** | **—** | **Loans and advances to** <br>**customers**<br>| **157** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> | **—** |  | **—** |  | **Reverse repurchase** <br>**agreements – non-**<br>**trading**<br>| **—** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> |  | **53482** |  | **(370)** | **Debt securities in issue** | **(586)** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> |  | **201** |  | **—** | **Deposits by banks** | **2** | **(2)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate<sup>3</sup> |  | **2237** |  | **—** | **Customer accounts** | **1** |  |  |
| Interest rate<sup>3</sup> |  | **25818** |  | **(610)** | **Subordinated liabilities**<sup>4</sup> | **(446)** |  |  |
| **At 31 Dec 2025** | **144053** | **81738** | **(998)** | **(980)** |  | **659** | **(2)** |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Interest rate<sup>3</sup> | 93055 |  | (2701) |  | Financial investments - <br>measured at fair value <br>through other <br>comprehensive income<br>| (728) | (8) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate<sup>3</sup> | 492 |  | 11 |  | Financial investments - <br>measured at amortised <br>cost<br>| (14) | (8) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate<sup>3</sup> | 13915 |  | (104) |  | Loans and advances to <br>customers<br>| 16 | (8) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate<sup>3</sup> |  |  |  |  | Reverse repurchase <br>agreements – non-<br>trading<br>|  | (8) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate<sup>3</sup> |  | 72576 |  | (1800) | Debt securities in issue | 1110 | (8) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate<sup>3</sup> |  | 207 |  |  | Customer accounts |  |  | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
|  |  | 1205 |  | (266) | Subordinated liabilities | 57 |  |  |
| At 31 Dec 2024 | 107462 | 73988 | (2794) | (2066) |  | 441 | (8) |  |

---

1The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for

hedging gains and losses were liabilities of $257m (2024: $311m) for FVOCI assets and assets of $733m (2024: $745m) for debt issued.

2Used in effectiveness testing, which comprise an amount attributable to the designated hedged risk that can be a risk component.

3The hedged risk 'interest rate' includes inflation risk.

4From 2025, HSBC Holdings is presenting separately the carrying amount of 'Subordinated liabilities' hedged items from 'Debt securities in issue'.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| HSBC Holdings hedging instrument by hedged risk | HSBC Holdings hedging instrument by hedged risk | HSBC Holdings hedging instrument by hedged risk | HSBC Holdings hedging instrument by hedged risk | HSBC Holdings hedging instrument by hedged risk | HSBC Holdings hedging instrument by hedged risk |
|  | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** |
|  |  | **Carrying amount** | **Carrying amount** |  |  |
|  | **Notional amount**<sup>1,2</sup> | **Assets** | **Liabilities** | **Balance sheet** <br>**presentation** | **Change in fair value**<sup>3</sup> |
| **Hedged risk** | **$m** | **$m** | **$m** | **Balance sheet** <br>**presentation** | **$m** |
| Foreign currency | **681** | **10** | **—** | **Derivatives** | **9** |
| Interest rate | **91600** | **561** | **2152** | **Derivatives** | **1128** |
| **At 31 Dec 2025** | **92281** | **571** | **2152** |  | **1137** |
| Foreign currency |  |  |  | Derivatives |  |
| Interest rate | 90074 | 714 | 3838 | Derivatives | (1103) |
| At 31 Dec 2024 | 90074 | 714 | 3838 |  | (1103) |

---

1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at

the balance sheet date. They do not represent amounts at risk.

2The notional amount of non-dynamic fair value hedges is equal to $92,281m (2024: $90,074m), of which the weighted-average maturity date is July 2031 and

the weighted-average swap rate is 2.76% (2024: 2.78%). The majority of these hedges are internal to the Group.

3Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **342** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk | HSBC Holdings hedged item by hedged risk |
|  | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Hedged item** | **Ineffectiveness** | **Ineffectiveness** |
|  | **Carrying amount** | **Carrying amount** | **Accumulated fair value** <br>**hedge adjustments included** <br>**in carrying amount**<sup>1</sup> | **Accumulated fair value** <br>**hedge adjustments included** <br>**in carrying amount**<sup>1</sup> |  | **Change in** <br>**fair value**<sup>2</sup> | **Recognised in** <br>**profit** <br>**and loss** |  |
|  | **Assets** | **Liabilities** | **Assets** | **Liabilities** | **Balance sheet** <br>**presentation** | **Change in** <br>**fair value**<sup>2</sup> | **Recognised in** <br>**profit** <br>**and loss** | **Profit and loss**<br>**presentation** |
| **Hedged risk** | **$m** | **$m** | **$m** | **$m** | **Balance sheet** <br>**presentation** | **$m** | **$m** | **Profit and loss**<br>**presentation** |
| Foreign currency | **666** | **—** | **(9)** | **—** | **Investment in** <br>**subsidiaries**<br>| **(9)** |  |  |
| Interest rate | **—** | **55770** | **—** | **(710)** | **Debt securities in** <br>**issue**<br>| **(870)** | **(7)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate | **—** | **24488** | **—** | **(361)** | **Subordinated** <br>**liabilities**<sup>3</sup><br>| **(447)** | **(7)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| Interest rate | **9225** | **—** | **(39)** | **—** | **Loans and** <br>**advances to banks**<br>| **183** | **(7)** | **Net income from** <br>**financial instruments** <br>**held for trading or** <br>**managed on a fair** <br>**value basis** |
| **At 31 Dec 2025** | **9891** | **80258** | **(48)** | **(1072)** |  | **(1144)** | **(7)** |  |
| Foreign currency |  |  |  |  | Investment in <br>subsidiaries<br>|  |  |  |
| Interest rate |  | 78402 |  | (2423) | Debt securities<br>in issue<br>| 861 | (9) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate | 7769 |  | (244) |  | Loans and <br>advances to banks<br>| 233 | (9) | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| At 31 Dec 2024 | 7769 | 78402 | (244) | (2423) |  | 1094 | (9) |  |

---

1The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for

hedging gains and losses were assets of $1,142m (2024: $1,216m) for debt issued.

2Used in effectiveness testing, comprising amount attributable to the designated hedged risk that can be a risk component.

3From 2025, HSBC Holdings is presenting separately the carrying amount of 'Subordinated liabilities' hedged items from 'Debt securities in issue'.

For some debt securities held, HSBC manages interest rate risk in a dynamic risk management strategy. The assets in scope of this strategy are

high-quality fixed-rate debt securities, which may be sold to meet liquidity and funding requirements.

The interest rate risk of the HSBC fixed-rate debt securities issued is managed in a non-dynamic risk management strategy.

Cash flow hedges

HSBC's cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to manage the variability

in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates and foreign-currency basis.

HSBC applies macro cash flow hedging for interest rate risk exposures on portfolios of replenishing current and forecasted issuances of non-

trading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of future cash flows,

representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of their contractual

terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing both principal balances

and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash flow hedges are considered

to be dynamic hedges.

HSBC also hedges the variability in future cash flows on foreign-denominated financial assets and liabilities arising due to changes in foreign

exchange market rates with cross-currency swaps, which are considered dynamic hedges.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk | Hedging instrument by hedged risk |
|  | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedging instrument** | **Hedged item** | **Ineffectiveness** | **Ineffectiveness** |
|  |  | **Carrying amount** | **Carrying amount** |  | **Change in** <br>**fair value**<sup>2</sup> | **Change in fair** <br>**value**<sup>3</sup> | **Recognised in** <br>**profit**<br> **and loss**  | **Profit and loss** <br>**presentation** |
|  | **Notional** <br>**amount**<sup>1</sup><br>| **Assets** | **Liabilities** | **Balance sheet** <br>**presentation** | **Change in** <br>**fair value**<sup>2</sup> | **Change in fair** <br>**value**<sup>3</sup> | **Recognised in** <br>**profit**<br> **and loss**  | **Profit and loss** <br>**presentation** |
| **Hedged risk** | **$m** | **$m** | **$m** | **Balance sheet** <br>**presentation** | **$m** | **$m** | **$m** | **Profit and loss** <br>**presentation** |
| Foreign currency | **62334** | **1138** | **278** | **Derivatives** | **(376)** | **(376)** | **—** | **Net income from** <br>**financial** <br>**instruments held for** <br>**trading or managed** <br>**on a fair value basis** |
| Interest rate | **190020** | **1095** | **282** | **Derivatives** | **1256** | **1267** | **(11)** | **Net income from** <br>**financial** <br>**instruments held for** <br>**trading or managed** <br>**on a fair value basis** |
| **At 31 Dec 2025** | **252354** | **2233** | **560** |  | **880** | **891** | **(11)** |  |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Foreign currency | 47194 | 2088 | 68 | Derivatives | 2451 | 2451 |  | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| Interest rate | 215777 | 619 | 519 | Derivatives | (2954) | (2964) | 10 | Net income from <br>financial instruments <br>held for trading or <br>managed on a fair <br>value basis |
| At 31 Dec 2024 | 262971 | 2707 | 587 |  | (503) | (513) | 10 |  |

---

1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at

the balance sheet date. They do not represent amounts at risk.

2Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.

3Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **343** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| Reconciliation of equity and analysis of other comprehensive income by risk type | Reconciliation of equity and analysis of other comprehensive income by risk type | Reconciliation of equity and analysis of other comprehensive income by risk type |
|  | **Interest**<br> **rate**<br>| **Foreign**<br> **currency**<br>|
|  | **$m** | **$m** |
| Cash flow hedging reserve at 1 Jan 2025 | **(1056)** | **(23)** |
| Fair value gains/(losses) | **1267** | **(376)** |
| Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of: |  |  |
| Hedged items that have affected profit or loss<sup>1</sup> | **807** | **574** |
| Income taxes | **(541)** | **(31)** |
| Others | **(49)** | **(2)** |
| **Cash flow hedging reserve at 31 Dec 2025** | **428** | **142** |

---

---

| | | |
|:---|:---|:---|
| Cash flow hedging reserve at 1 Jan 2024 | (901) | (132) |
| Fair value gains/(losses) | (2964) | 2451 |
| Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of: |  |  |
| Hedged items that have affected profit or loss<sup>1</sup> | 2529 | (2430) |
| Income taxes | 81 | 1 |
| Others | 199 | 87 |
| Cash flow hedging reserve at 31 Dec 2024 | (1056) | (23) |

---

1Hedged items that have affected profit or loss are primarily recorded within interest income.

Net investment hedges

The Group applies hedge accounting in respect of certain net investments in non-US dollar functional currency foreign operations for changes in

spot exchange rates only. Hedging could be undertaken for Group structural exposure to changes in the US dollar to foreign currency exchange

rates using forward foreign exchange contracts or by financing with foreign currency borrowings. An economic relationship exists between the

hedged net investment and hedging instrument due to the shared foreign currency risk exposure. For further details of our structural foreign

exchange exposures, see page .

The aggregate positions at the reporting date and the performance indicators of both live and de-designated hedges are summarised below.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Hedges of net investment in foreign operations | Hedges of net investment in foreign operations | Hedges of net investment in foreign operations | Hedges of net investment in foreign operations | Hedges of net investment in foreign operations | Hedges of net investment in foreign operations | Hedges of net investment in foreign operations |
|  | **Carrying amount** | **Carrying amount** | **Nominal**<br> **amount** | **Amounts** <br>**recognised** <br>**in OCI**<sup>1</sup> | **Change in** <br>**fair value**<sup>2</sup> | **Hedge ineffectiveness** <br>**recognised in income** <br>**statement** |
|  | **Derivative**<br> **assets**<br>| **Derivative** <br>**liabilities**<br>| **Nominal**<br> **amount** | **Amounts** <br>**recognised** <br>**in OCI**<sup>1</sup> | **Change in** <br>**fair value**<sup>2</sup> | **Hedge ineffectiveness** <br>**recognised in income** <br>**statement** |
| **Description of hedged risk** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **2025** |  |  |  |  |  |  |
| Pound sterling-denominated structural foreign exchange | **58** | **(188)** | **17114** | **(291)** | **(1124)** | **—** |
| Swiss franc-denominated structural foreign exchange | **—** | **(7)** | **615** | **13** | **(76)** | **—** |
| Hong Kong dollar-denominated structural foreign exchange | **7** | **—** | **5761** | **(29)** | **(2)** | **—** |
| Other structural foreign exchange<sup>3</sup> | **30** | **(189)** | **22761** | **116** | **(791)** | **—** |
| **Total** | **95** | **(384)** | **46251** | **(191)** | **(1993)** | **—** |
| 2024 |  |  |  |  |  |  |
| Pound sterling-denominated structural foreign exchange | 397 | (1) | 15407 | 833 | 229 |  |
| Swiss franc-denominated structural foreign exchange | 10 |  | 556 | 89 | 40 |  |
| Hong Kong dollar-denominated structural foreign exchange | 1 | (3) | 5844 | (27) | (26) |  |
| Other structural foreign exchange<sup>3</sup> | 242 | (3) | 13160 | 907 | 499 |  |
| Total | 650 | (7) | 34967 | 1803 | 742 |  |

---

1Amount recognised in OCI for Swiss franc includes $110m (2024: $110m) related to de-designated hedge.

2Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.

3Other currencies include Euro, New Taiwan dollar, Singapore dollar, Polish zloty, South Korean won, UAE dirham, Indian rupee, Chinese renminbi, Kuwaiti dinar,

Qatari riyal, Indonesian rupiah, Thai baht, Malaysian ringgit and Philippine peso.

16Financial investments

---

| | | |
|:---|:---|:---|
| Carrying amount of financial investments | Carrying amount of financial investments | Carrying amount of financial investments |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Financial investments measured at fair value through other comprehensive income | **385122** | 339193 |
| – treasury and other eligible bills | **105075** | 112705 |
| – debt securities | **277867** | 224496 |
| – equity securities | **1755** | 1569 |
| – other instruments | **425** | 423 |
| Debt instruments measured at amortised cost | **182089** | 153973 |
| – treasury and other eligible bills | **23445** | 22148 |
| – debt securities | **158644** | 131825 |
| **At 31 Dec** | **567211** | 493166 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **344** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| Equity instruments measured at fair value through other comprehensive income | Equity instruments measured at fair value through other comprehensive income | Equity instruments measured at fair value through other comprehensive income |
|  | **Fair value** | **Dividends** <br>**recognised**<br>|
| **Type of equity instruments** | **$m** | **$m** |
| Investments required by central institutions | **634** | **27** |
| Business facilitation | **1045** | **28** |
| Others | **76** | **2** |
| **At 31 Dec 2025** | **1755** | **57** |
| Investments required by central institutions | 620 | 29 |
| Business facilitation | 886 | 29 |
| Others | 63 | 2 |
| At 31 Dec 2024 | 1569 | 60 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Weighted average yields of investment debt securities | Weighted average yields of investment debt securities | Weighted average yields of investment debt securities | Weighted average yields of investment debt securities | Weighted average yields of investment debt securities |
| **Up to 1**<br> **year**<br>| **1 to 5** <br>**years**<br>| **5 to 10** <br>**years**<br>| **Over 10** <br>**years**<br>|  |
|  | **Yield** | **Yield** | **Yield** | **Yield** |
|  | **%** | **%** | **%** | **%** |
| **Debt securities measured at fair value through other comprehensive income** |  |  |  |  |
| US Treasury  | **2.9** | **3.7** | **2.3** | **2.3** |
| US Government agencies  | **—** | **3.0** | **4.4** | **3.5** |
| US Government-sponsored agencies  | **1.8** | **1.6** | **4.1** | **1.8** |
| UK Government  | **—** | **3.8** | **2.6** | **1.9** |
| Hong Kong Government  | **1.4** | **2.5** | **2.7** | **—** |
| Other governments  | **2.8** | **4.2** | **4.3** | **2.2** |
| Asset-backed securities  | **—** | **4.4** | **3.9** | **3.3** |
| Corporate debt and other securities  | **3.2** | **3.9** | **4.2** | **1.3** |
| **Debt securities measured at amortised cost** |  |  |  |  |
| US Treasury  | **3.2** | **3.8** | **3.7** | **2.0** |
| US Government agencies  | **4.5** | **4.3** | **4.0** | **4.7** |
| US Government-sponsored agencies  | **—** | **2.9** | **3.7** | **2.9** |
| UK Government  | **—** | **3.3** | **3.0** | **—** |
| Hong Kong Government  | **2.5** | **2.7** | **—** | **—** |
| Other governments  | **3.2** | **3.1** | **2.5** | **8.0** |
| Asset-backed securities  | **—** | **—** | **7.3** | **—** |
| Corporate debt and other securities  | **3.2** | **3.4** | **3.8** | **4.8** |

---

The maturity distributions of ABSs are presented in the above table on the basis of contractual maturity dates. The weighted average yield for each

range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2025 by the book amount of debt

securities at that date. The yields do not include the effect of related derivatives.

HSBC Holdings

---

| | | |
|:---|:---|:---|
| HSBC Holdings carrying amount of financial investments | HSBC Holdings carrying amount of financial investments | HSBC Holdings carrying amount of financial investments |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Debt instruments measured at amortised cost** |  |  |
| Treasury and other eligible bills | **15470** | 9556 |
| Debt securities | **—** | 772 |
| **At 31 Dec** | **15470** | 10328 |

---

---

| | |
|:---|:---|
| 17 | Assets pledged, collateral received and assets transferred |

---

Assets pledged<sup>1</sup>

---

| | | |
|:---|:---|:---|
| Financial assets pledged as collateral | Financial assets pledged as collateral | Financial assets pledged as collateral |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Treasury bills and other eligible securities  | **23482** | 17713 |
| Loans and advances to banks  | **16452** | 14880 |
| Loans and advances to customers  | **20416** | 24524 |
| Debt securities  | **124971** | 91975 |
| Equity securities | **51213** | 51642 |
| Other  | **61594** | 63386 |
| **Assets pledged at 31 Dec** | **298128** | 264120 |

---

The value of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case of

securitisations and covered bonds, the amount of liabilities issued plus mandatory over-collateralisation is less than the book value of the pool of

assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a floating charge

over all the assets placed to secure any liabilities under settlement accounts.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **345** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

These transactions are conducted under terms that are usual and customary for collateralised transactions including, where relevant, standard

securities lending and borrowing, repurchase agreements and derivative margining. HSBC places both cash and non-cash collateral in relation to

derivative transactions.

Hong Kong currency notes in circulation are secured by the deposit of funds in respect of which the Hong Kong Government certificates of

indebtedness are held.

---

| | | |
|:---|:---|:---|
| Financial assets pledged as collateral which the counterparty has the right to sell or repledge | Financial assets pledged as collateral which the counterparty has the right to sell or repledge | Financial assets pledged as collateral which the counterparty has the right to sell or repledge |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Trading assets  | **95938** | 84863 |
| Financial investments | **64163** | 47248 |
| **At 31 Dec** | **160101** | 132111 |

---

Collateral received<sup>1</sup>

The fair value of assets accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements, swaps of securities

and derivative margining that HSBC is permitted to sell or repledge in the absence of default was $647.7bn (2024: $515.3bn). The fair value of any

such collateral sold or repledged was $378.8bn (2024: $293.5bn).

HSBC is obliged to return equivalent securities. These transactions are conducted under terms that are usual and customary to standard securities

lending, reverse repurchase agreements and derivative margining.

Assets transferred<sup>1</sup>

The assets pledged include transfers to third parties that do not qualify for derecognition, including secured borrowings such as debt securities

held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as swaps

of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full while a related liability,

reflecting the Group's obligation to repurchase the assets for a fixed price at a future date, is also recognised on the balance sheet.

Where securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the non-cash collateral

received is not recognised on the balance sheet. The Group is unable to use, sell or pledge the transferred assets for the duration of the

transaction, and remains exposed to interest rate risk and credit risk on these pledged assets.

---

| | | |
|:---|:---|:---|
| Transferred financial assets not qualifying for full derecognition and associated financial liabilities | Transferred financial assets not qualifying for full derecognition and associated financial liabilities | Transferred financial assets not qualifying for full derecognition and associated financial liabilities |
|  | **Carrying amount of:** | **Carrying amount of:** |
|  | **Transferred**<br>**assets**<br>| **Associated**<br>**liabilities**<br>|
|  | **$m** | **$m** |
| **At 31 Dec 2025** |  |  |
| Repurchase agreements | **109524** | **96980** |
| Securities lending agreements | **62679** | **2005** |
| At 31 Dec 2024 |  |  |
| Repurchase agreements | 83585 | 75625 |
| Securities lending agreements | 58232 | 4361 |

---

1Excludes assets classified as held for sale.

---

| | |
|:---|:---|
| 18 | Interests in associates and joint ventures |

---

---

| | | |
|:---|:---|:---|
| Carrying amount of HSBC's interests in associates and joint ventures |  |  |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Interests in associates | **29469** | 28777 |
| Interests in joint ventures | **108** | 132 |
| **Interests in associates and joint ventures** | **29577** | 28909 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Principal associates of HSBC | Principal associates of HSBC | Principal associates of HSBC | Principal associates of HSBC | Principal associates of HSBC |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Carrying amount** | **Fair value**<sup>1</sup> | Carrying amount | Fair value<sup>1</sup> |
|  | **$m** | **$m** | $m | $m |
| Bank of Communications Co., Limited | **22456** | **11713** | 22367 | 11631 |
| Saudi Awwal Bank | **5511** | **5499** | 5027 | 5705 |

---

1Principal associates are listed on recognised stock exchanges. The fair values are based on the quoted market prices of the shares held (Level 1 in the fair value

hierarchy).

---

| | | | |
|:---|:---|:---|:---|
| Principal associates of HSBC (continued) | Principal associates of HSBC (continued) | Principal associates of HSBC (continued) | Principal associates of HSBC (continued) |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **Jurisdiction of incorporation**<br>**and principal place of business**<br>| **Principal activity** | **HSBC's interest**<sup>1</sup><br>**%**<br>|
| Bank of Communications Co., Limited | **Mainland China** | **Banking services** | **16.00** |
| Saudi Awwal Bank | **Saudi Arabia** | **Banking services** | **31.00** |

---

1The Group's interest in Bank of Communications Co., Limited ('BoCom') reduced from 19.03% to 16.00% following the completion of a capital issuance by

BoCom on 17 June 2025. There has been no percentage change in HSBC's shareholding interest in the Saudi Awwal Bank when compared with 2024.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **346** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | |
|:---|:---|:---|:---|
| Share of profit in associates and joint ventures |  |  |  |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Bank of Communications Co., Limited | **2132** | 2241 | 2250 |
| Saudi Awwal Bank | **665** | 596 | 538 |
| Other associates and joint ventures | **114** | 75 | 19 |
| **Share of profit in associates and joint ventures** | **2911** | 2912 | 2807 |
| Less: Impairment of interest in BoCom | **(1000)** |  | (3000) |

---

A list of all associates and joint ventures is set out in Note 38.

Bank of Communications Co., Limited

The results for the period ended 31 December 2025 included a $1.1bn loss from the dilution of our shareholding and a $1.0bn impairment to

the carrying amount of the Group's interest in BoCom.

The Group's interest in BoCom reduced from 19.03% to 16.00% following the completion of a capital issuance by BoCom on 17 June 2025. The

dilution of the Group's interest resulted in a pre-tax loss of $1.1bn, recognised in 'Other operating income/(expense)' in the Group's consolidated

income statement. The loss is not deductible for tax purposes as a consequence of our shareholding in BoCom being held for long-term

investment purposes.

In addition, the Group's impairment test on the carrying amount at 30 June 2025 resulted in an impairment of $1.0bn, as the recoverable amount

as determined by a value-in-use calculation was lower than the carrying amount. The impairment was recognised within 'Impairment of interest in

associate'. Consistent with prior periods, our value-in-use ('VIU') calculation uses both historical experience and market participant views to

estimate future cash flows, relevant discount rates and associated capital assumptions. No further impairment (or reversal) was required for the

period from 1 July 2025 to 31 December 2025 based on results of the quarterly impairment tests performed.

The impacts of the capital issuance have been incorporated in both the carrying amount and the VIU. The VIU assumptions incorporate updated

expectations, taking into account both the impact of the capital issuance on BoCom's financial position, and the latest macroeconomic, policy

and industry factors in mainland China.

We remain strategically committed to mainland China and continue our valued, strategic partnership with BoCom.

HSBC's Interest

The Group's investment in BoCom continues to be classified as an associate. Significant influence in BoCom was established with consideration of

all relevant factors, including the Group's latest shareholding, representation on BoCom's Board of Directors, and participation in a resource and

experience sharing agreement ('RES'). Under the RES, HSBC staff have been seconded to assist in the maintenance of BoCom's financial and

operating policies. Investments in associates are recognised using the equity method of accounting in accordance with IAS 28 'Investments in

Associates and Joint Ventures', whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the

Group's share of associate's net assets. An impairment test is required if there is any indication of impairment or reversal.

The fair value of the Group's investment in BoCom had been below its carrying amount. No impairment (or reversal) was required for the year

ended 31 December 2024.

If the Group did not have significant influence in BoCom, the investment would be carried at fair value rather than the current carrying amount.

Impairment testing

The Group's impairment test at 30 June 2025 concluded that there were indications of impairment. As part of this assessment, an impairment test

on the carrying amount with an updated VIU calculation was performed which resulted in an impairment of $1.0bn, as the recoverable amount as

determined by the VIU calculation was lower than the carrying amount. The impairment was recognised within 'Impairment of interest in

associate'. The impairment loss is not deductible for tax purposes.

At 31 December 2025, no further impairment (or reversal) was required and the investment had a carrying amount of $22.5bn (2024: $22.4bn) and

a fair value of $11.7bn (2024: $11.6bn).

Basis of recoverable amount

The VIU calculation uses discounted cash flow projections based on management's best estimates of future earnings available to ordinary

shareholders prepared in accordance with IAS 36 'Impairment of Assets'. Those cash flows used estimates based on BoCom's current condition

and so do not include estimated cash flows arising from uncommitted future actions that may affect the performance of the investment which will

be considered at the relevant time should they arise. Significant management judgement is required in arriving at the best estimate.

The VIU may increase or decrease depending on the effect of changes to model inputs. The main model inputs are described below and are based

on factors observed at period-end. The factors that could result in increases or reductions in the VIU include changes in BoCom's short-term

performance, a change in regulatory capital requirements or revisions to the forecast of BoCom's future profitability.

There are two main components to the VIU calculation. The first component is management's best estimate of BoCom's earnings. Forecast

earnings growth over the short to medium term continues to be lower than recent (within the last five years) actual growth, and reflects the impact

of recent macroeconomic, policy and industry factors in mainland China. As a result of management's intent to continue to retain its investment for

the 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.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **347** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Key assumptions in value in use calculation

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% (2024: 3.00%) for periods after 2029, 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% (2024: 3.25%) for periods after 2029, which is the rate that assets are expected to grow to achieve long-

term profit growth of 3.00%.

–Discount rate: 8.08% (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 8.7% (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 0.67% to 0.87% (2024: 0.74% to 0.93%) in

the short to medium term, reflecting reported credit experience in mainland China. For periods after 2029, the ratio is 0.87% (2024: 0.97%),

reflecting the anticipated continuation of BoCom's lower average ECL as a percentage of loans and advances to customers experienced in

recent years.

–Risk-weighted assets as a percentage of total assets: ranges from 62.0% to 64.2% (2024: 62.0% to 62.5%) in the short to medium term,

reflecting higher risk-weights in the short term followed by an expected reversion to recent historical levels. For periods after 2029, the ratio is

62.0% (2024: 62.0%), which continues to be similar to BoCom's actual results in recent years.

–Loans and advances to customers growth rate: ranges from 7.5% to 8.0% (2024: 7.5% to 9.5%) in the short to medium term, which is similar

to BoCom's actual results in recent years. Decreases in the forecast growth rate of loans and advances to customers result in lower forecast

ECL.

–Operating income growth rate: ranges from 0.5% to 7.4% (2024: 0.1% to 9.9%) in the short to medium term, which is similar to BoCom's

actual results in recent years. The projected net interest income over the short to medium term reduced to reflect expected pressure on net

interest margin compared with the prior period, which led to a net reduction in the VIU.

–Cost-income ratio: ranges from 34.8% to 40.0% (2024: 34.6% to 39.8%) in the short to medium term. These ratios are similar to BoCom's

actual results in recent years.

–Long-term effective tax rate: 15.0% (2024: 15.0%) for periods after 2029, which is higher than the recent historical average, and aligned to the

minimum tax rate as proposed by the OECD/Group of 20 ('G20') Inclusive Framework on Base Erosion and Profit Shifting.

–Capital requirements: capital adequacy ratio of 12.5% (2024: 12.5%) and tier 1 capital adequacy ratio of 9.5% (2024: 9.5%), based on BoCom's

capital risk appetite and capital requirements respectively.

The following table illustrates the impact on the carrying amount of reasonably possible changes to key assumptions used in the VIU calculation.

This reflects the sensitivity of each key assumption on its own and it is possible that more than one favourable and/or unfavourable change may

occur at the same time. The selected rates of reasonably possible changes to key assumptions are based on external analysts' forecasts, statutory

requirements and other relevant external data sources, which can change period to period. Unless specified, favourable and unfavourable changes

are consistently applied throughout short-to-medium and long-term forecast years, based on a straight-line average of the base case assumption.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Sensitivity of the carrying amount to the key VIU assumptions | Sensitivity of the carrying amount to the key VIU assumptions | Sensitivity of the carrying amount to the key VIU assumptions | Sensitivity of the carrying amount to the key VIU assumptions | Sensitivity of the carrying amount to the key VIU assumptions |
|  | **Favourable change** | **Favourable change** | **Unfavourable change** | **Unfavourable change** |
|  |  | **Reversal of impairment/**<br>**VIU headroom**<br>|  | **Impairment** |
|  | **bps** | **$bn** | **bps** | **$bn** |
| **At 31 Dec 2025** |  |  |  |  |
| Long-term profit growth rate | **30** | **2.1** | **(104)** | **(6.0)** |
| Long-term asset growth rate | **(129)** | **9.1** | **5** | **(0.5)** |
| Discount rate | **(98)** | **4.6** | **232** | **(5.5)** |
| Expected credit losses as a percentage of loans and advances to <br>customers<sup>1</sup><br>| **2025 to 2029: 64**<br>**2030 onwards: 84**<br>| **1.8** | **2025 to 2029: 90**<br>**2030 onwards: 98**<br>| **(4.7)** |
| Risk-weighted assets as a percentage of total assets  | **(184)** | **0.8** | **182** | **(1.7)** |
| Loans and advances to customers growth rate | **(138)** | **1.8** | **455** | **(7.1)** |
| Operating income growth rate | **101** | **3.7** | **(100)** | **(3.8)** |
| Cost-income ratio  | **(281)** | **0.4** | **292** | **(6.4)** |
| Long-term effective tax rate | **(426)** | **1.7** | **1000** | **(4.0)** |
| Capital requirements – capital adequacy ratio | **—** | **—** | **363** | **(13.0)** |
| Capital requirements – tier 1 capital adequacy ratio | **—** | **—** | **333** | **(6.9)** |
| At 31 Dec 2024 |  |  |  |  |
| Long-term profit growth rate | 55 | 4.0 | (96) | (5.4) |
| Long-term asset growth rate | (121) | 8.6 | 30 | (2.8) |
| Discount rate | (143) | 5.4 | 287 | (6.4) |
| Expected credit losses as a percentage of loans and advances to <br>customers<sup>1</sup><br>| 2024 to 2028: 66 <br>2029 onwards: 91<br>| 4.0 | 2024 to 2028: 108<br>2029 onwards: 104<br>| (4.3) |
| Risk-weighted assets as a percentage of total assets | (132) | 0.8 | 234 | (1.7) |
| Loans and advances to customers growth rate | (217) | 3.4 | 340 | (6.1) |
| Operating income growth rate | 76 | 2.7 | (81) | (3.3) |
| Cost-income ratio | (190) | 0.2 | 380 | (7.1) |
| Long-term effective tax rate | (426) | 1.6 | 1000 | (4.0) |
| Capital requirements – capital adequacy ratio |  |  | 372 | (14.3) |
| Capital requirements – tier 1 capital adequacy ratio |  |  | 270 | (6.7) |

---

1The expected credit losses as a percentage of loans and advances to customers reflect selected favourable and unfavourable rates.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **348** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Considering the interrelationship of the changes set out in the table above, management estimates that the reasonably possible range of VIU is

$13.4bn to $31.0bn (2024: $13.5bn to $30.8bn), acknowledging that the fair value of the Group's investment has ranged from $7.5bn to $13.1bn

over the last five years as at the date of the impairment tests. The possible range of VIU is based on impacts set out in the table above arising

from the favourable/unfavourable change in the operating income in the short to medium term, the expected credit losses as a percentage of loans

and advances to customers, and a 50bps increase/decrease in the discount rate. All other long-term assumptions, and the basis of the CMC have

been kept unchanged when determining the reasonably possible range of the VIU.

Selected financial information of BoCom

The statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2025, HSBC included the associate's results

on the basis of the financial statements for the 12 months ended 30 September 2025, taking into account any known changes in the subsequent

period from 1 October 2025 to 31 December 2025 that would have materially affected the results.

---

| | | |
|:---|:---|:---|
| Selected balance sheet information of BoCom | Selected balance sheet information of BoCom | Selected balance sheet information of BoCom |
|  | At 30 Sep | At 30 Sep |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Cash and balances at central banks  | **104220** | 99663 |
| Due from and placements with banks and other financial institutions  | **123034** | 122607 |
| Loans and advances to customers  | **1265800** | 1128603 |
| Other financial assets  | **657196** | 587721 |
| Other assets  | **66665** | 61086 |
| **Total assets**  | **2216915** | 1999680 |
| Due to and placements from banks and other financial institutions  | **346808** | 326742 |
| Deposits from customers | **1324734** | 1195590 |
| Other financial liabilities  | **320154** | 282894 |
| Other liabilities  | **40284** | 38082 |
| **Total liabilities**  | **2031980** | 1843308 |
| **Total equity**  | **184935** | 156372 |

---

---

| | | |
|:---|:---|:---|
| Reconciliation of BoCom's total shareholders' equity to the carrying amount in HSBC's consolidated financial statements | Reconciliation of BoCom's total shareholders' equity to the carrying amount in HSBC's consolidated financial statements | Reconciliation of BoCom's total shareholders' equity to the carrying amount in HSBC's consolidated financial statements |
|  | At 30 Sep | At 30 Sep |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Equity attributable to shareholders | **183347** | 154748 |
| Other equity instruments | **(20708)** | (23946) |
| Equity attributable to shareholders less other equity instruments | **162639** | 130802 |
| The Group's share of equity<sup>1</sup> | **26595** | 25284 |
| Impairment<sup>2</sup> | **(4139)** | (2917) |
| **Carrying amount**  | **22456** | 22367 |

---

1This balance includes goodwill originally arising on acquisition and reflects the impacts from the dilution of our shareholding in BoCom as well as BoCom's

interim dividend for the six months ended 30 June 2025.

2This balance includes the impact of foreign exchange movements.

---

| | | |
|:---|:---|:---|
| Selected income statement information of BoCom | Selected income statement information of BoCom | Selected income statement information of BoCom |
|  | For the 12 months ended 30 Sep | For the 12 months ended 30 Sep |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Net interest income  | **23886** | 23180 |
| Net fee and commission income  | **5142** | 5315 |
| Credit and impairment losses | **(7056)** | (7410) |
| Depreciation and amortisation  | **(2772)** | (2589) |
| Tax expense  | **(1402)** | (835) |
| **Profit for the year**  | **13319** | 12922 |
| Other comprehensive income  | **292** | 1361 |
| **Total comprehensive income**  | **13611** | 14283 |
| Dividends received from BoCom  | **744** | 745 |

---

Saudi Awwal Bank

The Group's investment in Saudi Awwal Bank ('SAB') is classified as an associate. HSBC is the largest shareholder in SAB with a shareholding of

31%. Significant influence in SAB is established via representation on the Board of Directors. Investments in associates are recognised using the

equity method of accounting in accordance with IAS 28, as described previously for BoCom.

Impairment testing

The fair value of the Group's investment in SAB was marginally below the carrying amount as at 31 December 2025. An impairment test on the

carrying amount with a VIU calculation was performed. The recoverable amount as determined by the VIU calculation was higher than the carrying

amount using discounted cash flow projections. SAB has also had increasing profits each year. On that basis, the Group has concluded there is no

indication of impairment.

The VIU calculation was based on management's best estimates of future earnings available to ordinary shareholders prepared in accordance with

IAS 36 'Impairment of Assets'. Those cash flows used estimates based on SAB's current condition and so do not include estimated cash flows

arising from uncommitted future actions that may affect the performance of the investment, which will be considered at the relevant time should

they arise.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **349** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| 19 | Investments in subsidiaries  |

---

---

| | | | |
|:---|:---|:---|:---|
| Main subsidiaries of HSBC Holdings<sup>1</sup> | Main subsidiaries of HSBC Holdings<sup>1</sup> | Main subsidiaries of HSBC Holdings<sup>1</sup> | Main subsidiaries of HSBC Holdings<sup>1</sup> |
|  | **At 31 Dec 2025** | **At 31 Dec 2025** | **At 31 Dec 2025** |
|  | **Place of** <br>**incorporation or** <br>**registration** | **HSBC's** <br>**interest %** |  |
|  | **Place of** <br>**incorporation or** <br>**registration** | **HSBC's** <br>**interest %** | **Share class** |
| **Europe** |  |  |  |
| HSBC Bank plc  | **England and Wales** | **100** | **£1 Ordinary, $0.01 Non-Cumulative Third Dollar** <br>**Preference**<br>|
| HSBC UK Bank plc | **England and Wales** | **100** | **£1 Ordinary** |
| HSBC Continental Europe | **France** | **99.99** | **€5 Actions** |
| **Asia** |  |  |  |
| Hang Seng Bank Limited<sup>2,3</sup> | **Hong Kong** | **63.43** | **HK$5 Ordinary** |
| HSBC Bank (China) Company Limited<sup>4</sup> | **People's Republic of** <br>**China**<br>| **100** | **CNY1 Ordinary** |
| HSBC Bank Malaysia Berhad  | **Malaysia** | **100** | **Ordinary no par value** |
| HSBC Life (International) Limited  | **Bermuda** | **100** | **HK$1 Ordinary** |
| The Hongkong and Shanghai Banking Corporation Limited  | **Hong Kong** | **100** | **Ordinary no par value** |
| **Middle East, North Africa and Türkiye** |  |  |  |
| HSBC Bank Middle East Limited  | **United Arab Emirates** | **100** | **$1 Ordinary and $1 Preference shares**  |
| **North America** |  |  |  |
| HSBC Bank USA, N.A.  | **US** | **100** | **$100 Common and $0.01 Preference** |
| **Latin America** |  |  |  |
| HSBC Mexico, S.A., Institución de Banca Múltiple,<br>Grupo Financiero HSBC <br>| **Mexico** | **99.99** | **MXN2 Ordinary** |

---

1Main subsidiaries are either held directly or indirectly via intermediate holding companies. There has been no material percentage change in HSBC's

shareholding for its existing main subsidiaries since 2024.

2In addition to the strategic holding disclosed above, the Group held 0.07% (2024: 0.06%) shareholding as part of its trading books.

3Based on the latest corporate substantial shareholding notice filed with Hong Kong Exchange and Clearing Limited on 21 June 2024, the Group's shareholding in

Hang Seng Bank on 18 June 2024 was 63.04%. Movements in our shareholding since 18 June 2024 are reflected in the above table. Hang Seng Bank became a

wholly owned subsidiary of the Group following the completion of the privatisation on 26 January 2026. See Note 37 for further details.

4Represents a wholly foreign owned limited liability company registered under the laws of People's Republic of China.

Details of the debt, subordinated debt and preference shares issued by the main subsidiaries to parties external to the Group are included in Note

26 'Debt securities in issue' and Note 29 'Subordinated liabilities', respectively.

A list of all related undertakings is set out in Note 38. The principal countries and territories of operation are the same as the countries and

territories of incorporation except for HSBC Life (International) Limited, which operates mainly in Hong Kong.

HSBC is structured as a network of regional banks and locally incorporated regulated banking entities. Each bank is separately capitalised in

accordance with applicable prudential requirements and maintains a capital buffer consistent with the Group's risk appetite for the relevant country

or region. HSBC's capital management process is incorporated in the financial resource plan, which is approved by the Board.

HSBC Holdings is the primary provider of equity capital to its subsidiaries and also provides them with non-equity capital where necessary. These

investments are substantially funded by HSBC Holdings' issuance of equity and non-equity capital, and by profit retention.

As part of its capital management process, HSBC Holdings seeks to maintain a balance between the composition of its capital and its investment

in subsidiaries. Subject to this, there is no current or foreseen impediment to HSBC Holdings' ability to provide funding for such investments.

During 2025, consistent with the Group's capital plan, the Group's material subsidiaries did not experience any significant restrictions on paying

dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from

material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things,

their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.

The amount of guarantees by HSBC Holdings in favour of other Group entities is set out in Note 33.

Information on structured entities consolidated by HSBC where HSBC owns less than 50% of the voting rights is included in Note 20 'Structured

entities'. In each of these cases, HSBC controls and consolidates an entity when it is exposed, or has rights, to variable returns from its

involvement with the entity and has the ability to affect those returns through its power over the entity.

**Impairment testing of investments in subsidiaries**

At each reporting period end, HSBC Holdings reviews investments in subsidiaries for indicators of impairment. An impairment is recognised when

the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment's fair value less

costs of disposal and its VIU, in accordance with the requirements of IAS 36. The VIU is calculated by discounting management's cash flow

projections for the investment. The cash flows represent the free cash flows based on the subsidiary's binding capital requirements.

We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:

–Management's judgement in estimating future cash flows: The cash flow projections for each investment are based on the latest approved

plans, which include forecast capital available for distribution based on the capital requirements of the subsidiary, taking into account minimum

and core capital requirements and factoring in reasonably possible uncertainties. For the impairment test as at 31 December 2025, cash flow

projections until the end of 2030 were considered in line with our internal planning horizon. Our cash flow projections include known and

observable climate-related opportunities and costs associated with our sustainable products and operating model.

–Long-term growth rates: The long-term growth rate is used to extrapolate the free cash flows in perpetuity because of the long-term

perspective of the legal entity. The growth rate reflects long-term inflation for the country or territory within which the investment operates.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **350** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

–Discount rates: The rate used to discount the cash flows is based on the cost of capital assigned to each investment, which is derived using a

CAPM and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-

free rate and a premium to reflect the inherent risk of the business being evaluated as well as leverage. These variables are based on the

market's assessment of the economic variables and management's judgement. The discount rates for each investment are refined to reflect

the rates of inflation for the countries or territories within which the investment operates. In addition, for the purposes of testing investments

for impairment, management supplements this process by comparing the discount rates derived using the internally generated CAPM, with

cost of capital rates produced by external sources for businesses operating in similar markets. The impacts from climate risk are included to the

extent that they are observable in discount rates and asset prices.

The carrying amount of HSBC Holdings' investments in subsidiaries was $157.7bn at 31 December 2025 (2024: $152.3bn), an increase of $5.4bn

during the year, primarily reflecting additional capital contributions of $1.9bn to HSBC Asia Holdings Limited and $0.7bn to HSBC UK Bank plc,

together with a $2.8bn impairment reversal relating to HSBC Overseas Holdings (UK) Limited. The impairment reversal was driven by improved

business performance, revenue growth and continued cost discipline, which strengthened the outlook of its principal subsidiary HSBC North

America Holdings Inc. Cumulative impairment losses recognised for HSBC Overseas Holdings (UK) Limited were $18.8bn (2024: $21.6bn), with

the carrying amount increasing to $16.8bn (2024: $14bn).

---

| | | | |
|:---|:---|:---|:---|
| Impairment test results | Impairment test results | Impairment test results | Impairment test results |
| **Investments** | **Recoverable** <br>**amount**<br>| **Discount** <br>**rate**<br>| **Long-term**<br> **growth rate**<br>|
|  | **$m** | **%** | **%** |
| **HSBC North America Holdings Inc.** |  |  |  |
| **At 31 Dec 2025** | **16016** | **10.91** | **2.30** |
| At 31 Dec 2024 | 13264 | 11.00 | 2.25 |

---

**Sensitivities of key assumptions in calculating VIU** 

At 31 December 2025, the recoverable amount of HSBC Overseas Holdings (UK) Limited remained sensitive to reasonably possible changes in

key assumptions impacting its principal subsidiary, HSBC North America Holdings Inc.

In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to

the model. These include the external range of observable discount rates, historical performance against forecast, and risks attached to the key

assumptions underlying cash flow.

The following table presents a summary of the key assumptions underlying the most sensitive inputs to the model for HSBC North America

Holdings Inc., the key risks attached to each, and details of a reasonably possible change to assumptions where, in the opinion of management,

these could result in a change in VIU.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Reasonably possible changes in key assumptions | Reasonably possible changes in key assumptions | Reasonably possible changes in key assumptions | Reasonably possible changes in key assumptions | Reasonably possible changes in key assumptions |
|  | **Input** | **Key assumptions** | **Associated risks** | **Reasonably possible** <br>**change**<br>|
| **Investment** |  |  |  |  |
| **HSBC North America Holdings Inc.** <br>**(subsidiary of HSBC Overseas** <br>**Holdings (UK) Limited)**<br>| Free cash flows projections | –Level of interest rates and <br>yield curves.<br>–Competitors' positions <br>within the market.<br>| –Strategic actions <br>relating to revenue and <br>costs are not achieved.<br>| –Free cash flow <br>projections decrease <br>by 10%.<br>|
|  | Discount rate | –Discount rate used is a <br>reasonable estimate of a <br>suitable market rate for <br>the profile of the <br>business.<br>| –External evidence arises <br>to suggest that the rate <br>used is not appropriate <br>to the business.<br>| –Discount rate <br>decreases by 1%.<br>|

---

---

| | | |
|:---|:---|:---|
| Sensitivity of VIU to reasonably possible changes in key assumptions | Sensitivity of VIU to reasonably possible changes in key assumptions | Sensitivity of VIU to reasonably possible changes in key assumptions |
| **In $bn (unless otherwise stated)** | **At 31 Dec 2025** | At 31 Dec 2024 |
| **HSBC North America Holdings Inc.** |  |  |
| VIU | **16.0** | 13.3 |
| **Impact on VIU** |  |  |
| 100bps decrease in the discount rate – single variable<sup>1</sup> | **1.8** | 1.5 |
| 10% decrease in forecast profitability – single variable<sup>1</sup> | **(1.6)** | (1.3) |

---

1The recoverable amount of HSBC Overseas Holdings (UK) Limited represents the aggregate of recoverable amounts of the underlying subsidiaries. Single

variable sensitivity analysis on a single subsidiary may therefore not be representative of the aggregate impact of the change in the variable.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **351** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| Subsidiaries with significant non-controlling interests | Subsidiaries with significant non-controlling interests | Subsidiaries with significant non-controlling interests |
|  | **2025** | 2024 |
| **Hang Seng Bank Limited** |  |  |
| Proportion of ownership interests and voting rights held by non-controlling interests (%)<sup>1</sup> | **36.57** | 36.88 |
| Place of business | **Hong Kong** | Hong Kong |
|  | **$m** | $m |
| Profit attributable to non-controlling interests  | **770** | 905 |
| Accumulated non-controlling interests of the subsidiary  | **7001** | 6879 |
| Dividends paid to non-controlling interests  | **627** | 620 |
| Summarised financial information:  |  |  |
| – total assets | **231786** | 229069 |
| – total liabilities  | **211124** | 208908 |
| – net operating income before changes in expected credit losses and other credit impairment charges | **5336** | 5249 |
| – profit for the year  | **2097** | 2434 |
| – total comprehensive income for the year  | **2509** | 2482 |

---

1This includes the Group's shareholding held under trading books 0.07% (2024: 0.06%).

20Structured entities

HSBC is mainly involved with both consolidated and unconsolidated structured entities through the securitisation of financial assets, conduits and

investment funds, established either by HSBC or a third party.

Consolidated structured entities

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Total assets of HSBC's consolidated structured entities, split by entity type | Total assets of HSBC's consolidated structured entities, split by entity type | Total assets of HSBC's consolidated structured entities, split by entity type | Total assets of HSBC's consolidated structured entities, split by entity type | Total assets of HSBC's consolidated structured entities, split by entity type | Total assets of HSBC's consolidated structured entities, split by entity type |
|  | **Conduits** | **Securitisations** | **HSBC managed**<br> **funds**<br>| **Other** | **Total** |
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| **At 31 Dec 2025** | **1.8** | **8.6** | **3.5** | **5.9** | **19.8** |
| At 31 Dec 2024 | 2.4 | 7.0 | 7.2 | 1.8 | 18.4 |

---

Conduits

HSBC has established and manages two types of conduits: securities investment conduits ('SICs') and multi-seller conduits.

**Securities investment conduits**

The SICs purchase highly rated ABSs to facilitate tailored investment opportunities. At 31 December 2025, HSBC's principal SIC, Solitaire, did not

hold any ABSs (2024: $0.7bn). Solitaire was previously funded entirely by commercial paper ('CP') issued to HSBC. At 31 December 2025, no CP

was held by HSBC (2024: $1.0bn).

**Multi-seller conduit**

HSBC's multi-seller conduit was established to provide access to flexible market-based sources of finance for its clients. Currently, HSBC bears

risk equal to the transaction-specific facility offered to the multi-seller conduit, amounting to $6.4bn at 31 December 2025 (2024: $5.2bn). First loss

protection is provided by the originator of the assets, and not by HSBC, through transaction-specific credit enhancements. A layer of loss

protection is provided by HSBC in the form of a programme-wide enhancement facility.

Securitisations

HSBC uses structured entities to securitise customer loans and advances it originates in order to diversify its sources of funding for asset

origination and capital efficiency purposes. The loans and advances are transferred by HSBC to the structured entities for cash or synthetically, and

the structured entities issue debt securities to investors. Where synthetic securitisations are used, the credit risk associated with the loan portfolio

of assets is transferred to the structured entities through loan portfolio financial guarantees.

HSBC managed funds

HSBC has established a number of money market and non-money market funds. Where it is deemed to be acting as principal rather than agent in

its role as investment manager, HSBC controls these funds.

Other

HSBC has entered into a number of transactions in the normal course of business, which include asset and structured finance transactions where

it has control of the structured entity. In addition, HSBC is deemed to control a number of third-party managed funds through its involvement as a

principal in the funds.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **352** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Unconsolidated structured entities

The term 'unconsolidated structured entities' refers to all structured entities not controlled by HSBC. The Group enters into transactions with

unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Nature and risks associated with HSBC interests in unconsolidated structured entities | Nature and risks associated with HSBC interests in unconsolidated structured entities | Nature and risks associated with HSBC interests in unconsolidated structured entities | Nature and risks associated with HSBC interests in unconsolidated structured entities | Nature and risks associated with HSBC interests in unconsolidated structured entities | Nature and risks associated with HSBC interests in unconsolidated structured entities |
| Total asset values of the entities ($m) | **Securitisations** | **HSBC managed** <br>**funds**<br>| **Non-HSBC** <br>**managed funds**<br>| **Other** | **Total** |
| 0–500 | **207** | **323** | **1062** | **57** | **1649** |
| 500–2000 | **2** | **71** | **910** | **1** | **984** |
| 2000–5000 | **—** | **35** | **403** | **1** | **439** |
| 5000–25000 | **—** | **24** | **237** | **—** | **261** |
| 25,000+ | **—** | **6** | **41** | **—** | **47** |
| **Number of entities at 31 Dec 2025**  | **209** | **459** | **2653** | **59** | **3380** |
|  | **$bn** | **$bn** | **$bn** | **$bn** | **$bn** |
| Total assets in relation to HSBC's interests in the unconsolidated <br>structured entities<br>| **9.4** | **12.4** | **21.8** | **2.8** | **46.4** |
| – trading assets  | **—** | **0.2** | **—** | **—** | **0.2** |
| – financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| **—** | **7.9** | **19.5** | **—** | **27.4** |
| – loans and advances to customers | **9.4** | **—** | **—** | **1.5** | **10.9** |
| – financial investments  | **—** | **—** | **0.4** | **—** | **0.4** |
| – assets held for sale | **—** | **4.3** | **1.9** | **—** | **6.2** |
| – other assets  | **—** | **—** | **—** | **1.3** | **1.3** |
| Total liabilities in relation to HSBC's interests in the <br>unconsolidated structured entities<br>| **—** | **—** | **—** | **0.7** | **0.7** |
| – other liabilities  | **—** | **—** | **—** | **0.7** | **0.7** |
| Other off-balance sheet commitments | **—** | **0.3** | **6.5** | **1.3** | **8.1** |
| **HSBC's maximum exposure at 31 Dec 2025** | **9.4** | **12.7** | **28.3** | **3.4** | **53.8** |
| Total asset values of the entities ($m) |  |  |  |  |  |
| 0–500 | 167 | 344 | 1215 | 46 | 1772 |
| 500–2000 | 2 | 75 | 911 | 2 | 990 |
| 2000–5000 |  | 30 | 348 | 1 | 379 |
| 5000–25000 |  | 21 | 212 |  | 233 |
| 25,000+ |  | 2 | 33 |  | 35 |
| Number of entities at 31 Dec 2024 | 169 | 472 | 2719 | 49 | 3409 |
|  | $bn | $bn | $bn | $bn | $bn |
| Total assets in relation to HSBC's interests in the unconsolidated <br>structured entities<br>| 5.4 | 12.1 | 25.4 | 2.4 | 45.3 |
| – trading assets  |  | 0.1 |  |  | 0.1 |
| – financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>|  | 7.8 | 22.2 |  | 30.0 |
| – loans and advances to customers | 5.4 |  | 0.7 | 1.5 | 7.6 |
| – financial investments  |  | 0.2 | 0.4 |  | 0.6 |
| – assets held for sale |  | 4.0 | 2.1 |  | 6.1 |
| – other assets  |  |  |  | 0.9 | 0.9 |
| Total liabilities in relation to HSBC's interests in the <br>unconsolidated structured entities<br>|  |  |  | 0.4 | 0.4 |
| – other liabilities  |  |  |  | 0.4 | 0.4 |
| Other off-balance sheet commitments |  | 1.0 | 8.1 | 1.3 | 10.4 |
| HSBC's maximum exposure at 31 Dec 2024 | 5.4 | 13.1 | 33.5 | 3.3 | 55.3 |

---

The maximum exposure to loss from HSBC's interests in unconsolidated structured entities represents the maximum loss it could incur as a result

of its involvement with these entities regardless of the probability of the loss being incurred.

–For commitments, guarantees and written credit default swaps, the maximum exposure to loss is the notional amount of potential future

losses.

–For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying amount

of these interests at the balance sheet reporting date.

The maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements that HSBC has entered into in order to

mitigate the Group's exposure to loss.

Securitisations

HSBC has interests in unconsolidated securitisation vehicles through holding notes issued by these entities. In addition, HSBC has investments in

ABSs issued by third-party structured entities.

HSBC managed funds

HSBC establishes and manages money market funds and non-money market investment funds to provide customers with investment

opportunities. Further information on funds under management is provided on page 94.

HSBC, as fund manager, may be entitled to receive management and performance fees based on the assets under management. HSBC may also

retain units in these funds.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **353** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Non-HSBC managed funds

HSBC purchases and holds units of third-party managed funds in order to facilitate business and meet customer needs.

Other

HSBC has established structured entities in the normal course of business, such as structured credit transactions for customers, to provide finance

to public and private sector infrastructure projects, and for asset and structured finance transactions.

In addition to the interests disclosed above, HSBC enters into derivative contracts, reverse repos and stock borrowing transactions with structured

entities. These interests arise in the normal course of business for the facilitation of third-party transactions and risk management solutions.

HSBC sponsored structured entities

The amount of assets transferred to and income received from such sponsored structured entities during 2025 and 2024 was not significant.

21Goodwill and intangible assets

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| Goodwill | **4419** | 4118 |
| Other intangible assets<sup>1</sup> | **8688** | 8266 |
| **At 31 Dec** | **13107** | 12384 |

---

1Included within other intangible assets is internally generated software with a net carrying amount of $7.5bn (2024: $7.1bn). During the year, capitalisation of

internally generated software was $3.0bn (2024: $2.5bn), impairment was $0.4bn (2024: impairment of $67m) and amortisation was $2.4bn (2024: $2.0bn).

---

| | | |
|:---|:---|:---|
| Movement analysis of goodwill | Movement analysis of goodwill | Movement analysis of goodwill |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Gross amount** |  |  |
| **At 1 Jan**  | **18626** | 19560 |
| Exchange differences | **1438** | (962) |
| Reclassified to held for sale and additions<sup>1</sup> | **(78)** | 28 |
| **At 31 Dec** | **19986** | 18626 |
| **Accumulated impairment losses** |  |  |
| **At 1 Jan** | **(14508)** | (15237) |
| Exchange differences | **(1059)** | 716 |
| Reclassified to held for sale<sup>1</sup> | **—** | 13 |
| **At 31 Dec** | **(15567)** | (14508) |
| **Net carrying amount at 31 Dec** | **4419** | 4118 |

---

1For the year ended 31 December 2025, this includes goodwill reclassified to held for sale associated with the sale of HSBC Life (UK) Limited, the sale of HSBC

Assurance Vie (France), the sale of the retail banking business of The Hongkong and Shanghai Banking Corporation Limited, Sri Lanka branch, and the sale of

the custody business and private banking business in Germany. For the year ended 31 December 2024, this includes goodwill arising from the acquisition of

Silkroad, offset by goodwill reclassified to held for sale associated with the sales of HSBC Bank Armenia, the private banking business in Germany, and the

planned sale of HSBC Assurances Vie (France). For further details, see Note 23.

Goodwill

Impairment testing

The Group's impairment test in respect of goodwill allocated to each cash-generating unit ('CGU') is performed at 1 October each year. A review

for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2025. No indicators of impairment were identified

as part of these reviews.

Basis of the recoverable amount

The recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use ('VIU') at each respective testing date. The

VIU is calculated by discounting management's cash flow projections for the CGU. The key assumptions used in the VIU calculation for each

individually significant CGU that is not impaired are discussed below.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> | Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> | Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> | Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> | Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> | Key assumptions in VIU calculation – significant CGUs at 1 October 2025<sup>1</sup> |  |  |  |  |  |
|  | **Carrying** <br>**amount at** <br>**1 Oct 2025**<br>| **of which** <br>**goodwill**<br>| **Value in** <br>**use at 1 Oct** <br>**2025**<br>| **Discount** <br>**rate**<br>| **Growth** <br>**rate beyond** <br>**initial**<br>**cash flow**<br>| Carrying <br>amount at <br>1 Oct 2024<br>| of which <br>goodwill<br>| Value in <br>use at 1 Oct <br>2024<br>| Discount<br>rate<br>| Growth <br>rate beyond <br>initial cash flow <br>projections<br>|
|  | **$m** | **$m** | **$m** | **%** | **%** | $m | $m | $m | % | % |
| **HSBC UK** <br>**Bank plc – UK**<br>| **29022** | **2639** | **82529** | **9.3** | **2.1** | N/A | N/A | N/A | N/A | N/A |
| **HSBC UK** <br>**Bank plc –** <br>**WPB**<br>| **N/A** | **N/A** | **N/A** | **N/A** | **N/A** | 12785 | 2843 | 27118 | 10.6 | 2.0 |

---

1Following change in the Group's reportable segments effective from 1 January 2025 the Group's CGUs are the Group's reportable segments subdivided by

main legal entities.

At 1 October 2025, aggregate goodwill of $1.8bn (1 October 2024: $1.5bn) had been allocated to CGUs that were not considered individually

significant. The Group's CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other than goodwill.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **354** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

**Management's judgement in estimating the cash flows of a CGU**

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but

does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability plans

approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and endorses

planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and

macroeconomic outlook. For the 1 October 2025 impairment test, cash flow projections until the end of 2030 were considered, in line with our

internal planning horizon. Key assumptions underlying cash flow projections reflect management's outlook on interest rates and inflation, as well

as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and observable

climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS Accounting Standards,

estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity

has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring costs.

**Discount rate**

The rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing model

('CAPM') and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-

free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market's assessment of the

economic variables and management's judgement. The discount rates for each CGU are refined to reflect the rates of inflation for the countries

within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management supplements this process by

comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced by external sources for

businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable in discount rates and asset

prices.

**Long-term growth rate**

The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of business

units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it derives revenue.

Sensitivities of key assumptions in calculating VIU

At 1 October 2025, given the extent by which VIU exceeds carrying amount, HSBC UK Bank plc CGU was not sensitive to reasonably possible

adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to assumptions,

management considers the available evidence in respect of each input to the VIU calculation, such as the external range of discount rates

observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections. None of the

remaining CGUs are individually significant.

Other intangible assets

Impairment testing

Impairment of other intangible assets is assessed in accordance with our policy explained in Note 1.2(b) by comparing the net carrying amount of

CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or fair

value, as appropriate, for each CGU. No significant impairment was recognised during the year.

**Key assumptions in VIU calculation**

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next

financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in

accordance with the requirements of IAS 36:

–Management's judgement in estimating future cash flows: We considered past business performance, current market conditions and our

macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude

estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to carry

out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the benefit of

certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections include

known and observable climate-related opportunities and costs associated with our sustainable products and operating model.

–Long-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective of

the businesses within the Group.

–Discount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and

geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates and

asset prices.

**Sensitivity of estimates relating to non-financial assets** 

As explained in Note 1.2(b), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for impairment.

Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use assets (see Note 22).

The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are no non-financial asset

balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in a material adjustment to

the results and financial position of the Group within the next financial year.

Non-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be

allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned

property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant. At

31 December 2025 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the recoverable

amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each

input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast and risks attaching to

the key assumptions underlying cash flow projections.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **355** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

22Prepayments, accrued income and other assets

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| Prepayments and accrued income | **15778** | 13781 |
| Settlement accounts and items in course of collection from other banks | **29961** | 19050 |
| Cash collateral and margin receivables | **57706** | 59488 |
| Bullion  | **34917** | 16841 |
| Endorsements and acceptances  | **8695** | 8093 |
| Insurance contract assets (Note 4)  | **118** | 132 |
| Reinsurance contract assets  | **5886** | 4798 |
| Employee benefit assets (Note 5) | **8246** | 7548 |
| Right-of-use assets | **2991** | 2205 |
| Owned property, plant and equipment | **9615** | 9407 |
| Other accounts  | **10881** | 11397 |
| **At 31 Dec**<sup>1</sup> | **184794** | 152740 |

---

1Prepayments, accrued income and other assets include $120.0bn (2024: $109.3bn) of financial assets, the majority of which are measured at amortised cost.

23Assets held for sale, liabilities of disposal groups held for sale and

business acquisitions

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| **Held for sale at 31 Dec** |  |  |
| Disposal groups | **9713** | 27126 |
| Unallocated impairment losses<sup>1</sup> | **(93)** | (31) |
| Non-current assets held for sale | **1495** | 139 |
| **Assets held for sale** | **11115** | 27234 |
| **Liabilities of disposal groups held for sale** | **23382** | 29011 |

---

1This represents impairment losses in excess of the carrying value of the non-current assets in scope of IFRS 5 for measurement, recognised against the total

assets of the disposal group.

Disposal groups

Retained portfolio of home and certain other loans in France

Following the sale of our French retail banking operations on 1 January 2024, HSBC Continental Europe retained a portfolio of home and certain

other loans, with a carrying value of €7.1bn ($8.3bn) at the time of sale. On 31 October 2025, HSBC Continental Europe completed the sale of its

retained portfolio to a consortium comprising Rothesay Life plc and CCF. Prior to their derecognition at completion, as at 30 September 2025,

related balances stood at $6.0bn in loans. The completion of the transaction resulted in the recycling of cumulative fair value losses of $1.5bn to

the income statement that were previously recognised through other comprehensive income. For the year ended 31 December 2025, we

additionally recognised a $0.1bn mark-to-market gain in 'net income from financial instruments held for trading or managed on a fair value basis'

arising on certain non-qualifying economic hedges that were used to hedge interest rate risk on the portfolio. These non-qualifying economic

hedges were derecognised following completion of the transaction.

Other disposals

On 30 January 2026, HSBC Bank plc completed the sale of its UK life insurance entity, HSBC Life (UK) Limited, to Chesnara plc. Prior to

completion, as at 31 December 2025, the balances that remained classified as held for sale were $6.6bn in assets and $6.4bn in liabilities. For the

year ended 31 December 2025, we recognised a loss on disposal of $0.1bn. In the first quarter of 2026, we will recycle foreign currency translation

reserves to the income statement. These stood at a cumulative $0.2bn loss as at 31 December 2025.

On 27 November 2025, HSBC Bank Middle East Limited, Bahrain branch, completed the sale of its retail banking operations in Bahrain to Bank of

Bahrain and Kuwait B.S.C., recognising a pre-tax gain on disposal of $0.1bn.

On 31 October 2025, HSBC Continental Europe completed the sale of its French life insurance business, HSBC Assurances Vie (France), to

Matmut Société d'Assurance Mutuelle. Prior to their derecognition at completion, as at 30 September 2025, related balances stood at $28.2bn in

assets and $27.2bn in liabilities. For the year ended 31 December 2025, we recognised a $0.2bn pre-tax loss inclusive of migration costs and the

recycling of related reserves.

On 3 October 2025, HSBC Continental Europe completed the sale of its private banking business in Germany to BNP Paribas at which point we

recognised a pre-tax gain on disposal of $0.2bn. Prior to their derecognition at completion, as at 30 September 2025, related balances stood at

$1.5bn in assets and $1.5bn in liabilities.

On 24 September 2025, The Hongkong and Shanghai Banking Corporation Limited, Sri Lanka branch, entered into a binding agreement to sell its

retail banking business to Nations Trust Bank PLC. Regulatory approvals for the transaction have now been received, and completion is expected

in the first half 2026, at which point an estimated immaterial pre-tax gain on disposal will be recognised.

On 16 September 2025, HSBC Continental Europe signed a put option agreement with CrediaBank S.A. regarding the potential sale of its majority

shareholding of 70.03% in HSBC Bank Malta plc. On 22 December 2025, pursuant to the terms of the put option agreement and following

completion of HSBC Continental Europe's employee information and consultation process in France, a Sale and Purchase Agreement for the

transaction was signed. The transaction, which remains subject to regulatory approvals, did not meet the criteria for held for sale in the fourth

quarter of 2025, given completion is now expected in the first half of 2027. The sale is expected to generate an estimated pre-tax loss of $0.4bn,

inclusive of migration costs, which we expect to recognise largely in the first half of 2026 upon classification of the disposal group as held for sale.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **356** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

On 27 July 2025, HSBC Latin America Holdings (UK) Limited entered into a binding agreement to sell HSBC Bank (Uruguay) S.A. to a subsidiary of

BTG Pactual Holding SA. The disposal group met the held for sale criteria and an immaterial loss on disposal was recognised in the third quarter of

2025, with balances remaining classified as held for sale at 31 December 2025 of $2.1bn in assets and $2.0bn in liabilities. The transaction, which

is subject to regulatory approvals, is expected to complete in the second half of 2026.

On 11 July 2025, HSBC Continental Europe, a wholly-owned subsidiary of HSBC Bank plc, reached an agreement to sell its fund administration

business, Internationale Kapitalanlagegesellschaft mbH, to BlackFin Capital Partners S.A.S. The disposal group met the held for sale criteria in the

third quarter of 2025, with immaterial balances remaining classified as held for sale at 31 December 2025. This transaction, which remains subject

to regulatory approval, is expected to complete in the second half of 2026, at which point an immaterial gain on disposal will be recognised.

On 27 June 2025, HSBC Continental Europe reached an agreement to sell its custody business in Germany to BNP Paribas. This transaction is

anticipated to be completed in a phased manner, starting in the first quarter of 2026. While client consent and related operational requirements

may extend the timing for completion of all client transfers, given the signing of a sale and purchase agreement, the disposal group met the held

for sale criteria in the second quarter of 2025, with balances remaining classified as held for sale at 31 December 2025 of $0.4bn in assets and

$12.5bn in liabilities. The sale is expected to generate an estimated pre-tax gain on disposal of $0.1bn, which will be recognised in line with

completion of client transfers.

On 25 September 2024, HSBC Bank plc reached an agreement to transfer its business in South Africa to local lender FirstRand Bank Ltd. The

disposal group met held for sale criteria in the fourth quarter of 2024, with balances remaining classified as held for sale at 31 December 2025 of

$0.4bn in assets and $2.1bn in liabilities. The transaction is expected to complete in the first quarter of 2026. Upon subsequent wind-down of the

entity, expected in the second half of 2026, cumulative foreign currency translation reserves and other reserves will recycle to the income

statement. At 31 December 2025, foreign currency translation reserve and other reserve losses stood at $0.1bn.

At 31 December 2025, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment losses,

were as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **South** <br>**Africa**<sup>1</sup><br>| **German** <br>**custody** <br>**business**<sup>2</sup><br>| **Uruguay** | **UK life** <br>**insurance** <br>**business**<br>| **Sri Lanka** <br>**retail** <br>**banking** <br>**business**<br>| **Other** | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Assets of disposal groups held for sale** |  |  |  |  |  |  |  |
| Cash and balances at central banks | **—** | **—** | **335** | **—** | **2** | **—** | **337** |
| Trading assets | **—** | **—** | **113** | **—** | **—** | **—** | **113** |
| Financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| **—** | **—** | **—** | **6351** | **—** | **—** | **6351** |
| Derivatives | **8** | **—** | **6** | **—** | **—** | **—** | **14** |
| Loans and advances to banks | **—** | **16** | **29** | **—** | **—** | **—** | **45** |
| Loans and advances to customers  | **431** | **323** | **1314** | **—** | **101** | **21** | **2190** |
| Financial investments | **—** | **—** | **294** | **—** | **—** | **—** | **294** |
| Goodwill | **—** | **—** | **—** | **—** | **3** | **—** | **3** |
| Prepayments, accrued income and other assets  | **3** | **17** | **51** | **273** | **15** | **7** | **366** |
| **Total assets at 31 Dec 2025** | **442** | **356** | **2142** | **6624** | **121** | **28** | **9713** |
| **Liabilities of disposal groups held for sale** |  |  |  |  |  |  |  |
| Deposits by banks | **—** | **116** | **15** | **—** | **—** | **—** | **131** |
| Customer accounts  | **2056** | **12316** | **1369** | **—** | **430** | **2** | **16173** |
| Financial liabilities designated at fair value | **—** | **—** | **—** | **1345** | **—** | **—** | **1345** |
| Derivatives | **13** | **—** | **3** | **—** | **—** | **—** | **16** |
| Debt securities in issue  | **—** | **—** | **495** | **—** | **—** | **—** | **495** |
| Insurance contract liabilities | **—** | **—** | **—** | **4925** | **—** | **—** | **4925** |
| Accruals, deferred income and other liabilities  | **13** | **33** | **77** | **116** | **40** | **18** | **297** |
| **Total liabilities at 31 Dec 2025** | **2082** | **12465** | **1959** | **6386** | **470** | **20** | **23382** |
| Expected date of completion | **First quarter** <br>**of 2026**<br>| **First half of** <br>**2027**<br>| **Second half** <br>**of 2026**<br>| **First quarter** <br>**of 2026**<br>| **First half of** <br>**2026**<br>|  |  |
| Operating segment | **CIB and** <br>**Corporate** <br>**Centre**<br>| **CIB** | **Corporate** <br>**Centre**<br>| **IWPB** | **IWPB** |  |  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **357** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

At 31 December 2024, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment losses,

were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | French life <br>insurance business<br>| Germany private <br>banking business<br>| South Africa<sup>1</sup> | Other | Total |
|  | $m | $m | $m | $m | $m |
| Assets of disposal groups held for sale |  |  |  |  |  |
| Cash and balances at central banks |  | 1896 |  |  | 1896 |
| Financial assets designated and otherwise mandatorily <br>measured at fair value through profit or loss<br>| 14560 |  |  |  | 14560 |
| Derivatives | 26 |  | 10 |  | 36 |
| Loans and advances to banks | 144 |  |  |  | 144 |
| Loans and advances to customers  |  | 309 | 656 |  | 965 |
| Financial investments | 8500 |  |  |  | 8500 |
| Goodwill |  | 5 |  |  | 5 |
| Prepayments, accrued income and other assets  | 992 | 21 | 7 |  | 1020 |
| Total assets at 31 Dec 2024 | 24222 | 2231 | 673 |  | 27126 |
| Liabilities of disposal groups held for sale |  |  |  |  |  |
| Customer accounts  |  | 2085 | 3294 | 20 | 5399 |
| Financial liabilities designated at fair value | 11 | 119 |  |  | 130 |
| Derivatives |  |  | 19 |  | 19 |
| Insurance contract liabilities | 21811 |  |  |  | 21811 |
| Accruals, deferred income and other liabilities  | 1598 | 22 | 32 |  | 1652 |
| Total liabilities at 31 Dec 2024 | 23420 | 2226 | 3345 | 20 | 29011 |
| Date of completion | 31 October 2025 | 31 October 2025 | First quarter<br> of 2026<br>|  |  |
| Operating segment | IWPB | IWPB | CIB and <br>Corporate<br> Centre<br>|  |  |

---

1Under the financial terms of the sale of our South Africa business, HSBC Bank plc will transfer the business with a net nil asset value at book value less any

provisions. The purchase price for the asset value of $0.4bn will be satisfied by the transfer of agreed liabilities of $2.1bn. Any required increase to the net asset

value of the business to achieve this will be satisfied by the inclusion of additional cash. Based upon the net liabilities of the disposal group at 31 December

2025, HSBC Bank plc would be expected to include a cash contribution of $1.7bn.

2 Under the financial terms of the sale of our German custody business, HSBC Continental Europe will transfer a nil net asset value for each client transferred, by

way of inclusion of additional cash.

24Trading liabilities

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| Deposits by banks<sup>1</sup> | **9353** | 7671 |
| Customer accounts<sup>1</sup> | **10089** | 10709 |
| Other debt securities in issue (Note 26) | **40** | 73 |
| Other liabilities – net short positions in securities | **52640** | 47529 |
| **At 31 Dec** | **72122** | 65982 |

---

1'Deposits by banks' and 'Customer accounts' include repos, stock lending and other amounts.

25Financial liabilities designated at fair value

---

| | | |
|:---|:---|:---|
| HSBC | HSBC | HSBC |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Deposits by banks and customer accounts<sup>1</sup> | **27491** | 23773 |
| Liabilities to customers under investment contracts | **5288** | 5931 |
| Debt securities in issue (Note 26) | **116502** | 99706 |
| Subordinated liabilities (Note 29) | **9175** | 9317 |
| **At 31 Dec** | **158456** | 138727 |

---

1Structured deposits placed at HSBC Bank USA are insured by the Federal Deposit Insurance Corporation, a US government agency, up to $250,000 per

depositor.

The carrying amount of financial liabilities designated at fair value was $2,691m less than the contractual amount at maturity (2024: $4,365m less).

The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $2,252m (2024: loss of $1,655m).

---

| | | |
|:---|:---|:---|
| HSBC Holdings  | HSBC Holdings  | HSBC Holdings  |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Debt securities in issue (Note 26) | **44687** | 33268 |
| Subordinated liabilities (Note 29) | **8220** | 8314 |
| **At 31 Dec** | **52907** | 41582 |

---

The carrying amount of financial liabilities designated at fair value was $1,161m more than the contractual amount at maturity (2024: $17m less).

The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $430m (2024: $540m).

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **358** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

26Debt securities in issue

---

| | | |
|:---|:---|:---|
| HSBC | HSBC | HSBC |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Bonds and medium-term notes  | **185974** | 163903 |
| Other debt securities in issue  | **30243** | 41661 |
| **Total debt securities in issue** | **216217** | 205564 |
| Included within: |  |  |
| – trading liabilities (Note 24) | **(40)** | (73) |
| – financial liabilities designated at fair value (Note 25) | **(116502)** | (99706) |
| **At 31 Dec** | **99675** | 105785 |

---

---

| | | |
|:---|:---|:---|
| HSBC Holdings | HSBC Holdings | HSBC Holdings |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Debt securities  | **113711** | 97588 |
| Included within: |  |  |
| – financial liabilities designated at fair value (Note 25) | **(44687)** | (33268) |
| **At 31 Dec** | **69024** | 64320 |

---

27Accruals, deferred income and other liabilities

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **$m** | $m |
| Accruals and deferred income | **16143** | 16277 |
| Settlement accounts and items in course of transmission to other banks | **30246** | 24692 |
| Cash collateral and margin payables | **60841** | 58040 |
| Endorsements and acceptances | **8708** | 8102 |
| Employee benefit liabilities (Note 5) | **1071** | 1017 |
| Reinsurance contract liabilities | **682** | 701 |
| Lease liabilities | **3320** | 2459 |
| Other liabilities | **21112** | 19052 |
| **At 31 Dec**<sup>1</sup> | **142123** | 130340 |

---

1Accruals, deferred income and other liabilities include $133.5bn (2024: $122.1bn) of financial liabilities, the majority of which are measured at amortised cost.

28Provisions

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Restructuring**<br>**costs**<br>| **Legal proceedings**<br>**and regulatory**<br>**matters**<br>| **Customer**<br>**remediation**<br>| **Other**<br>**provisions**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Provisions (excluding contractual commitments)** |  |  |  |  |  |
| At 1 Jan 2025 | 199 | 295 | 85 | 457 | 1036 |
| Additions | **991** | **1580** | **39** | **174** | **2784** |
| Amounts utilised | **(525)** | **(194)** | **(25)** | **(64)** | **(808)** |
| Unused amounts reversed | **(108)** | **(47)** | **(34)** | **(68)** | **(257)** |
| Exchange and other movements | **21** | **28** | **4** | **(2)** | **51** |
| **At 31 Dec 2025** | **578** | **1662** | **69** | **497** | **2806** |
| **Contractual commitments**<sup>1</sup> |  |  |  |  |  |
| At 1 Jan 2025 |  |  |  |  | 688 |
| Net change in expected credit loss provision and other movements |  |  |  |  | **(53)** |
| **At 31 Dec 2025** |  |  |  |  | **635** |
| **Total provisions** |  |  |  |  |  |
| At 31 Dec 2024 |  |  |  |  | 1724 |
| **At 31 Dec 2025** |  |  |  |  | **3441** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Provisions (excluding contractual commitments) |  |  |  |  |  |
| At 1 Jan 2024 | 284 | 380 | 130 | 420 | 1214 |
| Additions | 181 | 205 | 36 | 203 | 625 |
| Amounts utilised | (193) | (228) | (48) | (105) | (574) |
| Unused amounts reversed | (63) | (63) | (35) | (82) | (243) |
| Exchange and other movements | (10) | 1 | 2 | 21 | 14 |
| At 31 Dec 2024 | 199 | 295 | 85 | 457 | 1036 |
| Contractual commitments<sup>1</sup> |  |  |  |  |  |
| At 1 Jan 2024 |  |  |  |  | 527 |
| Net change in expected credit loss provision and other movements |  |  |  |  | 161 |
| At 31 Dec 2024 |  |  |  |  | 688 |
| Total provisions |  |  |  |  |  |
| At 31 Dec 2023 |  |  |  |  | 1741 |
| At 31 Dec 2024 |  |  |  |  | 1724 |

---

1Contractual commitments include the expected credit loss provision in relation to off-balance sheet financial guarantee contracts and commitments to which the

impairment requirements in IFRS 9 are applied; and provisions for performance and other guarantee contracts.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **359** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Further details of 'Legal proceedings and regulatory matters' are set out in Note 35. Legal proceedings include civil court, arbitration or tribunal

proceedings brought against HSBC companies (whether by way of claim or counterclaim); or civil disputes that may, if not settled, result in court,

arbitration or tribunal proceedings. 'Regulatory matters' refers to investigations, reviews and other actions carried out by, or in response to, the

actions of regulators or law enforcement agencies in connection with alleged wrongdoing by HSBC.

Customer remediation refers to HSBC's activities to compensate customers for losses or damages associated with a failure to comply with

regulations or to treat customers fairly. Customer remediation is often initiated by HSBC in response to customer complaints and/or industry

developments in sales practices, and is not necessarily initiated by regulatory action.

For further details of the impact of IFRS 9 on undrawn loan commitments and financial guarantees, presented in 'Contractual commitments', see

Note 33. Further analysis of the movement in the expected credit loss provision is disclosed within the 'Reconciliation of changes in gross carrying/

nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table on

Brazil PIS and COFINS tax matters

Beginning in the late 1990s, HSBC Bank Brasil S.A. – Banco Múltiplo ('HSBC Brazil') and other financial services firms brought legal proceedings in

Brazil challenging the assessment of Contribution to the Social Integration Programme ('PIS') and Contribution for the Financing of Social Security

('COFINS') taxes, which are federal taxes imposed on gross revenues earned by legal entities in Brazil. The Supreme Court of Brazil selected three

cases – one involving an insurer, in 2007, and two involving other banks, in 2011 – to set standards that would apply to all of these proceedings. In

June 2023, the court ruled against the financial services firms in all three cases. The standards set by the court in this ruling have not yet been

applied to HSBC Brazil's legacy cases, liability for which remained with HSBC after the sale of HSBC's operations in Brazil to Bradesco in 2016. In

May 2025, the first instance judicial court delivered a favourable judgment in HSBC Brazil's second largest legacy PIS and COFINS case, which has

been appealed by the Brazilian Tax Authority. There are many factors that may affect the range of outcomes and any resulting financial impact for

HSBC. Based upon the information currently available, a provision was recognised in respect of one legacy case. The remaining additional tax

liability subject to challenge on all legacy PIS and COFINS cases is up to $0.4bn. As at 31 December 2025, no provision has been booked for this

amount.

Bernard L. Madoff Investment Securities LLC

In a 2009 lawsuit in Luxembourg relating to the Bernard L. Madoff Investment Securities LLC fraud, HSBC Securities Services Luxembourg

('HSSL') is defending a claim brought by Herald Fund SPC ('Herald') for restitution of securities and $521m in cash (plus interest) or, alternatively

damages in the amount of $5.6bn (plus interest). On 24 October 2025, the Luxembourg Court of Cassation denied HSSL's appeal in respect of

Herald's securities restitution claim, but accepted HSSL's appeal in respect of Herald's cash restitution claim. HSSL will now pursue a second

appeal before the Luxembourg Court of Appeal. If HSSL is unsuccessful in that second appeal, it will contest the amount HSSL is required to pay

in subsequent proceedings before the Court of Appeal. Following this development, we recognised a $1.1bn provision. Given the pendency of the

second appeal and the complexities and uncertainties associated with determining the quantum of restitution, the eventual financial impact could

be significantly different.

Tax-related investigations

Since 2023 the French National Financial Prosecutor ('PNF') had been investigating HSBC Continental Europe and the Paris branch of HSBC Bank

plc in connection with the dividend withholding tax treatment of certain historical trading activities. During the year a provision of $0.3bn was

recognised, and in January 2026 HSBC Bank plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of

€302m and the matter is now closed.

29Subordinated liabilities

---

| | | |
|:---|:---|:---|
| HSBC's subordinated liabilities | HSBC's subordinated liabilities | HSBC's subordinated liabilities |
|  | **2025** | 2024 |
|  | **$m** | $m |
| At amortised cost | **28406** | 25958 |
| – subordinated liabilities | **27467** | 25080 |
| – preferred securities | **939** | 878 |
| Designated at fair value (Note 25) | **9175** | 9317 |
| – subordinated liabilities | **9175** | 9317 |
| **At 31 Dec** | **37581** | 35275 |
| Issued by HSBC subsidiaries | **2978** | 3144 |
| Issued by HSBC Holdings | **34603** | 32131 |

---

Subordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called and

redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed at the

first call date, coupons payable may reset or become floating rate based on relevant market rates. On subordinated liabilities other than floating

rate notes, interest is payable at fixed rates of up to 8.201%.

The balance sheet amounts disclosed in the following table are presented on an IFRS basis and do not reflect the amount that the instruments

contribute to regulatory capital, principally due to regulatory amortisation and regulatory eligibility limits.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **360** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| HSBC's subordinated liabilities: subsidiaries | HSBC's subordinated liabilities: subsidiaries | HSBC's subordinated liabilities: subsidiaries |
|  | **2025** | 2024 |
|  | **$m** | $m |
| Additional tier 1 capital securities issued by HSBC subsidiaries | **819** | 732 |
| Tier 2 securities issued by HSBC subsidiaries  |  |  |
| – Tier 2 securities issued by HSBC Bank plc  | **497** | 715 |
| – Tier 2 securities issued by HSBC Bank USA Inc  | **224** | 223 |
| – Tier 2 securities issued by HSBC Bank USA N.A. | **1438** | 1431 |
| Securities issued by other HSBC subsidiaries  | **—** | 43 |
| **Subordinated liabilities issued by HSBC subsidiaries at 31 Dec** | **2978** | 3144 |

---

---

| | | |
|:---|:---|:---|
| HSBC Holdings' subordinated liabilities | HSBC Holdings' subordinated liabilities | HSBC Holdings' subordinated liabilities |
|  | **2025** | 2024 |
|  | **$m** | $m |
| At amortised cost  | **26114** | 23548 |
| Designated at fair value (Note 25) | **8220** | 8314 |
| **At 31 Dec**<sup>1</sup> | **34334** | 31862 |

---

1This includes Tier 2 securities.

Guaranteed by HSBC Bank plc

Capital securities guaranteed by HSBC Bank plc were issued by a Jersey limited partnership. The proceeds of these were lent to the guarantor by

the limited partnership in the form of subordinated notes. These capital securities qualified as additional tier 1 capital for HSBC and HSBC Bank plc

(on a solo and a consolidated basis) under CRR II until 31 December 2021 by virtue of the grandfathering provision. Since 31 December 2021,

these securities have no longer qualified as regulatory capital for HSBC or HSBC Bank plc.

As at 31 December 2025 the preferred securities are intended to provide investors with rights to income and capital distributions, as well as

distributions upon liquidation of the issuer that are equivalent to the rights that they would have had if they had purchased non-cumulative

perpetual preference shares of the issuer. There are limitations on the payment of distributions if such payments are prohibited under UK banking

regulations or other requirements, if a payment would cause a breach of HSBC Bank plc's capital adequacy requirements, or if HSBC Bank plc has

insufficient distributable reserves (as defined).

HSBC Bank plc have covenanted that, if prevented under certain circumstances from paying distributions on the preferred securities in full, they

will not pay dividends or other distributions in respect of their ordinary shares, or repurchase or redeem their ordinary shares, until the distribution

on the preferred securities has been paid in full.

If the preferred securities are outstanding in November 2048, or if the total capital ratio of HSBC Bank plc (on a solo or consolidated basis) falls

below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that proceedings have not been

commenced for the liquidation, dissolution or winding up of HSBC Bank plc, the holders' interests in the preferred security will be exchanged for

interests in preference shares issued by HSBC Bank plc that have economic terms which are in all material respects equivalent to the preferred

security and its guarantee.

Tier 2 securities

Tier 2 capital securities are dated subordinated securities on which there is an obligation to pay coupons. These capital securities are included

within HSBC's regulatory capital base as tier 2 capital under CRR II. CRR II grandfathering provisions expired on 26 June 2025 and previously

grandfathered securities are now ineligible as regulatory capital for HSBC. In accordance with CRR II, the capital contribution of all tier 2 securities

is amortised for regulatory purposes in their final five years before maturity.

30Maturity analysis of assets, liabilities and off-balance sheet commitments

The table on page <u>[361](#i52a8ac564f2d4799b4150f1cfdffa9d2_532)</u> provides an analysis of consolidated total assets, liabilities and off-balance sheet commitments by residual contractual

maturity at the balance sheet date. These balances are included in the maturity analysis as follows:

–Trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the

'Due not more than 1 month' time bucket because trading balances are typically held for short periods of time.

–Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the 'Due over 5 years' time bucket.

Undated or perpetual instruments are classified based on the contractual notice period, which the counterparty of the instrument is entitled to

give. Where there is no contractual notice period, undated or perpetual contracts are included in the 'Due over 5 years' time bucket.

–Non-financial assets and liabilities with no contractual maturity are included in the 'Due over 5 years' time bucket.

–Financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual maturity

of the underlying instruments and not on the basis of the disposal transaction.

–Liabilities under insurance contracts included in 'non-financial liabilities' are irrespective of contractual maturity included in the 'Due over 5

years' time bucket in the maturity table provided below. An analysis of the present value of expected future cash flows of insurance contract

liabilities and contractual service margin is provided on page <u>[319](#i52a8ac564f2d4799b4150f1cfdffa9d2_7606)</u>. Liabilities under investment contracts are classified in accordance with their

contractual maturity. Undated investment contracts are included in the 'Due over 5 years' time bucket, although such contracts are subject to

surrender and transfer options by the policyholders.

–Loan and other credit-related commitments are classified on the basis of the earliest date they can be drawn down.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **361** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments |
|  | **Due not**<br>**more** <br>**than**<br>**1 month**<br>| **Due over**<br>**1 month**<br>**but not**<br>**more** <br>**than**<br>**3 months**<br>| **Due over**<br>**3 months**<br>**but not**<br>**more** <br>**than**<br>**6 months**<br>| **Due over**<br>**6 months**<br>**but not**<br>**more** <br>**than**<br>**9 months**<br>| **Due over**<br>**9 months**<br>**but not**<br>**more** <br>**than**<br>**1 year**<br>| **Due over**<br>**1 year**<br>**but not**<br>**more** <br>**than**<br>**2 years**<br>| **Due over**<br>**2 years**<br>**but not**<br>**more** <br>**than**<br>**5 years**<br>| **Due over**<br>**5 years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Financial assets** |  |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | **242859** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **242859** |
| Hong Kong Government certificates of <br>indebtedness<br>| **44063** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **44063** |
| Trading assets | **358864** | **4209** | **1551** | **646** | **349** | **534** | **—** | **—** | **366153** |
| Financial assets designated and otherwise <br>mandatorily measured at fair value through profit <br>or loss<br>| **7659** | **1002** | **2061** | **1273** | **1041** | **6097** | **10937** | **102993** | **133063** |
| Derivatives | **234390** | **149** | **176** | **151** | **79** | **287** | **2339** | **169** | **237740** |
| Loans and advances to banks | **74341** | **13842** | **5664** | **4899** | **3056** | **2675** | **3293** | **692** | **108462** |
| Loans and advances to customers | **150457** | **70926** | **59646** | **36257** | **36897** | **96320** | **186262** | **351634** | **988399** |
| – personal | **50268** | **11938** | **8704** | **7160** | **6295** | **21281** | **55491** | **310594** | **471731** |
| – corporate and commercial | **86383** | **50794** | **41517** | **19824** | **23073** | **54426** | **108282** | **32680** | **416979** |
| – financial | **13806** | **8194** | **9425** | **9273** | **7529** | **20613** | **22489** | **8360** | **99689** |
| Reverse repurchase agreements – non-trading | **199154** | **41434** | **20115** | **9474** | **5575** | **12837** | **9803** | **—** | **298392** |
| Financial investments | **41092** | **75509** | **44525** | **20166** | **17973** | **62079** | **199798** | **106069** | **567211** |
| Assets held for sale<sup>1</sup> | **1279** | **559** | **418** | **246** | **737** | **365** | **904** | **6303** | **10811** |
| Accrued income and other financial assets | **103776** | **7104** | **4989** | **817** | **715** | **350** | **593** | **1664** | **120008** |
| **Financial assets at 31 Dec 2025** | **1457934** | **214734** | **139145** | **73929** | **66422** | **181544** | **413929** | **569524** | **3117161** |
| Non-financial assets | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **115873** | **115873** |
| **Total assets at 31 Dec 2025** | **1457934** | **214734** | **139145** | **73929** | **66422** | **181544** | **413929** | **685397** | **3233034** |
| **Off-balance sheet commitments received** |  |  |  |  |  |  |  |  |  |
| Loan and other credit-related commitments | **52535** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **52535** |
| **Financial liabilities** |  |  |  |  |  |  |  |  |  |
| Hong Kong currency notes in circulation | **44063** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **44063** |
| Deposits by banks | **81954** | **2433** | **972** | **104** | **83** | **6518** | **1653** | **4235** | **97952** |
| Customer accounts | **1518208** | **162033** | **62389** | **19424** | **17348** | **5042** | **2249** | **135** | **1786828** |
| – personal | **697222** | **110013** | **47005** | **14460** | **12118** | **4128** | **2108** | **—** | **887054** |
| – corporate and commercial | **623088** | **38493** | **13242** | **3597** | **3146** | **686** | **88** | **134** | **682474** |
| – financial | **197898** | **13527** | **2142** | **1367** | **2084** | **228** | **53** | **1** | **217300** |
| Repurchase agreements – non-trading | **180780** | **12964** | **10257** | **619** | **174** | **180** | **—** | **—** | **204974** |
| Trading liabilities | **68054** | **2093** | **1975** | **—** | **—** | **—** | **—** | **—** | **72122** |
| Financial liabilities designated at fair value | **23306** | **12208** | **8709** | **4775** | **5877** | **21508** | **39904** | **42169** | **158456** |
| – debt securities in issue: unsecured | **8380** | **7958** | **7169** | **3608** | **3854** | **18928** | **35405** | **30671** | **115973** |
| – subordinated liabilities and preferred <br>securities<br>| **1** | **—** | **—** | **—** | **895** | **892** | **1185** | **6202** | **9175** |
| – other | **14925** | **4250** | **1540** | **1167** | **1128** | **1688** | **3314** | **5296** | **33308** |
| Derivatives | **235555** | **97** | **89** | **13** | **39** | **128** | **245** | **1688** | **237854** |
| Debt securities in issue | **5912** | **4399** | **6892** | **3999** | **4955** | **8039** | **32934** | **32545** | **99675** |
| – covered bonds | **—** | **—** | **—** | **—** | **—** | **670** | **1537** | **—** | **2207** |
| – otherwise secured | **507** | **43** | **62** | **58** | **338** | **201** | **691** | **2401** | **4301** |
| – unsecured | **5405** | **4356** | **6830** | **3941** | **4617** | **7168** | **30706** | **30144** | **93167** |
| Liabilities of disposal groups held for sale<sup>2</sup> | **15901** | **404** | **145** | **32** | **98** | **10** | **118** | **1626** | **18334** |
| Accruals and other financial liabilities | **110867** | **11030** | **5050** | **1019** | **1037** | **820** | **2230** | **1470** | **133523** |
| Subordinated liabilities | **—** | **—** | **—** | **—** | **—** | **2** | **906** | **27498** | **28406** |
| **Total financial liabilities at 31 Dec 2025** | **2284600** | **207661** | **96478** | **29985** | **29611** | **42247** | **80239** | **111366** | **2882187** |
| Non-financial liabilities | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **145181** | **145181** |
| **Total liabilities at 31 Dec 2025** | **2284600** | **207661** | **96478** | **29985** | **29611** | **42247** | **80239** | **256547** | **3027368** |
| **Off-balance sheet commitments given** |  |  |  |  |  |  |  |  |  |
| Loan and other credit-related commitments | **948261** | **67** | **20** | **30** | **43** | **10** | **190** | **16** | **948637** |
| – personal | **272532** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **272532** |
| – corporate and commercial  | **516435** | **67** | **20** | **30** | **43** | **10** | **190** | **16** | **516811** |
| – financial  | **159294** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **159294** |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **362** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) |
|  | Due not<br>more than<br>1 month<br>| Due over<br>1 month<br>but not<br>more than<br>3 months<br>| Due over<br>3 months<br>but not<br>more than<br>6 months<br>| Due over<br>6 months<br>but not<br>more than<br>9 months<br>| Due over<br>9 months<br>but not<br>more than<br>1 year<br>| Due over<br>1 year<br>but not<br>more than<br>2 years <br>| Due over<br>2 years<br>but not<br>more than<br>5 years <br>| Due over<br>5 years<br>| Total |
|  | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Financial assets |  |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | 267674 |  |  |  |  |  |  |  | 267674 |
| Hong Kong Government certificates of <br>indebtedness <br>| 42293 |  |  |  |  |  |  |  | 42293 |
| Trading assets  | 311277 | 1374 | 679 | 337 | 774 | 401 |  |  | 314842 |
| Financial assets designated and otherwise <br>mandatorily measured at fair value through profit <br>or loss<br>| 6329 | 1497 | 1218 | 810 | 1570 | 4010 | 11503 | 88832 | 115769 |
| Derivatives  | 264689 | 401 | 709 | 377 | 164 | 364 | 524 | 1409 | 268637 |
| Loans and advances to banks | 69778 | 16300 | 3871 | 4264 | 2922 | 2276 | 2236 | 392 | 102039 |
| Loans and advances to customers | 135250 | 69955 | 53557 | 36945 | 38985 | 89061 | 176645 | 330260 | 930658 |
| – personal  | 45221 | 10236 | 7634 | 6705 | 6197 | 19683 | 53434 | 295588 | 444698 |
| – corporate and commercial | 78170 | 52618 | 38440 | 22858 | 25292 | 54832 | 102637 | 29102 | 403949 |
| – financial  | 11859 | 7101 | 7483 | 7382 | 7496 | 14546 | 20574 | 5570 | 82011 |
| Reverse repurchase agreements – non-trading | 179590 | 36552 | 15054 | 3715 | 6659 | 7400 | 3579 |  | 252549 |
| Financial investments  | 35780 | 74850 | 50650 | 15907 | 20465 | 54125 | 143870 | 97519 | 493166 |
| Assets held for sale<sup>1</sup> | 2711 | 170 | 215 | 401 | 711 | 513 | 2465 | 19170 | 26356 |
| Accrued income and other financial assets | 94803 | 6831 | 4127 | 648 | 579 | 498 | 346 | 1504 | 109336 |
| Financial assets at 31 Dec 2024 | 1410174 | 207930 | 130080 | 63404 | 72829 | 158648 | 341168 | 539086 | 2923319 |
| Non-financial assets  |  |  |  |  |  |  |  | 93729 | 93729 |
| Total assets at 31 Dec 2024 | 1410174 | 207930 | 130080 | 63404 | 72829 | 158648 | 341168 | 632815 | 3017048 |
| Off-balance sheet commitments received |  |  |  |  |  |  |  |  |  |
| Loan and other credit-related commitments | 41875 |  |  |  |  |  |  |  | 41875 |
| Financial liabilities |  |  |  |  |  |  |  |  |  |
| Hong Kong currency notes in circulation  | 42293 |  |  |  |  |  |  |  | 42293 |
| Deposits by banks | 54714 | 1595 | 2227 | 653 | 3924 | 507 | 9919 | 458 | 73997 |
| Customer accounts | 1382204 | 168423 | 58928 | 19062 | 17389 | 6482 | 2353 | 114 | 1654955 |
| – personal  | 640031 | 111341 | 41429 | 13429 | 11109 | 3983 | 1981 |  | 823303 |
| – corporate and commercial | 564693 | 45047 | 14708 | 3991 | 4748 | 1968 | 332 | 106 | 635593 |
| – financial  | 177480 | 12035 | 2791 | 1642 | 1532 | 531 | 40 | 8 | 196059 |
| Repurchase agreements – non-trading  | 168075 | 10340 | 1176 | 450 | 473 | 171 |  | 195 | 180880 |
| Trading liabilities  | 58069 | 4933 | 2873 | 7 | 100 |  |  |  | 65982 |
| Financial liabilities designated at fair value  | 19037 | 8732 | 5890 | 4765 | 5600 | 17013 | 43274 | 34416 | 138727 |
| – debt securities in issue: unsecured  | 8431 | 4148 | 3557 | 2885 | 4362 | 14660 | 38259 | 22866 | 99168 |
| – subordinated liabilities and preferred <br>securities<br>|  |  |  | 1011 |  | 886 | 1871 | 5548 | 9316 |
| – other  | 10606 | 4584 | 2333 | 869 | 1238 | 1467 | 3144 | 6002 | 30243 |
| Derivatives  | 262928 | 2 | 6 | 3 | 1 | 43 | 192 | 1273 | 264448 |
| Debt securities in issue  | 5761 | 10915 | 10330 | 7332 | 7239 | 14724 | 22311 | 27173 | 105785 |
| – covered bonds  |  |  |  |  |  |  | 1253 |  | 1253 |
| – otherwise secured  | 511 | 47 | 67 | 64 | 61 | 664 | 520 | 2236 | 4170 |
| – unsecured  | 5250 | 10868 | 10263 | 7268 | 7178 | 14060 | 20538 | 24937 | 100362 |
| Liabilities of disposal groups held for sale<sup>2</sup> | 5356 | 223 | 42 | 2 | 107 |  |  | 1448 | 7178 |
| Accruals and other financial liabilities | 99424 | 11827 | 5415 | 1013 | 1241 | 902 | 1489 | 738 | 122049 |
| Subordinated liabilities  |  |  | 1719 | 16 |  |  | 861 | 23362 | 25958 |
| Total financial liabilities at 31 Dec 2024 | 2097861 | 216990 | 88606 | 33303 | 36074 | 39842 | 80399 | 89177 | 2682252 |
| Non-financial liabilities  |  |  |  |  |  |  |  | 142523 | 142523 |
| Total liabilities at 31 Dec 2024 | 2097861 | 216990 | 88606 | 33303 | 36074 | 39842 | 80399 | 231700 | 2824775 |
| Off-balance sheet commitments given |  |  |  |  |  |  |  |  |  |
| Loan and other credit-related commitments | 861181 | 74 | 12 | 85 | 49 | 6 | 57 | 114 | 861578 |
| – personal | 253522 |  |  |  |  |  |  |  | 253522 |
| – corporate and commercial | 460762 | 74 | 12 | 85 | 49 | 6 | 57 | 114 | 461159 |
| – financial | 146897 |  |  |  |  |  |  |  | 146897 |

---

1Unallocated impairment losses in relation to disposal groups of $0.09bn (2024: $0.03bn) and non-financial assets of $0.26bn (2024: $0.92bn) that are presented

within assets held for sale on the balance sheet have been included within non-financial assets in the table above.

2A total of $5.00bn (2024: $21.83bn) of non-financial liabilities that are presented within liabilities of disposal groups held for sale on the balance sheet have been

included within non-financial liabilities in the table above.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **363** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC Holdings

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments | Maturity analysis of assets, liabilities and off-balance sheet commitments |
|  | **Due not**<br>**more** <br>**than**<br>**1 month**<br>| **Due over**<br>**1 month**<br>**but not**<br>**more** <br>**than**<br>**3 months**<br>| **Due over**<br>**3 months**<br>**but not**<br>**more** <br>**than**<br>**6 months**<br>| **Due over**<br>**6 months**<br>**but not**<br>**more** <br>**than**<br>**9 months**<br>| **Due over**<br>**9 months**<br>**but not**<br>**more** <br>**than**<br>**1 year**<br>| **Due over**<br>**1 year**<br>**but not**<br>**more** <br>**than**<br>**2 years** <br>| **Due over**<br>**2 years**<br>**but not**<br>**more** <br>**than**<br>**5 years** <br>| **Due over**<br>**5 years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Financial assets** |  |  |  |  |  |  |  |  |  |
| Cash at bank and in hand: |  |  |  |  |  |  |  |  |  |
| – balances with HSBC undertakings | **5079** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **5079** |
| Financial assets with HSBC undertakings <br>designated and otherwise mandatorily <br>measured at fair value<br>| **—** | **—** | **—** | **—** | **—** | **4863** | **31702** | **30652** | **67217** |
| Derivatives  | **1371** | **26** | **10** | **—** | **—** | **114** | **118** | **303** | **1942** |
| Loans and advances to HSBC undertakings  | **6250** | **—** | **1760** | **—** | **—** | **2049** | **7331** | **23110** | **40500** |
| Trading assets | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **—** |
| Financial investments | **11736** | **3734** | **—** | **—** | **—** | **—** | **—** | **—** | **15470** |
| Accrued income and other financial assets | **1864** | **803** | **404** | **209** | **5** | **—** | **—** | **—** | **3285** |
| **Total financial assets at 31 Dec 2025** | **26300** | **4563** | **2174** | **209** | **5** | **7026** | **39151** | **54065** | **133493** |
| Non-financial assets  | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **159527** | **159527** |
| **Total assets at 31 Dec 2025** | **26300** | **4563** | **2174** | **209** | **5** | **7026** | **39151** | **213592** | **293020** |
| **Financial liabilities** |  |  |  |  |  |  |  |  |  |
| Amounts owed to HSBC undertakings  | **—** | **89** | **—** | **—** | **—** | **—** | **—** | **—** | **89** |
| Financial liabilities designated at fair value  | **—** | **1760** | **—** | **—** | **895** | **8750** | **15138** | **26364** | **52907** |
| – debt securities in issue  | **—** | **1760** | **—** | **—** | **—** | **7858** | **13953** | **21117** | **44688** |
| – subordinated liabilities and preferred <br>securities <br>| **—** | **—** | **—** | **—** | **895** | **892** | **1185** | **5247** | **8219** |
| Derivatives  | **1299** | **1** | **86** | **3** | **22** | **175** | **519** | **1346** | **3451** |
| Debt securities in issue  | **—** | **—** | **1535** | **408** | **—** | **2711** | **33550** | **30820** | **69024** |
| Accruals and other financial liabilities | **294** | **1109** | **676** | **140** | **34** | **—** | **—** | **21** | **2274** |
| Subordinated liabilities  | **—** | **—** | **—** | **—** | **—** | **—** | **901** | **25213** | **26114** |
| **Total financial liabilities at 31 Dec 2025** | **1593** | **2959** | **2297** | **551** | **951** | **11636** | **50108** | **83764** | **153859** |
| Non-financial liabilities  | **—** | **—** | **—** | **—** | **—** | **—** | **—** | **12** | **12** |
| **Total liabilities at 31 Dec 2025** | **1593** | **2959** | **2297** | **551** | **951** | **11636** | **50108** | **83776** | **153871** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Financial assets |  |  |  |  |  |  |  |  |  |
| Cash at bank and in hand: |  |  |  |  |  |  |  |  |  |
| – balances with HSBC undertakings | 2548 |  |  |  |  |  |  |  | 2548 |
| Financial assets with HSBC undertakings <br>designated and otherwise mandatorily <br>measured at fair value<br>|  |  |  |  |  | 5835 | 31547 | 23904 | 61286 |
| Derivatives  | 2339 |  | 24 |  |  | 243 | 162 | 286 | 3054 |
| Loans and advances to HSBC undertakings  | 8500 |  | 120 |  | 13 | 1640 | 6739 | 20665 | 37677 |
| Trading assets | 709 |  |  |  |  |  |  |  | 709 |
| Financial investments | 6141 | 4187 |  |  |  |  |  |  | 10328 |
| Accrued income and other financial assets | 2719 | 856 | 292 | 203 | 11 |  |  |  | 4081 |
| Total financial assets at 31 Dec 2024 | 22956 | 5043 | 436 | 203 | 24 | 7718 | 38448 | 44855 | 119683 |
| Non-financial assets  |  |  |  |  |  |  |  | 154574 | 154574 |
| Total assets at 31 Dec 2024 | 22956 | 5043 | 436 | 203 | 24 | 7718 | 38448 | 199429 | 274257 |
| Financial liabilities |  |  |  |  |  |  |  |  |  |
| Amounts owed to HSBC undertakings  |  | 231 |  |  |  |  |  |  | 231 |
| Financial liabilities designated at fair value  |  |  |  | 1012 |  | 3641 | 16907 | 20022 | 41582 |
| – debt securities in issue |  |  |  |  |  | 2755 | 15036 | 15476 | 33267 |
| – subordinated liabilities and preferred <br>securities<br>|  |  |  | 1012 |  | 886 | 1871 | 4546 | 8315 |
| Derivatives  | 1502 | 89 | 144 | 44 | 45 | 209 | 794 | 2513 | 5340 |
| Debt securities in issue  |  |  |  |  |  | 14897 | 24395 | 25028 | 64320 |
| Accruals and other financial liabilities | 351 | 1713 | 831 | 129 | 31 |  |  | 20 | 3075 |
| Subordinated liabilities  |  |  | 1541 |  |  |  | 836 | 21171 | 23548 |
| Total financial liabilities at 31 Dec 2024 | 1853 | 2033 | 2516 | 1185 | 76 | 18747 | 42932 | 68754 | 138096 |
| Non-financial liabilities  |  |  |  |  |  |  |  | 22 | 22 |
| Total liabilities at 31 Dec 2024 | 1853 | 2033 | 2516 | 1185 | 76 | 18747 | 42932 | 68776 | 138118 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **364** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Contractual maturity of financial liabilities

The following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities

and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in our

consolidated balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual

maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the 'Due not more than 1 month' time bucket and

not by contractual maturity.

In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The

undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis

of the earliest date they can be called.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC under financial liabilities by remaining contractual maturities |  |
|  | **Due not** <br>**more**<br>**than 1** <br>**month**<br>| **Due over**<br>**1 month but**<br>**not more** <br>**than**<br>**3 months**<br>| **Due over**<br>**3 months but**<br>**not more than**<br>**1 year**<br>| **Due over**<br>**1 year but** <br>**not**<br>**more than**<br>**5 years**<br>| **Due over**<br>**5 years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Deposits by banks | **81989** | **2617** | **1582** | **9192** | **4334** | **99714** |
| Customer accounts | **1518669** | **164800** | **100734** | **8079** | **135** | **1792417** |
| Repurchase agreements – non-trading | **180768** | **13771** | **11169** | **180** | **—** | **205888** |
| Trading liabilities | **72122** | **—** | **—** | **—** | **—** | **72122** |
| Financial liabilities designated at fair value | **23595** | **12871** | **21954** | **72552** | **52326** | **183298** |
| Derivatives | **235317** | **246** | **395** | **1870** | **2885** | **240713** |
| Debt securities in issue | **5928** | **5312** | **18421** | **51297** | **38047** | **119005** |
| Subordinated liabilities | **39** | **368** | **1424** | **8085** | **38878** | **48794** |
| Other financial liabilities<sup>1</sup> | **153469** | **8753** | **5312** | **2881** | **1838** | **172253** |
|  | **2271896** | **208738** | **160991** | **154136** | **138443** | **2934204** |
| Loan and other credit-related commitments | **948277** | **66** | **94** | **200** | **—** | **948637** |
| Financial guarantees<sup>2</sup> | **17476** | **—** | **—** | **—** | **—** | **17476** |
| **At 31 Dec 2025** | **3237649** | **208804** | **161085** | **154336** | **138443** | **3900317** |
| Proportion of cash flows payable in period | **83%** | **5%** | **4%** | **4%** | **4%** |  |
| Deposits by banks | 54819 | 1759 | 7381 | 11242 | 511 | 75712 |
| Customer accounts | 1382666 | 171917 | 97667 | 10089 | 113 | 1662452 |
| Repurchase agreements – non-trading | 168633 | 10425 | 2195 | 188 | 196 | 181637 |
| Trading liabilities | 65982 |  |  |  |  | 65982 |
| Financial liabilities designated at fair value | 19139 | 9042 | 18462 | 70587 | 45767 | 162997 |
| Derivatives | 262014 | 531 | 1008 | 2034 | 2765 | 268352 |
| Debt securities in issue | 5780 | 11309 | 27103 | 45725 | 32129 | 122046 |
| Subordinated liabilities | 39 | 120 | 2959 | 7373 | 35512 | 46003 |
| Other financial liabilities<sup>1</sup> | 138319 | 9754 | 5421 | 2206 | 608 | 156308 |
|  | 2097391 | 214857 | 162196 | 149444 | 117601 | 2741489 |
| Loan and other credit-related commitments | 861193 | 78 | 146 | 63 | 98 | 861578 |
| Financial guarantees<sup>2</sup> | 16998 |  |  |  |  | 16998 |
| At 31 Dec 2024 | 2975582 | 214935 | 162342 | 149507 | 117699 | 3620065 |
| Proportion of cash flows payable in period | 83% | 6% | 4% | 4% | 3% |  |

---

1Excludes financial liabilities of disposal groups.

2Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

HSBC Holdings

HSBC Holdings' primary sources of liquidity are dividends received from subsidiaries, interest on and repayment of intra-Group loans and

securities, and interest earned on its own liquid funds. HSBC Holdings also raises funds in the debt capital markets to meet the Group's minimum

requirement for own funds and eligible liabilities and maintain an appropriate liquidity buffer. HSBC Holdings uses this liquidity to meet its

obligations, including interest and principal repayments on external debt liabilities, operating expenses and collateral on derivative transactions.

HSBC Holdings is also subject to contingent liquidity risk by virtue of credit-related commitments and guarantees and similar contracts issued

relating to its subsidiaries. Such commitments and guarantees are only issued after due consideration of HSBC Holdings' ability to finance the

commitments and guarantees and the likelihood of the need arising.

HSBC Holdings actively manages the cash flows from its subsidiaries to optimise the amount of cash held at the holding company level. During

2025, consistent with the Group's capital plan, the Group's material subsidiaries did not experience any significant restrictions on paying dividends

or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from material

subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things, their

respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.

HSBC Holdings currently has sufficient liquidity to meet its present and forecast requirements.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **365** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

The following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities

and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in HSBC

Holdings balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual

maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the 'Due not more than 1 month' time bucket and

not by contractual maturity.

In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The

undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis

of the earliest date they can be called.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities |  |
|  | **Due not** <br>**more**<br>**than 1** <br>**month**<br>| **Due over 1**<br>**month but** <br>**not**<br>**more than 3**<br>**months**<br>| **Due over 3**<br>**months but**<br>**not more** <br>**than**<br>**1 year**<br>| **Due over 1**<br>**year but not**<br>**more than 5**<br>**years**<br>| **Due over**<br>**5 years**<br>| **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| Amounts owed to HSBC undertakings  | **—** | **89** | **—** | **—** | **—** | **89** |
| Financial liabilities designated at fair value | **23** | **2230** | **2786** | **30944** | **32214** | **68197** |
| Derivatives  | **796** | **47** | **608** | **857** | **1614** | **3922** |
| Debt securities in issue  | **—** | **796** | **4080** | **45834** | **36373** | **87083** |
| Subordinated liabilities  | **—** | **353** | **1336** | **7508** | **35087** | **44284** |
| Other financial liabilities  | **274** | **40** | **—** | **—** | **21** | **335** |
| **At 31 Dec 2025** | **1093** | **3555** | **8810** | **85143** | **105309** | **203910** |
| Amounts owed to HSBC undertakings  |  | 231 |  |  |  | 231 |
| Financial liabilities designated at fair value  | 2 | 133 | 2254 | 26335 | 26788 | 55512 |
| Derivatives  | 669 | 202 | 1344 | 2591 | 1658 | 6464 |
| Debt securities in issue  |  | 254 | 1697 | 47771 | 29706 | 79428 |
| Subordinated liabilities  |  | 105 | 2627 | 6794 | 31773 | 41299 |
| Other financial liabilities  | 351 | 1735 | 991 |  | 20 | 3097 |
| At 31 Dec 2024 | 1022 | 2660 | 8913 | 83491 | 89945 | 186031 |

---

31Offsetting of financial assets and financial liabilities

In the offsetting of financial assets and financial liabilities, the net amount is reported in the balance sheet when the offset criteria are met. This is

achieved when there is a legally enforceable right to offset the recognised amounts and there is either an intention to settle on a net basis, or

realise the asset and settle the liability simultaneously.

In the following table, the 'Amounts not set off in the balance sheet' include transactions where:

–the counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right to set off only in the

event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and

–cash and non-cash collateral (debt securities and equities) has been received/pledged for derivatives and reverse repurchase/repurchase, stock

borrowing/lending and similar agreements to cover net exposure in the event of a default or other predetermined events.

The effect of over-collateralisation is excluded.

'Amounts not subject to enforceable netting agreements' include contracts executed in jurisdictions where the rights of offset may not be upheld

under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have been sought,

or may have been unable to obtain.

For risk management purposes, the net amounts of loans and advances to customers are subject to limits, which are monitored and the relevant

customer agreements are subject to review and updated, as necessary, to ensure the legal right to set off remains appropriate.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **366** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities | Offsetting of financial assets and financial liabilities |
|  | **Amounts subject to enforceable netting arrangements** | **Amounts subject to enforceable netting arrangements** | **Amounts subject to enforceable netting arrangements** | **Amounts subject to enforceable netting arrangements** | **Amounts subject to enforceable netting arrangements** | **Amounts subject to enforceable netting arrangements** | **Amounts not**<br>**subject to**<br>**enforceable**<br>**netting**<br>**arrangements**<sup>1</sup> | **Total** |
|  |  |  | **Amounts not set off in the** <br>**balance sheet**<br>|  |  |  | **Amounts not**<br>**subject to**<br>**enforceable**<br>**netting**<br>**arrangements**<sup>1</sup> | **Total** |
|  | **Gross**<br>**amounts**<br>| **Amounts**<br>**offset**<br>| **Net**<br>**amounts** <br>**in the** <br>**balance**<br>**sheet**<br>| **Financial** <br>**instruments,** <br>**including non-**<br>**cash collateral**<br>| **Cash**<br>**collateral**<br>| **Net**<br>**amount**<br>| **Amounts not**<br>**subject to**<br>**enforceable**<br>**netting**<br>**arrangements**<sup>1</sup> | **Total** |
|  | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** | **$m** |
| **Financial assets** |  |  |  |  |  |  |  |  |
| Derivatives (Note 15)<sup>2</sup> | **330338** | **(97243)** | **233095** | **(202744)** | **(26074)** | **4277** | **4645** | **237740** |
| Reverse repos, stock borrowing and <br>similar agreements classified as:<sup>3</sup><br>|  |  |  |  |  |  |  |  |
| – trading assets | **31450** | **(610)** | **30840** | **(30839)** | **(1)** | **—** | **2556** | **33396** |
| – non-trading assets  | **504986** | **(224173)** | **280813** | **(279149)** | **(207)** | **1457** | **17640** | **298453** |
| Loans and advances to customers<sup>4</sup> | **39273** | **(18826)** | **20447** | **(17395)** | **(81)** | **2971** | **2** | **20449** |
| **At 31 Dec 2025** | **906047** | **(340852)** | **565195** | **(530127)** | **(26363)** | **8705** | **24843** | **590038** |
| Derivatives (Note 15)<sup>2</sup> | 372699 | (112746) | 259953 | (230133) | (22730) | 7090 | 8684 | 268637 |
| Reverse repos, stock borrowing and <br>similar agreements classified as:<sup>3</sup><br>|  |  |  |  |  |  |  |  |
| – trading assets  | 25077 | (637) | 24440 | (24428) | (10) | 2 | 757 | 25197 |
| – non-trading assets | 386124 | (154133) | 231991 | (230584) | (332) | 1075 | 20602 | 252593 |
| Loans and advances to customers<sup>4</sup> | 34582 | (16540) | 18042 | (15313) | (75) | 2654 | 4 | 18046 |
| At 31 Dec 2024 | 818482 | (284056) | 534426 | (500458) | (23147) | 10821 | 30047 | 564473 |
| **Financial liabilities** |  |  |  |  |  |  |  |  |
| Derivatives (Note 15)<sup>2</sup> | **329387** | **(97243)** | **232144** | **(201311)** | **(28038)** | **2795** | **5710** | **237854** |
| Repos, stock lending and similar <br>agreements classified as:<sup>3</sup><br>|  |  |  |  |  |  |  |  |
| – trading liabilities | **19691** | **(329)** | **19362** | **(19362)** | **—** | **—** | **1** | **19363** |
| – non-trading liabilities  | **375173** | **(224454)** | **150719** | **(145206)** | **(224)** | **5289** | **54255** | **204974** |
| Customer accounts<sup>5</sup> | **46444** | **(18826)** | **27618** | **(17395)** | **(81)** | **10142** | **12** | **27630** |
| **At 31 Dec 2025** | **770695** | **(340852)** | **429843** | **(383274)** | **(28343)** | **18226** | **59978** | **489821** |
| Derivatives (Note 15)<sup>2</sup> | 369287 | (112746) | 256541 | (221232) | (30334) | 4975 | 7907 | 264448 |
| Repos, stock lending and similar <br>agreements classified as:<sup>3</sup><br>|  |  |  |  |  |  |  |  |
| – trading liabilities  | 18482 | (157) | 18325 | (18326) |  | (1) | 6 | 18331 |
| – non-trading liabilities | 287648 | (154613) | 133035 | (131719) | (164) | 1152 | 47845 | 180880 |
| Customer accounts<sup>5</sup> | 41409 | (16540) | 24869 | (15313) | (75) | 9481 | 17 | 24886 |
| At 31 Dec 2024 | 716826 | (284056) | 432770 | (386590) | (30573) | 15607 | 55775 | 488545 |

---

1These exposures continue to be secured by financial collateral, but we may not have sought or been able to obtain a legal opinion evidencing enforceability of

the right of offset.

2At 31 December 2025, the amount of cash margin received that had been offset against the gross derivatives assets was $3.8bn (2024: $5.3bn). The amount of

cash margin paid that had been offset against the gross derivatives liabilities was $11.5bn (2024: $5.6bn).

3For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within 'Trading assets' of

$33.4bn (2024: $25.2bn) and 'Trading liabilities' of $19.4bn (2024: $18.3bn), see the 'Funding sources and uses' table on page 195.

4At 31 December 2025, the total amount of 'Loans and advances to customers' was $988.4bn (2024: $930.7bn), of which $20.4bn (2024: $18.0bn) was subject

to offsetting.

5At 31 December 2025, the total amount of 'Customer accounts' was $1,786.8bn (2024: $1,655.0bn), of which $27.6bn (2024: $24.9bn) was subject to

offsetting.

---

| | |
|:---|:---|
| 32 | Called up share capital and other equity instruments |

---

Called up share capital and share premium

---

| | | | | |
|:---|:---|:---|:---|:---|
| HSBC Holdings ordinary shares of $0.50 each, issued and fully paid | HSBC Holdings ordinary shares of $0.50 each, issued and fully paid | HSBC Holdings ordinary shares of $0.50 each, issued and fully paid | HSBC Holdings ordinary shares of $0.50 each, issued and fully paid | HSBC Holdings ordinary shares of $0.50 each, issued and fully paid |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Number** | **$m** | Number | $m |
| At 1 Jan | **17946950582** | **8973** | 19262728193 | 9631 |
| Shares issued under HSBC employee share plans | **9937366** | **5** | 10283430 | 5 |
| Less: shares repurchased and cancelled | **781648086** | **390** | 1326061041 | 663 |
| **At 31 Dec**<sup>1</sup> | **17175239862** | **8588** | 17946950582 | 8973 |

---

1All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **367** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| HSBC Holdings share premium | HSBC Holdings share premium | HSBC Holdings share premium |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **At 31 Dec**<sup>1</sup> | **111** | 14810 |

---

1On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings' share

premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings' Annual General Meeting held on

2 May 2025 (the 'Capital Reduction'). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting

in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.

---

| | | |
|:---|:---|:---|
| Total called up share capital and share premium | Total called up share capital and share premium | Total called up share capital and share premium |
|  | **2025** | 2024 |
|  | **$m** | $m |
| **At 31 Dec** | **8699** | 23783 |

---

HSBC Holdings non-cumulative preference share of £0.01

The one non-cumulative sterling preference share of £0.01 ('sterling preference share') has been in issue since 29 December 2010 and is held by a

subsidiary of HSBC Holdings. Dividends are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share carries no

rights of conversion into ordinary shares of HSBC Holdings and no right to attend or vote at shareholder meetings of HSBC Holdings. These

securities can be redeemed by HSBC Holdings at any time, subject to prior approval by the PRA.

Other equity instruments

HSBC Holdings' contingent convertible securities are described below. These are accounted for as equity because HSBC does not have an

obligation to transfer cash or a variable number of its own ordinary shares to holders under any circumstances outside its control.

Additional tier 1 capital – contingent convertible securities

HSBC Holdings continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1

capital securities. These securities are marketed principally and subsequently allotted to corporate investors and fund managers. The net proceeds

of the issuances are typically used for HSBC Holdings' general corporate purposes and to maintain or further strengthen its capital base to meet

requirements under CRR II. These securities bear a fixed rate of interest until their initial reset dates (unless previously redeemed in accordance

with their terms). If not redeemed, the securities will bear interest at a rate fixed on each reset date for the subsequent five-year period, equal to

the sum of the applicable reference rate at the time of reset and a credit spread set at issuance. Interest on the contingent convertible securities

will be due and payable only at the sole discretion of HSBC Holdings, and HSBC Holdings has sole and absolute discretion at all times to cancel for

any reason (in whole or part) any interest payment that would otherwise be payable on any payment date. Distributions will not be paid if they are

prohibited under UK banking regulations or if the Group has insufficient reserves or fails to meet the solvency conditions defined in the securities'

terms.

The contingent convertible securities are undated and are repayable at the option of HSBC Holdings in whole typically at the initial call date or on

any fifth anniversary after this date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons.

Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC Holdings' sterling preference shares and

therefore rank ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of HSBC Holdings at

a predetermined price, should HSBC's consolidated CET1 ratio fall below 7.0%. Therefore, in accordance with the terms of the securities, if

HSBC's consolidated CET1 ratio breaches the 7.0% trigger, the securities will convert into ordinary shares at fixed contractual conversion prices in

the currency of the relevant securities, subject to anti-dilution adjustments.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Original nominal** <br>**amount (LCY)** | **Description of security** | **Issue** <br>**Date** | **First call**<br>**date** | **Reset Date** | **2025** | 2024 |
| **Original nominal** <br>**amount (LCY)** | **Description of security** | **Issue** <br>**Date** | **First call**<br>**date** | **Reset Date** | **$m** | $m |
| $2,450m | 6.375% Perpetual Subordinated Contingent Convertible Securities<sup>1</sup> | Mar 2015 | Mar 2025 | Mar 2025 | **—** | 2450 |
| $3,000m | 6.000% Perpetual Subordinated Contingent Convertible Securities | May 2017 | May 2027 | May 2027 | **3000** | 3000 |
| €1,250m | 4.750% Perpetual Subordinated Contingent Convertible Securities | Jul 2017 | Jul 2029 | Jul 2029 | **1421** | 1422 |
| $1,800m | 6.500% Perpetual Subordinated Contingent Convertible Securities | Mar 2018 | Mar 2028 | Mar 2028 | **1800** | 1800 |
| £1,000m | 5.875% Perpetual Subordinated Contingent Convertible Securities | Sep 2018 | Sep 2026 | Sep 2026 | **1301** | 1301 |
| $1,500m | 4.600% Perpetual Subordinated Contingent Convertible Securities | Dec 2020 | Dec 2030 | Jun 2031 | **1500** | 1500 |
| $1,000m | 4.000% Perpetual Subordinated Contingent Convertible Securities | Mar 2021 | Mar 2026 | Sep 2026 | **1000** | 1000 |
| $1,000m | 4.700% Perpetual Subordinated Contingent Convertible Securities | Mar 2021 | Mar 2031 | Sep 2031 | **1000** | 1000 |
| $2,000m | 8.000% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Mar 2023 | Mar 2028 | Sep 2028 | **1980** | 1980 |
| SGD1,500m | 5.250% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Jun 2024 | Jun 2029 | Dec 2029 | **1096** | 1096 |
| $1,350m | 6.875% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Sep 2024 | Sep 2029 | Mar 2030 | **1337** | 1337 |
| $1,150m | 6.950% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Sep 2024 | Mar 2034 | Sep 2034 | **1139** | 1138 |
| $1,500m | 6.950% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Feb 2025 | Aug 2031 | Feb 2032 | **1485** |  |
| SGD800m | 5.000% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Mar 2025 | Mar 2030 | Sep 2030 | **596** |  |
| $2,000m | 7.050% Perpetual Subordinated Contingent Convertible Securities<sup>2</sup> | Jun 2025 | Jun 2030 | Dec 2030 | **1980** |  |
| **At 31 Dec** |  |  |  |  | **20635** | 19024 |

---

1This security was called by HSBC Holdings on 7 February 2025 and was redeemed and cancelled on 31 March 2025.

2These securities have been accounted for net of directly attributable transaction costs.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **368** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Shares under option

For details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Savings-Related Share Option

Plan (UK), see Note 5.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Aggregate options outstanding under these plans | Aggregate options outstanding under these plans | Aggregate options outstanding under these plans | Aggregate options outstanding under these plans | Aggregate options outstanding under these plans | Aggregate options outstanding under these plans |
| **31 Dec 2025** | **31 Dec 2025** | **31 Dec 2025** | 31 Dec 2024 | 31 Dec 2024 | 31 Dec 2024 |
| **Number of**<br>**HSBC Holdings**<br>**ordinary shares**<br>| **Usual period**<br> **of exercise**<br>| **Exercise price**  | Number of<br>HSBC Holdings<br>ordinary shares<br>| Usual period<br> of exercise<br>| Exercise price |
| **58902349** | **2024 to 2031** | **£2.6270–£7.6110** | 75335399 | 2023 to 2030 | £2.6270–5.4490 |

---

Maximum obligation to deliver HSBC Holdings ordinary shares

At 31 December 2025, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements and the

HSBC International Employee Share Purchase Plan, together with long-term incentive awards and deferred share awards granted under the HSBC

Share Plan 2011, was 178,823,734 (2024: 209,683,768). The total number of shares at 31 December 2025 held by employee benefit trusts that

may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 35,354,337 (2024: 9,305,925).

33Contingent liabilities, contractual commitments and guarantees

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | HSBC | HSBC | HSBC Holdings<sup>1</sup> | HSBC Holdings<sup>1</sup> |
|  | **2025** | 2024 | **2025** | 2024 |
|  | **$m** | $m | **$m** | $m |
| Guarantees and other contingent liabilities: |  |  |  |  |
| – financial guarantees | **17476** | 16998 | **—** |  |
| – performance and other guarantees | **102684** | 92723 | **6983** | 7327 |
| – other contingent liabilities | **164** | 298 | **—** |  |
| **At 31 Dec** | **120324** | 110019 | **6983** | 7327 |
| Commitments:<sup>2</sup> |  |  |  |  |
| – documentary credits and short-term trade-related transactions  | **6959** | 7096 | **—** |  |
| – forward asset purchases and forward deposits placed | **84978** | 61017 | **—** |  |
| – standby facilities, credit lines and other commitments to lend | **856700** | 793465 | **—** |  |
| **At 31 Dec** | **948637** | 861578 | **—** |  |

---

1Guarantees by HSBC Holdings are in favour of other Group entities. These include contracts that provide protection against credit risk on a specified exposure

but do not meet the definition of financial guarantees.

2Includes $690.8bn of commitments at 31 December 2025 (31 December 2024: $619.4bn), to which the impairment requirements in IFRS 9 are applied.

The preceding table discloses the nominal principal amounts of off-balance sheet liabilities and commitments for the Group, which represent the

maximum amounts at risk should the contracts be fully drawn upon and the clients default. As a significant portion of guarantees and

commitments are expected to expire without being drawn upon, the total of the nominal principal amounts is not indicative of future liquidity

requirements. The expected credit loss provision relating to guarantees and commitments under IFRS 9 is disclosed in Note 28.

The majority of the guarantees have a term of less than one year. All guarantees are subject to HSBC's annual credit review process.

Contingent liabilities arising from legal proceedings, regulatory and other matters against Group companies are excluded from this note but are

disclosed in Notes 28 and 35.

Financial Services Compensation Scheme

The Financial Services Compensation Scheme ('FSCS') provides compensation, up to certain limits, to eligible customers of financial services firms

that are unable, or likely to be unable, to pay claims against them. The FSCS may impose a further levy on the Group to the extent the industry

levies imposed to date are not sufficient to cover the compensation due to customers in any future possible collapse. The ultimate FSCS levy to

the industry as a result of a collapse cannot be estimated reliably. It is dependent on various uncertain factors including the potential recovery of

assets by the FSCS, changes in the level of protected products (including deposits and investments) and the population of FSCS members at the

time.

Associates

HSBC's share of associates' contingent liabilities, contractual commitments and guarantees amounted to $70.9bn at 31 December 2025 (2024:

$74.5bn). No matters arose where HSBC was severally liable.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **369** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

34Finance lease receivables

HSBC leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property and general plant and

machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are calculated to recover the cost of

assets less their residual value, and earn finance income.

The table below excludes finance lease receivables reclassified on the balance sheet to 'Assets held for sale' in accordance with IFRS 5. Net

investment in finance leases of $2m was reclassified to 'Assets held for sale' in 2025 as a result of the planned sale of HSBC Bank (Uruguay) S.A.

There was no net investment in finance leases classified as held-for-sale at 31 December 2024.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Total future**<br>**minimum**<br>**payments**<br>| **Unearned**<br>**finance**<br>**income**<br>| **Present**<br>**value**<br>| Total future<br>minimum<br>payments<br>| Unearned<br>finance<br>income<br>| Present<br>value<br>|
|  | **$m** | **$m** | **$m** | $m | $m | $m |
| **Lease receivables:** |  |  |  |  |  |  |
| No later than one year  | **2507** | **(293)** | **2214** | 2331 | (295) | 2036 |
| One to two years | **1830** | **(224)** | **1606** | 1787 | (226) | 1561 |
| Two to three years | **1335** | **(167)** | **1168** | 1290 | (171) | 1119 |
| Three to four years | **884** | **(127)** | **757** | 839 | (134) | 705 |
| Four to five years | **629** | **(102)** | **527** | 766 | (147) | 619 |
| **Later than one year and no later than five years**  | **4678** | **(620)** | **4058** | 4682 | (678) | 4004 |
| Later than five years  | **3553** | **(578)** | **2975** | 3518 | (639) | 2879 |
| **At 31 Dec** | **10738** | **(1491)** | **9247** | 10531 | (1612) | 8919 |

---

35Legal proceedings and regulatory matters

HSBC is party to legal proceedings and regulatory matters in a number of jurisdictions arising out of its normal business operations. Apart from the

matters described below, HSBC considers that none of these matters are material. The recognition of provisions is determined in accordance with

the accounting policies set out in Note 1. While the outcomes of legal proceedings and regulatory matters are inherently uncertain, management

believes that, based on the information available to it, appropriate provisions have been made in respect of these matters as at 31 December 2025

(see Note 28). Where an individual provision is material, the fact that a provision has been made is stated and quantified, except to the extent that

doing so would be seriously prejudicial. Any provision recognised does not constitute an admission of wrongdoing or legal liability. It is not

practicable to provide an aggregate estimate of potential liability for our legal proceedings and regulatory matters as a class of contingent liabilities.

Bernard L. Madoff Investment Securities LLC

Various HSBC companies that provided custodial, administration and similar services to a number of funds whose assets were invested with

Bernard L. Madoff Investment Securities LLC ('Madoff Securities') have been named as defendants in lawsuits arising out of Madoff Securities'

fraud.

**Trustee litigation:** The Madoff Securities trustee (the 'Trustee') has brought lawsuits in the US against various HSBC companies and others

seeking recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $508m (plus interest). In September 2025,

the US Bankruptcy Court for the Southern District of New York dismissed all claims against HSBC Private Bank (Suisse) SA in the amount of

$292m and certain claims against HSBC Bank USA N.A. ('HSBC Bank USA') in the amount of $32m. The Trustee has appealed. The Trustee's

remaining claims, which amount to $184m, are pending.

The Trustee has filed a claim against various HSBC companies in the High Court of England and Wales seeking recovery of alleged transfers from

Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been specified.

**Fairfield Funds litigation:** Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (each in liquidation and together, the

'Fairfield Funds') have brought lawsuits in the US against various HSBC companies and others seeking recovery of alleged transfers from the

Fairfield Funds to the HSBC companies (that acted as nominees for clients) in the amount of $382m (plus interest). In August 2025, the US Court

of Appeals for the Second Circuit confirmed the dismissal of Fairfield Funds' claims against all HSBC companies. Fairfield Funds may appeal.

**Herald Fund SPC ('Herald') litigation:** HSBC Securities Services Luxembourg ('HSSL') and HSBC Bank plc are defending an action brought by

Herald (in liquidation) before the Luxembourg District Court seeking restitution of securities (the amount of which would be determined by further

proceedings, if Herald is successful in its claim) and $521m in cash (plus interest) or, alternatively, damages in the amount of $5.6bn (plus interest).

Herald's damages claim against HSSL and HSBC Bank plc has been stayed. In December 2024, the Luxembourg Court of Appeal determined that

Herald's claims for restitution of securities and cash against HSSL were founded in principle. HSSL appealed this decision and, in October 2025,

the Luxembourg Court of Cassation denied HSSL's appeal in respect of Herald's securities restitution claim, but accepted HSSL's appeal in

respect of Herald's cash restitution claim, which has been returned to the Luxembourg District Court for determination. HSSL is pursuing a second

appeal on the securities restitution claim before the Luxembourg Court of Appeal. Following the Court of Cassation's decision, HSSL has

recognised a $1.1bn provision in connection with this matter. Given the pendency of the second appeal and the complexities and uncertainties

associated with determining the quantum of restitution, the eventual financial impact could be significantly different.

**Alpha Prime Fund Limited ('Alpha Prime') litigation:** Various HSBC companies are defending an action brought by Alpha Prime in the

Luxembourg District Court seeking restitution of securities and $1bn (plus interest) in supplementary damages or, alternatively, damages in the

amount of $3.3bn (plus interest). This matter is currently pending before the Luxembourg District Court.

In November 2024, Alpha Prime served various HSBC companies with a lawsuit filed in the Bermuda Supreme Court seeking damages for

unspecified amounts for alleged breach of contract and negligence. This claim is currently stayed.

**Senator Fund SPC ('Senator') litigation:** HSSL and the Luxembourg branch of HSBC Bank plc are defending an action brought by Senator before

the Luxembourg District Court seeking restitution of securities or, alternatively, damages in the amount of $1.4bn (plus interest). This matter is

currently pending before the Luxembourg District Court.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **370** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

US Anti-Terrorism Act litigation

Since November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others on behalf of

plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants aided and

abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism Act, or provided banking services to customers

alleged to have connections to terrorism financing. Six actions, which seek damages for unspecified amounts, remain pending. One of these

actions has been dismissed but may be appealed. The other five actions remain at an early procedural stage.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

US dollar Libor litigation

Various HSBC companies are defending two individual actions which allege that the HSBC defendants violated various US federal and state laws,

including antitrust laws, related to the setting of US dollar Libor, and seek damages for unspecified amounts. In September 2025, the US District

Court for the Southern District of New York granted the defendants' joint motion for summary judgment and dismissed these actions. The

plaintiffs have appealed.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

Foreign exchange-related investigations and litigation

In December 2016, Brazil's Administrative Council of Economic Defense initiated an investigation into the onshore foreign exchange market and

identified a number of banks, including HSBC, as subjects of its investigation. This investigation is ongoing. Lawsuits alleging foreign exchange-

related misconduct remain pending against HSBC and other banks in courts in Brazil.

Since 2017, HSBC Bank plc, among other financial institutions, has been defending a complaint filed by the Competition Commission of South

Africa before the South African Competition Tribunal for alleged anti-competitive behaviour in the South African foreign exchange market. In 2020,

a revised complaint was filed which also named HSBC Bank USA as a defendant. In January 2024, the South African Competition Appeal Court

dismissed HSBC Bank USA from the revised complaint but denied HSBC Bank plc's application to dismiss. Both the Competition Commission and

HSBC Bank plc have appealed to the Constitutional Court of South Africa.

HSBC Bank plc and HSBC Holdings have reached a settlement with plaintiffs in Israel to resolve a class action filed in the local courts alleging

foreign exchange-related misconduct. The settlement, the impact of which is not significant and is fully provisioned, remains subject to court

approval.

In February 2024, HSBC Bank plc and HSBC Holdings were joined to an existing claim brought in the UK Competition Appeals Tribunal ('UK CAT')

against various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking approximately £3bn in

damages from all the defendants. In December 2025, the UK Supreme Court upheld an earlier ruling of the UK CAT refusing certification as an opt-

out claim. This matter remains pending before the UK CAT.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

Precious metals fix-related litigation

**US litigation:** Various HSBC companies and other members of The London Silver Market Fixing Limited are defending a class action pending in

the US District Court for the Southern District of New York alleging that, from January 2007 to December 2013, the defendants conspired to

manipulate the price of silver and silver derivatives for their collective benefit in violation of US antitrust laws, the US Commodity Exchange Act

and New York state law. In May 2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or

any possible impact on HSBC, which could be significant.

**Canada litigation:** Various HSBC companies and other financial institutions have been defending putative class actions filed in the Ontario and

Quebec Superior Courts of Justice alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation

of the Canadian Competition Act and common law. These actions each seek CA$1bn in damages plus CA$250m in punitive damages. The HSBC

defendants have reached a settlement with the plaintiffs to resolve these matters. The settlement, the impact of which is not significant and is

fully provisioned, is subject to court approval.

Tax-related investigations

Since 2023, the French National Financial Prosecutor ('PNF') had been investigating HSBC Continental Europe and the Paris branch of HSBC Bank

plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities. In January 2026, HSBC Bank

plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of €302m and this matter is now closed. The

investigation into HSBC Continental Europe was closed with no further action.

HSBC Bank plc and the German branch of HSBC Continental Europe continue to cooperate with investigations by the German public prosecutor

into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain trading activities.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any

possible impact on HSBC, which could be significant.

Gilts trading litigation

In June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among other banks, were named as defendants in a putative class action filed in the

US District Court for the Southern District of New York by plaintiffs alleging anti-competitive conduct in the gilts market and seeking damages for

unspecified amounts. Certain of the defendants, including HSBC Bank plc and HSBC Securities (USA) Inc., have reached a settlement with the

plaintiffs to resolve this matter. The settlement, the impact of which is not significant and has been paid, remains subject to final court approval.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **371** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Korean short selling indictment

In March 2024, the Korean Prosecutors' Office issued a criminal indictment against The Hongkong and Shanghai Banking Corporation Limited

('HBAP') and three current and former employees for breaching short selling rules under the Financial Investment Services and Capital Markets Act

in connection with trades carried out between August 2021 and December 2021. In September 2025, the Korean appellate court confirmed the

acquittal of HBAP of all charges. The Korean Prosecutors' Office has further appealed to the Korean Supreme Court.

Investigations involving HSBC Private Bank (Suisse) SA

Law enforcement authorities in Switzerland and France are conducting criminal investigations into HSBC Private Bank (Suisse) SA in connection

with alleged money laundering offences in respect of two historical banking relationships. These investigations are ongoing.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

First Citizens litigation

In May 2023, First-Citizens Bank & Trust Company ('First Citizens') brought a lawsuit in the US District Court for the Northern District of California

against various HSBC companies and seven US-based HSBC employees who had previously worked for Silicon Valley Bank ('SVB'). The lawsuit

seeks $1bn in damages and alleges, among other things, that the various HSBC companies conspired with the individual defendants to solicit

employees from First Citizens and that the individual defendants took confidential information belonging to SVB and/or First Citizens. In January

2026, First Citizens amended its complaint to add claims purportedly assigned by the Federal Deposit Insurance Corporation ('FDIC'). These

include claims concerning the period between SVB's entry into FDIC receivership and First Citizens' purchase of SVB's US assets. First Citizens

also seeks to bring certain claims and defendants dismissed by the court in July 2024 back into the litigation. The defendants have filed a motion to

dismiss the amended complaint.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any

possible impact on HSBC, which could be significant.

US mortgage securitisation litigation

Beginning in 2014, a number of lawsuits were filed in various state and federal courts in the US against HSBC Bank USA, as a trustee of more than

280 mortgage securitisation trusts, seeking unspecified damages for losses in collateral value allegedly sustained by the trusts. Nearly all of these

lawsuits have either been settled or dismissed; one action remains pending in a New York state court.

HSBC Bank USA and certain of its affiliates are named as defendants in a mortgage loan repurchase action brought by the trustee of a mortgage

securitisation trust in New York state court and seeking unspecified damages and specific performance. The plaintiff has appealed the dismissal of

this action, and the appeal is pending.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any

possible impact on HSBC, which could be significant.

Mexican government bond litigation

HSBC Mexico S.A. and other banks are named as defendants in a consolidated putative class action pending in the US District Court for the

Southern District of New York alleging anti-competitive conduct related to Mexican government bond transactions between 2010 and 2014 and

seeking unspecified damages. In January 2025, the court denied the defendants' motion to dismiss the plaintiffs' third amended complaint, and

this action is proceeding.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any

possible impact on HSBC, which could be significant.

Other regulatory investigations, reviews and litigation

HSBC Holdings and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for information,

investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal proceedings

including litigation, arbitration and other contentious proceedings, in connection with various matters arising out of their businesses and operations.

At the present time, HSBC does not expect the ultimate resolution of any of these matters to be material to the Group's financial position;

however, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the eventual outcome

of a particular matter or matters.

36Related party transactions

Related parties of the Group and HSBC Holdings include subsidiaries, associates, joint ventures, fund-related entities, post-employment benefit

plans for HSBC employees, Key Management Personnel ('KMP') as defined by IAS 24, close family members of KMP and entities that are

controlled or jointly controlled by KMP or their close family members. KMP are defined as those persons having authority and responsibility for

planning, directing and controlling the activities of HSBC Holdings. These individuals also constitute 'senior management' for the purposes of the

Hong Kong Listing Rules. In applying IAS 24, it was determined that for this financial reporting period KMP included Directors, former Directors and

senior management listed on pages 220 to 224 except for the roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief People

& Governance Officer and Group Company Secretary who do not meet the criteria for KMP as provided for in the standard.

Particulars of transactions with related parties are tabulated below. The disclosure of the year-end balance and the highest amounts outstanding during

the year is considered to be the most meaningful information to represent the amount of the transactions and outstanding balances during the year.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **372** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Key Management Personnel

Details of Directors' remuneration and interests in shares are disclosed in the 'Directors' remuneration report' on pages 249 to 274.

IAS 24 'Related Party Disclosures' requires the following additional information for key management compensation.

---

| | | | |
|:---|:---|:---|:---|
| Compensation of Key Management Personnel | Compensation of Key Management Personnel | Compensation of Key Management Personnel | Compensation of Key Management Personnel |
|  | **2025** | 2024 | 2023 |
|  | **$m** | $m | $m |
| Short-term employee benefits  | **47** | 53 | 51 |
| Post-employment benefits  | **1** | 1 | 1 |
| Other long-term employee benefits  | **14** | 12 | 10 |
| Share-based payments  | **30** | 29 | 29 |
| **Year ended 31 Dec** | **92** | 95 | 91 |

---

---

| | | |
|:---|:---|:---|
| Shareholdings, options and other securities of Key Management Personnel | Shareholdings, options and other securities of Key Management Personnel | Shareholdings, options and other securities of Key Management Personnel |
|  | **2025** | 2024 |
|  | **(000s)** | (000s) |
| Number of options held over HSBC Holdings ordinary shares under employee share plans  | **—** | 20 |
| Number of HSBC Holdings ordinary shares held beneficially and non-beneficially  | **14817** | 17455 |
| Number of other HSBC securities held | **—** | 228 |
| **At 31 Dec** | **14817** | 17703 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Advances and credits, guarantees and deposit balances during the year with Key Management Personnel | Advances and credits, guarantees and deposit balances during the year with Key Management Personnel | Advances and credits, guarantees and deposit balances during the year with Key Management Personnel | Advances and credits, guarantees and deposit balances during the year with Key Management Personnel | Advances and credits, guarantees and deposit balances during the year with Key Management Personnel |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Balance at**<br>**31 Dec**<br>| **Highest amounts**<br>**outstanding**<br>**during year**<br>| Balance at<br>31 Dec<br>| Highest amounts<br>outstanding<br>during year<br>|
|  | **$m** | **$m** | $m | $m |
| **Key Management Personnel** |  |  |  |  |
| Advances and credits<sup>1</sup> | **11** | **12** | 9 | 12 |
| Guarantees | **—** | **—** |  |  |
| Deposits | **67** | **144** | 78 | 191 |

---

1Advances and credits entered into by subsidiaries of HSBC Holdings plc during 2025 with Directors and former Directors, disclosed pursuant to section 413 of

the Companies Act 2006, totalled $0.1m (2024: $1.3m) and the total value of guarantees entered into on behalf of the Directors and former Directors was nil

(2024: nil).

Unless previously disclosed, there were no connected transactions during the reporting period that fell outside the exemptions provided by the

Companies Act 2006, the UK Financial Conduct Authority's Listing Rules and the Rules Governing The Listing of Securities on The Stock Exchange

of Hong Kong Limited. The transactions conducted were in the ordinary course of business and on substantially the same terms, including interest

rates and security, as for comparable transactions with parties of a similar standing or, where applicable, with other employees. These transactions

did not involve more than the normal risk of repayment or present other unfavourable features.

Associates and joint ventures

The Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest

bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Transactions and balances during the year with associates and joint ventures | Transactions and balances during the year with associates and joint ventures | Transactions and balances during the year with associates and joint ventures | Transactions and balances during the year with associates and joint ventures | Transactions and balances during the year with associates and joint ventures |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Highest balance** <br>**during the year**<br>| **Balance at**<br>**31 Dec**<br>| Highest balance<br>during the year<br>| Balance at<br>31 Dec<br>|
|  | **$m** | **$m** | $m | $m |
| Unsubordinated amounts due from joint ventures | **253** | **229** | 104 | 72 |
| Unsubordinated amounts due from associates | **9945** | **4760** | 8097 | 5011 |
| Amounts due to associates  | **2990** | **1344** | 2992 | 1844 |
| Amounts due to joint ventures | **212** | **153** | 101 | 85 |
| Fair value of derivative assets with associates  | **902** | **673** | 919 | 763 |
| Fair value of derivative liabilities with associates | **2660** | **1480** | 3718 | 2641 |
| Guarantees and commitments | **992** | **777** | 569 | 577 |

---

The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security,

as for comparable transactions with third-party counterparties.

Post-employment benefit plans

At 31 December 2025, $3.8bn (2024: $3.4bn) of HSBC post-employment benefit plan assets were under management by HSBC companies,

earning management fees of $15m in 2025 (2024: $14m). At 31 December 2025, HSBC's post-employment benefit plans had placed deposits of

$0.4bn (2024: $0.4bn) with its banking subsidiaries, earning interest payable to the schemes of $5m (2024: $2m). The above outstanding balances

arose from the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable

transactions with third-party counterparties.

The combined HSBC Bank (UK) Pension Scheme enters into swap transactions with HSBC to manage inflation and interest rate sensitivity of its

liabilities and selected assets. At 31 December 2025, the gross notional value of the swaps was $6.6bn (2024: $6.4bn). These swaps had a

positive fair value to the scheme of $0.4bn (2024: $0.4bn); and HSBC had delivered collateral of $0.3bn (2024: $0.4bn) to the scheme in respect of

these arrangements. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **373** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

HSBC Holdings

Details of HSBC Holdings' subsidiaries are shown in Note 38.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Transactions and balances during the year with subsidiaries | Transactions and balances during the year with subsidiaries | Transactions and balances during the year with subsidiaries | Transactions and balances during the year with subsidiaries | Transactions and balances during the year with subsidiaries |
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Highest balance**<br>**during the year**<br>| **Balance at**<br>**31 Dec**<br>| Highest balance<br>during the year<br>| Balance at<br>31 Dec<br>|
|  | **$m** | **$m** | $m | $m |
| **Assets**  |  |  |  |  |
| Cash and balances with HSBC undertakings | **7613** | **5079** | 9342 | 2548 |
| Financial assets with HSBC undertakings designated and otherwise mandatorily <br>measured at fair value<br>| **70015** | **67217** | 66030 | 61286 |
| Derivatives  | **3102** | **1942** | 3391 | 3054 |
| Loans and advances to HSBC undertakings | **40500** | **40500** | 37677 | 37677 |
| Prepayments, accrued income and other assets | **6126** | **3416** | 7108 | 4216 |
| Investments in subsidiaries  | **157728** | **157728** | 160805 | 152337 |
| **Total related party assets at 31 Dec** | **285084** | **275882** | 284353 | 261118 |
| **Liabilities** |  |  |  |  |
| Amounts owed to HSBC undertakings  | **192** | **89** | 231 | 231 |
| Derivatives  | **5412** | **3451** | 7944 | 5340 |
| Accruals, deferred income and other liabilities | **2184** | **53** | 399 | 194 |
| Subordinated liabilities | **—** | **—** | 1202 |  |
| **Total related party liabilities at 31 Dec** | **7788** | **3593** | 9776 | 5765 |
| Guarantees and commitments | **7318** | **6983** | 7440 | 7327 |

---

The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security,

as for comparable transactions with third-party counterparties.

One employee of HSBC Holdings is a member of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company. HSBC

Holdings incurs a charge for this employee, equal to the contributions paid into the scheme on his behalf. Disclosure in relation to the scheme is

made in Note 5.

37Events after the balance sheet date

On 8 January 2026, the proposal to privatise Hang Seng Bank Limited ('Hang Seng Bank') through a scheme of arrangement was approved by

Hang Seng Bank shareholders. On approval, a financial liability was recognised in the Group's consolidated financial statements for the present

value of the proposed HK$106bn ($13.7bn) purchase consideration. A corresponding adjustment to equity, net of derecognising the non-controlling

interest, which stood at $7.0bn as at 31 December 2025, was also recognised. On 26 January 2026, the scheme of arrangement became effective

and Hang Seng Bank was subsequently delisted from The Stock Exchange of Hong Kong Limited on 27 January 2026. To demonstrate funding

availability for the proposal, securities of HK$129.3bn ($16.6bn) were segregated and reported as encumbered on the balance sheet as at 31

December 2025. These assets were designated to demonstrate that sufficient resources were available at all times to settle the acquisition

consideration and to provide a buffer against potential mark-to-market movements. The transaction was settled on 4 February 2026. At that point,

all payment obligations under the scheme of arrangement were met, and the segregation of assets ceased.

On 30 January 2026, HSBC Bank plc completed the sale of its UK life insurance entity, HSBC Life (UK) Limited, to Chesnara plc. Prior to

completion, as at 31 December 2025, the balances that were classified as held for sale were $6.6bn in assets and $6.4bn in liabilities. For the year

ended 31 December 2025, we recognised a loss on disposal of $0.1bn. In the first quarter of 2026, we will recycle foreign currency translation

reserves to the income statement. These stood at a cumulative $0.2bn loss as at 31 December 2025.

A fourth interim dividend for 2025 of $0.45 per ordinary share (a distribution of approximately $7.71bn) was approved by the Directors after

31 December 2025. On 11 February 2026, HSBC Holdings called $1,000m 4.000% perpetual subordinated contingent convertible securities,

which are expected to be redeemed and cancelled on 9 March 2026. The accounts were approved by the Board of Directors on 25 February

2026 and authorised for issue.

38HSBC Holdings' subsidiaries, funds, joint ventures and associates

In accordance with section 409 of the Companies Act 2006 a list of HSBC Holdings plc subsidiaries, funds, joint ventures and associates, the

registered office addresses and the effective percentages of equity owned at 31 December 2025 are disclosed below.

Unless otherwise stated, the share capital comprises ordinary or common shares that are held by Group subsidiaries. The ownership percentage is

provided for each undertaking. The undertakings below are consolidated by HSBC unless otherwise indicated.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **374** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

Subsidiaries

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| AI Nominees (UK) One Limited | 100.00 |  | 11 |
| AI Nominees (UK) Two Limited | 100.00 |  | 11 |
| Almacenadora Banpacifico S.A. (In <br>Liquidation)<br>| N/A |  | 1, 12 |
| Assetfinance December (F) Limited | 100.00 |  | 13 |
| Assetfinance December (H) Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| Assetfinance December (P) Limited | 100.00 |  | 11 |
| Assetfinance December (R) Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| Assetfinance June (A) Limited | 100.00 |  | 11 |
| Assetfinance June (D) Limited (In Liquidation) | 100.00 |  | 14 |
| Assetfinance March (B) Limited | 100.00 |  | 15 |
| Assetfinance March (D) Limited | 100.00 |  | 13 |
| Assetfinance March (F) Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| Assetfinance September (F) Limited | 100.00 |  | 11 |
| Assetfinance September (G) Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| B&Q Financial Services Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| Banco HSBC S.A. | 100.00 |  | 16 |
| Banco Nominees (Guernsey) Limited | 100.00 |  | 17 |
| Banco Nominees 2 (Guernsey) Limited | 100.00 |  | 17 |
| Banco Nominees Limited | 100.00 |  | 18 |
| Beau Soleil Limited Partnership | N/A |  | 1, 19 |
| Beijing HSBC Real Estate Leasing Company <br>Limited<br>| N/A |  | 1, 10, 20 |
| Beijing Miyun HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 21 |
| BentallGreenOak China Real Estate <br>Investments, L.P.<br>| N/A |  | 1, 22 |
| Canada Square Nominees (UK) Limited | 100.00 |  | 11 |
| Capco/Cove, Inc. | 100.00 |  | 23 |
| Card-Flo #3, Inc. | 100.00 |  | 24 |
| CCF & Partners Asset Management Limited <br>(In Liquidation)<br>| 100.00 | (99.99) | 14 |
| CCF Holding (Liban) S.A.L. (In Liquidation) | 74.99 |  | 2, 25 |
| Charterhouse Administrators (D.T.) Limited | 100.00 | (99.99) | 11 |
| Charterhouse Management Services Limited | 100.00 | (99.99) | 11 |
| Charterhouse Pensions Limited | 100.00 |  | 11 |
| Chongqing Dazu HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 26 |
| Chongqing Fengdu HSBC Rural Bank <br>Company Limited<br>| N/A |  | 1, 10, 27 |
| Chongqing Rongchang HSBC Rural Bank <br>Company Limited (In Liquidation)<br>| N/A |  | 1, 10, 28 |
| COIF Nominees (UK) Two Limited | 100.00 |  | 11 |
| COIF Nominees Limited | N/A |  | 1, 11 |
| Corsair IV Financial Services Capital Partners - <br>B L.P<br>| N/A |  | 1, 29 |
| Dalian Pulandian HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 30 |
| Decision One Mortgage Company, LLC | N/A |  | 1, 31 |
| Desarrollo Turistico, S.A. de C.V. (In <br>Liquidation)<br>| 100.00 | (99.99) | 12 |
| Electronic Data Process México, S.A. de C.V. | 100.00 |  | 32 |
| Eton Corporate Services Limited | 100.00 |  | 17 |
| Flandres Contentieux S.A. | 100.00 | (99.99) | 5, 33 |
| Foncière Elysées | 100.00 | (99.99) | 5, 33 |
| Fujian Yongan HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 34 |
| Fulcher Enterprises Company Limited (In <br>Liquidation)<br>| 100.00 | (63.43) | 35 |
| Fundacion HSBC, A.C. | 100.00 | (99.99) | 2, 8, 12 |
| Giller Ltd. | 100.00 |  | 23 |
| Griffin International Limited (In Liquidation) | 100.00 |  | 14 |
| Grupo Financiero HSBC, S. A. de C. V. | 99.99 |  | 12 |
| Guangdong Enping HSBC Rural Bank <br>Company Limited<br>| N/A |  | 1, 10, 36 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| Guangzhou HSBC Real Estate Company Ltd | N/A |  | 1, 10, 37 |
| Hang Seng (Nominee) Limited | 100.00 | (63.43) | 38 |
| Hang Seng Bank (China) Limited | N/A |  | 1, 10, 39 |
| Hang Seng Bank (Trustee) Limited | 100.00 | (63.43) | 38 |
| Hang Seng Bank Limited | 63.43 |  | 38 |
| Hang Seng Bullion Company Limited | 100.00 | (63.43) | 38 |
| Hang Seng Credit Limited (In Liquidation) | 100.00 | (63.43) | 35 |
| Hang Seng Data Services Limited | 100.00 | (63.43) | 38 |
| Hang Seng Finance Limited | 100.00 | (63.43) | 38 |
| Hang Seng Financial Information Limited | 100.00 | (63.43) | 38 |
| Hang Seng Indexes (Netherlands) B.V. | 100.00 | (63.43) | 40 |
| Hang Seng Indexes Company Limited | 100.00 | (63.43) | 38 |
| Hang Seng Insurance Company Limited | 100.00 | (63.43) | 38 |
| Hang Seng Investment Management Limited | 100.00 | (63.43) | 38 |
| Hang Seng Investment Services Limited | 100.00 | (63.43) | 38 |
| Hang Seng Qianhai Fund Management <br>Company Limited<br>| N/A |  | 1, 10, 41 |
| Hang Seng Real Estate Management Limited | 100.00 | (63.43) | 38 |
| Hang Seng Securities Limited | 100.00 | (63.43) | 38 |
| Hang Seng Security Management Limited | 100.00 | (63.43) | 38 |
| HASE Wealth Limited | 100.00 | (63.43) | 38 |
| Haseba Investment Company Limited | 100.00 | (63.43) | 38 |
| HBPH Corporation (In Liquidation) | 99.99 |  | 42 |
| HFC Bank Limited (In Liquidation) | 100.00 |  | 43 |
| High Time Investments Limited | 100.00 | (63.43) | 38 |
| HLF | 100.00 | (99.99) | 5, 33 |
| Honey Blue Enterprises Limited | 100.00 |  | 19 |
| Honey Green Enterprises Ltd. | 100.00 |  | 44 |
| Honey Grey Enterprises Limited | 100.00 |  | 19 |
| Honey Silver Enterprises Limited | 100.00 |  | 19 |
| Household International Europe Limited (In <br>Liquidation)<br>| 100.00 |  | 43 |
| Household Pooling Corporation | 100.00 |  | 45 |
| Housing (USA) Inc. | 100.00 |  | 24 |
| HSBC (BGF) Investments Limited | 100.00 |  | 11 |
| HSBC (Kuala Lumpur) Nominees Sdn Bhd | 100.00 |  | 46 |
| HSBC (Malaysia) Trustee Berhad | 100.00 |  | 47 |
| HSBC (Singapore) Nominees Pte Ltd | 100.00 |  | 48 |
| HSBC Agency (India) Private Limited | 100.00 |  | 49 |
| HSBC Amanah Malaysia Berhad | 100.00 |  | 46 |
| HSBC Americas Corporation (Delaware) | 100.00 |  | 24 |
| HSBC Asia Holdings B.V. | 100.00 |  | 11 |
| HSBC Asia Holdings Limited | 100.00 |  | 3, 19 |
| HSBC Asia Pacific Holdings (UK) Limited | 100.00 |  | 6, 11 |
| HSBC Asset Finance (UK) Limited | 100.00 |  | 11 |
| HSBC Asset Finance M.O.G. Holdings (UK) <br>Limited<br>| 100.00 |  | 11 |
| HSBC Australia Holdings Pty Limited | 100.00 |  | 4, 6, 52 |
| HSBC BANK (CHILE) | 100.00 |  | 53 |
| HSBC Bank (China) Company Limited | N/A |  | 1, 10, 54 |
| HSBC Bank (General Partner) Limited | 100.00 |  | 55 |
| HSBC Bank (Mauritius) Limited | 100.00 |  | 56 |
| HSBC Bank (Singapore) Limited | 100.00 |  | 48 |
| HSBC Bank (Taiwan) Limited | 100.00 |  | 57 |
| HSBC Bank (Uruguay) S.A. | 100.00 |  | 58 |
| HSBC Bank (Vietnam) Ltd. | 100.00 |  | 59 |
| HSBC Bank A.S. | 100.00 |  | 60 |
| HSBC Bank Australia Limited | 100.00 |  | 52 |
| HSBC Bank Bermuda Limited | 100.00 |  | 18 |
| HSBC Bank Capital Funding (Sterling 1) LP | N/A |  | 1, 55 |
| HSBC Bank Egypt S.A.E | 94.54 |  | 61 |
| HSBC Bank Malaysia Berhad | 100.00 |  | 4, 46 |
| HSBC Bank Malta p.l.c. | 70.03 |  | 62 |
| HSBC Bank Middle East Limited | 100.00 |  | 4, 63 |
| HSBC Bank Pension Trust (UK) Limited | 100.00 |  | 11 |
| HSBC Bank plc | 100.00 |  | 3, 4, 11 |
| HSBC Bank USA, National Association | 100.00 |  | 4, 64 |
| HSBC Branch Nominee (UK) Limited | 100.00 |  | 13 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **375** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| HSBC Brasil Holding S.A. | 100.00 |  | 16 |
| HSBC Broking Forex (Asia) Limited | 100.00 |  | 19 |
| HSBC Broking Futures (Asia) Limited | 100.00 |  | 19 |
| HSBC Broking Futures (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Broking Securities (Asia) Limited | 100.00 |  | 19 |
| HSBC Broking Securities (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Broking Services (Asia) Limited | 100.00 |  | 19 |
| HSBC Capital (USA), Inc. | 100.00 |  | 24 |
| HSBC Card Services Inc. | 100.00 |  | 24 |
| HSBC Casa de Bolsa, S.A. de C.V., Grupo <br>Financiero HSBC<br>| 100.00 | (99.99) | 12 |
| HSBC Cayman Limited (In Liquidation) | 100.00 |  | 65 |
| HSBC Cayman Services Limited | 100.00 |  | 65 |
| HSBC Client Holdings Nominee (UK) Limited | 100.00 |  | 11 |
| HSBC Client Nominee (Jersey) Limited | 100.00 |  | 2, 66 |
| HSBC Continental Europe | 99.99 |  | 5, 33 |
| HSBC Corporate Advisory (Malaysia) Sdn Bhd | 100.00 |  | 46 |
| HSBC Corporate Finance (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Corporate Secretary (UK) Limited | 100.00 |  | 3, 11 |
| HSBC Corporate Services (Shanghai) Co., Ltd. | N/A |  | 1, 10, 67 |
| HSBC Corporate Trustee Company (UK) <br>Limited<br>| 100.00 |  | 11 |
| HSBC Custody Nominees (Australia) Limited | 100.00 |  | 52 |
| HSBC Custody Services (Guernsey) Limited | 100.00 |  | 17 |
| HSBC Electronic Data Processing <br>(Guangdong) Limited<br>| N/A |  | 1, 10, 69 |
| HSBC Electronic Data Processing (Malaysia) <br>Sdn Bhd<br>| 100.00 |  | 70 |
| HSBC Electronic Data Processing <br>(Philippines), Inc.<br>| 99.99 |  | 71 |
| HSBC Electronic Data Processing India <br>Private Limited<br>| 100.00 |  | 72 |
| HSBC Electronic Data Processing Lanka <br>(Private) Limited<br>| 100.00 |  | 73 |
| HSBC Electronic Data Service Delivery <br>(Egypt) S.A.E<br>| 100.00 |  | 74 |
| HSBC Equipment Finance (UK) Limited | 100.00 |  | 13 |
| HSBC Equity (UK) Limited (In Liquidation) | 100.00 |  | 14 |
| HSBC Europe B.V. | 100.00 |  | 11 |
| HSBC Express Finance Data Services Limited | 100.00 |  | 19 |
| HSBC Factoring (France) | 100.00 | (99.99) | 5, 33 |
| HSBC Finance (Netherlands) | 100.00 |  | 3, 11 |
| HSBC Finance Corporation | 100.00 |  | 24 |
| HSBC Finance Limited (In Liquidation) | 100.00 |  | 14 |
| HSBC Finance Transformation (UK) Limited | 100.00 |  | 11 |
| HSBC Financial Advisors Singapore Pte. Ltd. | 100.00 |  | 2, 48 |
| HSBC Financial Services (Lebanon) S.A.L (In <br>Liquidation)<br>| 99.83 |  | 75 |
| HSBC FinTech Services (Shanghai) Company <br>Limited<br>| N/A |  | 1, 10, 76 |
| HSBC Global Custody Nominee (UK) Limited | 100.00 |  | 11 |
| HSBC Global Custody Proprietary Nominee <br>(UK) Limited<br>| 100.00 |  | 11 |
| HSBC Global Services (Canada) Limited | 100.00 |  | 85 |
| HSBC Global Services (China) Holdings <br>Limited<br>| 100.00 |  | 11 |
| HSBC Global Services (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Global Services (UK) Limited | 100.00 |  | 11 |
| HSBC Global Services Limited | 100.00 |  | 3, 11 |
| HSBC Group Management Services Limited | 100.00 |  | 11 |
| HSBC Group Nominees UK Limited | 100.00 |  | 3, 11 |
| HSBC Holdings B.V. | 100.00 |  | 11 |
| HSBC Innovation Bank Limited | 100.00 |  | 87 |
| HSBC Institutional Trust Services (Asia) <br>Limited<br>| 100.00 |  | 19 |
| HSBC Institutional Trust Services (Bermuda) <br>Limited<br>| 100.00 |  | 18 |
| HSBC Institutional Trust Services (Mauritius) <br>Limited<br>| 100.00 |  | 88 |
| HSBC Institutional Trust Services (Singapore) <br>Limited<br>| 100.00 |  | 48 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| HSBC Insurance (Asia) Limited | 100.00 |  | 89 |
| HSBC Insurance (Asia-Pacific) Holdings <br>Limited<br>| 100.00 |  | 79 |
| HSBC Insurance (Bermuda) Limited | 100.00 |  | 18 |
| HSBC Insurance Agency (USA) Inc. | 100.00 |  | 90 |
| HSBC Insurance Brokerage Company Limited | N/A |  | 1, 10, 91 |
| HSBC Insurance Brokers Greater China <br>Limited<br>| 100.00 |  | 79 |
| HSBC Insurance SAC 1 (Bermuda) Limited | 100.00 |  | 18 |
| HSBC Insurance SAC 2 (Bermuda) Limited | 100.00 |  | 18 |
| HSBC International Finance Corporation <br>(Delaware)<br>| 100.00 |  | 92 |
| HSBC International Trustee (BVI) Limited | 100.00 |  | 9, 93 |
| HSBC International Trustee (Holdings) Pte. <br>Limited<br>| 100.00 |  | 48 |
| HSBC International Trustee Limited | 100.00 |  | 94 |
| HSBC Inversiones S.A. | 100.00 |  | 53 |
| HSBC InvestDirect (India) Private Limited | 99.99 |  | 50 |
| HSBC InvestDirect Financial Services (India) <br>Limited<br>| 99.99 |  | 50 |
| HSBC InvestDirect Sales & Marketing (India) <br>Private Limited<br>| 98.99 | (98.98) | 49 |
| HSBC InvestDirect Securities (India) Private <br>Limited<br>| 99.99 |  | 50 |
| HSBC Investment and Insurance Brokerage, <br>Philippines Inc.<br>| 99.99 |  | 95 |
| HSBC Investment Bank Holdings B.V. | 100.00 |  | 11 |
| HSBC Investment Bank Holdings Limited | 100.00 |  | 11 |
| HSBC Investment Company Limited | 100.00 |  | 3, 11 |
| HSBC Invoice Finance (UK) Limited | 100.00 |  | 13 |
| HSBC Issuer Services Common Depositary <br>Nominee (UK) Limited<br>| 100.00 |  | 11 |
| HSBC Latin America B.V. | 100.00 |  | 11 |
| HSBC Latin America Holdings (UK) Limited | 100.00 |  | 3, 11 |
| HSBC Leasing (Asia) Limited | 100.00 |  | 19 |
| HSBC Life (Bermuda) Limited | 100.00 |  | 18 |
| HSBC Life (Cornell Centre) Limited | 100.00 |  | 89 |
| HSBC Life (Edwick Centre) Limited | 100.00 |  | 89 |
| HSBC Life (International) Limited | 100.00 |  | 18 |
| HSBC Life (Property) Limited | 100.00 |  | 89 |
| HSBC Life (Singapore) Pte. Ltd. | 100.00 |  | 48 |
| HSBC Life (Tsing Yi Industrial) Limited | 100.00 |  | 89 |
| HSBC Life (UK) Limited | 100.00 |  | 11 |
| HSBC Life (Workshop) Limited | 100.00 |  | 89 |
| HSBC Life Assurance (Malta) Ltd. | 100.00 | (70.03) | 80 |
| HSBC Life Insurance Company Limited | N/A |  | 1, 10, 97 |
| HSBC LU Nominees Limited | 100.00 |  | 11 |
| HSBC Markets (USA) Inc. | 100.00 |  | 24 |
| HSBC Marking Name Nominee (UK) Limited | 100.00 |  | 11 |
| HSBC Master Trust Trustee Limited (In <br>Liquidation)<br>| 100.00 |  | 14 |
| HSBC Mexico, S.A., Institucion de Banca <br>Multiple, Grupo Financiero HSBC<br>| 99.99 |  | 12 |
| HSBC Middle East Asset CO. LLC | 100.00 |  | 100 |
| HSBC Middle East Holdings B.V. | 100.00 |  | 3, 4, 63 |
| HSBC Middle East Leasing Partnership | N/A |  | 1, 101 |
| HSBC Middle East Securities L.L.C (In <br>Liquidation)<br>| 100.00 |  | 102 |
| HSBC Mortgage Corporation (USA) | 100.00 |  | 24 |
| HSBC Nominees (Asing) Sdn Bhd | 100.00 |  | 46 |
| HSBC Nominees (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Nominees (New Zealand) Limited | 100.00 |  | 103 |
| HSBC Nominees (Tempatan) Sdn Bhd | 100.00 |  | 46 |
| HSBC North America Holdings Inc. | 100.00 |  | 4, 24 |
| HSBC Overseas Holdings (UK) Limited | 100.00 |  | 3, 11 |
| HSBC Overseas Investments Corporation <br>(New York)<br>| 100.00 |  | 104 |
| HSBC Overseas Nominee (UK) Limited | 100.00 |  | 11 |
| HSBC PB Corporate Services 1 Limited | 100.00 |  | 105 |
| HSBC PB Services (Suisse) SA | 100.00 |  | 106 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **376** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| HSBC Pension Trust (Ireland) DAC (In <br>Liquidation)<br>| 100.00 |  | 107 |
| HSBC Pensiones, S.A. (In Liquidation) | 100.00 | (99.99) | 12 |
| HSBC PI Holdings (Mauritius) Limited | 100.00 |  | 88 |
| HSBC Preferential LP (UK) | 100.00 |  | 11 |
| HSBC Private Bank (Luxembourg) S.A. | 100.00 | (99.99) | 96 |
| HSBC Private Bank (Suisse) SA | 100.00 |  | 106 |
| HSBC Private Bank (UK) Limited | 100.00 |  | 11 |
| HSBC Private Banking Holdings (Suisse) SA | 100.00 |  | 106 |
| HSBC Private Banking Nominee 3 (Jersey) <br>Limited<br>| 100.00 |  | 105 |
| HSBC Private Equity Investments (UK) <br>Limited<br>| 100.00 |  | 11 |
| HSBC Private Markets Management SARL | N/A |  | 1, 2, 108 |
| HSBC Private Trustee (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Professional Services (India) Private <br>Limited<br>| 100.00 |  | 109 |
| HSBC Property (UK) Limited | 100.00 |  | 11 |
| HSBC Property Funds (Holding) Limited | 100.00 |  | 11 |
| HSBC Provident Fund Trustee (Hong Kong) <br>Limited<br>| 100.00 |  | 19 |
| HSBC Qianhai Securities Limited | N/A |  | 1, 10, 110 |
| HSBC Real Estate Leasing (France) | 100.00 | (99.99) | 5, 33 |
| HSBC REGIO Fund General Partner S.à r.l. | 100.00 |  | 86 |
| HSBC Retirement Benefits Trustee (UK) <br>Limited<br>| 100.00 |  | 3, 11 |
| HSBC Retirement Services Limited (In <br>Liquidation)<br>| 100.00 |  | 2, 14 |
| HSBC Saudi Arabia, Closed Joint Stock <br>Company<br>| 100.00 | (66.19) | 111 |
| HSBC Securities (Egypt) S.A.E. (In <br>Liquidation)<br>| 100.00 | (94.65) | 112 |
| HSBC Securities (Japan) Co., Ltd. | 100.00 |  | 51 |
| HSBC Securities (Singapore) Pte Limited | 100.00 |  | 48 |
| HSBC Securities (South Africa) (Pty) Limited | 100.00 |  | 113 |
| HSBC Securities (Taiwan) Corporation Limited | 100.00 |  | 57 |
| HSBC Securities (USA) Inc. | 100.00 |  | 24 |
| HSBC Securities and Capital Markets (India) <br>Private Limited<br>| 99.99 |  | 6, 49 |
| HSBC Securities Brokers (Asia) Limited | 100.00 |  | 19 |
| HSBC Securities Investments (Asia) Limited | 100.00 |  | 19 |
| HSBC Securities Services (Bermuda) Limited | 100.00 |  | 18 |
| HSBC Securities Services (Guernsey) Limited | 100.00 |  | 17 |
| HSBC Securities Services (Ireland) DAC | 100.00 |  | 107 |
| HSBC Securities Services (Luxembourg) S.A. | 100.00 |  | 96 |
| HSBC Securities Services Holdings (Ireland) <br>DAC<br>| 100.00 |  | 107 |
| HSBC Securities Services Nominees Limited | 100.00 |  | 19 |
| HSBC Seguros, S.A de C.V., Grupo Financiero <br>HSBC<br>| 100.00 | (99.99) | 12 |
| HSBC Semfi Limited | 75.00 |  | 11 |
| HSBC Service Company Germany GmbH | 100.00 | (99.99) | 7, 77 |
| HSBC Service Delivery (Polska) Sp. z o.o. | 100.00 |  | 114 |
| HSBC Services (France) | 100.00 | (99.99) | 5, 33 |
| HSBC Services Japan Limited | 100.00 |  | 84 |
| HSBC Services USA Inc. | 100.00 |  | 115 |
| HSBC Servicios Financieros, S.A. de C.V | 100.00 | (99.99) | 12 |
| HSBC Servicios, S.A. DE C.V., Grupo <br>Financiero HSBC<br>| 100.00 | (99.99) | 12 |
| HSBC SFT (C.I.) Limited | 100.00 |  | 17 |
| HSBC Software Development (Guangdong) <br>Limited<br>| N/A |  | 1, 10, 116 |
| HSBC Software Development (India) Private <br>Limited<br>| 100.00 |  | 117 |
| HSBC Software Development (Malaysia) Sdn <br>Bhd<br>| 100.00 |  | 70 |
| HSBC Specialist Investments Limited | 100.00 |  | 11 |
| HSBC Technology & Services (USA) Inc. | 100.00 |  | 24 |
| HSBC Transaction Services GmbH | 100.00 | (99.99) | 7, 77 |
| HSBC Trinkaus & Burkhardt (International) <br>S.A.<br>| 100.00 | (99.99) | 96 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| HSBC Trinkaus & Burkhardt Gesellschaft fur <br>Bankbeteiligungen mbH<br>| 100.00 | (99.99) | 7, 77 |
| HSBC Trinkaus & Burkhardt GmbH | 100.00 | (99.99) | 7, 77 |
| HSBC Trinkaus Real Estate GmbH | 100.00 | (99.99) | 7, 77 |
| HSBC Trust Company (Delaware), National <br>Association<br>| 100.00 |  | 92 |
| HSBC Trustee (C.I.) Limited | 100.00 |  | 105 |
| HSBC Trustee (Cayman) Limited | 100.00 |  | 65 |
| HSBC Trustee (Guernsey) Limited | 100.00 |  | 17 |
| HSBC Trustee (Hong Kong) Limited | 100.00 |  | 19 |
| HSBC Trustee (Singapore) Limited | 100.00 |  | 48 |
| HSBC UK Bank plc | 100.00 |  | 3, 13 |
| HSBC UK Client Nominee Limited | 100.00 |  | 13 |
| HSBC UK Covered Bonds LLP | N/A |  | 1, 13 |
| HSBC UK Societal Projects Limited (In <br>Dissolution)<br>| N/A |  | 1, 13 |
| HSBC USA Inc. | 100.00 |  | 4, 104 |
| HSBC Ventures USA Inc. | 100.00 |  | 24 |
| HSBC Violet Investments (Mauritius) Limited | 100.00 |  | 118 |
| HSBC Wealth Client Nominee Limited | 100.00 |  | 13 |
| HSBC Yatirim Menkul Degerler A.S. | 100.00 |  | 60 |
| HSI Asset Securitization Corporation | 100.00 |  | 24 |
| HSI International Limited | 100.00 | (63.43) | 38 |
| HSIL Investments Limited | 100.00 |  | 11 |
| Hubei Macheng HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 119 |
| Hubei Suizhou Cengdu HSBC Rural Bank <br>Company Limited<br>| N/A |  | 1, 10, 120 |
| Hubei Tianmen HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 121 |
| Hunan Pingjiang HSBC Rural Bank Company <br>Limited<br>| N/A |  | 1, 10, 122 |
| Imenson Limited | 100.00 | (63.43) | 38 |
| Inmobiliaria Bisa, S.A. de C.V. | 99.99 | (99.98) | 12 |
| Inmobiliaria Grufin, S.A. de C.V. | 100.00 | (99.99) | 12 |
| Inmobiliaria Guatusi, S.A. de C.V. | 100.00 | (99.99) | 12 |
| Internationale Kapitalanlagegesellschaft mit <br>beschränkter Haftung<br>| 100.00 | (99.99) | 7, 77 |
| James Capel (Nominees) Limited | 100.00 |  | 11 |
| James Capel (Taiwan) Nominees Limited | 100.00 |  | 11 |
| Keyser Ullmann Limited | 100.00 | (99.99) | 11 |
| Lion Corporate Services Limited | 100.00 |  | 19 |
| Lion International Corporate Services Limited | 100.00 |  | 94 |
| Lion International Management Limited | 100.00 |  | 94 |
| Lion Management (Hong Kong) Limited | 100.00 |  | 19 |
| Lyndholme Limited | 100.00 |  | 19 |
| Marks and Spencer Financial Services plc | 100.00 |  | 123 |
| Marks and Spencer Unit Trust Management <br>Limited<br>| 100.00 |  | 123 |
| Midcorp Limited (In Liquidation) | 100.00 |  | 14 |
| Midland Bank (Branch Nominees) Limited | 100.00 |  | 13 |
| Midland Nominees Limited | 100.00 |  | 13 |
| MP Payments Group Limited | 100.00 |  | 11 |
| MP Payments Middle East AE L.L.C. (In <br>Liquidation)<br>| 100.00 |  | 124 |
| MP Payments Operations Limited | 100.00 |  | 11 |
| MP Payments Singapore Pte. Ltd. (In <br>Liquidation)<br>| 100.00 |  | 48 |
| MP Payments UK Limited | 100.00 |  | 11 |
| Prudential Client HSBC GIS Nominee (UK) <br>Limited<br>| 100.00 |  | 11 |
| PT Bank HSBC Indonesia | 98.94 |  | 125 |
| PT HSBC Sekuritas Indonesia | 99.00 |  | 126 |
| R/CLIP Corp. | 100.00 |  | 24 |
| Real Estate Collateral Management Company | 100.00 |  | 24 |
| Republic Nominees Limited | 100.00 |  | 17 |
| RLUKREF Nominees (UK) One Limited | 100.00 |  | 11 |
| RLUKREF Nominees (UK) Two Limited | 100.00 |  | 11 |
| S.A.P.C. - Ufipro Recouvrement | 99.99 |  | 8, 33 |
| Saf Baiyun | 100.00 | (99.99) | 5, 33 |
| Saf Guangzhou | 100.00 | (99.99) | 5, 33 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **377** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiaries** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | **% of share class** <br>**held by immediate** <br>**parent company (or** <br>**by the Group where** <br>**this varies)** | Footnotes |
| SFM | 100.00 | (99.99) | 5, 33 |
| SFSS Nominees (Pty) Limited | 100.00 |  | 113 |
| Shandong Rongcheng HSBC Rural Bank <br>Company Limited<br>| N/A |  | 1, 10, 127 |
| Shenzhen HSBC Development Company Ltd | N/A |  | 1, 10, 128 |
| Sico Limited | 100.00 |  | 129 |
| SNC Les Oliviers D'Antibes | 60.00 | (59.99) | 8, 78 |
| SNCB/M6-2007 A | 100.00 | (99.99) | 2, 5, 33 |
| SNCB/M6-2007 B | 100.00 | (99.99) | 2, 5, 33 |
| SNCB/M6-2008 A | 100.00 | (99.99) | 2, 5, 33 |
| Société Française et Suisse | 100.00 | (99.99) | 5, 33 |
| Somers Dublin DAC | 100.00 | (99.99) | 107 |
| Somers Nominees (Far East) Limited | 100.00 |  | 18 |
| Sopingest | 100.00 | (99.99) | 2, 5, 33 |
| St Cross Trustees Limited | 100.00 |  | 13 |
| Sun Hung Kai Development (Lujiazui III) <br>Limited<br>| N/A |  | 1, 10, 134 |
| The Hongkong and Shanghai Banking <br>Corporation Limited<br>| 100.00 |  | 19 |
| Tooley Street View Limited | 100.00 |  | 3, 11 |
| Trinkaus Europa Immobilien-Fonds Nr.3 <br>Objekt Utrecht Verwaltungs-GmbH<br>| 100.00 | (99.99) | 7, 77 |
| Trinkaus Immobilien-Fonds <br>Geschaeftsfuehrungs-GmbH<br>| 100.00 | (99.99) | 7, 77 |
| Trinkaus Immobilien-Fonds Verwaltungs-<br>GmbH<br>| 100.00 | (99.99) | 7, 77 |
| Trinkaus Private Equity Management GmbH | 100.00 | (99.99) | 7, 77 |
| Trinkaus Private Equity Verwaltungs GmbH | 100.00 | (99.99) | 7, 77 |
| Turnsonic (Nominees) Limited | 100.00 |  | 13 |
| Valeurs Mobilières Elysées | 100.00 | (99.99) | 5, 33 |
| WARDLEY LIMITED | 100.00 |  | 19 |
| Wayfoong (Asia) Limited | 100.00 |  | 79 |
| Wayfoong Nominees Limited | 100.00 |  | 19 |
| Westminster House, LLC | N/A |  | 1, 24 |
| Woodex Limited | 100.00 |  | 18 |
| Yan Nin Development Company Limited | 100.00 | (63.43) | 38 |

---

Funds

The undertakings below are part of our fund management structure.

---

| | | | |
|:---|:---|:---|:---|
| **Funds** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| Amber 2022 Direct Lending Fund SCA <br>SICAV-RAIF<br>| N/A |  | 1, 175 |
| AMGB International Long-Term Equity <br>Strategy Mandate<br>| N/A |  | 1, 11 |
| Blackthorn Diversified Credit 2024 LP | N/A |  | 1, 186 |
| CI 10 LP Inc | N/A |  | 1, 98 |
| Cinnabar 2021 Direct Lending Cell 1 PC | N/A |  | 1, 176 |
| Copper Direct Lending L.P. | N/A |  | 1, 177 |
| D9 LP Inc | N/A |  | 1, 98 |
| Deerpath Capital VII (Cayman), LP | N/A |  | 1, 187 |
| Diversified Loan Fund – Direct Lending A <br>S.a.r.l<br>| 100.00 | (48.00) | 68 |
| Diversified Loan Fund – Direct Lending B <br>S.a.r.l<br>| 100.00 | (48.00) | 68 |
| Diversified Loan Fund – Syndicated Loan A <br>S.a.r.l<br>| 100.00 | (48.00) | 68 |
| Diversified Loan Fund – Syndicated Loan C <br>S.a.r.l<br>| 100.00 | (48.00) | 68 |
| DRC European Real Estate Debt Fund IV <br>(EUR) L.P.<br>| N/A |  | 1, 178 |
| Elysées Grand Large | N/A |  | 1, 78 |
| ESDLF 2023 Carry L.P | N/A |  | 1, 98 |
| GTIDF Fund Carry L.P. | N/A |  | 1, 98 |
| H.I.G. Heliodor 2021 PC | N/A |  | 1, 179 |
| H5 LP Inc | N/A |  | 1, 98 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Funds** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| H8 LP Inc | N/A |  | 1, 98 |
| H9 LP Inc | N/A |  | 1, 98 |
| Hayfin Garnet Feeder Fund S.C.A. SICAV-<br>RAIF<br>| N/A |  | 1, 180 |
| Hayfin Garnet II Feeder Fund S.C.A. SICAV-<br>RAIF<br>| N/A |  | 1, 180 |
| HSBC (Guernsey) Aggregator PCC Limited | 100.00 |  | 98 |
| HSBC (Guernsey) Focus PCC Limited | 100.00 |  | 98 |
| HSBC (Guernsey) GP PCC Limited | 100.00 |  | 17 |
| HSBC Alternative Investments Limited | 100.00 |  | 11 |
| HSBC ASIA LIVING REAL ESTATE GP S.À <br>R.L.<br>| 100.00 |  | 164 |
| HSBC Asset Management (Fund Services <br>UK) Limited<br>| 100.00 |  | 11 |
| HSBC Asset Management (India) Private <br>Limited<br>| 99.99 |  | 50 |
| HSBC Asset Management (Japan) Limited | 100.00 |  | 51 |
| HSBC Climate Growth Partners Fund SCSp | N/A |  | 1, 165 |
| HSBC Climate Growth Partners GP S.à r.l. | 100.00 |  | 165 |
| HSBC Climate Growth Partners VC Carry <br>L.P.<br>| N/A |  | 1, 98 |
| HSBC Diversified Loan Fund – Master S.a.r.l. | 100.00 | (48.00) | 68 |
| HSBC Diversified Loan Fund General Partner <br>S.à r.l.<br>| 100.00 |  | 68 |
| HSBC Diversified Loan Fund SCSp-RAIF | N/A |  | 1, 68 |
| HSBC Equity Partners USA, LP | N/A |  | 1, 83 |
| HSBC European Senior Direct Lending 2023 <br>HoldCo S.à r.l.<br>| 100.00 | (99.60) | 86 |
| HSBC EUROPEAN SENIOR DIRECT <br>LENDING AIF OFS<br>| N/A |  | 1, 165 |
| HSBC European Senior Direct Lending Fund <br>2023 RAIF SICAV-S.A.<br>| 99.60 |  | 86 |
| HSBC Financial Technology Venture Capital <br>Fund SCSp<br>| N/A |  | 1, 165 |
| HSBC Financial Technology Venture Capital <br>GP S.à r.l.<br>| 100.00 |  | 165 |
| HSBC Fintech VC Carry L.P. | N/A |  | 1, 98 |
| HSBC GH Luxembourg Fund | N/A |  | 1, 165 |
| HSBC Global Asset Management (Bermuda) <br>Limited<br>| 100.00 |  | 4, 18 |
| HSBC Global Asset Management <br>(Deutschland) GmbH<br>| 100.00 | (99.99) | 7, 77 |
| HSBC Global Asset Management (France) | 100.00 | (99.99) | 5, 78 |
| HSBC Global Asset Management (Hong <br>Kong) Limited<br>| 100.00 |  | 79 |
| HSBC Global Asset Management (Malta) <br>Limited<br>| 100.00 | (70.03) | 80 |
| HSBC Global Asset Management (México), <br>S.A. de C.V., Sociedad Operadora de Fondos <br>de Inversión, Grupo Financiero HSBC<br>| 100.00 | (99.99) | 12 |
| HSBC Global Asset Management <br>(Singapore) Limited<br>| 100.00 |  | 48 |
| HSBC Global Asset Management <br>(Switzerland) AG<br>| 100.00 |  | 5, 81 |
| HSBC Global Asset Management (Taiwan) <br>Limited<br>| 100.00 |  | 82 |
| HSBC Global Asset Management (UK) <br>Limited<br>| 100.00 |  | 11 |
| HSBC Global Asset Management (USA) Inc. | 100.00 |  | 83 |
| HSBC Global Asset Management Holdings <br>(Bahamas) Limited<br>| 100.00 |  | 84 |
| HSBC Global Asset Management Limited | 100.00 |  | 3, 11 |
| HSBC Global Infrastucture Debt Fund SCSp | N/A |  | 1, 86 |
| HSBC Global Transition Infrastructure Debt <br>Fund RAIF SICAV-S.A.<br>| N/A |  | 1, 86 |
| HSBC Infrastructure Debt GP 1 S.à r.l. | N/A |  | 1, 86 |
| HSBC Infrastructure Debt GP 2 S.à r.l. | N/A |  | 1, 86 |
| HSBC Investment Funds (Hong Kong) <br>Limited<br>| 100.00 |  | 79 |
| HSBC Investment Funds (Luxembourg) SA | 100.00 |  | 96 |
| HSBC Latin America Coinvestments <br>Partners, LP<br>| N/A |  | 1, 83 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **378** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | | |
|:---|:---|:---|:---|
| **Funds** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| HSBC Management (Guernsey) Limited | 100.00 |  | 98 |
| HSBC Management Consultancy (Shanghai) <br>Company Limited<br>| N/A |  | 1, 10, 99 |
| HSBC Portfoy Yonetimi A.S. | 100.00 |  | 60 |
| HSBC Private Markets GP S.à r.l. | 100.00 |  | 165 |
| HSBC RCF HoldCo S.à r.l. | 100.00 |  | 86 |
| HSBC RCF Partnership Fund RAIF SICAV-<br>S.A.<br>| N/A |  | 1, 86 |
| HSBC RCF SPV S.à r.l. | 100.00 |  | 86 |
| HSBC REIM (France) | 100.00 | (99.99) | 5, 78 |
| HSBC SDL UK 2020 HoldCo S.à r.l | 100.00 | (32.60) | 96 |
| HSBC SDL UK 2020 LendCo S.à r.l.B137 | 100.00 | (32.60) | 96 |
| HSBC SDL UK II HoldCo S.à r.l. | 100.00 | (48.90) | 86 |
| HSBC SDLF II Carry L.P. | N/A |  | 1, 98 |
| HSBC Senior UK Direct Lending 2020 RAIF <br>SICAV-S.A.<br>| N/A |  | 1, 96 |
| HSBC Senior UK Direct Lending Fund II <br>RAIF SICAV-S.A.<br>| N/A |  | 1, 86 |
| HSBC Trustees (India) Private Limited | 99.99 |  | 49 |
| HSBC USD Senior Direct Lending Carry L.P. | N/A |  | 1, 98 |
| HSBC USD Senior Direct Lending GP S.à.r.l | 100.00 |  | 86 |
| HVDF US LLC | N/A |  | 1, 24 |
| HVDF US, L.P. | N/A |  | 1, 2, 24 |
| I3 LP Inc | N/A |  | 1, 98 |
| ICG Credit Strategies S.C.A SICAV-RAIF - <br>ICG Mandate 2023 Direct Lending Fund<br>| N/A |  | 1, 181 |
| ICG Credit Strategies S.C.A. SICAV-RAIF - <br>ICG Mandate 2020 Direct Lending Fund<br>| N/A |  | 1, 181 |
| Idinvest Growth Secondary Feeder SCA <br>SICAV-RAIF<br>| N/A |  | 1, 182 |
| INHK IE LP Inc | N/A |  | 1, 98 |
| INHK Orca Carry L.P. | N/A |  | 1, 98 |
| INHK PC LP Inc | N/A |  | 1, 98 |
| INHK PE LP Inc | N/A |  | 1, 98 |
| J6 LP Inc | N/A |  | 1, 98 |
| KKR-LON Credit Strategies SCA SICAV-RAIF | N/A |  | 1, 183 |
| Korea Nova Solar 1 Inc | 100.00 | (66.70) | 166 |
| Korea Nova Solar 2 Inc | 100.00 | (66.70) | 166 |
| L1 LP Inc | N/A |  | 1, 98 |
| Lohas ECE Brown KK | N/A |  | 1, 167 |
| NAV Financing Partnership Fund Carry L.P. | N/A |  | 1, 98 |
| Nova Solar 1 GK | N/A |  | 1, 168 |
| Nova Solar 2 GK | N/A |  | 1, 168 |
| Nova Solar 3 GK | N/A |  | 1, 168 |
| Nova Solar 4 GK | N/A |  | 1, 168 |
| P2 LP Inc | N/A |  | 1, 98 |
| PE Opps II Carry L.P | N/A |  | 1, 98 |
| PE Opps III Carry L.P | N/A |  | 1, 98 |
| PPDP Peridot 2022 Feeder SCA SICAV-RAIF | N/A |  | 1, 180 |
| RCF Partnership Fund Carry L.P. | N/A |  | 1, 98 |
| Red Hexagon Energy Transition Asia Carry <br>L.P.<br>| N/A |  | 1, 98 |
| Red Hexagon Energy Transition Asia Fund <br>SCSp<br>| N/A |  | 1, 86 |
| Red Hexagon Energy Transition Asia GP S.à <br>r.l.<br>| 100.00 |  | 86 |
| Red Hexagon ETA Master HoldCo Limited | 100.00 |  | 169 |
| Red Hexagon ETA Tekoma Japan Limited | 100.00 | (66.70) | 169 |
| Red Hexagon ETA Tekoma Operation <br>Limited<br>| 100.00 | (66.70) | 169 |
| Red Hexagon ETA Tekoma Taiwan Limited | 100.00 | (66.70) | 169 |
| SilkRoad Fund Management S.à.r.l | 100.00 |  | 130 |
| Silkroad GP II Limited | 100.00 |  | 2, 131 |
| Silkroad GP II S.a.r.l. | 100.00 |  | 130 |
| Silkroad GP Limited | 100.00 |  | 65 |
| Silkroad GP SC S.a r.l | 100.00 |  | 132 |
| Silkroad Property Partners PTE. LTD. | 100.00 |  | 133 |
| Solar Field 13 GK | N/A |  | 1, 168 |
| SSOF IV Overage SMA H, L.P. | N/A |  | 1, 184 |
| Sunpower Americas Co-Invest I SCS | N/A |  | 1, 185 |
| Taiwan Nova Solar 1 Limited | 100.00 | (66.70) | 170 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Funds** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| Tekoma Energy Group Holdings Limited | 66.70 |  | 169 |
| Tekoma Energy Holdings Limited | 100.00 | (66.70) | 170 |
| Tekoma Energy Inc | 100.00 | (66.70) | 171 |
| Tekoma Energy KK | 100.00 | (66.70) | 1, 168 |
| Tekoma Energy Korea Inc | 100.00 | (66.70) | 172 |
| Tekoma Korea Holdings Limited | 100.00 | (66.70) | 166 |
| Tekoma Korea Limited | 100.00 | (66.70) | 169 |
| Vision 2023 Carry L.P | N/A |  | 1, 98 |
| Vision 2024 Carry L.P. | N/A |  | 1, 98 |
| Vision 2025 Carry L.P. | N/A |  | 1, 98 |
| Vision Apex 2025 Carry L.P. | N/A |  | 1, 98 |
| Vision Impact Carry L.P. | N/A |  | 1, 98 |
| Vision Infrastructure Carry L.P. | N/A |  | 1, 98 |
| W4 LP Inc | N/A |  | 1, 98 |

---

Joint ventures

The undertakings below are joint ventures and equity accounted.

---

| | | |
|:---|:---|:---|
| **Joint ventures** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| Climate Asset Management Limited | 40.00 | 135 |
| MK HoldCo Limited | 50.32 | 2, 136 |
| Pentagreen Capital Pte. Ltd | 50.00 | 137 |
| ProServe Bermuda Limited | 50.00 | 138 |
| The London Silver Market Fixing Limited | N/A | 1, 2, 139 |
| Vaultex UK Limited | 50.00 | 2, 140 |

---

Non-Profit Foundation

The undertakings below are Non-Profit Foundation.

---

| | | |
|:---|:---|:---|
| **Non-Profit Foundation** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| HSBC Philanthropy Foundation Beijing | N/A | 1, 163 |

---

Associates

The undertakings below are associates and equity accounted.

---

| | | | |
|:---|:---|:---|:---|
| **Associates** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)** | Footnotes |
| Aiera, Inc. | 2.90 |  | 4, 173 |
| Bank of Communications Co., Ltd. | 16.00 |  | 2, 141 |
| Barrowgate Limited | 24.64 | (15.63) | 142 |
| BGF Group plc | 24.62 |  | 143 |
| Bud Financial Limited | 6.20 |  | 4, 144 |
| CANARA HSBC LIFE INSURANCE <br>COMPANY LIMITED<br>| 25.50 |  | 145 |
| Dowsure Inc. | 10.12 |  | 2, 4, 147 |
| Episode Six Inc. | 5.68 |  | 4, 148 |
| EPS Company (Hong Kong) Limited | 42.03 | (38.65) | 19 |
| Future Forward Holdings LLC | N/A |  | 1, 24 |
| HQLAX S.à r.l. | 6.09 |  | 4, 149 |
| HSBC Jintrust Fund Management Company <br>Limited<br>| N/A |  | 1, 2, 10, <br>150<br>|
| HSBC UK Covered Bonds (LM) Limited | 20.00 |  | 2, 151 |
| Intelligent Processing Solution Limited | 10.00 |  | 2, 174 |
| Lightico Ltd | 3.19 |  | 4, 152 |
| LiquidityMatch LLC | N/A |  | 1, 153 |
| London Precious Metals Clearing Limited | 30.00 |  | 2, 154 |
| Marketnode PTE. Ltd. | 12.64 |  | 4, 155 |
| MENA Infrastructure Fund (GP) Ltd | 33.33 |  | 156 |
| Quantexa Limited | 8.92 |  | 4, 157 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **379** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | | |
|:---|:---|:---|
| Radiant Global Investors LLC | N/A | 1, 2, 158 |
| Saudi Awwal Bank | 31.00 | 159 |
| The London Gold Market Fixing Limited | N/A | 1, 139 |
| Threadneedle Software Holdings Limited | 7.80 | 4, 160 |
| Topaz Consultation LLC | N/A | 1, 24 |
| Trade Information Network Limited (In <br>Liquidation)<br>| 12.76 | 161 |
| Trinkaus Europa Immobilien-Fonds Nr. 7 <br>Frankfurt Mertonviertel KG<br>| N/A | 1, 77 |
| We Trade Innovation Designated Activity <br>Company (In Liquidation)<br>| 9.88 | 2, 162 |

---

---

| | |
|:---|:---|
| Footnotes for Note 38 | Footnotes for Note 38 |
| Description of shares | Description of shares |
| 1 | Where an entity is governed by voting rights, HSBC consolidates <br>when it holds – directly or indirectly – the necessary voting rights to <br>pass resolutions by the governing body. In all other cases, the <br>assessment of control is more complex and requires judgement of <br>other factors, including having exposure to variability of returns, power <br>to direct relevant activities, and whether power is held as an agent or <br>principal. HSBC's consolidation policy is described in Note 1.2(a).<br>|
| 2 | Management has determined that these undertakings are excluded <br>from consolidation in the Group accounts as these entities do not <br>meet the definition of subsidiaries in accordance with IFRS. HSBC's <br>consolidation policy is described in Note 1.2(a).<br>|
| 3 | Directly held by HSBC Holdings plc |
| 4 | Preference Shares |
| 5 | Actions |
| 6 | Redeemable Preference Shares |
| 7 | GmbH Anteil |
| 8 | Parts |
| 9 | Non-Participating Voting |
| 10 | Registered Capital Shares |

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 11 | 8 Canada Square, London, United Kingdom, E14 5HQ |
| 12 | 347 Paseo de la Reforma, Col. Cuauhtémoc, Mexico, 06500 |
| 13 | 1 Centenary Square, Birmingham, United Kingdom, B1 1HQ |
| 14 | c/o Teneo Financial Advisory Limited, The Colmore Building, 20 <br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT<br>|
| 15 | 5 Donegal Square South, Northern Ireland, Belfast, United Kingdom, <br>BT1 5JP<br>|
| 16 | 1909 Avenida Presidente Juscelino Kubitschek, 19° andar, Torre <br>Norte, São Paulo Corporate Towers, São Paulo, Brazil, 04551-903<br>|
| 17 | Arnold House, St Julian's Avenue, St Peter Port, Guernsey, GY1 3NF |
| 18 | 37 Front Street, Harbourview Centre, Ground Floor, Hamilton, <br>Pembroke, Bermuda, HM 11<br>|
| 19 | 1 Queen's Road Central, Hong Kong |
| 20 | Units 2401-55, Floor 24, Tower 2, 1 Jianguomenwai Avenue, <br>Chaoyang District, Beijing, China, 100020<br>|
| 21 | First Floor, Xinhua Bookstore Xindong Road (SE of roundabout), <br>Miyun District, Beijing, China<br>|
| 22 | Oak House Hirzel Street, St Peter Port, Guernsey, GY1 2NP |
| 23 | 239 Van Rensselaer Street, Buffalo, New York, United States of <br>America, 14210<br>|
| 24 | c/o The Corporation Trust Company 1209 Orange Street, Wilmington, <br>Delaware, United States of America, 19801<br>|
| 25 | Solidere - Rue Saad Zaghloul Immeuble - 170 Marfaa, P.O. Box 17 <br>5476 Mar Michael, Beyrouth, Lebanon, 11042040<br>|
| 26 | No 1, Bei Huan East Road Dazu County, Chongqing, China |
| 27 | No 107 Ping Du Avenue (E), Sanhe Town, Fengdu County, <br>Chongqing, China<br>|
| 28 | No. 3, 5, 7, Haitang Erzhi Road Changyuan, Rongchang, Chongqing, <br>China, 402460<br>|
| 29 | c/o Walkers Corporate Services Limited, Walker House, 87 Mary <br>Street, George Town, Grand Cayman, Cayman Islands, KY1-9005<br>|
| 30 | First & Second Floor No.3 Nanshan Road, Pulandian, Dalian, Liaoning, <br>China<br>|
| 31 | 160 Mine Lake CT, Ste 200, Raleigh, North Carolina, United States of <br>America, 27615-6417<br>|
| 32 | Avenida de las Granjas 972, Building A, Floor 2, Colonia Santa <br>Bárbara, Alcaldía Azcapotzalco, Mexico City, Mexico, 02230<br>|
| 33 | 38 avenue Kléber, Paris, France, 75116 |

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 34 | No. 1 1211 Yanjiang Zhong Road, Yongan, Fujian, China |
| 35 | 8/F, Prince's Building, 10 Chater Road, Central, Hong Kong |
| 36 | No. 44 Xin Ping Road Central, Encheng, Enping, Guangdong, China, <br>529400<br>|
| 37 | Rooms 101, 201-205, 301-305, No. 2 Yong Jin Yi Street, Huangge <br>Town, Nansha District, Guangzhou, China<br>|
| 38 | 83 Des Voeux Road Central, Hong Kong |
| 39 | 34/F, 36/F and 46/F, Hang Seng Bank Tower 1000 Lujiazui Ring Road, <br>Pilot Free Trade Zone, Shanghai, China, 200120<br>|
| 40 | Gustav Mahlerplein 2 1082 MA, Amsterdam, Netherlands |
| 41 | 1001, T2 Office Building, Qianhai Kerry Business Center, Qianhai <br>Avenue, Nanshan Street, Qianhai Shenzhen-Hong Kong Cooperation <br>Zone, Shenzhen, Guangdong, China<br>|
| 42 | Unit 1 GF The Commerical Complex Madrigal Avenue, Ayala Alabang <br>Village, Muntinlupa City, Philippines, 1780<br>|
| 43 | C/O Teneo Financial Advisory Limited The Colmore Building, 20 <br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT<br>|
| 44 | Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, <br>Tortola, British Virgin Islands, VG1110<br>|
| 45 | The Corporation Trust Company of Nevada 311 S. Division Street, <br>Carson City, Nevada, United States of America, 89703<br>|
| 46 | Level 21 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala <br>Lumpur, Malaysia, 55188<br>|
| 47 | Level 19 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala <br>Lumpur, Malaysia, 55188<br>|
| 48 | 10 Marina Boulevard #48-01 Marina Bay Financial Centre, Singapore, <br>018983<br>|
| 49 | 52/60 M G Road Fort, Mumbai, India, 400 001 |
| 50 | 9-11 Floors, NESCO IT Park Building No. 3 Western Express <br>Highway, Goregaon (East), Mumbai, India, 400063<br>|
| 51 | HSBC Building 11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan, <br>103-0027<br>|
| 52 | Level 36, Tower 1, International Towers Sydney, 100 Barangaroo <br>Avenue, Sydney, New South Wales, Australia, 2000<br>|
| 53 | Isidora Goyenechea 2800 23rd floor, Las Condes, Santiago, Chile, <br>7550647<br>|
| 54 | HSBC Building Shanghai ifc, 8 Century Avenue, Pudong, Shanghai, <br>China, 200120<br>|
| 55 | HSBC House, Esplanade, St. Helier, Jersey, JE4 8UB |
| 56 | IconEbene, Level 5 Office 1 (West Wing), Rue de L'institut, Ebene, <br>Mauritius<br>|
| 57 | 54F, 7 Xinyi Road Sec. 5 Xinyi district, Taipei, Taiwan |
| 58 | 1266 Dr Luis Bonativa 1266 Piso 30 (Torre IV WTC), Montevideo, <br>Uruguay, CP 11.000<br>|
| 59 | Metropolitan Building, 235 Dong Khoi, Sai Gon Ward, Ho Chi Minh <br>City, Viet Nam<br>|
| 60 | Esentepe Mah. Büyükdere Caddesi No.128 Şişli, Istanbul, Turkiye, <br>34394<br>|
| 61 | 306 Corniche El Nil Street, Maadi, Cairo, Egypt |
| 62 | 116 Archbishop Street, Valletta, Malta, VLT1444 |
| 63 | Unit 401, Level 4 Gate Precinct Building 2, Dubai International <br>Financial Centre, P. O. Box 30444, Dubai, United Arab Emirates<br>|
| 64 | 1800 Tysons Boulevard Suite 50, Tysons, Virginia, United States of <br>America, 22102<br>|
| 65 | P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands, <br>KY1-1104<br>|
| 66 | HSBC House, Esplanade, St. Helier, Jersey, JE1 1HS |
| 67 | Room 2703, 27F, Tower A, No.8 Century Avenue, China (Shanghai) <br>Pilot Free Trade Zone, Shanghai, China, 200120<br>|
| 68 | 49 avenue J.F. Kennedy, Luxembourg, Luxembourg, 1855 |
| 69 | 4-17/F, Office Tower 2 TaiKoo Hui Development, No. 381 Tian He <br>Road, Guangzhou, Guangdong, China<br>|
| 70 | Suite 1005, 10th Floor, Wisma Hamzah Kwong, Hing No. 1, Leboh <br>Ampang, Kuala Lumpur, Malaysia, 50100<br>|
| 71 | Building C-1 UP Ayala Technohub, Commonwealth Avenue, Diliman, <br>Quezon City, Metro Manila, Philippines<br>|
| 72 | HSBC House Plot No.8 Survey No.64 (Part), Hitec City Layout <br>Madhapur, Hyderabad, India, 500081<br>|
| 73 | Mireka City 324/9 Havelock Road, Colombo 05, Sri Lanka, 00500 |
| 74 | Smart Village 28th Km Cairo- Alexandria Desert Road Building, Cairo, <br>Egypt<br>|
| 75 | Centre Ville 1341 Building - 4th Floor Patriarche Howayek Street, PO <br>Box Riad El Solh, Lebanon, 9597<br>|

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **380** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 76 | Room 405 Odd House Number of 859-863, Huanhu West 1st Road, <br>Lingang New Area, China (Shanghai) Pilot Free Trade Zone, Shanghai, <br>China, 201306<br>|
| 77 | Hansaallee 3, Düsseldorf, Germany, 40549 |
| 78 | Immeuble Cœur Défense 110 esplanade du Général de Gaulle, <br>Courbevoie, France, 92400<br>|
| 79 | HSBC Main Building 1 Queen's Road Central, Hong Kong |
| 80 | 80 Mill Street, Qormi, Malta, QRM 3101 |
| 81 | 26 Gartenstrasse, Zurich, Switzerland, 8002 |
| 82 | 36F., No. 68 Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City, Taiwan, <br>110419<br>|
| 83 | 66 Hudson Boulevard E, New York, New York, United States of <br>America, 10001<br>|
| 84 | Mareva House 4 George Street, Nassau, Bahamas |
| 85 | 150 King Street West, Suite 200, Toronto, Ontario, Canada, M5H 1J9 |
| 86 | 4, rue Peternelchen, Howald, Grand Duchy of Luxembourg, <br>Luxembourg, L-2370<br>|
| 87 | Alphabeta 14-18 Finsbury Square, London, United Kingdom, EC2A <br>1BR<br>|
| 88 | 5th Floor, IconEbene 1 Building, Lot 441, Rue de L'Institut, Ebene, <br>Mauritius, 1704-01<br>|
| 89 | 18th Floor Tower 1, HSBC Centre 1 Sham Mong Road, Kowloon, <br>Hong Kong<br>|
| 90 | CT Corporation System 28 Liberty Street, New York, New York, <br>United States of America, 10005<br>|
| 91 | Unit 201, Floor 2, Building 3 No. 12, Anxiang Street, Shunyi District, <br>Beijing, Beijing, China<br>|
| 92 | 300 Delaware Avenue Suite 1401, Wilmington, Delaware, United <br>States of America, 19801<br>|
| 93 | Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box <br>916<br>|
| 94 | Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, <br>VG1110<br>|
| 95 | 5/F HSBC Centre 3058 Fifth Ave West, Bonifacio Global City, Taguig <br>City, Philippines<br>|
| 96 | 18 Boulevard de Kockelscheuer, Luxembourg, Luxembourg, 1821 |
| 97 | 29/F HSBC Building 8 Century Avenue, China (Shanghai) Pilot Free <br>Trade Zone, Shanghai, China, 200120<br>|
| 98 | Arnold House St Julians Avenue, St Peter Port, Guernsey, GY1 1WA |
| 99 | Unit 2017, Floor 20, Tower 1 No.288, Shimen 1st Road, Jing An <br>District, Shanghai, China, 200041<br>|
| 100 | HSBC Tower, Downtown Dubai, P O Box 66, Dubai, United Arab <br>Emirates<br>|
| 101 | Unit 401, Level 4, Gate Precinct Building 2, Dubai International <br>Financial Centre, P. O. Box 506553, Dubai, United Arab Emirates<br>|
| 102 | Level 16, HSBC Tower, Downtown Dubai, P.O. Box 66, Dubai, United <br>Arab Emirates<br>|
| 103 | HSBC Tower, Level 21, 188 Quay Street, Auckland, New Zealand, <br>1010<br>|
| 104 | The Corporation Trust Incorporated, 2405 York Road, Suite 201, <br>Lutherville Timonium, Maryland, United States of America, 21093<br>|
| 105 | HSBC House, Esplanade, St. Helier, Jersey, JE1 1GT |
| 106 | 9-17 Quai des Bergues, Geneva, Switzerland, 1201 |
| 107 | 1 Grand Canal Square Grand Canal Harbour, Dublin 2, Ireland, D02 <br>P820<br>|
| 108 | 5 rue Heienhaff, Senningerberg, Luxembourg, L-1736 |
| 109 | 52/60 M G Road, Fort, Mumbai, India, 400 001 |
| 110 | Unit 2201, 22/F, Qianhai Chow Tai Fook Finance Tower (Phase I) No. <br>66 Shu Niu Avenue, Nanshan Subdistrict, the Shenzhen Qianhai <br>Shenzhen-Hong Kong Cooperation Zone, the PRC, Shenzhen, China, <br>518054<br>|
| 111 | HSBC Building 7267 Olaya - Al Murrooj, Riyadh, Saudi Arabia, 12283 - <br>2255<br>|
| 112 | 306 Corniche El Nil, HSBC Building, Maadi, Cairo, Egypt |
| 113 | 1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South Africa, <br>2196<br>|
| 114 | Kapelanka 42A, Krakow, Poland, 30-347 |
| 115 | C T Corporation System 820 Bear Tavern Road, West Trenton, New <br>Jersey, United States of America, 08628<br>|
| 116 | 22/F, Tower 2, Taikoo Hui Building, No. 381 Tianhe Road, Tianhe <br>District, Guangzhou, China<br>|
| 117 | Business Bay, Wing 2 Tower B, Survey no 103, Hissa no. 2, Airport <br>road, Yerwada, Pune, India, 411006<br>|
| 118 | c/o Rogers Capital St. Louis Business Centre, Cnr Desroches & St <br>Louis Streets, Port Louis, Mauritius<br>|

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 119 | No. 56 Yu Rong Street, Macheng, China, 438300 |
| 120 | No. 205 Lie Shan Road Suizhou, Hubei, China |
| 121 | Building 3, Yin Zuo Di Jing Wan Tianmen New City, Tianmen, Hubei <br>Province, China<br>|
| 122 | RM101, 102 & 106 Sunshine Fairview, Sunshine Garden, Pedestrian <br>Walkway, Pingjiang, China<br>|
| 123 | Kings Meadow Chester Business Park, Chester, United Kingdom, <br>CH99 9FB<br>|
| 124 | Level 15 HSBC Tower, Downtown Dubai, Dubai, United Arab <br>Emirates, PO Box 66<br>|
| 125 | World Trade Center 3, 9th Floor, Jalan Jendral Sudirman Kaveling <br>29-31, Karet, Setiabudi, South Jakarta, DKI Jakarta, Indonesia, 12920<br>|
| 126 | 5th Floor, World Trade Center 1, Jl. Jend. Sudirman Kav. 29-31, <br>Jakarta, Indonesia, 12920<br>|
| 127 | No.198-2 Chengshan Avenue (E), Rongcheng, China, 264300 |
| 128 | Room 601, 6/F Phase 1 Qianhai Chow Tai Fook Finance Tower, 66 <br>Shuniu Avenue, Nanshan Community, Qianhai Shenzhen-Hong Kong <br>Corporation Zone, Shenzhen, Guangdong, China<br>|
| 129 | Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box <br>3162<br>|
| 130 | 1A Heienhaff, Senningerberg, Luxembourg, 1736 |
| 131 | P.O. Box 3119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, <br>Grand Cayman, Cayman Islands, KY1 – 1205<br>|
| 132 | 17 Boulevard F.W Raiffeisen, Luxembourg, 2411 |
| 133 | 10 Collyer Quay, #10-01 Ocean Financial Centre, Singapore, <br>Singapore, 049315<br>|
| 134 | RM 2112, HSBC Building, Shanghai ifc No. 8 Century Road, Pudong, <br>Shanghai, China, 200120<br>|
| 135 | 43 Whitfield Street, London, United Kingdom, W1T 4HD |
| 136 | 35 Ballards Lane, London, United Kingdom, N3 1XW |
| 137 | 38 Beach Road #19-11 South Beach Tower, Singapore, Singapore, <br>189767<br>|
| 138 | c/o Mayfair Corporate Services Ltd., 26 Burnaby Street, Hamilton, <br>Bermuda, HM11<br>|
| 139 | 27 Old Gloucester Street, London, United Kingdom, WC1N 3AX |
| 140 | All Saints Triangle Caledonian Road, London, United Kingdom, N19UT |
| 141 | 188 Yin Cheng Zhong Lu (Shanghai) Pilot Free Trade Zone, China |
| 142 | 50/F Lee Garden One, 33 Hysan Avenue, Hong Kong |
| 143 | 13-15 York Buildings, London, United Kingdom, WC2N 6JU |
| 144 | 167-169 Great Portland Street, 5th Floor, London, United Kingdom, <br>W1W 5PF<br>|
| 145 | 8th Floor Unit No. 808-814, Ambadeep Building, Plot No. 14, Kasturba <br>Gandhi Marg, New Delhi, India, 110001<br>|
| 146 | c/o Interpath Ltd, 10 Fleet Place, London, United Kingdom, EC4M <br>7RB<br>|
| 147 | ICS Corporate Services (Cayman) Limited, 3-212 Governors Square 23 <br>Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand <br>Cayman, Cayman Islands, KY1-1203<br>|
| 148 | 251 Little Falls Drive, New Castle, Wilmington, United States of <br>America, 19808<br>|
| 149 | 9 rue du Laboratoire, Grand Duchy of Luxembourg, Luxembourg, <br>L-1911<br>|
| 150 | 17F, HSBC Building, Shanghai ifc 8 Century Avenue, Pudong, <br>Shanghai, China<br>|
| 151 | 10th Floor 5 Churchill Place, London, United Kingdom, E14 5HU |
| 152 | 121 HaHashmonaim St., Tel Aviv, Israel, 6713328 |
| 153 | 111 Town Square Place, Suite 840, Jersey City, New Jersey, United <br>States of America, 07310<br>|
| 154 | 7th Floor, 62 Threadneedle Street, London, United Kingdom, EC2R <br>8HP<br>|
| 155 | 1 Harbourfront Avenue, #14-07 Keppel Bay Tower, Singapore, 098632 |
| 156 | Unit 306,307, 308, Gate Village Building 05, Dubai International <br>Financial Centre, Dubai, United Arab Emirates<br>|
| 157 | c/o Company Secretarial Department, 280 Bishopsgate, London, <br>United Kingdom, EC2M 4AG<br>|
| 158 | 4482 Deer Ridge Road, Danville, CA, Delaware, United States of <br>America, 94506<br>|
| 159 | 7383 King Fahad Branch Rd, 2338 - Al Yasmeen Dist., Riyadh, Saudi <br>Arabia, 13325<br>|
| 160 | 2nd Floor, Regis House, 45 King William Street, London, United <br>Kingdom, EC4R 9AN<br>|
| 161 | 45 Gresham Street, C/O Restructuring & Recovery Services (RRS) <br>S&W Partners LLP, London, United Kingdom, EC2V 7BG<br>|
| 162 | 10 Earlsfort Terrace, Dublin, Ireland, D02 T380 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **381** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| **Financial** <br>**statements**<br>| Additional <br>information<br>|
|  |  |  |  |  | Notes on the financial statements | Notes on the financial statements |

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 163 | Meeting Room 18.R005, 18/F Fortune Financial Center No. 5 <br>Dongsanhuan Zhong Road, Chaoyang District, Beijing, China, 100020<br>|
| 164 | 20, rue de la Poste, L-2346, Luxembourg, Grand Duchy of <br>Luxembourg<br>|
| 165 | 3, rue Jean Piret, L-2350 Luxembourg Grand Duchy of Luxembourg <br>R.C.S. Luxembourg: B253299<br>|
| 166 | 9F, Unit B, Seowang Building, 14-8 Teheran-ro 70-gil, Gangnam-gu, <br>Seoul, South Korea (Walk Forest LS8)<br>|
| 167 | 6190-2 Fukushima, Kisomachi, Kiso-gun, Nagano 397-0001 Japan |
| 168 | 2-1-4, Tsukiji, Chuo-ku, Tokyo 104-0045 JAPAN |
| 169 | 89 Nexus Way, Camana Bay, George Town, Grand Cayman, <br>KY1-1205, Cayman Islands<br>|
| 170 | 11F, No. 122, Songjiang Rd, Zhongshan Dist., Taipei City |
| 171 | 10F., No. 156, Sec. 3, Minsheng E. Rd., Songshan Dist., Taipei City |
| 172 | 3F and 8F, 136, Sejong-daero, Jung-gu, Seoul |
| 173 | 800 North State Street, Suite 304, Dover, Delaware, United States of <br>America, DE 19901<br>|

---

---

| | |
|:---|:---|
| Registered offices | Registered offices |
| 174 | Enigma, Wavendon Business Park, England, United Kingdom, MK17 <br>8LX<br>|
| 175 | 11-13, Boulevard de la Foire, L-1528 Luxembourg |
| 176 | 2nd Floor, Sir Walter Raleigh House, 48-50 Esplanade, St. Helier, <br>Jersey JE2 3QB<br>|
| 177 | 375 Park Avenue New York, NY 10152 |
| 178 | 4th Floor, Ensign House, 29 Seaton Place, St Helier, Jersey JE2 3QL |
| 179 | 3rd Floor, 37 Esplanade, St. Helier JE1 1AD, Jersey |
| 180 | 15, Boulevard F.W Raiffeisen, L-2411 Luxembourg, Grand Duchy of <br>Luxembourg<br>|
| 181 | 60, Avenue J.F. Kennedy, L-1855 Luxembourg |
| 182 | 5, Allée Scheffer, L 2520 Luxembourg, Grand Duchy of Luxembourg |
| 183 | 2, rue Edward Steichen, Luxembourg, L-2540, Luxembourg |
| 184 | 450, Lexington Avenue, 31st Floor, New York 10017 |
| 185 | 26A, Boulevard Royal L-2449 Luxembourg |
| 186 | Maples Corporate Services Limited, PO Box 309, Ugland House, <br>Grand Cayman, KY1-1104, Cayman Islands<br>|
| 187 | 405 Lexington Avenue, 53rd Floor, New York, New York 10174, USA |

---

---

| | |
|:---|:---|
| 39 | Non-statutory accounts |

---

The information set out in these accounts does not constitute the Company's statutory accounts for the years ended 31 December 2025 or 2024.

Those accounts have been reported on by the Company's auditors: their reports were unqualified and did not contain a statement under Section

498(2) or (3) of the Companies Act 2006.

The accounts for 2024 have been delivered to the Registrar of Companies and those for 2025 will be delivered in due course.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **382** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Shareholder information

This section gives important information for our shareholders, including contact information. It also includes an overview of key abbreviations and

terminology used throughout this Annual Report and Accounts.

🡠A glossary of terms used in the Annual Report and Accounts can be found in the Investors section of www.hsbc.com.

Fourth interim dividend for 2025

The Directors have approved a fourth interim dividend for 2025 of $0.45 per ordinary share. Information on the currencies in which shareholders

may elect to have the cash dividend paid can be viewed at www.hsbc.com/investors. The interim dividend will be paid in cash. The timetable for

the interim dividend is:

---

| | |
|:---|:---|
| **Announcement**  | **25 February 2026** |
| Shares quoted ex-dividend in London, Hong Kong and Bermuda  | **12 March 2026** |
| American Depositary Shares ('ADS') quoted ex-dividend in New York | **13 March 2026** |
| Record date – London, Hong Kong, New York, Bermuda<sup>1</sup> | **13 March 2026** |
| Mailing of Annual Report and Accounts 2025 and/or Strategic Report 2025 | **27 March 2026** |
| Final date for dividend election changes including Investor Centre electronic instructions and revocations of standing instructions for dividend elections | **15 April 2026** |
| Exchange rate determined for payment of dividends in pounds sterling and Hong Kong dollars | **20 April 2026** |
| Payment date | **30 April 2026** |

---

1Removals to and from the Overseas Branch register of shareholders in Hong Kong or Bermuda will not be permitted on this date.

Interim dividends for 2026

We maintain our dividend policy of a target payout ratio of 50% earnings per ordinary share ('EPS') for each of 2026, 2027 and 2028, subject to

meeting capital requirements. EPS for this purpose will continue to exclude material notable items and related impacts.

For the financial year 2025, dividends were paid in accordance with our dividend policy. We achieved a dividend payout ratio of 50% of EPS,

excluding material notable items and related impacts. Material notable items in 2025 primarily related to the income statement impacts associated

with actions to exit or wind down non-strategic businesses. They also include a dilution loss and the recognition of an impairment of our investment

in BoCom, a legal provision relating to the Bernard L. Madoff Investment Securities LLC fraud, as well as the impacts of transactions completed in

previous periods, including the sale of our retail banking operations in France, the sale of our banking business in Canada and the disposal of our

business in Argentina.

The Board has adopted a dividend policy designed to provide sustainable cash dividends, while retaining the flexibility to invest and grow the

business in the future, supplemented by additional shareholder distributions, if appropriate.

Dividends are approved in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, pounds

sterling and Hong Kong dollars.

Other equity instruments

Additional tier 1 capital – contingent convertible securities

HSBC continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1 capital

securities. For further details on these securities, see Note 32 on the financial statements.

HSBC Holdings issued $1,500m 6.950% perpetual subordinated contingent convertible securities on 27 February 2025, SGD800m 5.000%

perpetual subordinated contingent convertible securities on 24 March 2025 and $2,000m 7.050% perpetual subordinated contingent convertible

securities on 5 June 2025.

2025 Annual General Meeting

With the exception of the shareholder requisitioned Resolution 20, which the Board recommended that shareholders vote against, all resolutions

considered at the 2025 AGM held at 10:00am on 2 May 2025 at InterContinental London O2, 1 Waterview Drive, London SE10 0TW, United

Kingdom, were passed on a poll.

Earnings releases and interim results

First and third quarter results for 2026 will be released on 5 May 2026 and 27 October 2026, respectively. The interim results for the six months to

30 June 2026 will be issued on 4 August 2026.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **383** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Shareholder enquiries and communications

Enquiries

Any enquiries relating to shareholdings on the share register (for example: transfers of shares, changes of name or address, lost share certificates

or dividend cheques) should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which

enables shareholders to manage their shareholding electronically.

---

| | | |
|:---|:---|:---|
| **Principal Register:** | Computershare Investor Services PLC<br>The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ, <br>United Kingdom<br>| Telephone: +44 (0) 370 702 0137<br>www.investorcentre.co.uk/contactus<br>Investor Centre: www.investorcentre.co.uk<br>|
| **Hong Kong Overseas Branch Register:** | Computershare Hong Kong Investor Services Limited<br>Rooms 1712–1716, 17th Floor Hopewell Centre, 183 <br>Queen's Road East, Hong Kong<br>| Telephone: +852 2862 8555 <br>hsbc.ecom@computershare.com.hk<br>Investor Centre: www.investorcentre.com/hk<br>|
| **Bermuda Overseas Branch Register:** | Investor Relations Team<br>HSBC Bank Bermuda Limited, 37 Front Street, <br>Hamilton, HM 11, Bermuda<br>| hbbm.shareholder.services@hsbc.bm<br>hbbm.mutual.fund@hsbc.bm<br>Investor Centre: www.investorcentre.com/bm<br>|
| **ADS Depositary:** | The Bank of New York Mellon<br>Shareowner Services, P.O. Box 43006, Providence RI <br>02940-3078, USA<br>| Telephone (US): +1 877 283 5786<br>Telephone (International): +1 201 680 6825 <br>shrrelations@cpushareownerservices.com<br>|

---

If your shareholding is not recorded directly on the share register, it is important to remember that your main contact for all matters relating to your

investment remains the registered shareholder, or custodian or broker, who administers the investment on your behalf. This is the case even if you

have elected to receive information rights directly from HSBC Holdings. Any changes or queries relating to your personal details and holding

(including any administration of it) should be directed to your existing contact at your investment manager or custodian or broker. HSBC Holdings

cannot guarantee dealing with matters directed to it in error.

Shareholders who wish to receive a hard copy of the Annual Report and Accounts 2025 should contact HSBC's Registrars. Please visit

www.hsbc.com/investors/investor-contacts for further information. You can also download an online version of the report from www.hsbc.com.

Electronic communications

Shareholders may at any time choose to receive corporate communications in printed form or to receive notifications of their availability on HSBC's

website. To receive notifications of the availability of a corporate communication on HSBC's website by email, or revoke or amend an instruction to

receive such notifications by email, go to www.hsbc.com/investors/shareholder-information/manage-your-shareholding. If you received a

notification of the availability of this document on HSBC's website and would like to receive a printed copy, or if you would like to receive future

corporate communications in printed form, please write or send an email (quoting your shareholder reference number) to the appropriate Registrars

at the address given above. Printed copies will be provided without charge.

Chinese translation

A Chinese translation of the Annual Report and Accounts 2025 will be available upon request after 27 March 2026 from the Registrars (contact

details above). Please also contact the Registrars if you wish to receive Chinese translations of future documents, or if you have received a Chinese

translation of this document and do not wish to receive them in future.

《2025 年報及賬目》備有中譯本，各界人士可於2026年3月27日之後，向上列股份登記處索閱。

閣下如欲於日後收取相關文件的中譯本，或已收到本文件的中譯本但不希望繼續收取有關譯本，均請聯絡股份登記處。

Stock symbols

HSBC Holdings ordinary shares trade under the following stock symbols:

---

| | | | |
|:---|:---|:---|:---|
| London Stock Exchange | HSBA<sup>\*</sup> | New York Stock Exchange (ADS) | HSBC |
| Hong Kong Stock Exchange | 5 | Bermuda Stock Exchange | HSBC.BH |
| ∗ HSBC's Primary market |  |  |  |

---

Investor relations

Enquiries relating to HSBC's strategy or operations may be directed to:

---

| | |
|:---|:---|
| Alastair Ryan, Global Head of Investor Relations | Yafei Tian, Head of Investor Relations, Asia-Pacific |
| HSBC Holdings plc | The Hongkong and Shanghai Banking |
| 8 Canada Square | Corporation Limited |
| London E14 5HQ | 1 Queen's Road Central |
| United Kingdom | Hong Kong |
| Telephone: +44 (0) 7468 703 010 | Telephone: +852 2899 8909 |
| Email: investorrelations@hsbc.com | Email: investorrelations@hsbc.com.hk |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **384** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Where more information about HSBC

is available

The Annual Report and Accounts 2025 and other information on HSBC

may be downloaded from HSBC's website: www.hsbc.com.

Reports, statements and information that HSBC Holdings files with the

Securities and Exchange Commission are available at www.sec.gov.

Investors can also request hard copies of these documents upon

payment of a duplicating fee by writing to the SEC at the Office of

Investor Education and Advocacy, 100 F Street N.E., Washington, DC

20549-0213 or by emailing PublicInfo@sec.gov. Investors should call

the Commission at (1) 202 551 8090 if they require further assistance.

Investors may also obtain the reports and other information that HSBC

Holdings files at www.nyse.com (telephone number (1) 212 656 3000).

HM Treasury has transposed the requirements set out under CRD IV

and issued the Capital Requirements Country-by-Country Reporting

Regulations 2013. The legislation requires HSBC Holdings to publish

additional information in respect of the year ended 31 December 2025

by 31 December 2026. This information will be available on HSBC's

website: www.hsbc.com/tax.

Taxation of shares and dividends

Taxation – UK residents

The following is a summary, under current law (unless otherwise

noted) and the current published practice of HM Revenue and Customs

('HMRC'), of certain UK tax considerations that are likely to be material

to the ownership and disposition of HSBC Holdings ordinary shares.

The summary does not purport to be a comprehensive description of all

the tax considerations that may be relevant to a holder of shares. In

particular, the summary deals with shareholders who are resident

solely in the UK for UK tax purposes and only with holders who hold

the shares as investments and who are the beneficial owners of the

shares, and does not address the tax treatment of certain classes of

holders such as dealers in securities. Holders and prospective

purchasers should consult their own advisers regarding the tax

consequences of an investment in shares in light of their particular

circumstances, including the effect of any national, state or local laws.

Taxation of dividends

Currently, no tax is withheld from dividends paid by HSBC Holdings.

UK resident individuals

UK resident individuals are generally entitled to a tax-free annual

allowance in respect of dividends received. The amount of the

allowance for the tax year beginning 6 April 2025 is £500. To the extent

that dividend income received by an individual in the relevant tax year

does not exceed the allowance, a nil tax rate will apply. Dividend

income in excess of this allowance will be taxed at 8.75% for basic rate

taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional

rate taxpayers.

UK resident companies

Shareholders that are within the charge to UK corporation tax should

generally be entitled to an exemption from UK corporation tax on any

dividends received from HSBC Holdings. However, the exemptions are

not comprehensive and are subject to anti-avoidance rules.

If the conditions for exemption are not met or cease to be satisfied, or

a shareholder within the charge to UK corporation tax elects for an

otherwise exempt dividend to be taxable, the shareholder will be

subject to UK corporation tax on dividends received from HSBC

Holdings at the rate of corporation tax applicable to that shareholder.

Taxation of capital gains

The computation of the capital gains tax liability arising on disposals of

shares in HSBC Holdings by shareholders subject to UK tax on capital

gains can be complex, partly depending on whether, for example, the

shares were purchased since April 1991, acquired in 1991 in exchange

for shares in The Hongkong and Shanghai Banking Corporation Limited,

or acquired subsequent to 1991 in exchange for shares in other

companies.

For capital gains tax purposes, the acquisition cost for ordinary shares is

adjusted to take account of subsequent rights and capitalisation issues.

Any capital gain arising on a disposal of shares in HSBC Holdings by a

UK company may also be adjusted to take account of indexation

allowance if the shares were acquired before 1 January 2018, although

the level of indexation allowance that is given in calculating the gain

would be frozen at the value that would have been applied to a disposal

of those shares in December 2017. If in doubt, shareholders are

recommended to consult their professional advisers.

Stamp duty and stamp duty reserve tax

Transfers of shares by a written instrument of transfer generally will be

subject to UK stamp duty at the rate of 0.5% of the consideration paid

for the transfer (rounded up to the next £5), and such stamp duty is

generally payable by the transferee. An agreement to transfer shares,

or any interest therein, normally will give rise to a charge to stamp duty

reserve tax at the rate of 0.5% of the consideration. However, provided

an instrument of transfer of the shares is executed pursuant to the

agreement and duly stamped before the date on which the stamp duty

reserve tax becomes payable, under the current published practice of

HMRC it will not be necessary to pay the stamp duty reserve tax, nor to

apply for such tax to be cancelled. Stamp duty reserve tax is generally

payable by the transferee.

Paperless transfers of shares within CREST, the UK's paperless share

transfer system, are liable to stamp duty reserve tax at the rate of 0.5%

of the consideration. In CREST transactions, the tax is calculated and

payment made automatically. Deposits of shares into CREST generally

will not be subject to stamp duty reserve tax, unless the transfer into

CREST is itself for consideration.

Taxation – US residents

The following is a summary, under current law, of the principal UK tax

and US federal income tax considerations that are likely to be material

to the ownership and disposition of shares or American Depositary

Shares ('ADSs') by a holder that is a US holder, as defined below, and

who is not resident in the UK for UK tax purposes.

The summary does not purport to be a comprehensive description of all

of the tax considerations that may be relevant to a holder of shares or

ADSs. In particular, the summary deals only with US holders that hold

shares or ADSs as capital assets, and does not address the tax

treatment of holders that are subject to special tax rules. These include

banks, tax-exempt entities, insurance companies, dealers in securities

or currencies, persons that hold shares or ADSs as part of an integrated

investment (including a 'straddle' or 'hedge') comprised of a share or

ADS and one or more other positions, and persons that own directly or

indirectly 10% or more (by vote or value) of the stock of HSBC

Holdings. This discussion is based on laws, treaties, judicial decisions

and regulatory interpretations in effect on the date hereof, all of which

are subject to change.

For the purposes of this discussion, a 'US holder' is a beneficial holder

that is a citizen or resident of the United States, a US domestic

corporation or otherwise is subject to US federal income taxes on a net

income basis in respect thereof.

Holders and prospective purchasers should consult their own advisers

regarding the tax consequences of an investment in shares or ADSs in

light of their particular circumstances, including the effect of any

national, state or local laws.

Any US federal tax advice included in the Annual Report and Accounts

2025 is for informational purposes only. It was not intended or written

to be used, and cannot be used, for the purpose of avoiding US federal

tax penalties.

Taxation of dividends

Currently, no tax is withheld from dividends paid by HSBC Holdings. For

US tax purposes, a US holder must include cash dividends paid on the

shares or ADSs in ordinary income on the date that such holder or the

ADS depositary receives them, translating dividends paid in UK pounds

sterling into US dollars using the exchange rate in effect on the date of

receipt. A US holder that elects to receive shares in lieu of a cash

dividend must include in ordinary income the fair market value of such

shares on the dividend payment date, and the tax basis of those shares

will equal such fair market value.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **385** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Subject to certain exceptions for positions that are held for less than 61

days, and subject to a foreign corporation being considered a 'qualified

foreign corporation' (which includes not being classified for US federal

income tax purposes as a passive foreign investment company), certain

dividends ('qualified dividends') received by an individual US holder

generally will be subject to US taxation at preferential rates.

Based on the company's audited financial statements and relevant

market and shareholder data, HSBC Holdings does not believe that it

was a passive investment company for its 2025 taxable year and does

not anticipate becoming a passive foreign investment company in 2026

or the foreseeable future. Accordingly, dividends paid on the shares or

ADSs generally should be eligible for qualified dividends treatment.

Taxation of capital gains

Gains realised by a US holder on the sale or other disposition of shares

or ADSs normally will not be subject to UK taxation unless at the time

of the sale or other disposition the holder carries on a trade, profession

or vocation in the UK through a branch or agency or permanent

establishment and the shares or ADSs are or have been used, held or

acquired for the purposes of such trade, profession, vocation, branch or

agency or permanent establishment. Such gains will be included in

income for US tax purposes, and will be long-term capital gains if the

shares or ADSs were held for more than one year. A long-term capital

gain realised by an individual US holder generally will be subject to US

tax at preferential rates.

Inheritance tax

Shares or ADSs held by an individual whose domicile is determined to

be the US for the purposes of the United States–United Kingdom

Double Taxation Convention relating to estate and gift taxes (the

'Estate Tax Treaty') and who is not for such purposes a national of the

UK will not, provided any US federal estate or gift tax chargeable has

been paid, be subject to UK inheritance tax on the individual's death or

on a lifetime transfer of shares or ADSs except in certain cases where

the shares or ADSs (i) are comprised in a settlement (unless, at the

time of the settlement, the settlor was domiciled in the US and was not

a national of the UK), (ii) are part of the business property of a UK

permanent establishment of an enterprise, or (iii) pertain to a UK fixed

base of an individual used for the performance of independent personal

services. In such cases, the Estate Tax Treaty generally provides a

credit against US federal tax liability for the amount of any tax paid in

the UK in a case where the shares or ADSs are subject to both UK

inheritance tax and to US federal estate or gift tax.

Stamp duty and stamp duty reserve tax –

ADSs

If shares are transferred to a clearance service or American Depositary

Receipt ('ADR') issuer (which will include a transfer of shares to the

depositary) UK stamp duty and/or stamp duty reserve tax will be

payable unless the transfer is, or is treated as being, in the course of a

capital raising arrangement. The stamp duty or stamp duty reserve tax

is generally payable on the consideration for the transfer (or, if there is

no consideration in money or money's worth, the value of the shares

being transferred) and is payable at the aggregate rate of 1.5%.

The amount of stamp duty reserve tax payable on such a transfer will

be reduced by any stamp duty paid in connection with the same

transfer.

No stamp duty will be payable on the transfer of, or agreement to

transfer, an ADS, provided that the ADR and any separate instrument

of transfer or written agreement to transfer remain at all times outside

the UK, and provided further that any such transfer or written

agreement to transfer is not executed in the UK. No stamp duty

reserve tax will be payable on a transfer of, or agreement to transfer, an

ADS effected by the transfer of an ADR.

US information reporting and backup

withholding tax

Distributions made on shares or ADSs and proceeds from the sale of

shares or ADSs that are paid within the US, or through certain financial

intermediaries to US holders, are subject to US information reporting

and may be subject to a US 'backup' withholding tax. General

exceptions to this rule happen when the US holder: establishes that it

is a corporation (other than an S corporation) or other exempt holder; or

provides a correct taxpayer identification number, certifies that no loss

of exemption from backup withholding has occurred and otherwise

complies with the applicable requirements of the backup withholding

rules. Holders that are not US persons (as defined in the US Internal

Revenue Code of 1986, as amended) generally are not subject to US

information reporting or backup withholding tax, but may be required to

comply with applicable certification procedures to establish that they

are not US persons in order to avoid the application of such US

information reporting requirements or backup withholding tax to

payments received within the US or through certain financial

intermediaries.

Approach to ESG reporting

The information set out in the ESG review on pages 32 to 63, taken

together with other information relating to ESG issues included in this

report, aims to provide key ESG information and data for the year

ended 31 December 2025. The data is compiled for the financial year

1 January to 31 December 2025 unless otherwise specified.

Measurement techniques and calculations are explained next to data

tables where necessary. Where we have changes in scope, boundary

or measurement we call these out where relevant in our disclosures.

Additionally, a rationale is provided for any restatement of information

or data that has been previously published.

How we decide what to measure

We listen to our stakeholders in a number of different ways and we

use the information they provide us to identify the issues that are most

important to them and consequently also matter to our own business.

Our relevant governance bodies discuss the new and existing themes

and issues that matter to our stakeholders. Our management team

then uses this insight, alongside the framework of the ESG Code

(which refers to our obligations under the Hong Kong Listing Rules

Appendix C2 ESG Reporting Code Parts C and D) and the UKLR

6.6.6R(8) of the Financial Conduct Authority's ('FCA') Listing Rules,

Sections 414CA and 414CB of the UK Companies Act 2006, and other

applicable laws and regulations to choose what we measure and

publicly report in our ESG review. We will continue to develop and

refine our reporting and disclosures on ESG matters in line with

feedback received from our investors and other stakeholders, and in

view of our obligations under the ESG Code and the FCA's Listing

Rules.

Under the ESG Code, 'materiality' is considered to be the threshold at

which ESG issues become sufficiently important to our investors and

other stakeholders that they should be publicly reported. Our approach

to materiality also considers disclosure standards and other applicable

rules and regulations as part of our materiality assessment for specific

ESG topics and relevant disclosures.

Given ongoing developments in the ESG regulatory environment across

various jurisdictions in which we operate, combined with the relative

immaturity of processes, systems, data quality and controls, our focus

remains on supporting a globally consistent set of mandatory

sustainability standards. We aim to continue to evolve our reporting to

recognise market developments, such as the International Sustainability

Standards Board ('ISSB'), and support the efforts to harmonise the

disclosures. We report against the Hong Kong Exchange ('HKEx') ESG

Code metrics, and will continue to review our approach as the

regulatory landscape evolves.

Consistent with the scope of financial information presented in this

report, the ESG review covers the operations of HSBC Holdings plc and

its subsidiaries, unless otherwise specified. Given the relative

immaturity of ESG-related data and methodologies in general, we are

on a journey towards improving completeness and robustness.

🡠For further details, see 'Engaging with our stakeholders and our material

ESG topics' on page 34.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **386** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Our reporting around ESG

We report on ESG matters throughout this report, including the 'ESG

overview' section of the Strategic Report (pages 28 to 29), ESG review

(pages 32 to 63), and the 'Climate risk' sections of the Risk review

(pages 203 to N/A). In addition, we have other supplementary materials,

including our ESG Data Pack, which provides a more granular

breakdown of ESG information.

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| | |
|:---|:---|
| Detailed data | Additional reports |
| ESG Data Pack 2025, <br>including HKEx ESG <br>Code Index <br>| 2025 UK Pay Gap Disclosures<br>Modern Slavery and Human Trafficking Statement 2025<br>Green Bonds Report 2025<br>HSBC UN Sustainable Development - Goals Bond <br>Report 2025<br>|

---

🡠For further details of our supplementary materials, see our ESG reporting

centre at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-

reporting-centre.

**TCFD**<br>

Task Force on Climate-related Financial Disclosures ('TCFD')

The table below summarises the TCFD requirements and cross-references to where further information can be found within our Annual Report and

Accounts 2025. We also include cross-references to our ESG Data Pack where relevant.

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| | | | |
|:---|:---|:---|:---|
| **TCFD Pillar** | **CA 2006 requirement** | **Theme** | **Disclosure location** |
| Governance<br> a) | Sections 414CA and 414CB 2A (a) | HSBC Board's oversight of climate-related risks and opportunities | 🡠Pages 57, 204, 228  |
| Governance<br> b) | Sections 414CA and 414CB 2A (a) | HSBC management's role in assessing and managing climate-<br>related risks and opportunities<br>| 🡠Pages 57, 204 |
| Strategy<br> a) | Sections 414CA and 414CB 2A (d) | Climate-related risks and opportunities HSBC has identified over <br>the short, medium and long term<br>| 🡠Pages 35 - 38, 203 - 206, <br>206 - 212<br>|
| Strategy<br> b) | Sections 414CA and 414CB 2A (e) | Impact of climate-related risks and opportunities on HSBC's <br>businesses, strategy and financial planning<br>| 🡠Pages 35 - 38, 47 - 48, 203, <br>204, 206 - 212<br>|
| Strategy<br> c) | Sections 414CA and 414CB 2A (f) | Resilience of HSBC's strategy, taking into consideration different <br>climate-related scenarios, including a 2°C or lower scenario<br>| 🡠Pages 206 - 212<br>🡠ESG Data Pack<br>|
| Risk Management<br> a) | Sections 414CA and 414CB 2A (b) | HSBC's processes for identifying and assessing climate-related <br>risks<br>| 🡠Pages 49, 203 - 206, 209, 212 |
| Risk Management<br> b) | Sections 414CA and 414CB 2A (b) | HSBC's processes for managing climate-related risks | 🡠Pages 203 - 206 |
| Risk Management<br> c) | Sections 414CA and 414CB 2A (c) | HSBC's processes for integration of climate-related risks into <br>overall risk management framework<br>| 🡠Pages 203 - 204 |
| Metric & Targets<br> a) | Sections 414CA and 414CB 2A (h) | Metrics used by HSBC to assess climate-related risk and <br>opportunities in line with its strategy and risk management <br>process<br>| 🡠Pages 35 - 38, 41 - 48, 50, <br>203 - 212<br>🡠ESG Data Pack<br>|
| Metric & Targets<br> b) | Sections 414CA and 414CB 2A (h) | Disclose scope 1, scope 2 and, if appropriate, scope 3 greenhouse <br>gas emissions and the related risks<br>| 🡠Pages 39 - 49<br>🡠ESG Data Pack<br>|
| Metric & Targets<br> c) | Sections 414CA and 414CB 2A (g) | Targets used by HSBC to manage climate-related risks and <br>opportunities and performance against targets<br>| 🡠Pages 39 - 46<br>🡠ESG Data Pack<br>|

---

Explanatory statements

HKEx and TCFD Explanatory Statements

We have considered our 'comply or explain' obligation under both the

UK Financial Conduct Authority's Listing Rules 6.6.6R(8) ('UKLR'), and

Sections 414CA and 414CB of the UK Companies Act 2006 ('CA 2006'),

collectively referred to as the 'TCFD requirements', and Hong Kong

Listing Rules Appendix C2 ESG Reporting Code Parts C and D.

The Group has prepared its climate-related disclosures in accordance

with the ESG Reporting Code under Appendix C2 of the Rules

Governing the Listing of Securities on Hong Kong Exchanges and

Clearing Limited. While IFRS S1 principles have been considered to

support the quality and consistency of disclosures, the Group has not

adopted IFRS Sustainability Disclosure Standards as a reporting

framework for the purposes of these disclosures.

We comply with mandatory requirements, including Part B and

disclosure of scope 1 and 2 GHG emissions within the HKEx ESG

Code. We have set out in the HKLR index where these and other

relevant disclosures may be found. We confirm that we have made

disclosures consistent with TCFD Recommendations and

Recommended Disclosures, including its annexes and supplemental

guidance, as well as the HKEx ESG Code, save for certain items as set

out below. Our reporting approach will continue to evolve over time to

reflect regulatory requirements.

🡠Our detailed HKLR Index, including HKLR Part D can be found in our ESG

Data Pack at www.hsbc.com/esg

HKEx A1(b) related to relevant laws/regulations relating to air and

greenhouse gas emissions, discharges into water and land, and

generation of hazardous and non-hazardous waste, and on emissions:

taking into account the nature of our business, we do not believe that

there are relevant laws and regulations in these areas that have significant

impacts on our operations. Nevertheless, we are fully compliant with our

publication of information regarding scope 1 and 2 greenhouse gas

emissions, while we only partially publish information on scope 3

emissions, as the data required for that publication is not yet fully

available.

HKEx A1.3 related to total hazardous waste produced and HKEx A1.4

related to total non-hazardous waste produced: taking into account the

nature of our business, we do not consider hazardous waste to be a

material issue for our stakeholders. As such, we report only on total

waste produced, which includes hazardous and non-hazardous waste.

HKEx A1.6 related to handling hazardous and non-hazardous waste:

taking into account the nature of our business, we do not consider this

to be a material issue for our stakeholders. Notwithstanding this, we

continue to focus on the reduction and recycling of all waste. Building

on the success of our 'reduce, replace, remove' environmental

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **387** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

approach, we are continuing to seek to identify key opportunities where

we can lessen our wider environmental impact, including waste

management. For further details, please see our ESG review on page

47. HKEx A2.4 related to sourcing water issue and water efficiency target:

taking into account the nature of our business, we do not consider this

to be a material issue for our stakeholders. Notwithstanding this, we

have implemented measures to further reduce water consumption

through the installation of water efficient taps, flow restrictors, and

continue to track our water consumption.

HKEx A2.5 related to packaging material, HKEx B6(b) related to issues

about health and safety, advertising and labelling relating to products

and services provided, HKEx B6.1 related to percentage of total

products sold or shipped subject to recalls for safety and health

reasons, HKEx B6.4 in recall procedures: taking into account the nature

of our business, we do not consider these to be material issues for our

stakeholders.

**Understanding our climate-related risks and opportunities**

HKEx Para 20(a) related to understanding our climate-related risks and

opportunities: we currently do not fully describe climate-related risks

and opportunities that could reasonably be expected to affect our

cash flows, access to finance, or cost of capital over the short,

medium and long term. Our 2025 climate risk assessment utilises

internal risk management processes, external data sources, and

industry guidance. We focus our disclosures on risks and

opportunities that are most relevant to our business model and

strategy. We recognise that the identification of such items is an

evolving process and as our capabilities and data availability mature,

we will continue to review and refine our approach in medium term.

**Target-setting and review**

TCFD requirements related to metrics and targets (c) on short-term

targets: we do not plan to set short-term targets for financed

emissions, sustainable finance or our own operations as our overall

climate strategy is focused on our ambition to become a net zero bank

by 2050. We have set interim financed emissions 2030 targets and a

sustainable finance and investment ambition by 2030. Further

information can be found on pages 35 and 41.

TCFD requirements related to metrics and targets (c) on climate-related

opportunities: we currently have not set targets for climate-related

opportunities. However, we report progress towards our ambition to

provide and facilitate $750bn–$1tn in sustainable finance and

investment by 2030.

**Financial position, financial performance and cash flows**

HKEx Para 24(a), 25(b) on financial effects of climate-related

opportunities and TCFD requirements related to metrics and targets (a)

on climate-related opportunities: we currently do not fully disclose the

qualitative or quantitative information about how climate-related

opportunities have affected our financial position (e.g. proportion of

assets), financial performance (e.g. proportion of revenue) or cash flows

or other aligned business activities for the reporting period, as well as

the relevant anticipated financial effects. Therefore we have not

disclosed how such information is reflected in our financial statements.

The relevant metrics are not individually identifiable. It may also involve

disclosing commercially sensitive non-public information. We do

however assess the effect of climate credit risk on IFRS9 ECL. The

output of this assessment is included on page 212. We also disclose

our conclusion that no incremental adjustments were needed to

capture climate impacts in our financial statements on page 34. We

have also disclosed the progress against our ambition of providing and

facilitating $750bn–$1tn of sustainable finance and investment by 2030.

We are exploring ways to enhance our methodologies and data

capabilities to improve granularity of these disclosures in the medium

term.

**Capital deployment**

HKEx Para 33 related to expenditure for climate-related risks and

opportunities: we currently do not disclose the amount of capital

expenditure, financing or investment specifically allocated to climate-

related risks and opportunities. We integrate climate-risk considerations

into our broader capital planning process. Climate risk is therefore not

individually identifiable. Climate risk considerations are incorporated

across a wide range of initiatives, including investing in resources to

meet forward-looking regulatory requirements, enhancements to data

and modelling capabilities, power purchase arrangements and

engagements with suitable data vendors. The relevant metrics are

therefore not individually identifiable. As part of enhancing our

disclosures for upcoming regulatory requirements we plan to reassess

our approach to these requirements in the medium term.

**Internal carbon prices**

HKEx Para 34 and TCFD requirements related to metrics and targets (a)

on internal carbon prices: we do not currently use an internal carbon

price, and are still developing the relevant implementation strategy. We

aim to provide further disclosures in the medium term. For details on

the external carbon prices used in our climate scenario analysis, please

refer to page 207.

**Financial planning and performance**

TCFD requirements related to Strategy (b) and (c) on financial planning

and performance: we have used climate scenario analysis to inform our

organisation's business, strategy and financial planning. In 2025, we

continued to incorporate certain aspects of sustainable finance within

our financial planning process. Also, we used climate scenario analysis

to assess the impacts of climate-related risks on financial performance

and our financial position, which is largely focused on how expected

credit losses will be impacted under different climate scenarios. We do

not fully disclose impacts from climate-related opportunities on financial

planning and performance, including on revenue, costs and the balance

sheet, detailed climate risk exposures for all sectors and geographies,

or physical risk metrics. This is due to transitional challenges in relation

to data limitations, although nascent work is ongoing in these areas.

However, we have disclosed the progress against our ambition of

providing and facilitating $750bn–$1tn of sustainable finance and

investment by 2030. We expect these data limitations to be addressed

in the medium term as more reliable data becomes available and

technology solutions are implemented.

**Transition plan**

TCFD requirements related to Strategy (b) on transition plan: in 2020,

we set an ambition to become a net zero bank by 2050. Since then, we

have made good progress and published our updated transition plan

incorporating revised interim 2030 financed emission targets in

November 2025, which reflects the realities of an evolving transition

playing out very differently across the global economy. We currently do

not disclose the planned sources of funding to implement our climate

strategy. Our planned sources of funding take into consideration our

overall bank strategy. Our climate strategy is part of this, and the

specific climate-related sources of funding are not separately

identifiable. The relevant access to capital is therefore not individually

identifiable. We currently partially test achievability of our transition plan

and associated targets by performing feasibility analysis of our financed

emissions targets considering multiple climate-related scenarios. As

part of enhancing our disclosures for upcoming regulatory

requirements, we plan to reassess our approach to these requirements

in the medium term. The reference pathways we consider are global

and we do not currently set GHG targets for individual countries or

entities, unless required by regulation.

**Impacts of transition and physical risk**

HKEx Para 30 and 31, TCFD requirements related to metrics and

targets (a) on detailed climate-related risk exposure metrics for physical

and transition risks: we do not fully disclose the amount and

percentage of assets or business activities vulnerable to climate-related

physical and transition risks, or the metrics used to assess the impact

of climate-related physical (chronic) and transition (policy and legal,

technology and market) risks on parts of wholesale, retail lending and

other financial intermediary business activities (specifically credit

exposure, equity and debt holdings, or trading positions, broken down

by industry, geography, credit quality and average tenor). We are aiming

to develop the appropriate systems, data and processes to provide

these disclosures in future years. We do, however, disclose the

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **388** |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

exposure to six, high-transition risk wholesale sectors and the flood risk

exposure and Energy Performance Certificate ('EPC') breakdown for

the UK retail mortgage portfolio.

**Scope 3 emissions disclosure**

HKEx Para 28(c), 29(d) and TCFD requirements related to metrics and

targets (a) and (b) on scope 3 emissions metrics: we currently partially

disclose scope 3 GHG emissions, and related risks. We currently focus

on disclosing only four out of 15 categories of scope 3 GHG emissions,

including business travel, supply chain and financed emissions,

following our internal materiality assessment. Further details on

reasons for exclusion can be found in our GHG reporting guidance

2025. To calculate supply chain emissions, as detailed in the GHG

reporting guidance, we use spend data for the 12-month period to 30

September, and the latest data available as at end of 2024 for suppliers'

emissions and revenue. In relation to financed emissions, we partially

comply with scope 3 category 15 – albeit on a lagged basis. We publish

on-balance sheet financed emissions for our in-scope target-sectors,

where the total lending exposures included were approximately 3.5%

of our loans and advances to customers at 31 December 2024, as

detailed on page 46. We also publish facilitated emissions for the oil

and gas, and power and utilities sectors. In relation to related risks, we

currently disclose the exposure to six, high-transition risk wholesale

sectors, please refer to page 204. Data quality of future disclosures on

financed emissions and related risks are reliant on our customers

publicly disclosing their GHG emissions, targets and plans, and related

risks, and the accuracy and completeness of these in third-party data.

We are working to enhance the appropriate systems, data and

processes to enhance our disclosures to align with HKEx requirements

where possible in future years. We recognise the need to provide early

transparency on climate disclosures but balance this with the

recognition that existing data and reporting processes continue to

evolve.

**Anticipated financial effects**

HKEx Para 25(a)(i) related to investment and disposal plans: due to the

nature of our business, we consider a wide range of factors, including

climate change, in our M&A activities. Our current processes to

manage climate and sustainability-related targets, net zero transition

plans and climate strategy include impact assessments of HSBC

mergers and acquisitions activity. While we perform this assessment

for each planned transaction, the anticipated financial effects of the

transaction as a result of the climate and sustainability impacts, are not

separately identifiable and are a secondary impact of the transaction as

opposed to the primary objective.

HKEx Para 25(a)(ii) related to planned sources of funding to implement

its strategy and TCFD requirements related to Strategy (b) on access to

capital: we do not disclose the changes in financial position over the

short, medium and long term with respect to planned sources of

funding to implement our climate strategy. We have, however,

considered how the implementation of our climate strategy may impact

our businesses, strategy and financial planning. Our access to capital

may be impacted by reputational concerns as a result of climate action

or inaction. In addition, if we are perceived to mislead stakeholders on

our business activities or if we fail to achieve our stated net zero

ambitions, we could potentially face reputational damage, impacting our

revenue-generating ability and our access to capital markets. To

manage these risks, we have integrated climate risk into our existing

risk taxonomy, and incorporated it within the risk management

framework through the policies and controls for the existing risks

where appropriate. The relevant access to capital is therefore not

individually identifiable. As part of enhancing our disclosures for

upcoming regulatory requirements, we plan to reassess our approach

to these requirements in the medium term.

**Climate-related opportunities**

HKEx Para 32 and TCFD requirements related to metrics and targets (a)

on amount and percentage of assets or business activities, or capital

deployment: we currently do not disclose the proportion of revenue,

amount and percentage of assets or capital deployment aligned with

climate-related opportunities, including revenue from low-carbon

products and forward-looking metrics. This is due to transitional data

and system limitations, and the absence of standardised

methodologies. As part of enhancing our disclosures for upcoming

regulatory requirements, we plan to reassess our approach to these

requirements in the medium term.

**Applicability of cross-industry metrics and industry-based** 

**metrics**

HKEx Para 36 and 41 requirements are related to applicability of cross-

industry metrics and industry-based metrics: our current disclosures

focus primarily on cross-industry metrics, as our approach, internal

processes and data availability for industry-based metrics are still under

development. We will continue to review and refine our approach to

industry-based metrics in the medium term as our capabilities and data

mature.

Information about the enforceability

of judgments made in the US

HSBC Holdings is a public limited company incorporated in England and

Wales.

Most of the Directors and executive officers live outside the US. As a

result, it may not be possible to serve process on such persons or

HSBC Holdings in the US or to enforce judgments obtained in US

courts against them or HSBC Holdings based on civil liability provisions

of the securities laws of the US.

There is doubt as to whether English courts would enforce:

–civil liabilities under US securities laws in original actions; or

–judgments of US courts based upon these civil liability provisions.

In addition, judgments that contain awards of punitive and/or multiple

damages in actions brought in the US or elsewhere may be

unenforceable in the UK.

The enforceability of any judgment in the UK will depend on the

particular facts of the case as well as the laws and treaties in effect at

the time.

Exchange controls and other

limitations affecting equity security

holders

Other than certain economic sanctions that may be in force from time

to time, there are currently no UK laws, decrees or regulations that

would prevent the import or export of capital or remittance of

distributable profits by way of dividends and other payments to holders

of HSBC Holdings' equity securities who are not residents of the UK.

There are also no restrictions under the laws of the UK or the terms of

the Memorandum and Articles of Association concerning the right of

non-resident or foreign owners to hold HSBC Holdings' equity

securities or, when entitled to vote, to do so.

Insider trading policies and

procedures

The Company has adopted insider trading policies and procedures

governing the purchase, sale, and other dispositions of its securities by

directors, senior management and employees that are reasonably

designed to promote compliance with applicable insider trading laws,

rules and regulations, and any listing standards applicable to the

Company.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **389** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

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Dividends on the ordinary shares of HSBC Holdings

The HSBC Holdings dividends approved, per ordinary share, in respect of each of the last five years were:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | First interim | Second interim | Third interim | Fourth interim<sup>1</sup> | Total<sup>2</sup> |
| 2025 | $**0.100** | **0.100** | **0.100** | **0.450** | **0.75** |
|  | £**0.074** | **0.074** | **0.075** | **0.335** | **0.558** |
|  | **0.784** | **0.778** | **0.778** | **3.502** | **5.842** |
| 2024<sup>3</sup> | $0.310 | 0.100 | 0.100 | 0.360 | 0.870 |
|  | £0.243 | 0.076 | 0.078 | 0.273 | 0.671 |
|  | 2.420 | 0.779 | 0.777 | 2.791 | 6.768 |
| 2023 | $0.100 | 0.100 | 0.100 | 0.310 | 0.610 |
|  | £0.079 | 0.080 | 0.080 | 0.248 | 0.487 |
|  | 0.783 | 0.783 | 0.780 | 2.426 | 4.773 |
| 2022 | $0.090 | 0.230 |  |  | 0.320 |
|  | £0.079 | 0.185 |  |  | 0.264 |
|  | 0.706 | 1.804 |  |  | 2.511 |
| 2021 | $0.070 | 0.180 | – | – | 0.250 |
|  | £0.051 | 0.138 | – | – | 0.189 |
|  | 0.545 | 1.412 | – | – | 1.957 |

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1The fourth interim dividend for 2025 of $0.45 per ordinary share will be paid on 30 April 2026. The fourth interim dividend for 2025 has been translated into

pounds sterling and Hong Kong dollars at the closing rate on 31 December 2025.

2The above dividends approved are accounted for as disclosed in Note 8 on the Financial Statements.

3The first interim dividend for 2024 includes a special dividend of $0.21.

4The above dividend amounts for pounds sterling and Hong Kong dollars have been rounded.

American Depositary Shares

A holder of HSBC Holdings' American Depositary Shares ('ADSs') may

have to pay, either directly or indirectly (via the intermediary through

whom their ADSs are held) fees to the Bank of New York Mellon as

depositary.

Fees may be paid or recovered in several ways: by deduction from

amounts distributed; by selling a portion of distributable property; by

deduction from dividend distributions; by directly invoicing the holder;

or by charging the intermediaries who act for them.

Fees for the holders of the HSBC ADSs include:

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| | |
|:---|:---|
| **For:**  | **HSBC ADS holders must pay:** |
| Each issuance of HSBC ADSs, including as a result of a distribution of shares (including <br>through a stock dividend, stock split or distribution of rights or other property) <br>| $5.00 (or less) per 100 HSBC ADSs or portion thereof |
| Each cancellation of HSBC ADSs, including if the deposit agreement terminates | $5.00 (or less) per 100 HSBC ADSs or portion thereof |
| Transfer and registration of shares on our share register to/from the holder's name to/from the <br>name of The Bank of New York Mellon or its agent when the holder deposits or withdraws <br>shares<br>| Registration or transfer fees (of which there currently are none) |
| Conversion of non-US currency to US dollars | Charges and expenses incurred by The Bank of New York Mellon <br>with respect to the conversion<br>|
| Each cash distribution to HSBC ADS holders | $0.02 or less per ADS |
| Transfers of HSBC ordinary shares to the depositary in exchange for HSBC ADSs | Any applicable taxes and/or other governmental charges  |
| Distribution of securities by the depository to HSBC ADS holders  | A fee equivalent to the fee that would be payable if securities <br>distributed to you had been shares and those shares had been <br>deposited for issuance of ADSs<br>|
| Any other charges incurred by the depositary or its agents for servicing shares or other <br>securities deposited<br>| As applicable |

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The depositary may generally refuse to provide fee-attracting services

until its fees for those services are paid.

The depositary has agreed to reimburse us for expenses we incur, and

to pay certain out-of-pocket expenses and waive certain fees, in

connection with the administration, servicing and maintenance of our

ADS programme. There are limits on the amount of expenses for which

the depositary will reimburse us. During the year ended 31 December

2025, the depositary reimbursed, paid and/or waived fees and

expenses totalling $2,025,386.48 in connection with the administration,

servicing and maintenance of the programme.

Nature of trading market

HSBC Holdings ordinary shares are listed or admitted to trading on the

London Stock Exchange ('LSE'), the Hong Kong Stock Exchange

('HKSE'), the Bermuda Stock Exchange and on the New York Stock

Exchange ('NYSE') in the form of ADSs. HSBC Holdings maintains its

principal share register in England and overseas branch share registers

in Hong Kong and Bermuda (collectively, the 'share register').

As at 31 December 2025, there were a total of 159,073 holders of

record of HSBC Holdings ordinary shares on the share register.

As at 31 December 2025, approximately 15.5m HSBC Holdings

ordinary shares were registered in the HSBC Holdings' share register in

the name of 13,601 holders of record with addresses in the US. These

shares represented approximately 0.09% of the total HSBC Holdings

ordinary shares in issue.

As at 31 December 2025, there were 4,255 holders of record of ADSs

holding approximately 112.62m ADSs, representing approximately

563.1m HSBC Holdings ordinary shares, 4,188 of these holders had

addresses in the US, holding approximately 112.60m ADSs,

representing approximately 563.0m HSBC Holdings ordinary shares. As

at 31 December 2025, approximately 3.28% of the HSBC Holdings

ordinary shares were represented by ADSs held by holders of record

with addresses in the US.

Memorandum and Articles of

Association

The disclosure under the caption 'Memorandum and Articles of

Association' contained in Form 20-F for the years ended 31 December

2000, 2001, 2014, 2018 and 2022 is incorporated by reference herein.

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| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **390** |

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|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

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Differences in HSBC Holdings/New York Stock Exchange corporate

governance practices

Under the NYSE's corporate governance rules for listed companies and

the applicable rules of the SEC, as a NYSE-listed foreign private issuer,

HSBC Holdings must disclose any significant ways in which its

corporate governance practices differ from those followed by US

companies subject to NYSE listing standards. HSBC Holdings believes

the following to be the significant differences between its corporate

governance practices and NYSE corporate governance rules applicable

to US companies.

US companies listed on the NYSE are required to adopt and disclose

corporate governance guidelines. The UK Listing Rules of the FCA

require each listed company incorporated in the UK to include in its

annual report and accounts a statement of how it has applied the

principles of the UK Corporate Governance Code issued by the

Financial Reporting Council and a statement as to whether or not it has

complied with the code provisions of The UK Corporate Governance

Code throughout the accounting period covered by the annual report

and accounts. A company that has not complied with the code

provisions, or complied with only some of the code provisions or (in the

case of provisions whose requirements are of a continuing nature)

complied for only part of an accounting period covered by the report,

must specify the code provisions with which it has not complied, and

(where relevant) for which part of the reporting period such non-

compliance continued, and give reasons for any non-compliance.

During 2025, HSBC complied with the applicable code provisions of the

UK Corporate Governance Code. The UK Corporate Governance Code

does not require HSBC Holdings to disclose the full range of corporate

governance guidelines with which it complies.

Under NYSE standards, companies are required to have a nominating/

corporate governance committee composed entirely of directors

determined to be independent in accordance with the NYSE's

corporate governance rules. All of the members of the Nomination &

Corporate Governance Committee (excluding the Group Chairman)

during 2025 were independent non-executive Directors, as determined

in accordance with the UK Corporate Governance Code. The terms of

reference of our Nomination & Corporate Governance Committee,

which comply with the UK Corporate Governance Code, require that

the Committee shall be comprised of the independent non-executive

Directors of the Company and the Group Chairman. In addition to

identifying individuals qualified to become Board members, a

nominating/corporate governance committee must develop and

recommend to the Board a set of corporate governance principles.

The Nomination & Corporate Governance Committee's terms of

reference do not require it to develop and recommend corporate

governance principles for HSBC Holdings, as HSBC Holdings is subject

to the corporate governance principles of the UK Corporate Governance

Code.

The Board of Directors is responsible under its terms of reference for

the development and review of Group policies and practices on

corporate governance.

Under the NYSE standards, companies are required to have a

compensation committee composed entirely of directors determined to

be independent in accordance with the NYSE's corporate governance

rules. All of the members of the Group Remuneration Committee

during 2025 were independent non-executive Directors, as determined

in accordance with the UK Corporate Governance Code. The terms of

reference of our Group Remuneration Committee, which comply with

the UK Corporate Governance Code, require the Committee (including

the Chair) to comprise at least three members, all of whom shall be

independent non-executive Directors. A compensation committee must

review and approve corporate goals and objectives relevant to Chief

Executive Officer ('CEO') compensation and evaluate a CEO's

performance in light of these goals and objectives. The Group

Remuneration Committee's terms of reference require it to review and

approve performance-based remuneration of the executive Directors by

reference to corporate goals and objectives that are set by the Board of

Directors.

Pursuant to NYSE listing standards, non-management directors must

meet on a regular basis without management present and independent

directors must meet separately at least once per year.

The Group Chairman meets with the independent non-executive

Directors without the executive Directors in attendance after each

scheduled Board meeting and otherwise, as necessary. HSBC

Holdings' practice, in this regard, complies with the UK Corporate

Governance Code.

In accordance with the requirements of the UK Corporate Governance

Code, HSBC Holdings discloses in its Annual Report and Accounts how

the Board, its committees and the Directors are evaluated (on page

231) and provides extensive information regarding Directors'

compensation in the Directors' remuneration report (on page 249).

The terms of reference of HSBC Holdings' Group Audit, Nomination &

Corporate Governance and Group Remuneration Committees, as well

as the Group Risk and Group Technology and Operations Committees,

are available at www.hsbc.com/who-we-are/our-people/board-of-

directors/board-committees.

NYSE listing standards require US companies to adopt a code of

business conduct and ethics for directors, officers and employees, and

promptly disclose any waivers of the code for directors or executive

officers.

In 2025, the Board endorsed the Statement of Business Principles and

Code of Conduct, which, pursuant to the requirements of the Sarbanes-

Oxley Act, incorporates the Sarbanes-Oxley code of ethics (the

'Sarbanes-Oxley Principles') applicable to the Group CEO, as the

principal executive officer, and to the Group Chief Financial Officer and

Global Financial Controller. The Statement of Business Principles and

Code of Conduct remains in force and applies to the executive directors

and employees of the HSBC Group. The Statement of Business

Principles and Code of Conduct is available at www.hsbc.com/who-we-

are/purpose-values-and-strategy/our-conduct or from the Group Chief

People & Governance Officer at 8 Canada Square, London E14 5HQ.

During 2025, HSBC Holdings granted no waivers from its code of

ethics.

Under NYSE listing rules applicable to US companies, independent

directors must comprise a majority of the board of directors. Currently,

more than three-quarters of HSBC Holdings' Directors are independent.

Under the UK Corporate Governance Code, the HSBC Holdings Board

determines whether a Director is independent in character and

judgement and whether there are relationships or circumstances that

are likely to affect, or could appear to affect, the Director's judgement.

Under the NYSE rules, a director cannot qualify as independent unless

the board affirmatively determines that the director has no material

relationship with the listed company; in addition, the NYSE rules

prescribe a list of circumstances in which a director cannot be

independent. The UK Corporate Governance Code requires a

company's board to assess director independence by affirmatively

concluding that the director is independent of management and free

from any business or other relationship that could materially interfere

with the exercise of independent judgement. Lastly, a CEO of a US

company listed on the NYSE must annually certify that he or she is not

aware of any violation by the company of NYSE corporate governance

standards. In accordance with NYSE listing rules applicable to foreign

private issuers, HSBC Holdings' Group CEO is not required to provide

the NYSE with this annual compliance certification. However, in

accordance with rules applicable to both US companies and foreign

private issuers, the Group CEO is required promptly to notify the NYSE

in writing after any executive officer becomes aware of any material

non-compliance with the NYSE corporate governance standards

applicable to HSBC Holdings. HSBC Holdings is required to submit

annual and interim written affirmations of compliance with applicable

NYSE corporate governance standards, similar to the affirmations

required of NYSE-listed US companies.

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **391** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Glossary of accounting terms and US equivalents

---

| | |
|:---|:---|
| **Accounting term** | **US equivalent or brief description**  |
| Accounts | Financial Statements |
| Articles of Association | Articles of incorporation |
| Called up share capital | Shares issued and fully paid |
| Creditors | Payables |
| Debtors | Receivables |
| Deferred tax | Deferred income tax |
| Finance lease | Capital lease |
| Freehold | Ownership with absolute rights in perpetuity |
| Interests in associates and joint<br>ventures<br>| Interests in entities over which we have significant influence or joint control, which are accounted for using the equity <br>method<br>|
| Loans and advances | Loans |
| Loan capital | Long-term debt |
| Nominal value | Par value |
| One-off | Non-recurring |
| Ordinary shares | Common stock |
| Overdraft | A line of credit, contractually repayable on demand unless a fixed-term has been agreed, established through a customer's <br>current account<br>|
| Preference shares | Preferred stock |
| Premises | Property |
| Provisions | Liabilities of uncertain timing or amount |
| Share premium account | Additional paid-in capital |
| Shares in issue | Shares outstanding |
| Write-offs | Charge-offs  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **392** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

---

| | | |
|:---|:---|:---|
| Reconciliations |  |  |
| **Form 20-F Item Number and Caption** | **Location** | **Page** |
| PART1 |  |  |
| 1. Identity of Directors, Senior Management and Advisers  | Not required for Annual Report |  |
| 2. Offer statistics and Expected Timetable | Not required for Annual Report |  |
| 3. Key information |  |  |
| A. [Reserved] |  |  |
| B. Capitalisation and Indebtedness | Not required for Annual Report |  |
| C. Reasons for the Offer and use of Proceeds | Not required for Annual Report |  |
| D. Risk Factors | Risk Review - Risk factors | 126-137 |
| 4. Information on the Company |  |  |
| A. History and Development of the Company | Shareholder information | 382-395 |
|  | Strategic Report | 4-31 |
|  | ESG Review | 32-63 |
|  | Financial Review | 64-110 |
|  | Risk Review | 118-218 |
|  | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Note 16 on the Financial Statements - Financial investments | 343-344 |
|  | Note 18 on the Financial Statements - Interests in associates and joint ventures | 345-348 |
|  | Note 19 on the Financial Statements - Investments in subsidiaries | 349-351 |
| B. Business review | Strategic Report | 4-31 |
|  | Financial Review | 64-110 |
|  | Note 10 on the Financial Statements - Segmental analysis | 329-331 |
| C. Organisational Structure | Strategic Report | 4-31 |
|  | Report of the Directors: Corporate Governance Report  | 219-284 |
|  | Report of the Directors: Corporate Governance Report - Subsidiary governance | 232 |
|  | Note 18 on the Financial Statements - Interests in associates and joint ventures | 345-348 |
|  | Note 19 on the Financial Statements - Investments in subsidiaries | 349-351 |
|  | Note 38 on the Financial Statements - HSBC Holdings' subsidiaries, joint ventures <br>and associates<br>| 373-381 |
| D. Property, Plants and Equipment | Note 22 on the Financial Statements - Prepayments, accrued income and other <br>assets<br>| 355 |
| 4 A..Unresolved Staff Comments | Not Applicable |  |
| 5. Operating and Financial Review and Prospects |  |  |
| A. Operating Results | Strategic Report | 4-31 |
|  | Financial Review | 64-110 |
|  | Risk Review | 118-218 |
|  | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Note 15 on the Financial Statements - Derivatives | 339-343 |
| B. Liquidity and Capital Resources | Strategic Report | 4-31 |
|  | Financial Review - Loan maturity and interest sensitivity analysis | 84 |
|  | Risk Review - Capital and Liquidity Risk | 191-195 |
|  | Risk Review - Insurance Manufacturing Operations Risk | 215 |
|  | Note 1 on the Financial Statements - Basis of preparation and material accounting <br>policies<br>| 300-311 |
|  | Note 12 on the Financial Statements - Fair values of financial instruments carried at <br>fair value<br>| 332-337 |
|  | Note 13 on the Financial Statements - Fair values of financial instruments not carried <br>at fair value<br>| 337-339 |
|  | Note 15 on the Financial Statements - Derivatives | 339-343 |
|  | Note 30 on the Financial Statements - Maturity analysis of assets, liabilities and off-<br>balance sheet commitments<br>| 360-365 |
|  | Note 33 on the Financial Statements - Contingent liabilities, contractual commitments <br>and guarantees<br>| 368-368 |
| C. Research and Development, Patents and Licences, etc. | Not Applicable |  |
| D. Trend Information | Strategic Report | 4-31 |
|  | Financial Review | 64-110 |
|  | Risk Review | 118-218 |
| E. Critical Accounting Estimates | Not Applicable |  |
| 6. Directors, Senior Management and Employees |  |  |
| A. Directors and Senior Management | Report of the Directors: Corporate Governance Report  | 219-284 |
| B. Compensation | Report of the Directors: Corporate Governance Report - Directors' Remuneration <br>Report<br>| 249-274 |
|  | Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 |
|  | Note 36 on the Financial Statements - Related party transactions | 371-373 |
| C. Board Practices | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Report of the Directors: Corporate Governance Report - Directors' Remuneration <br>Report<br>| 249-274 |
| D. Employees | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Strategic Report | 4-31 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **393** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

---

| | | |
|:---|:---|:---|
| **Form 20-F Item Number and Caption** | **Location** | **Page** |
|  | ESG Review - Social | 51-56 |
|  | Financial Review | 64-110 |
|  | Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 |
|  | Note 36 on the Financial Statements - Related party transactions | 371-373 |
| E. Share Ownership | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Report of the Directors: Corporate Governance Report - Directors' Remuneration <br>Report<br>| 249-274 |
|  | Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 |
|  | Note 32 on the Financial Statements - Called up share capital and other equity <br>instruments<br>| 366-368 |
| F. Disclosure of a registrant's action to recover erroneously <br>awarded compensation<br>| Not Applicable |  |

---

---

| | | |
|:---|:---|:---|
| 7. Major Shareholders and Related Party Transactions  |  |  |
| A. Major Shareholders  | Report of the Directors: Corporate Governance Report | 219-284 |
|  | Shareholder Information | 389 |
| B. Related Party Transactions  | Note 36 on the Financial Statements - Related party transactions | 371-373 |
| C. Interests of Experts and Counsel | Not required for Annual Report |  |
| 8. Financial Information |  |  |
| A. Consolidated Statements and Other Financial <br>Information<br>| Financial Review | 64-110 |
|  | Financial Statements | 285-381 |
|  | Report of Independent Registered Public Accounting Firm to the Board of Directors and <br>Shareholders of HSBC Holdings plc<br>| 286-287 |
|  | Note 1 on the Financial Statements - Basis of preparation and material accounting  | 300-311 |
|  | Note 32 on the Financial Statements - Called up share capital and other equity <br>instruments<br>| 366-368 |
|  | Note 35 on the Financial Statements - Legal proceedings and regulatory matters | 369-371 |
|  | Shareholder Information | 382-395 |
| B. Significant Changes | Note 37 on the Financial Statements - Events after the Balance Sheet date | 373 |
| 9. The Offer and Listing |  |  |
| A. Offer and Listing Details  | Shareholder Information | 383-389 |
| B. Plan of Distribution  | Not required for Annual Report |  |
| C. Markets | Shareholder Information | 382-395 |
| D. Exchange Controls | Not required for Annual Report |  |
| E. Taxation | Not required for Annual Report |  |
| F. Dividends and Paying Agents | Not required for Annual Report |  |
| 10. Additional Information |  |  |
| A. Share Capital | Not required for Annual Report |  |
| B. Memorandum and Articles of Association | Shareholder Information | 382-395 |
| C. Material Contracts | Report of the Directors: Corporate Governance Report - Directors' Remuneration <br>Report<br>| 249-274 |
|  | Corporate Governance Report - Contracts of significance | 279 |
|  | Note 35 on the Financial Statements - Legal proceedings and regulatory matters | 369-371 |
| D. Exchange Controls | Shareholder Information | 382-395 |
| E. Taxation | Shareholder Information | 382-395 |
| F. Dividends and Paying Agents | Not required for Annual Report |  |
| G. Statements by Experts | Not required for Annual Report |  |
| H. Documents on Display | Shareholder Information | 382-395 |
| I. Subsidiary Information | Not applicable |  |
| J. Annual Report to Security Holders | Not applicable |  |
| 11. Quantitative and Qualitative Disclosures About Market <br>Risk<br>| Risk Review | 118-218 |
|  | Risk Review - Market risk | 200-202 |
|  | Note 15 on the Financial Statements - Derivatives | 339-343 |
|  | Note 16 on the Financial Statements - Financial investments | 343-344 |
|  | Note 30 on the Financial Statements - Maturity analysis of assets, liabilities and off-<br>balance sheet commitments<br>| 360-365 |
| 12. Description of Securities Other than Equity Securities |  |  |
| A. Debt Securities | Not required for Annual Report |  |
| B. Warrants and Rights | Not required for Annual Report |  |
| C. Other Securities | Not required for Annual Report |  |
| D. American Depository Shares | Taxation of shares and dividends | 384 |
|  | Shareholder information | 382-395 |
| PART II |  |  |
| 13. Defaults, Dividends Arrearages and Delinquencies | Not applicable |  |
| 14. Material Modifications to the Rights of Securities <br>Holders and Use of Proceeds<br>| Not applicable |  |
| 15. Controls and Procedures | Report of Independent Registered Public Accounting Firm to the Board of Directors and <br>Shareholders of HSBC Holdings plc<br>| 286-287 |
|  | Financial Review: Other Information | 111-117 |
|  | Financial Review: Other information - Management's review of internal controls over <br>financial reporting<br>| 111-117 |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **394** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

---

| | | |
|:---|:---|:---|
| **Form 20-F Item Number and Caption** | **Location** | **Page** |
| 16A. Audit Committee Financial Expert | Report of the Directors: Corporate Governance  | 219-284 |
| 16B. Code of Ethics | Shareholder Information | 382-395 |
| 16C. Principal Accountant Fees and Services | Report of the Directors: Corporate Governance | 219-284 |
|  | Note 6 on the Financial Statements - Auditors' remuneration | 325 |
| 16D. Exemptions from the Listing Standards for Audit <br>Committees<br>| Not applicable |  |
| 16E. Purchases of Equity Securities by the Issuer and <br>Affiliated Purchasers<br>| Report of the Directors: Corporate Governance | 219-284 |
| 16F. Change in Registrant's Certifying Accountant | Not applicable |  |
| 16G. Corporate Governance | Shareholder Information | 382-395 |
| 16H. Mine Safety Disclosure | Not applicable |  |
| 16I. Disclosure Regarding Foreign Jurisdictions that <br>Prevent Inspections<br>| Not applicable |  |
| 16J. Insider Trading Policies | Shareholder information | 388 |
| 16K. Cybersecurity | ESG Review - Cybersecurity | 63 |
|  | Risk Review - Top and Emerging risks | 31 |
|  | Risk review - Risk factors | 133-134 |
|  | Report of the Directors: Corporate Governance Report - Group Risk Committee | 242-243 |
| PART III |  |  |
| 17. Financial Statements | Not applicable |  |
| 18. Financial Statements | Financial Statements | 285-381 |
| 19. Exhibits (including Certifications) |  | \* |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **395** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

Abbreviations

---

| |
|:---|
| Australian dollar  |
| £British pound sterling |
| Canadian dollar |
| Euro |
| Hong Kong dollar |
| Mexican peso |
| Chinese renminbi |
| Singapore dollar |
| $United States dollar |
| First half of 2025 |
| First quarter of 2025 |
| Second quarter of 2025 |
| Third quarter of 2025 |
| Fourth quarter of 2025 |
| Asset-backed security |
| American Depositary Receipt |
| American Depositary Share |
| Annual General Meeting |
| Artificial intelligence |
| Average interest-bearing liabilities  |
| Average interest-earning assets |
| Asset and Liability Management Committee |
| Anti-money laundering |
| Annualised new business premium |
| Association of Southeast Asian Nations |
| Additional tier 1 |
| Assets under management |
| Banking net interest income |
| Basel Committee on Banking Supervision |
| 2006 Basel Capital Accord |
| Basel Committee's reforms to strengthen global capital and <br>liquidity rules<br>|
| Outstanding measures to be implemented from the Basel <br>III reforms<br>|
| Bank capital stress test |
| Base Erosion and Profit Shifting |
| Business Growth Fund, an investment firm that provides <br>growth capital for small and mid-sized businesses in the UK <br>and Ireland<br>|
| Bank of Communications Co., Limited, one of China's <br>largest banks<br>|
| Bank of England |
| Basis points. One basis point is equal to one-hundredth of a <br>percentage point<br>|
| British Virgin Islands |
| Capital asset pricing model |
| Credit default swap |
| Common equity tier 1 |
| Cash-generating units |
| Corporate and Institutional Banking, a business segment  |
| Chief Information Security Officer  |
| Commercial Banking |
| Capital maintenance charge |
| Chief Operating Decision Maker |
| 2013 Committee of Sponsoring Organizations of the <br>Treadway Commission (US)<br>|
| Corporate Centre comprises Central Treasury, our legacy <br>businesses, interests in our associates and joint ventures, <br>central stewardship costs and consolidation adjustments<br>|
| Commercial paper |
| Capital Requirements Regulation and Directive |
| Commercial real estate |
| Customer risk rating |

---

---

| | |
|:---|:---|
| CRR II¹ | The regulatory requirements of the Capital Requirements <br>Regulation and Directive, the CRR II regulation and the PRA <br>Rulebook<br>|
| CSA | Credit support annex |
| CSM | Contractual service margin |
| CVA¹ | Credit valuation adjustment |
| D |  |
| DCF | Discounted cash flow |
| DECL | Disclosures about Expected Credit Losses |
| Deferred shares | Awards of deferred shares define the number of HSBC <br>Holdings ordinary shares to which the employee will <br>become entitled, generally between one and seven years <br>from the date of the award, and normally subject to the <br>individual remaining in employment<br>|
| DPD | Days past due |
| DPF | Discretionary participation feature of insurance and <br>investment contracts<br>|
| E |  |
| EAD¹ | Exposure at default |
| EBA | European Banking Authority |
| EC | European Commission |
| ECB | European Central Bank |
| ECL | Expected credit losses. In the income statement, ECL is <br>recorded as a change in expected credit losses and other <br>credit impairment charges. In the balance sheet, ECL is <br>recorded as an allowance for financial instruments to which <br>only the impairment requirements in IFRS 9 are applied<br>|
| ECM | Equity capital markets |
| EEA | European Economic Area |
| EPC | Energy performance certificate |
| EPS | Earnings per ordinary share |
| ERG | Employee Resource Group |
| ESG | Environmental, social and governance |
| EU | European Union |
| EV | Electric vehicles |
| EVE | Economic value of equity |
| F |  |
| FCA | Financial Conduct Authority (UK) |
| FDIC | Federal Deposit Insurance Corporation |
| FPA | Fixed pay allowance |
| FRB | Federal Reserve Board (US) |
| FRC | Financial Reporting Council |
| FSCS | Financial Services Compensation Scheme |
| FTE | Full-time equivalent staff |
| FTSE | Financial Times Stock Exchange index |
| FVOCI¹ | Fair value through other comprehensive income |
| FX | Foreign exchange |
| G |  |
| GAAP | Generally accepted accounting principles |
| GAC | Group Audit Committee |
| Galicia | Grupo Financiero Galicia |
| GBM | Global Banking and Markets, a former global business |
| GDP | Gross domestic product |
| GenAI | Generative AI |
| GHG | Greenhouse Gas  |
| GPS | Global Payments Solutions, the business formerly known as <br>Global Liquidity and Cash Management<br>|
| GRC | Group Risk Committee |
| Group | HSBC Holdings together with its subsidiary undertakings |
| Group OpCo | Group Operating Committee |
| GTC | Global Technology and Operations Committee |
| GTS | Global Trade Solutions, the business formerly known as <br>Global Trade and Receivables Finance<br>|
| H |  |
| Hang Seng Bank | Hang Seng Bank Limited, one of Hong Kong's largest banks |
| Herald | Herald Fund SPC |
| HIBOR | Hong Kong interbank offered rate |
| HKEx | The Stock Exchange of Hong Kong Limited |
| HKMA | Hong Kong Monetary Authority |
| HMRC | HM Revenue and Customs |
| Holdings ALCO | HSBC Holdings Asset and Liability Management Committee |
| HKLR | Hong Kong Listing Rules  |

---

---

| |
|:---|
| **HSBC Holdings plc** Annual Report on Form 20-F |
| **396** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Strategic report | ESG review | Financial review | Risk review | Corporate <br>Governance Report<br>| Financial <br>statements<br>| **Additional** <br>**information**<br>|

---

---

| | |
|:---|:---|
| Hong Kong | Hong Kong Special Administrative Region of the People's <br>Republic of China<br>|
| HQLA | High-quality liquid assets |
| HSBC | HSBC Holdings together with its subsidiary undertakings |
| HSBC Bank plc | HSBC Bank plc, also known as the non-ring-fenced bank |
| HSBC Bank <br>USA<br>| HSBC Bank USA, N.A., HSBC's retail bank in the US |
| HSBC Canada | The sub-group, HSBC Bank Canada, HSBC Trust Company <br>Canada, HSBC Mortgage Corporation Canada and HSBC <br>Securities Canada, consolidated for liquidity purposes<br>|
| HSBC Finance | HSBC Finance Corporation, the US consumer finance <br>company (formerly Household International, Inc.)<br>|
| HSBC Holdings | HSBC Holdings plc, the parent company of HSBC |
| HSBC Private <br>Bank (Suisse)<br>| HSBC Private Bank (Suisse) SA, HSBC's private bank in <br>Switzerland<br>|
| HSBC UK | HSBC UK Bank plc, also known as the ring-fenced bank |
| HSBC USA | The sub-group, HSBC USA Inc (the holding company of <br>HSBC Bank USA) and HSBC Bank USA, consolidated for <br>liquidity purposes<br>|
| HSI | HSBC Securities (USA) Inc. |
| HSSL | HSBC Securities Services (Luxembourg) |
| I |  |
| IAS | International Accounting Standards |
| IASB | International Accounting Standards Board |
| IBE | Independent Board Evaluation |
| Ibor | Interbank offered rate |
| ICAAP | Internal capital adequacy assessment process |
| IEA | International Energy Agency |
| IFRS Accounting <br>Standards<br>| International Financial Reporting Standards as issued by the <br>International Accounting Standards Board<br>|
| ILAAP | Internal liquidity adequacy assessment process |
| IMA | Internal model approach |
| IMM | Internal model method |
| IRB¹ | Internal ratings-based |
| IRRA | Interest rate risk assessment |
| IRRBB | Interest rate risk in the banking book  |
| ISDA | International Swaps and Derivatives Association |
| ISSB | International Sustainability Standard Board |
| IWPB | International Wealth and Premier Banking, a business <br>segment<br>|
| J |  |
| JV | Joint venture |
| K |  |
| KMP | Key Management Personnel |
| L |  |
| LCR | Liquidity coverage ratio |
| LGBTQ+ | Lesbian, gay, bisexual, transgender and queer. The plus <br>sign denotes other non-mainstream groups on the <br>spectrums of sexual orientation and gender identity<br>|
| LGD¹ | Loss given default |
| Libor | London interbank offered rate |
| Long term | For our financial targets, we define long term as five to six <br>years, commencing 1 January 2026<br>|
| LTI | Long-term incentive |
| LTV¹ | Loan to value |
| M |  |
| M&A | Mergers and acquisitions |
| Mainland China | People's Republic of China excluding Hong Kong and <br>Macau<br>|
| Medium term | For our financial targets, we define medium term as three <br>to five years, commencing 1 January 2026<br>|
| MENAT | Middle East, North Africa and Türkiye |
| MREL | Minimum requirement for own funds and eligible liabilities |
| MRT¹ | Material Risk Taker |
| MRM | Model risk management  |
| MSS | Markets and Securities Services, HSBC's capital markets <br>and securities services businesses in Global Banking and <br>Markets<br>|
| N |  |
| NAV | Net asset value |
| NED | Non-executive Director |
| Net operating <br>income<br>| Net operating income before change in expected credit <br>losses and other credit impairment charges<br>|
| NGO | Non-governmental organisation |

---

---

| | |
|:---|:---|
| NII | Net interest income |
| NIM | Net interest margin |
| NNM | Net new money |
| NPS | Net promoter score |
| NSFR | Net stable funding ratio |
| NYSE | New York Stock Exchange |
| O |  |
| OCI | Other comprehensive income |
| OECD | Organisation of Economic Co-operation and Development |
| OTC¹ | Over-the-counter |
| P |  |
| PBT | Profit before tax |
| PCAF | Partnership for Carbon Accounting Financials |
| PD¹ | Probability of default |
| Performance <br>shares¹<br>| Awards of HSBC Holdings ordinary shares under employee <br>share plans that are subject to corporate performance <br>conditions<br>|
| Ping An | Ping An Insurance (Group) Company of China, Ltd, the <br>second-largest life insurer in the PRC<br>|
| POCI | Purchased or originated credit-impaired financial assets |
| PRA | Prudential Regulation Authority (UK) |
| PRC | People's Republic of China |
| Principal plan | HSBC Bank (UK) Pension Scheme |
| PwC | The member firms of the PwC network, including <br>PricewaterhouseCoopers LLP<br>|
| R |  |
| RAS | Risk appetite statement |
| RBW | Retail Banking and Wealth |
| Repo¹ | Sale and repurchase transaction |
| RES | Resource and experience sharing agreement |
| Revenue | Net operating income before ECL |
| Reverse repo | Security purchased under commitments to sell |
| RMF | Risk management framework |
| RNIV | Risk not in VaR |
| RoE | Return on average ordinary shareholders' equity |
| RoTE | Return on average tangible equity |
| RWA¹ | Risk-weighted asset |
| S |  |
| SAB | Saudi Awwal Bank |
| SAPS | Self-administered pension scheme |
| SASB | Sustainability Accounting Standards Board |
| SEC | Securities and Exchange Commission (US) |
| ServCo Group | Separately incorporated group of service companies <br>established in response to UK ring-fencing requirements<br>|
| SIC | Securities investment conduit |
| SME | Small and medium-sized enterprise |
| Solitaire | Solitaire Funding Limited, a special purpose entity managed <br>by HSBC<br>|
| SVaR | Stressed value at risk |
| SVB UK | Silicon Valley Bank UK Limited, now HSBC Innovation Bank <br>Limited<br>|
| T |  |
| TCFD¹ | Task Force on Climate-related Financial Disclosures |
| TEQ | Transition engagement questionnaire |
| TSR¹ | Total shareholder return |
| U |  |
| UAE | United Arab Emirates |
| UK | United Kingdom |
| UNGPs | UN Guiding Principles on Business and Human Rights |
| UKLR | UK Listing Rules |
| UN | United Nations |
| US | United States of America |
| V |  |
| VaR¹ | Value at risk |
| VFA | Variable fee approach |
| VIU | Value in use |
| W |  |
| WEF | World Economic Forum |

---

1A full definition is included in the glossary to the Annual Report and

Accounts 2025 which is available at www.hsbc.com/investors.

**HSBC Holdings plc**

Incorporated in England and Wales on 1 January 1959 with

limited liability under the UK Companies Act

Registration number 617987

---

| |
|:---|
| **Registered Office and Group Head Office** |
| 8 Canada Square<br>London E14 5HQ<br>United Kingdom<br>|
| Telephone: 44 020 7991 8888  |
| Facsimile: 44 020 7992 4880 |
| Web: www.hsbc.com |

---

---

| |
|:---|
| **Corporate Brokers** |
| Morgan Stanley & Co. International plc |
| 25 Cabot Square |
| London E14 4QA |
| United Kingdom |
| Bank of America Securities |
| 2 King Edward Street |
| London EC1A 1HQ |
| United Kingdom |

---

© Copyright HSBC Holdings plc 2026

All rights reserved

No part of this publication may be reproduced, stored in a retrieval

system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior

written permission of HSBC Holdings plc

Published by Global Finance, HSBC Holdings plc, London

Designed by Global Finance, HSBC Holdings plc with Design Bridge

and Partners, London

Printed by Park Communications Limited, London, on Nautilus

SuperWhite board and paper using vegetable oil-based inks. Made in

Austria, the stocks comprise 100% de-inked post-consumer waste.

Pulps used are totally chlorine-free.

The FSC® recycled logo identifies a paper that contains 100% post-

consumer recycled fibre certified in accordance with the rules of the

Forest Stewardship Council®.

![fscrecycledladscpeblack.jpg](hsbc-20251231_g141.jpg)

Item 19. Exhibits

Documents filed as exhibits to this annual report on Form 20-F:

**Exhibit NumberDescription**

1.1<u>[Memorandum and Articles of Association of HSBC Holdings plc (incorporated by reference to Exhibit 1.1 to HSBC Holding plc's Form](https://www.sec.gov/Archives/edgar/data/1089113/000108911323000006/a11memo_assoc.htm)</u>

<u>[20-F filed with the SEC on February 22, 2023).](https://www.sec.gov/Archives/edgar/data/1089113/000108911323000006/a11memo_assoc.htm)</u>

2.1<u>[Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934.](a21_securities.htm)</u>

4.1<u>[Undertaking by HSBC Holdings plc to the Financial Services Authority (incorporated by reference to Exhibit 99.3 to HSBC Holdings plc's](https://www.sec.gov/Archives/edgar/data/1089113/000119312512499974/d451985dex993.htm)</u>

<u>[Form 6-K filed with the Securities and Exchange Commission on December 12, 2012), as replaced by the Direction by the Financial Conduct](https://www.sec.gov/Archives/edgar/data/1089113/000119312512499974/d451985dex993.htm)</u>

<u>[Authority to HSBC Holdings plc (incorporated by reference to HSBC Holdings plc's Form 6-K filed with the Securities and Exchange Commission on](https://www.sec.gov/Archives/edgar/data/1089113/000119312512499974/d451985dex993.htm)</u>

<u>[April 12, 2013), as further replaced by the Direction by the Financial Conduct Authority to HSBC Holdings plc dated July 7, 2020.](https://www.sec.gov/Archives/edgar/data/1089113/000119312512499974/d451985dex993.htm)</u>

4.2<u>[Amendment dated January 16, 2024 to Paragraph 5 of the Annex to the Direction by the Financial Conduct Authority to HSBC Holdings](https://www.sec.gov/Archives/edgar/data/1089113/000108911324000004/a42_fcapara5.htm)</u>

<u>[plc dated July 7, 2020 (incorporated by reference to Exhibit 4.2 to HSBC Holdings plc's Form 20-F filed with the SEC on February 22, 2024).](https://www.sec.gov/Archives/edgar/data/1089113/000108911324000004/a42_fcapara5.htm)</u>

4.3<u>[Service Agreement dated July 16, 2024 between HSBC Group Management Services Limited and Georges Elhedery (incorporated by](https://www.sec.gov/Archives/edgar/data/1089113/000108911325000040/a43_gehxservxag.htm)</u>

<u>[reference to Exhibit 4.3 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange Commission on February 20, 2025).](https://www.sec.gov/Archives/edgar/data/1089113/000108911325000040/a43_gehxservxag.htm)</u>

4.4<u>[Service Agreement dated October 21, 2024 between HSBC Group Management Services Limited and Manveen (Pam) Kaur](https://www.sec.gov/Archives/edgar/data/1089113/000108911325000040/a44_mkaurxservxag.htm)</u>

<u>[(incorporated by reference to Exhibit 4.4 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange Commission on February 20,](https://www.sec.gov/Archives/edgar/data/1089113/000108911325000040/a44_mkaurxservxag.htm)</u>

<u>[2025).](https://www.sec.gov/Archives/edgar/data/1089113/000108911325000040/a44_mkaurxservxag.htm)</u>

4.5<u>[Engagement Letter dated December 3, 2025 and executed on February 18, 2026 between HSBC Holdings plc and Brendan Nelson.](a45_engagementletter.htm)</u>

8.1 Subsidiaries of HSBC Holdings plc (set forth in Note 38 to the consolidated financial statements included in this annual report on Form

20-F).

11.1 <u>[HSBC Holdings plc Insider Trading Policies and Procedures.](a111_insiderxtrading.htm)</u>

12.1 <u>[Certificate of HSBC Holdings plc's Group Chief Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](a121_sox302.htm)</u>

12.2 <u>[Certificate of HSBC Holdings plc's Group Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](a122_sox302.htm)</u>.

13.1 <u>[Annual Certification of HSBC Holdings plc's Group Chief Executive and Group Chief Financial Officer pursuant to Section 906 of the](a131_sox906.htm)</u>

<u>[Sarbanes-Oxley Act of 2002.](a131_sox906.htm)</u>

15.1 <u>[Consent of PricewaterhouseCoopers LLP.](a151_pwcxconsent.htm)</u>

15.2 <u>[Pages of HSBC Holdings plc's 2000 Form 20-F/A dated February 26, 2001 relating to the Memorandum and Articles of Association of](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-2.htm)</u>

<u>[HSBC Holdings plc (incorporated by reference to Exhibit 14.2 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-2.htm)</u>

<u>[Commission on March 20, 2006).](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-2.htm)</u>

15.3<u>[Page of HSBC Holdings plc's 2001 Form 20-F dated March 13, 2002 relating to the Memorandum and Articles of Association of HSBC](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-3.htm)</u>

<u>[Holdings plc (incorporated by reference to Exhibit 14.3 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange Commission on](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-3.htm)</u>

<u>[March 20, 2006).](https://www.sec.gov/Archives/edgar/data/1089113/000102123106000157/b822899ex14-3.htm)</u>

15.4 <u>[Page of HSBC Holdings plc's 2018 Form 20-F dated February 20, 2019 relating to the Memorandum and Articles of Association of](https://www.sec.gov/Archives/edgar/data/1089113/000162828020001784/a154memart.htm)</u>

<u>[HSBC Holdings plc (incorporated by reference to Exhibit 15.4 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange](https://www.sec.gov/Archives/edgar/data/1089113/000162828020001784/a154memart.htm)</u>

<u>[Commission on February 19, 2020).](https://www.sec.gov/Archives/edgar/data/1089113/000162828020001784/a154memart.htm)</u>

15.5 <u>[Page of HSBC Holdings plc's 2022 Form 20-F dated February 22, 2023 relating to the Memorandum and Articles of Association of](https://www.sec.gov/Archives/edgar/data/1089113/000108911324000004/a155_memo.htm)</u>

<u>[HSBC Holdings plc (incorporated by reference to Exhibit 15.5 to HSBC Holdings plc's Form 20-F filed with the Securities and Exchange](https://www.sec.gov/Archives/edgar/data/1089113/000108911324000004/a155_memo.htm)</u>

<u>[Commission on February 22, 2024).](https://www.sec.gov/Archives/edgar/data/1089113/000108911324000004/a155_memo.htm)</u>

15.6 <u>[Consent of Willis Towers Watson Limited.](a156_actuary.htm)</u>

97 <u>[HSBC Holdings plc Policy for the Recovery of Erroneously Awarded Compensation.](a97_recoverycomp.htm)</u>

SIGNATURES

The registrant hereby certiﬁes that it meets all of the requirements for ﬁling on Form 20-F and that it has duly caused and authorized the

undersigned to sign this annual report on its behalf.

---

| | |
|:---|:---|
| HSBC Holdings plc | HSBC Holdings plc |
| By: | /s/ Manveen (Pam) Kaur |
| Name: | Manveen (Pam) Kaur |
| Title: | Group Chief Financial Officer |

---

Date: February 26, 2026

## Exhibit 2.1

![](a21_securities001.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT This Description of Securities is being provided for informational and reference purposes only and is not intended to be, and must not be, taken as the basis for any investment decision. This Description of Securities does not constitute an offer to sell or a solicitation of an offer to buy any securities. As of December 31, 2025, HSBC Holdings plc ("Holdings," the "Company," "we," "us," and "our") had four classes of securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Act"): Ordinary Shares; American Depositary Shares; Senior Debt Securities; and Subordinated Debt Securities. A. Description of Ordinary Shares This summary of the general terms and provisions of our ordinary shares (as defined below) does not purport to be complete and is subject to and qualified in its entirety by reference to our Articles of Association (the "Articles"), which are incorporated herein by reference to Exhibit 1.1 of our annual report on Form 20-F for the year ended December 31, 2025. As of December 31, 2025, Holdings had ordinary shares in issue (the "Ordinary Shares") which are governed by the laws of England and Wales. As at December 31, 2025, there were 17,175,239,862 Ordinary Shares in issue, each having a nominal value of $0.50 per share. Our Ordinary Shares are admitted to trading on (i) the New York Stock Exchange (in connection with the registration of American Depositary Shares) under the symbol "HSBC", (ii) the London Stock Exchange under the trading symbol "HSBA", (iii) the Hong Kong Stock Exchange under the trading symbol "5" and (iv) the Bermuda Stock Exchange under the trading symbol "HSBC.BH". The holders of Ordinary Shares have statutory pre-emption rights under the UK Companies Act 2006 (the "Companies Act") on the issuance of new Ordinary Shares or rights to subscribe for, or to convert into, Ordinary Shares. Under the Companies Act, such pre-emption rights may be dis- applied by a special resolution of the shareholders of Holdings. It is market practice in the UK for listed companies to dis-apply pre-emption rights up to an amount that is recommended by investor bodies from time to time and Holdings follows this practice. The shareholders of Holdings passed an ordinary resolution on May 2, 2025, to give directors of Holdings the authority to increase our share capital by the allotment of up to 11,869,935,002 new Ordinary Shares. In addition, shareholders gave the directors of Holdings authority to grant rights to subscribe for, or to convert any security into, no more than 3,560,980,500 new Ordinary Shares in relation to any issue of contingent convertible securities that automatically convert into or are exchanged for Ordinary Shares of Holdings in prescribed circumstances. The authorizations granted by the shareholders expire on the earlier of the end of Holdings' Annual General Meeting to be held in 2026 and the close of business on June 30, 2026, unless otherwise renewed or passed pursuant to a separate resolution. The shareholders of Holdings passed a special resolution on May 2, 2025 to effect a reduction of Holding's share premium account and capital redemption reserve in order to create additional distributable reserves. On June 24, 2025, the High Court of England and Wales confirmed the cancellation of US$14,809,888,249 standing to the credit of Holding's share premium account and US$1,755,360,094 standing to the credit of Holding's capital redemption reserve. The Ordinary Shares rank pari passu in all respects. Fully paid Ordinary Shares confer identical rights in respect of capital, dividends (save where and to the extent that any such Ordinary Share is issued on terms providing that it will rank for dividend as from a particular date), voting and otherwise. Our Articles contain provisions to the following effect: Form and Transfers

------

![](a21_securities002.jpg)

Ordinary Shares may be held in either certificated or uncertificated form. Ordinary Shares may be transferred in writing in any usual or other form approved by the Board and executed by or on behalf of the transferor and the transferee. Transfers of uncertificated Ordinary Shares must be made in accordance with the Companies Act and the UK Uncertificated Securities Regulations 2001, as amended (the "Regulations"). The Board may refuse to register any transfer of Ordinary Shares unless: (a) it is in respect of a share which is fully paid up; (b) it is in respect of a share on which we have no lien; (c) it is in respect of only one class of shares of a particular series; (d) it is in favour of a single transferee or not more than four joint transferees; (e) it is duly stamped (if so required); and (f) it is delivered for registration at the prescribed place and accompanied by the relevant share certificate(s) and with such other evidence as reasonably required by the Board to evidence right to transfer (except in the case of a transfer by a recognised person where a certificate has not been issued or in the case of an uncertificated share). The Board may refuse to register a transfer of uncertificated shares in such other circumstances as may be permitted or required by the Regulations and the relevant clearing system. Dividends Subject to the provisions of the Articles and the Companies Act, Holdings may declare dividends or other distributions in respect of a share on the Ordinary Shares by ordinary resolution. Such dividends may not exceed the amount recommended by the Board. The Board may also pay or declare and pay interim dividends (including any dividend payable at a fixed rate) if it appears to the Board to be justified by the profits of Holdings available for distribution. All dividends unclaimed for 12 months after having become payable may be invested or otherwise made use of by the Board for the benefit of Holdings until claimed. If a dividend is not claimed after 12 years of becoming payable (if the Board so resolves), or if Holdings exercises its power of sale in respect of a share of an untraced member, such unclaimed dividend or any dividend or other sum payable in respect of that share outstanding at the time of the exercise of the power of sale is forfeited and reverts to us. No dividend or other moneys payable by us or in respect of an Ordinary Share will bear interest (unless otherwise provided for in the rights attached to the share). Holdings has in place a Scrip Dividend mandate. The Scrip Dividend mandate must be approved by the shareholders of Holdings every three years. The Board has discretion in relation to any dividend which is approved as to whether to offer the eligible shareholders of Ordinary Shares the right to receive Ordinary Shares instead of a cash dividend pursuant to the Scrip Dividend mandate in respect of that dividend. Voting Every member who is present in person or by proxy or represented at any general meeting of Holdings, and who is entitled to vote, has one vote on a show of hands (or, in the case of a general meeting held partly by means of an electronic facility, one vote cast by such electronic means as the Board deems appropriate). On a poll, every member who is present or represented and who is entitled to vote has one vote for every share held. In the case of joint holders, only the vote of the senior holder (as determined by order in the share register) or their proxy may be counted. Every proxy present has one vote, except that the proxy will have one vote for and one vote against a resolution if he or she has been instructed to vote for and against the resolution by different members or in one direction by a member while another member has permitted the proxy discretion as to how to vote (and the proxy chooses to vote in the other direction). Every proxy who has been appointed by one or more members shall, on a poll, have one vote for each share in respect of which the proxy has been appointed. No member will, unless the Board otherwise determines, be entitled to vote at a general meeting or at any separate meeting of the holders, either in person or by proxy, in respect of any Ordinary Share held by them or to exercise any right as a member unless all calls or other sums presently payable by them in respect of that Ordinary Share in the Company have been paid. Where

------

![](a21_securities003.jpg)

any member is, under the rules governing the listing of securities on any stock exchange on which all or any shares of the Company are for the time being listed or traded, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such member in contravention of such requirement or restriction will not be counted. Holdings will send out written notice at least 21 clear days before an annual general meeting and at least 14 clear days before all other general meetings or such longer period as may be required by law from time to time. For general meetings to be valid, at least three shareholders entitled to vote must be present in person or by proxy. The Board shall determine in relation to each general meeting the means of attendance at and participation in the meeting, including whether the persons entitled to attend and participate in the general meeting shall be enabled to do so partly by simultaneous attendance and participation at a physical place anywhere in the world determined by it, and partly by means of an electronic facility or facilities determined by it in accordance with the Articles of Association. The shareholders present in person or by proxy at the satellite meeting places or through an electronic facility will be counted in the quorum for the general meeting. The satellite meeting places and electronic facilities offered by the Board must enable shareholders to participate in the business for which the meeting has been convened. Shareholders must be able to hear all persons who speak at the meeting and be heard by all other persons attending and participating in the meeting if they wish to speak themselves. If any member, or any other person appearing to be interested in any of our shares held by that member, is served with a notice under Section 793 of the Companies Act (a "Section 793 Notice") and does not supply us with the information required in the notice in respect of such shares (the "Default Shares", which includes shares issued after the date of such Section 793 Notice in respect of those shares), then (unless the Board otherwise decides, and subject to applicable law) the following sanctions will apply: (a) that member will not be entitled, in respect of such Default Shares, to attend or vote at any meeting of Holdings or on any poll, or to exercise any other right conferred by their membership in relation to any such meeting or poll, and (b) if the Default Shares represent 0.25% or more of the issued shares of their class (excluding any shares of that class held as treasury shares), (i) dividends or other monies payable on those Default Shares will be withheld by us (with no obligation to pay interest) and the member will not be entitled to elect to receive shares instead of that dividend and (ii) no transfer of those Default Shares will be registered (other than certain specified "excepted transfers" under the Articles) unless the member themselves is not in default as regards supplying the information required and the member proves to the satisfaction of the Board that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer. These sanctions cease to have effect (a) if the Default Shares are transferred by means of an "excepted transfer" (but only in respect of the shares transferred) or (b) at the end of the period of one week (or such shorter period as the Board may determine) following receipt by Holdings of the information required by the Section 793 Notice and the Board being fully satisfied that such information is full and complete. All of the directors will retire from office at each annual general meeting and be eligible for re-election and a director who is re-elected at the annual general meeting will be treated as continuing in office without a break. Otherwise, we may at any general meeting by ordinary resolution fill a vacancy of a director who retires by re-appointing the retiring director or some other person who is eligible for appointment and willing to act as a director. If we do not do so, the retiring director will, if willing, be deemed to have been re-appointed unless it is expressly resolved not to fill the vacancy or a resolution for the re-appointment of the director is put to the meeting and lost. If any resolution for the appointment or re-appointment of a director is put to the annual general meeting and is lost and, at the end of that meeting, the number of directors is fewer than the minimum required under the Articles, all retiring directors who stood for re-appointment at that meeting shall be deemed to have been re-appointed and shall remain in office, except that such retiring directors may only act for the purposes of filling vacancies and convening general meetings of Holdings and may only perform limited duties and shall convene a general meeting as soon as

------

![](a21_securities004.jpg)

reasonably practical and shall retire from office at that meeting if the number of directors appointed or ratified by Holdings at that meeting meets the minimum number of directors required by the Articles. Redemption and Repurchase Subject to applicable legislation and the rights of the other shareholders, any Ordinary Share may be issued on terms that it is, at our option or the option of the holder of such share, redeemable. The directors are authorized to determine the terms, conditions and manner of redemption of any such Ordinary Shares under the Articles. If agreed by a special resolution of our shareholders, we may repurchase Ordinary Shares upon such terms as the Board determines. Calls on Capital Subject to the terms of allotment of the Ordinary Shares, the Board may make calls upon the members in respect of any monies unpaid on such shares (whether in respect of nominal value or premium) and not payable on a date fixed by or in accordance with the terms of issue. A person upon whom a call is made remains liable even if the shares in respect of which the call is made have subsequently been transferred. Interest will be chargeable on any unpaid amount called at a rate determined by the Board (of not more than 15% per annum), and the person from whom it is due and payable will pay all costs, charges and expenses that we may have incurred by reason of such non- payment. Unless the Board otherwise determines, no member is entitled to receive any dividend, to be present and vote at any general meeting either personally or (save as proxy for another member) by proxy, to be reckoned in a quorum or to exercise any other privilege as a member unless and until they have paid all calls due and payable on their shares, together with interest and expenses (if any) payable to us by such member. If a member fails to pay any call in full (following notice from the Board that such failure will result in forfeiture of the relevant shares), such shares (including any dividends declared (or other moneys payable) but not paid) may be forfeited by a resolution of the Board and will become the property of Holdings. A member whose shares have been forfeited will cease to be a member in respect of them. Forfeiture will not absolve a previous member for amounts payable by them (which may continue to accrue interest). Holdings also has a lien over all of our partly paid shares to the extent permitted by the Companies Act. If any monies which are the subject of the lien remain unpaid after a notice from the Board demanding payment, we may sell such shares. Other Shareholder Rights The Ordinary Shares carry no rights to share in Holdings' profits or to share in any surplus in the event of liquidation other than as provided by applicable law. Our Articles do not provide for any sinking fund provisions. The provisions of our Articles do not discriminate against any existing or prospective holder of Ordinary Shares as a result of such shareholder owning a substantial number of shares. Variation of Rights The rights attached to our Ordinary Shares may be varied or abrogated either with the consent in writing of the holders of at least 75% in nominal value of the issued Ordinary Shares (excluding any Ordinary Shares held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of Ordinary Shares. The rights attached to the Ordinary Shares may also be varied or abrogated by a special resolution of Holdings without the separate consent or sanction of the holders of any of the Ordinary Shares; provided that the rights attached to all the Ordinary Shares are thereby varied or abrogated in like manner and to like extent, and, accordingly, neither the passing nor the implementation of any such resolution constitutes a variation or abrogation of any of the rights attached to any of the Ordinary Shares.

------

![](a21_securities005.jpg)

The rights or privileges attached to the Ordinary Shares will be deemed to be varied or abrogated by the reduction of the capital paid up on such Ordinary Shares but will not be deemed to be varied or abrogated by the creation or issue of any new shares ranking in priority to or pari passu in all respects (save as to the date from which such new shares will rank for dividend) with or subsequent to those Ordinary Shares already issued, or by the purchase or redemption by Holdings of our own shares or the sale of any shares held as treasury shares in accordance with the provisions of the Companies Act and the Articles. Limitations on Share Ownership There are no limitations on the rights of shareholders to own Ordinary Shares. In addition, there are no restrictions imposed by the Articles or (subject to the effect of any economic sanctions that may be in force from time to time) by current UK laws which relate to non-residents or foreign shareholders and which limit the rights of such non-residents or foreign shareholders to hold or (when entitled to do so) exercise voting rights on the Ordinary Shares. The rights of any holder of Ordinary Shares to vote may, however, be restricted in certain circumstances as described above. B. Description of American Depositary Shares This summary of the general terms and provisions of the American Depositary Shares ("ADSs") representing our Ordinary Shares does not purport to be complete and is subject to and qualified in its entirety by our Form F-6 filed on Aug. 17, 2010 (Commission file No. 333-168882), which are incorporated by reference, including the exhibits thereto. In the following description, a "Holder" is the person registered with the Depositary (as defined below). A "Beneficial Owner," with respect to a Receipt, means any person who has a beneficial interest in the ADSs evidenced by such Receipt. "Receipts" means American depositary receipts evidencing ADSs. General ADSs are issuable pursuant to an amended and restated deposit agreement dated March 22, 2001, as amended and restated on March 27, 2001 and March 28, 2003, among Holdings, The Bank of New York, as depositary (the "Depositary"), and the Holders and Beneficial Owners from time to time of Receipts issued thereunder (the "Deposit Agreement"). The corporate trust office of the Depositary is 240 Greenwich Street, New York, New York 10286. Each ADS represents the right to receive five Ordinary Shares of Holdings. A Receipt may evidence any number of the related ADSs. Voting Upon receipt by the Depositary of notice of any meeting or solicitation of consents or proxies of holders of Deposited Securities, if requested by Holdings, the Depositary will, as soon as practicable thereafter, mail the information in such notice to the Holders along with instructions for the voting of their respective ADSs. "Deposited Securities" as of any time means Ordinary Shares at such time deposited or deemed to be deposited under the applicable Deposit Agreement and any and all other securities, property and cash received by the Depositary or the custodian in respect or in lieu of such Ordinary Shares deposited or deemed to be deposited and at such time held under such Deposit Agreement. Upon the written request of a Holder, the Depositary will endeavour, insofar as practical, to vote or cause to be voted the amount of Deposited Securities represented by such Holder's Receipts in accordance with the Holder's instructions. The Depositary will not vote the Deposited Securities except in accordance with such instructions. Holders will not be entitled to vote Deposited Securities directly. Collecting and Distributing Dividends

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The Depositary will distribute all cash dividends or other cash distributions that are received by it or the custodian in respect of Deposited Securities to Holders in proportion to their holdings of ADSs (after payment of any charges and fees provided for in the Deposit Agreement), provided that at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into United States Dollars transferable to the United States. In the event that any of the Deposited Securities are not entitled, by reason of their dates of issuance or otherwise, to receive the full amount of such cash dividend or distribution, the Depositary will make appropriate adjustments in the amounts distributed to the Holders of the Receipts issued in respect of such Deposited Securities. The cash amount distributed will be reduced by any amounts that Holdings or the Depositary must withhold on account of taxes. If Holdings makes a non-cash distribution in respect of any Deposited Securities, the Depositary will distribute the property it receives to Holders (after deduction or upon payment of any taxes, charges and fees provided for in the Deposit Agreement) in proportion to their holdings of ADSs in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution. However, if in the opinion of the Depositary such distribution cannot be made among the Holders entitled thereto in proportion to the number of ADSs held by each of them or if for any other reason the Depositary deems such distribution not to be lawful or feasible, the Depositary may adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property received, or any part thereof. The net proceeds of any such sale (after deduction or upon payment of any taxes, charges and fees provided for in the Deposit Agreement) will be distributed to the Holders entitled thereto as in the case of a distribution received in cash (described above). If a distribution by Holdings in respect of Deposited Securities consists of a dividend in, or free distribution of, Ordinary Shares, the Depositary may (and will, if Holdings requests) distribute to Holders, in proportion to their holdings of ADSs, additional Receipts evidencing an aggregate number of ADSs representing the amount of Ordinary Shares received as such dividend or free distribution (after deduction or withholding of any tax or other governmental charge and the payment of the fees, expenses and charges of the Depositary provided for in the Deposit Agreement). If the Depositary does not distribute additional Receipts, each ADS will from then forward also represent its proportionate interest in the additional Ordinary Shares distributed in respect of the Deposited Securities. In lieu of delivering Receipts for fractional ADSs, the Depositary may, in its discretion, sell the amount of Ordinary Shares represented by the aggregate of such fractions at a public or private sale and distribute the net proceeds of any such sale. In the event that the Depositary determines that any distribution in property (including Ordinary Shares and rights to subscribe therefor) is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the Depositary may, by public or private sale, dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay any such taxes or charges, and the Depositary will distribute the net proceeds of any such sale to the Holders entitled thereto in proportion to the number of ADSs held by them. Procedures for Transmitting Notices, Reports and Proxy Soliciting Material In addition to the procedures for transmitting notices discussed above under "Voting," the Depositary will make available for inspection by Holders, at its corporate trust office, any notices, reports and communications, including any proxy soliciting material, received from Holdings which may be (i) received by the Depositary or the custodian or the nominee of either of them as the holder of the Deposited Securities and (ii) made generally available by Holdings to the holders of such Deposited Securities. If requested in writing by Holdings, the Depositary will arrange for the mailing to all Holders of such notices, reports and communications made generally available by Holdings to holders of its Deposited Securities or will otherwise make such notices, reports and other communications available to all Holders on a basis similar to that for holders of Deposited Securities

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or on such other basis as Holdings may advise the Depositary is required or as the Depositary may be required by any applicable law or regulation. Sale or Exercising of Rights If Holdings offers to Holders rights to subscribe for additional Ordinary Shares or any other rights of any nature, the Depositary will have discretion as to the procedure for making such rights available to Holders or of disposing of such rights and making the net proceeds available to any Holders in accordance with the procedures for distributing cash described above, or, if by the terms of such rights offering or for any other reason it would not be lawful or feasible for the Depositary either to make such rights available to any Holders or to dispose of such rights and make the net proceeds available to such Holders, then the Depositary will allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that it is lawful and feasible to make such rights available to all or certain Holders but not to other Holders, the Depositary will distribute to any Holder to whom it determines the distribution to be lawful and feasible, in proportion to the number of ADSs held by such Holder, warrants or other instruments therefor in such form as it deems appropriate. If the Depositary has distributed rights to all or certain Holders, then upon the instruction of such Holders (and payment of any applicable purchase price, fees, expenses and charges), the Depositary will exercise such rights to purchase Ordinary Shares on behalf of such Holders. Ordinary Shares purchased by the Depositary will be deposited and Receipts will be delivered to such Holders. If the Depositary determines in its discretion that it is not lawful or feasible to make such rights available to all or certain Holders, it may sell the rights, warrants or other instruments in proportion to the number of ADSs held by the Holders to whom it has determined it may not lawfully or feasibly make such rights available, allocate the net proceeds of such sales (net of the fees, expenses and charges of the Depositary and all taxes and other governmental charges payable in connection with such rights) for the account of such Holders otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such Holders on account of exchange restrictions or the date of delivery of any Receipt or otherwise. The Depositary will not offer rights to Holders unless it has received from Holdings evidence to the effect that (i) a registration statement under the Securities Act covering such offering is in effect or (ii) such offering does not require registration under the Securities Act. If a Holder requests the distribution of warrants or other instruments, notwithstanding that there has been no registration under the Securities Act, the Depositary will not effect such distribution unless it has received an opinion from recognized counsel in the United States for Holdings satisfactory to the Depositary upon which the Depositary may rely that such distribution to such Holder is exempt from such registration. The Depositary will not be responsible for any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holder in particular. Deposit or Sale of Securities Resulting from Dividends, Splits or Plans of Reorganization If Holdings makes a non-cash distribution in respect of any Deposited Securities, the Depositary may dispose of all or part of property, including by public or private sale, in the circumstances described under "Collecting and Distributing Dividends" above. In circumstances where the provisions of the Deposit Agreement governing distributions of Ordinary Shares do not apply, upon any change in par or nominal value, sub-division, consolidation, or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger, amalgamation or consolidation, or sale of assets affecting Holdings or to which it is a party, the Depositary may in its discretion, and in such manner as the Depositary may deem equitable, treat any securities which are received by the Depositary or a custodian in exchange for or in conversion of or in respect of Deposited Securities as new Deposited Securities under the Deposit Agreement, and

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Receipts then outstanding will thenceforth represent the new Deposited Securities so received in exchange for or on conversion of or in respect of Deposited Securities, unless additional or new Receipts are delivered pursuant to the following sentence. In any such case, the Depositary may, and will at Holdings' request, execute and deliver additional Receipts as in the case of a dividend in Ordinary Shares, or may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such new Deposited Securities. Amendment and Termination of the Deposit Agreement The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between Holdings and the Depositary in any respect which they may deem necessary or desirable. Any amendment which will impose or have the effect of increasing any fees or charges payable by the Holders (other than taxes or other governmental charges, registration fees and cable, telex or facsimile transmission and delivery expenses and the fees of the Depositary for the execution and delivery or cancellation of Receipts), or which will otherwise prejudice any substantial existing right of Holders, will not become effective as to outstanding Receipts until the expiration of thirty days after notice of such amendment will have been given to the Holders. Every Holder of an outstanding Receipt at the time any such amendment so becomes effective will be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event will any amendment impair the right of the Holder of any Receipt to surrender such Receipt and receive therefor the Deposited Securities represented thereby except in order to comply with mandatory provisions of applicable law. The Depositary at any time, at the direction of Holdings, will terminate the Deposit Agreement by mailing notice of such termination to the Holders of all Receipts then Outstanding at least ninety days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement by mailing notice of such termination to Holdings and the Holders of all Receipts then outstanding, if at any time ninety days have expired after the Depositary has delivered to Holdings a written notice of its election to resign and a successor depositary has not been appointed and accepted its appointment as provided in the Deposit Agreement. On and after the date of termination, the Holder of a Receipt will, upon (a) surrender of such Receipt at the corporate trust office of the Depositary, (b) payment of the fee of the Depositary for the surrender of Receipts specified in the Deposit Agreement and (c) payment of any applicable taxes or other governmental charges, be entitled to delivery to him or her, or upon his or her order, of the amount of Deposited Securities represented by the ADSs evidenced by such Receipt. If any Receipts remain outstanding after the date of termination, the Depositary will discontinue the registration of transfers of Receipts, suspend the distribution of dividends to the Holders thereof, and will not give any further notices or perform any further acts under the Deposit Agreement, except that the Depositary will continue to collect dividends and other distributions pertaining to Deposited Securities, sell rights as provided in the Deposit Agreement and continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts surrendered to the Depositary (without liability for interest and after deducting, in each case, the fee of the Depositary for the surrender of a Receipt, any expenses for the account of the Holder of such Receipt in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or other governmental charges). At any time after the expiration of one year from the date of termination, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested and without liability for interest the net proceeds of any such sale, together with any other cash then held by it thereunder, unsegregated and without liability for interest, for the pro rata benefit of the Holders of Receipts which have not been surrendered, such Holders thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary will be discharged from all obligations under the Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of a Receipt, any expenses for the account of the Holder of such Receipt in accordance with

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the terms and conditions of the Deposit Agreement and any applicable taxes or other governmental charges). Rights of Holders to Inspect the Transfer Books of the Depositary and the List of Holders The Depositary will keep at its corporate trust office a book or books for the transfer and registration of Receipts which at all reasonable times will be open for inspection by Holders. Such inspection may not be for the purpose of communicating with Holders in the interest of a business or object other than the business of Holdings or a matter related to the Deposit Agreement or the Receipts. Restrictions on the Right to Transfer or Withdraw the Underlying Securities As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any Receipt, the delivery of any distribution thereon, or withdrawal of any Deposited Securities, the Depositary, Holdings, the custodian or registrar may require (a) payment from the depositor of the Deposited Securities or the presenter of the Receipt of a sum sufficient to reimburse it for any applicable tax or other governmental charge and any stock transfer or registration fees in respect of Receipts or registration of transfers of Deposited Securities upon any applicable register and any applicable fees as may be provided in the Deposit Agreement or otherwise; (b) the production of proof satisfactory to it as to the identity and genuineness of any signature and as to any other matter specified in the Deposit Agreement; (c) compliance with the provisions of our Articles and resolutions and regulations of the Board adopted pursuant to our Articles; and (d) compliance with such reasonable regulations as the Depositary and Holdings may establish consistent with the provisions of the Deposit Agreement. The delivery of Receipts against deposits of the Deposited Securities generally or against deposits of particular Deposited Securities may be suspended, or the transfer of Receipts in particular instances may be refused, or the registration of transfer of outstanding Receipts, or the combination or split-up of Receipts, generally may be suspended, during any period when the transfer books of the Depositary or any register for Deposited Securities are closed, or if any such action is deemed necessary or advisable by the Depositary or Holdings at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of the Deposit Agreement or for any other reason. Notwithstanding any other provision of the Deposit Agreement, the surrender of outstanding Receipts and withdrawal of Deposited Securities may be suspended only for (i) temporary delays caused by closing the transfer books of the Depositary or Holdings or the deposit of Ordinary Shares in connection with voting at a shareholders' meeting, or the payment of dividends, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the Receipts or to the withdrawal of the Deposited Securities, or (iv) any other reason that may at any time be specified in paragraph I(A)(1) of the General Instructions to Form F-6, as from time to time in effect, or any successor provision thereto. The Depositary may not knowingly accept for deposit under the Deposit Agreement any Ordinary Shares which are required to be registered under the Securities Act, unless a registration statement is in effect as to such Ordinary Shares. Limitations on the Depositary's Liability The Depositary will not incur any liability to any Holder or Beneficial Owners, if by reason of any provision of any present or future law or regulation of the United States of America, any state thereof, the United Kingdom or of any other country, or of any other action of any governmental or regulatory authority of the United States, the United Kingdom, or any other country or of any stock exchange, or by reason of any provision, present or future, of our Articles, or by reason of any act of God or war or other circumstances beyond its control, the Depositary is delayed in, prevented or forbidden from or subjected to any civil or criminal penalty on account of doing or performing any act or thing which by the terms of the Deposit Agreement it is provided will be done or performed; nor

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will the Depositary incur any liability to any Holder or Beneficial Owner by reason of any non- performance or delay, caused as aforesaid, in the performance of any act or thing which, by the terms of the Deposit Agreement, it is provided will or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. Where, by the terms of a distribution pursuant to the Deposit Agreement, or an offering or distribution pursuant to the Deposit Agreement, such distribution or offering may not be made available to Holders, and the Depositary may not dispose of such distribution or offering, on behalf of such Holder and make the net proceeds available to such Holder, then the Depositary will not make such distribution or offering and will allow any rights, if applicable, to lapse. The Depositary assumes no obligation nor will it be subject to any liability under the Deposit Agreement to any Holders or Beneficial Owners (including, without limitation, liability with respect to the validity or worth of any Deposited Securities), except that it agrees to perform its obligations specifically set forth in the Deposit Agreement without gross negligence or bad faith. The Depositary will not be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expenses and liabilities will be furnished as often as may be required. The Depositary will not be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Ordinary Shares for deposit, any Holder or Beneficial Owner or any other person believed by it in good faith to be competent to give such advice or information. The Depositary may rely and will be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner or effect of any such vote made either with or without request, or for not exercising any right to vote, as long as any such action or non-action is in good faith and in accordance with the terms of the Deposit Agreement. The Depositary will not be liable for any acts or omissions made by a successor depositary, whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Company has agreed to indemnify the Depositary under the Deposit Agreement and its directors, officers, employees, agents and affiliates (each, an "Indemnified Person") against, and hold each of them harmless from, any liability or expense (including, but not limited to, the reasonable fees and expenses of counsel) which may be based on or arise (a) out of acts performed or omitted in accordance with the provisions of the Deposit Agreement and of the Receipts, as the same may be amended, modified or supplemented from time to time, (i) by an Indemnified Person, except for any liability or expense arising out of the negligence or bad faith of such Indemnified Person, or (ii) by Holdings or any of its directors, officers, employees, agents and affiliates, or (b) out of or in connection with any offer or sale of Receipts, ADSs, Ordinary Shares, other Deposited Securities, proxy statement, prospectus (or placement memorandum) or preliminary prospectus (or preliminary placement memorandum) or any registration statement under the Securities Act in respect thereof, except to the extent such loss, liability or expense arises out of information (or omissions from such information) relating to such Indemnified Person, furnished in writing to Holdings, and not materially changed or altered by Holdings, by such Indemnified Person expressly for use in a registration statement, proxy statement, prospectus (or placement memorandum) or preliminary prospectus (or preliminary placement memorandum) under the Securities Act. No disclaimer of liability under the Securities Act is intended by any provisions of the Deposit Agreement.

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The Depositary may own and deal in any class of securities of Holdings and its affiliates and in Receipts.

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&nbsp;&nbsp;&nbsp;&nbsp;C. Description of Debt Securities As of December 31, 2025, we had the following series of Debt Securities registered pursuant to Section 12(b) of the Act, which are all listed on the New York Stock Exchange. Capitalized terms used but not defined in the following table (the "Summary of Key Terms") will have the meanings given to them in the Description of Terms below. Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $487,913,000 7.625% Subordinated Notes due 2032 US404280AF65 Fixed Rate: 7.625% per annum ("p.a.") Interest Start Date: May 17, 2005 Aug. 30, 2005 to May 17, 2032 May 17 and Nov. 17 each year, beginning Nov. 17, 2005 N/A Tax Redemption Subordinated Events of Default and Defaults Registration Statement dated July 12, 2005 (File no. 333-126531) (the "2005 Base Prospectus") Prospectus dated July 28, 2005 Subordinated Debt Securities Indenture dated Dec. 10, 2002 (the "2002 Indenture") Supplemental Indenture dated as of Dec. 3, 2004 $222,042,000 7.35% Subordinated Notes due 2032 US404280AE90 Fixed Rate: 7.35% p.a. Interest Start Date: May 27, 2005 Aug. 30, 2005 to Nov. 27, 2032 May 27 and Nov. 27 each year, beginning Nov. 27 2005 N/A Tax Redemption Subordinated Events of Default and Defaults 2005 Base Prospectus Prospectus dated July 28, 2005 2002 Indenture Supplemental Indenture dated as of Dec. 3, 2004

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 6.5% Subordinated Notes due 2036 US404280AG49 Fixed Rate: 6.5% p.a. May 3, 2006 to May 2, 2036 Add'l Issue Date: Aug. 23, 2006 Add'l Issue Date: Dec. 14, 2006 May 2 and Nov. 2 each year, beginning Nov. 2, 2006 N/A Tax Redemption Subordinated Events of Default and Defaults Registration Statement dated Nov. 26, 2002 (File no. 333-92024) (the "2002 Base Prospectus") Prospectus Supplement dated April 26, 2006 Registration Statement dated June 14, 2006 (File no. 333-135007) (the "2006 Base Prospectus") Prospectus Supplement dated Aug. 16, 2006 Prospectus Supplement dated Dec. 7, 2006 2002 Indenture $2,500,000,000 6.5% Subordinated Notes due 2037 US404280AH22 Fixed Rate: 6.5% p.a. Sept. 12, 2007 to Sept. 15, 2037 Add'l Issue Date: Oct. 18, 2007 March 15 and Sept. 15 each year, beginning March 15, 2008 N/A Tax Redemption Subordinated Events of Default and Defaults 2006 Base Prospectus Prospectus Supplement dated Sept. 5, 2007 Prospectus Supplement dated Oct. 11, 2007 2002 Indenture

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 6.8% Subordinated Notes due 2038 US404280AJ87 Fixed Rate: 6.8% p.a. May 27, 2008 to June 1, 2038 June 1 and Dec. 1 each year, beginning on Dec. 1, 2008 N/A Tax Redemption Subordinated Events of Default and Defaults 2006 Base Prospectus Prospectus Supplement dated May 19, 2008 2002 Indenture $750,000,000 6.100% Senior Unsecured Notes due 2042 US404280AM17 Fixed Rate: 6.100% p.a. Nov. 17, 2011 to Jan. 14, 2042 Jan. 14 and July 14 each year, beginning July 14, 2012 N/A Tax Redemption Extended Events of Default and Defaults 2010 Base Prospectus Prospectus Supplement dated Nov. 14, 2011 Senior Indenture dated August 26, 2009 (the "2009 Indenture") $1,500,000,000 5.250% Subordinated Notes due 2044 US404280AQ21 Fixed Rate: 5.250% p.a. March 12, 2014 to March 14, 2044 March 14 and Sept. 14 each year, beginning Sept. 14, 2014 N/A Tax Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults 2012 Base Prospectus Prospectus Supplement dated March 5, 2014 2014 Indenture First Supplemental Indenture dated March 12, 2014 $3,000,000,000 4.300% Senior Unsecured Notes due 2026 US404280AW98 Fixed Rate: 4.300% p.a. March 8, 2016 to March 8, 2026 March 8 and Sept. 8 each year, beginning Sept. 8, 2016 N/A Tax Redemption Extended Events of Default and Defaults Registration Statement dated Feb. 25, 2016 (File no. 333-202420) (the "2016 Base Prospectus") Prospectus Supplement dated March 1, 2016 2009 Indenture First Supplemental Indenture dated March 8, 2016

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,500,000,000 3.900% Senior Unsecured Notes due 2026 US404280BB43 Fixed Rate: 3.900% p.a. May 25, 2016 to May 25, 2026 May 25 and Nov. 25 each year, beginning Nov. 25, 2016 N/A Tax Redemption Extended Events of Default and Defaults 2016 Base Prospectus Prospectus Supplement dated May 18, 2016 2009 Indenture Second Supplemental Indenture dated May 25, 2016 $1,500,000,000 4.375% Subordinated Notes due 2026 US404280BH13 Fixed Rate: 4.375% p.a. Nov. 23, 2016 to Nov. 23, 2026 May 23 and Nov. 23 each year, beginning May 23, 2017 N/A Tax Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults 2016 Base Prospectus Prospectus Supplement dated November 16, 2016 2014 Indenture Third Supplemental Indenture dated November 23, 2016 $2,500,000,000 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280BK42 Fixed Rate: 4.041% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.546% p.a. Interest Reset Dates: March 13, 2027, June 13, 2027, Sept. 13, 2027 and Dec. 13, 2027 March 13, 2017 to March 13, 2028 Fixed Rate: March 13 and Sept. 13 each year, beginning Sept. 13, 2017, and ending March 13, 2027 Floating Rate: June 13, 2027, Sept. 13, 2027, Dec. 13, 2027, and March 13, 2028 March 13, 2027 Tax Redemption and Optional Redemption LADE Provisions 2017 Base Prospectus Prospectus Supplement dated March 6, 2017 2009 Indenture Fourth Supplemental Indenture dated March 13, 2017

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280BT50 Fixed Rate: 4.583% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.53455% p.a. Interest Reset Dates: June 19, 2028, Sept. 19, 2028, Dec. 19, 2028, and March 19, 2029 LIBOR Replacement Provisions June 19, 2018 to June 19, 2029 Fixed Rate: June 19 and Dec. 19 each year, beginning Dec. 19, 2018, and ending June 19, 2028 Floating Rate: Sept. 19, 2028, Dec. 19, 2028, March 19, 2029, and June 19, 2029 June 19, 2028 Tax Redemption and Optional Redemption LADE Provisions 2018 Base Prospectus and Prospectus Supplement dated June 12, 2018 2009 Indenture and Seventh Supplemental Indenture dated June 19, 2018 £1,000,000,000 3.000% Resettable Senior Unsecured Notes due 2028 XS1961843171 Fixed Rate: 3.000% p.a. Reset Rate: Mid- Market Swap Rate plus 1.65% p.a. Interest Reset Date: July 22, 2027 LIBOR Replacement Provisions March 12, 2019 to July 22, 2028 July 22 each year, beginning July 22, 2019 (there was a short first coupon for the first interest period; interest in this period was computed on the basis of the actual number of days divided by 365) July 22, 2027 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated March 5, 2019 2009 Indenture and Eleventh Supplemental Indenture dated March 12, 2019

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280CC17 Fixed Rate: 3.973% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.61% p.a. Interest Reset Dates: May 22, 2029, Aug. 22, 2029, Nov. 22, 2029, and Feb. 22, 2030 LIBOR Replacement Provisions May 22, 2019 to May 22, 2030 Fixed Rate: May 22 and Nov. 22 each year, beginning Nov. 22, 2019, and ending May 22, 2029 Floating Rate: Aug. 22, 2029, Nov. 22, 2029, Feb. 22, 2030, and May 22, 2030 May 22, 2029 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 15, 2019 2009 Indenture and Twelfth Supplemental Indenture dated May 22, 2019 £750,000,000 3.00% Resettable Senior Unsecured Notes due 2030 XS2003500142 Fixed Rate: 3.000% p.a. Reset Rate: Mid- Market Swap Rate plus 1.77% p.a. Interest Reset Date: May 29, 2029 LIBOR Replacement Provisions May 29, 2019 to May 29, 2030 May 29 each year, beginning May 29, 2020 May 29, 2029 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 21, 2019 2009 Indenture and Thirteenth Supplemental Indenture dated May 29, 2019 $2,500,000,000 4.950% Fixed Rate Senior Unsecured Notes due 2030 US404280CF48 Fixed Rate: 4.950% p.a. March 31, 2020 to March 31, 2030 March 31 and Sept. 30 each year, beginning Sept. 30, 2020 N/A Tax Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated March 25, 2020 2009 Indenture and Fifteenth Supplemental Indenture dated March 31, 2019

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 2.848% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280CH04 Fixed Rate: 2.848% p.a. Floating Rate: Compounded Daily SOFR plus 2.387% p.a. Benchmark Transition Provisions June 4, 2020 to June 4, 2031 Fixed Rate: June 4 and Dec. 4 each year, beginning Dec. 4, 2020 and ending June 4, 2030 Floating Rate: Sept. 4, 2030, Dec. 4, 2030, March 4, 2031 and June 4, 2031 June 4, 2030 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 28, 2020 2009 Indenture and Sixteenth Supplemental Indenture dated June 4, 2020 $1,500,000,000 2.357% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280CK33 Fixed Rate: 2.357% p.a. Floating Rate: Compounded Daily SOFR plus 1.947% p.a. Benchmark Transition Provisions Aug.18, 2020 to Aug. 18, 2031 Fixed Rate: Aug. 18 and Feb. 18 each year, beginning Feb. 18, 2021 and ending Aug. 18, 2030 Floating Rate: Nov. 18, 2030, Feb. 18, 2031, May 18, 2031 and Aug. 18, 2031 August 18, 2030 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated August 11, 2020 2009 Indenture and Seventeenth Supplemental Indenture dated August 18, 2020 $2,000,000,000 2.013% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280CL16 Fixed Rate: 2.013% p.a. Floating Rate: Compounded Daily SOFR plus 1.732% p.a. Benchmark Transition Provisions Sept. 22, 2020 to Sept. 22, 2028 Fixed Rate: March 22 and Sept. 22 each year, beginning March 22, 2021 and ending Sept. 22, 2027 Floating Rate: Dec. 22, 2027, March 22, 2028, June 22, 2028 and Sept. 22, 2028 Par Redemption Date: September 22, 2027 Make-Whole Redemption Period: from (and including) March 22, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated September 15, 2020 2009 Indenture and Eighteenth Supplemental Indenture dated September 22, 2020

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280CM98 Fixed Rate: 1.589% p.a. Floating Rate: Compounded Daily SOFR plus 1.290% p.a. Benchmark Transition Provisions Nov. 24, 2020 to May 24, 2027 Fixed Rate: May 24 and Nov. 24 each year, beginning May 24, 2021 and ending May 24, 2026 Floating Rate: Aug. 24, 2026, Nov. 24, 2026, Feb. 24, 2027 and May 24, 2027 Par Redemption Date: May 24, 2026 Make-Whole Redemption Period: from (and including) May 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole and Par Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated November 17, 2020 2009 Indenture and Nineteenth Supplemental Indenture dated November 24, 2020 £1,000,000,000 1.750% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 XS2322315727 Fixed Rate: 1.750% p.a. Floating Rate: Compounded Daily SONIA plus 1.307% p.a. March 24, 2021 to July 24, 2027 Fixed Rate: July 24 each year, beginning July 24, 2021 and ending July 24, 2026 Floating Rate: October 24, 2026, January 24, 2027, April 24, 2027 and July 24, 2027 Par Redemption Date: July 24, 2026 Make-Whole Redemption Period: from (and including) September 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Registration Statement dated Feb. 26, 2021 (File no. 333-253632) (the "2021 Base Prospectus") and Prospectus Supplement dated March 17, 2021 2009 Indenture and Twentieth Supplemental Indenture dated March 24, 2021

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 2.804% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280CT42 Fixed Rate: 2.804% p.a. Floating Rate: Compounded Daily SOFR plus 1.1870% p.a. Benchmark Transition Provisions May 24, 2021 to May 24, 2032 Fixed Rate: May 24 and November 24 each year, beginning November 24, 2021 and ending May 24, 2031 Floating Rate: August 24, 2031, November 24, 2031, February 24, 2032 and May 24, 2032 Par Redemption Date: May 24, 2031 Make-Whole Redemption Period: from (and including) November 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated May 17, 2021 2009 Indenture and Twenty-First Supplemental Indenture dated May 24, 2021 $2,000,000,000 2.206% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280CV97 Fixed Rate: 2.206% p.a. Floating Rate: Compounded Daily SOFR plus 1.285% p.a. Benchmark Transition Provisions August 17, 2021 to August 17, 2029 Fixed Rate: February 17 and August 17 each year, beginning February 17, 2022 and ending August 17, 2028 Floating Rate: November 17, 2028, February 17, 2029, May 17, 2029 and August 17, 2029 Par Redemption Date: August 17, 2028 Make-Whole Redemption Period: from (and including) February 17, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 10, 2021 2009 Indenture and Twenty-Second Supplemental Indenture dated August 17, 2021

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,500,000,000 2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280CX53 Fixed Rate: 2.251% p.a. Floating Rate: Compounded Daily SOFR plus 1.100% p.a. Benchmark Transition Provisions November 22, 2021 to November 22, 2027 Fixed Rate: May 22 and November 22 each year, beginning May 22, 2022 and ending November 22, 2026 Floating Rate: February 22, 2027, May 22, 2027, August 22, 2027 and November 22, 2027 Par Redemption Date: November 22, 2026 Make-Whole Redemption Period: from (and including) May 22, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 15, 2021 2009 Indenture and Twenty-Third Supplemental Indenture dated November 22, 2021 $1,750,000,000 2.871% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280CY37 Fixed Rate: 2.871% p.a. Floating Rate: Compounded Daily SOFR plus 1.410% p.a. Benchmark Transition Provisions November 22, 2021 to November 22, 2032 Fixed Rate: May 22 and November 22 each year, beginning May 22, 2022 and ending November 22, 2031 Floating Rate: February 22, 2032, May 22, 2032, August 22, 2032 and November 22, 2032 Par Redemption Date: November 22, 2031 Make-Whole Redemption Period: from (and including) May 22, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 15, 2021 2009 Indenture and Twenty-Third Supplemental Indenture dated November 22, 2021

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 4.762% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 US404280DC08 Fixed Rate: 4.762% p.a. Floating Rate: Compounded Daily SOFR plus 2.530% p.a. Benchmark Transition Provisions March 29, 2022 to March 29, 2033 Fixed Rate: March 29 and September 29 of each year, beginning on September 29, 2022 and ending on March 29, 2032 Floating Rate: June 29, 2032, September 29, 2032, December 29, 2032 and March 29, 2033 March 29, 2032 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 22, 2022 2014 Indenture and Fourth Supplemental Indenture dated March 29, 2022 $2,250,000,000 4.755% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DF39 Fixed Rate: 4.755% p.a. Floating Rate: Compounded Daily SOFR plus 2.110 % p.a. Benchmark Transition Provisions June 9, 2022 to June 9, 2028 Fixed Rate: June 9 and December 9 of each year, beginning on December 9, 2022 and ending on June 9, 2027 Floating Rate: September 9, 2027, December 9, 2027, March 9, 2028 and June 9, 2028 Par Redemption Date: June 9, 2027 Make-Whole Redemption Period: from (and including) December 9, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated May 31, 2022 2009 Indenture and Twenty-Fifth Supplemental Indenture dated June 9, 2022

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 5.210% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DG12 Fixed Rate: 5.210% p.a. Floating Rate: Compounded Daily SOFR plus 2.610% p.a. Benchmark Transition Provisions August 11, 2022 to August 11, 2028 Fixed Rate: February 11 and August 11 of each year, beginning on February 11, 2023 and ending on August 11, 2027 Floating Rate: November 11, 2027, February 11, 2028, May 11, 2028 and August 11, 2028 Par Redemption Date: August 11, 2027 Make-Whole Redemption Period: from (and including) February 11, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 4, 2022 2009 Indenture and Twenty-Sixth Supplemental Indenture dated August 11, 2022 $2,500,000,000 5.402% Fixed Rate/Floating Rate Senior Unsecured Notes due 2033 US404280DH94 Fixed Rate: 5.402% p.a. Floating Rate: Compounded Daily SOFR plus 2.870% p.a. Benchmark Transition Provisions August 11, 2022 to August 11, 2033 Fixed Rate: February 11 and August 11 of each year, beginning on February 11, 2023 and ending on August 11, 2032 Floating Rate: November 11, 2032, February 11, 2033, May 11, 2033 and August 11, 2033 Par Redemption Date: August 11, 2032 Make-Whole Redemption Period: from (and including) February 11, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 4, 2022 2009 Indenture and Twenty-Sixth Supplemental Indenture dated August 11, 2022 $96,878,000 7.35% Subordinated Notes due 2032 US404280DJ50 Fixed Rate: 7.35% p.a. September 16, 2022 to November 27, 2032 May 27 and November 27 of each year, beginning on November 27, 2022 and ending on November 27, 2032 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $223,151,000 7.625% Subordinated Notes due 2032 US404280DK24 Fixed Rate: 7.625% p.a. September 16, 2022 to May 17, 2032 May 17 and November 17 of each year, beginning on November 17, 2022 and ending on May 17, 2032 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $569,189,000 6.5% Subordinated Notes Due 2036 US404280DL07 Fixed Rate: 6.5% p.a. September 16, 2022 to May 2, 2036 May 2 and November 2 of each year, beginning on November 2, 2022 and ending on May 2, 2036 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $985,360,000 6.5% Subordinated Notes Due 2037 US404280DM89 Fixed Rate: 6.5% p.a. September 16, 2022 to September 15, 2037 March 15 and September 15 of each year, beginning on March 15, 2023 and ending on September 15, 2037 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $538,705,000 6.8% Subordinated Notes Due 2038 US404280DN62 Fixed Rate: 6.8% p.a. September 16, 2022 to June 1, 2038 June 1 and December 1 of each year, beginning on December 1, 2022 and ending on June 1, 2038 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 7.390% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DR76 Fixed Rate: 7.390% p.a. Floating Rate: Compounded Daily SOFR plus 3.350% p.a. Benchmark Transition Provisions November 3, 2022 to November 3, 2028 Fixed Rate: May 3 and November 3 of each year, beginning on May 3, 2023 and ending on November 3, 2027 Floating Rate: February 3, 2028, May 3, 2028, August 3, 2028 and November 3, 2028 Par Redemption Date: November 3, 2027 Make-Whole Redemption Period: from (and including) May 3, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated October 26, 2022 2009 Indenture and Twenty-Seventh Supplemental Indenture dated November 3, 2022 $2,000,000,000 8.113% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 US404280DS59 Fixed Rate: 8.113% p.a. Floating Rate: Compounded Daily SOFR plus 4.250% p.a. Benchmark Transition Provisions November 3, 2022 to November 3, 2033 Fixed Rate: May 3 and November 3 of each year, beginning on May 3, 2023 and ending on November 3, 2032 Floating Rate: February 3, 2033, May 3, 2033, August 3, 2033 and November 3, 2033 November 3, 2032 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated October 26, 2022 2014 Indenture and Fifth Supplemental Indenture dated November 3, 2022

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 6.161% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280DU06 Fixed Rate: 6.161% p.a. Floating Rate: Compounded Daily SOFR plus 1.970% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2029 Fixed Rate: March 9 and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2028 Floating Rate: June 9, 2028, September 9, 2028, December 9, 2028 and March 9, 2029 Par Redemption Date: March 9, 2028 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023 $2,250,000,000 6.254% Fixed Rate/Floating Rate Senior Unsecured Notes due 2034 US404280DV88 Fixed Rate: 6.254% p.a. Floating Rate: Compounded Daily SOFR plus 2.390% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2034 Fixed Rate: March 9, and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2033 Floating Rate: June 9 2033, September 9, 2033, December 9, 2033 and March 9, 2034 Par Redemption Date: March 9, 2033 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,750,000,000 6.332% Fixed Rate/Floating Rate Senior Unsecured Notes due 2044 US404280DW61 Fixed Rate: 6.332% p.a. Floating Rate: Compounded Daily SOFR plus 2.650% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2044 Fixed Rate: March 9 and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2043 Floating Rate: June 9, 2043, September 9, 2043, December 9, 2043 and March 9, 2044 Par Redemption Date: March 9, 2043 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023 $2,000,000,000 6.547% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 US404280DX45 Fixed Rate: 6.547% p.a. Floating Rate: Compounded Daily SOFR plus 2.980% p.a. Benchmark Transition Provisions June 20, 2023 to June 20, 2034 Fixed Rate: June 20 and December 20 of each year, beginning on December 20, 2023 and ending on June 20, 2033 Floating Rate: September 20, 2033, December 20, 2033, March 20, 2034 and June 20, 2034 June 20, 2033 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated June 12, 2023 2014 Indenture and Sixth Supplemental Indenture dated June 20, 2023

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,300,000,000 5.887% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280DZ92 Fixed Rate: 5.887% p.a. Floating Rate: Compounded Daily SOFR plus 1.570% p.a. Benchmark Transition Provisions August 14, 2023 to August 14, 2027 Fixed Rate: February 14 and August 14 of each year, beginning on February 14, 2024 and ending on August 14, 2026 Floating Rate: November 14, 2026, February 14, 2027, May 14, 2027 and August 14, 2027 Par Redemption Date: August 14, 2026 Make-Whole Redemption Period: from (and including) February 14, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 7, 2023 2009 Indenture and Twenty-Ninth Supplemental Indenture dated August 14, 2023 $700,000,000 Floating Rate Senior Unsecured Notes due 2027 US404280DY28 Floating Rate: Compounded Daily SOFR plus 1.570% p.a. Benchmark Transition Provisions August 14, 2023 to August 14, 2027 February 14, May 14, August 14 and November 14 of each year, beginning on November 14, 2023 and ending on August 14, 2027 August 14, 2026 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 7, 2023 2009 Indenture and Twenty-Ninth Supplemental Indenture dated August 14, 2023 £1,000,000,000 6.800% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 XS2685873908 Fixed Rate: 6.800% p.a. Floating Rate: Compounded Daily SONIA plus 2.124% p.a. September 14, 2023 to September 14, 2031 Fixed Rate: September 14 of each year, beginning on September 14, 2024 and ending on September 14, 2030 Floating Rate: December 14, 2030, March 14, 2031, June 14, 2031, and September 14, 2031 Par Redemption Date: September 14, 2030 Make-Whole Redemption Period: from (and including) March 14, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated September 7, 2023 2009 Indenture and Thirtieth Supplemental Indenture dated September 14, 2023

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![](a21_securities029.jpg)

Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 7.399% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 US404280EC98 Fixed Rate: 7.399% p.a. Floating Rate: Compounded Daily SOFR plus 3.020% p.a. Benchmark Transition Provisions November 13, 2023 to November 13, 2034 Fixed Rate: May 13 and November 13 of each year, beginning on May 13, 2024 and ending on November 13, 2033 Floating Rate: February 13, 2034, May 13, 2034, August 13, 2034 and November 13, 2034 November 13, 2033 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 6, 2023 2014 Indenture and Seventh Supplemental Indenture dated November 13, 2023 $1,500,000,000 5.546% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280ED71 Fixed Rate: 5.546% p.a. Floating Rate: Compounded Daily SOFR plus 1.460% p.a. March 4, 2024 to March 4, 2030 Fixed Rate: March 4 and September 4 of each year, beginning on September 4, 2024 and ending on March 4, 2029 Floating Rate: June 4, 2029, September 4, 2029, December 4, 2029, March 4, 2030 Par Redemption Date: March 4, 2029 Make-Whole Redemption Period: from (and including) September 4, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2024 2009 Indenture and Thirty-Second Supplemental Indenture dated March 4, 2024 $1,250,000,000 5.719% Fixed Rate/Floating Rate Senior Unsecured Notes due 2035 US404280EE54 Fixed Rate: 5.719% p.a. Floating Rate: Compounded Daily SOFR plus 1.780% p.a. March 4, 2024 to March 4, 2035 Fixed Rate: March 4 and September 4 of each year, beginning on September 4, 2024 and ending on March 4, 2034 Floating Rate: June 4, 2034, September 4, 2034, December 4, 2034, March 4, 2035 March 4, 2034 Make-Whole Redemption Period: from (and including) September 4, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2024 2009 Indenture and Thirty-Second Supplemental Indenture dated March 4, 2024

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,850,000,000 5.597% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280EF20 Fixed Rate: 5.597% p.a. Floating Rate: Compounded Daily SOFR plus 1.060% p.a. May 17, 2024 to May 17, 2028 Fixed Rate: May 17 and November 17 of each year, beginning on November 17, 2024 and ending on May 17, 2027 Floating Rate: August 17, 2027, November 17, 2027, February 17, 2028, May 17, 2028 Par Redemption Date: May 17, 2027 Make-Whole Redemption Period: from (and including) November 17, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2024 2009 Indenture and Thirty-Third Supplemental Indenture dated May 17, 2024 $1,400,000,000 5.733% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280EG03 Fixed Rate: 5.733% p.a. Floating Rate: Compounded Daily SOFR plus 1.520% p.a. May 17, 2024 to May 17, 2032 Fixed Rate: May 17 and November 17 of each year, beginning on November 17, 2024 and ending on May 17, 2031 Floating Rate: August 17, 2031, November 17, 2031, February 17, 2032, May 17, 2032 Par Redemption Date: May 17, 2031 Make-Whole Redemption Period: from (and including) November 17, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2024 2009 Indenture and Thirty-Third Supplemental Indenture dated May 17, 2024 $1,750,000,000 5.874% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2035 US404280EL97 Fixed Rate: 5.874% p.a. Floating Rate: Compounded Daily SOFR plus 1.90% p.a. November 18, 2024 to November 18, 2035 Fixed Rate: May 18 and November 18 of each year, beginning on May 18, 2025 and ending on November 18, 2034 Floating Rate: February 18, 2035, May 18, 2035, August 18, 2035, November 18, 2035 November 18, 2034 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2014 Indenture and Ninth Supplemental Indenture dated November 18, 2024

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280EM70 Fixed Rate: 5.130% p.a. Floating Rate: Compounded Daily SOFR plus 1.04% p.a. November 19, 2024 to November 19, 2028 Fixed Rate: May 19 and November 19 of each year, beginning on May 19, 2025 and ending on November 19, 2027 Floating Rate: February 19, 2028, May 19, 2028, August 19, 2028, November 19, 2028 Par Redemption Date: November 19, 2027 Make-Whole Redemption Period: from (and including) May 19, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $2,250,000,000 5.286% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280EN53 Fixed Rate: 5.286% p.a. Floating Rate: Compounded Daily SOFR plus 1.29% p.a. November 19, 2024 to November 19, 2030 Fixed Rate: May 19 and November 19 of each year, beginning on May 19, 2025 and ending on November 19, 2029 Floating Rate: February 19, 2030, May 19, 2030, August 19, 2030, November 19, 2030 Par Redemption Date: November 19, 2029 Make-Whole Redemption Period: from (and including) May 19, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $500,000,000 Floating Rate Senior Unsecured Notes due 2028 US404280EK15 Floating Rate: Compounded Daily SOFR plus 1.04% p.a. November 19, 2024 to November 19, 2028 February 19, May 19, August 19 and November 19 of each year, beginning on February 19, 2025, and ending on November 19, 2028 November 19, 2027 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $500,000,000 Floating Rate Senior Unsecured Notes due 2030 US404280EP02 Floating Rate: Compounded Daily SOFR plus 1.29% p.a. November 19, 2024 to November 19, 2030 February 19, May 19, August 19 and November 19 of each year, beginning on February 19, 2025, and ending on November 19, 2030 November 19, 2029 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $1,500,000,000 4.899% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280EQ84 Fixed Rate: 4.899% p.a. Floating Rate: Compounded Daily SOFR plus 1.030% p.a. March 3, 2025 to March 3, 2029 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2028 Floating Rate: June 3, 2028, September 3, 2028, December 3, 2028 and March 3, 2029 Par Redemption Date: March 3, 2028 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,750,000,000 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280ER67 Fixed Rate: 5.130% p.a. Floating Rate: Compounded Daily SOFR plus 1.290% p.a. March 3, 2025 to March 3, 2031 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2030 Floating Rate: June 3, 2030, September 3, 2030, December 3, 2030 and March 3, 2031 Par Redemption Date: March 3, 2030 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025 $2,250,000,000 5.450% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280ES41 Fixed Rate: 5.450% p.a. Floating Rate: Compounded Daily SOFR plus 1.560% p.a. March 3, 2025 to March 3, 2036 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2035 Floating Rate: June 3, 2035, September 3, 2035, December 3, 2035 and March 3, 2036 Par Redemption Date: March 3, 2035 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025 $750,000,000 Floating Rate Senior Unsecured Notes due 2029 US404280ET24 Floating Rate: Compounded Daily SOFR plus 1.030% p.a. March 3, 2025 to March 3, 2029 March 3, June 3, September 3 and December 3 of each year, beginning on June 3, 2025 and ending on March 3, 2029 March 3, 2028 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $750,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280EU96 Floating Rate: Compounded Daily SOFR plus 1.290% p.a. March 3, 2025 to March 3, 2031 March 3, June 3, September 3 and December 3 of each year, beginning on June 3, 2025 and ending on March 3, 2031 March 3, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental Indenture, dated March 3, 2025 $2,250,000,000 5.240% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280EW52 Fixed Rate: 5.240% p.a. Floating Rate: Compounded Daily SOFR plus 1.570% p.a. May 13, 2025 to May 13, 2031 Fixed Rate: May 13 and November 13 of each year, beginning on November 13, 2025 and ending on May 13, 2030 Floating Rate: August 13, 2030, November 13, 2030, February 13, 2031 and May 13, 2031 Par Redemption Date: May 13, 2030 Make-Whole Redemption Period: from (and including) November 13, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025 $2,000,000,000 5.790% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280EX36 Fixed Rate: 5.790% p.a. Floating Rate: Compounded Daily SOFR plus 1.880% p.a. May 13, 2025 to May 13, 2036 Fixed Rate: May 13 and November 13 of each year, beginning on November 13, 2025 and ending on May 13, 2035 Floating Rate: August 13, 2035, November 13, 2035, February 13, 2036 and May 13, 2036 Par Redemption Date: May 13, 2035 Make-Whole Redemption Period: from (and including) November 13, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,250,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280EZ83 Floating Rate: Compounded Daily SOFR plus 1.570% p.a. May 13, 2025 to May 13, 2031 February 13, May 13, August 13 and November 13 of each year, beginning on August 13, 2025 and ending on May 13, 2031 May 13, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025 $1,500,000,000 5.741% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2036 US404280FB07 Fixed Rate: 5.741% p.a. Floating Rate: Compounded Daily SOFR plus 1.960% p.a. September 10, 2025 to September 10, 2036 Fixed Rate: March 10 and September 10 of each year, beginning on March 10, 2026 and ending on September 10, 2035 Floating Rate: December 10, 2035, March 10, 2036, June 10, 2036 and September 10, 2036 September 10, 2035 Tax Redemption, Par Redemption, Capital Disqualification Event Redemption and Residual Call Subordinated Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated September 2, 2025 2014 Indenture and Tenth Supplemental Indenture dated September 10, 2025 $2,250,000,000 4.619% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280FE46 Fixed Rate: 4.619% p.a. Floating Rate: Compounded Daily SOFR plus 1.190% p.a. November 6, 2025 to November 6, 2031 Fixed Rate: May 6 and November 6 of each year, beginning on May 6, 2026 and ending on November 6, 2030 Floating Rate: February 6, 2031, May 6, 2031, August 6, 2031 and November 6, 2031 Par Redemption Date: November 6, 2030 Make-Whole Redemption Period: from (and including) May 6, 2026 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025

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Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 5.133% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280FG93 Fixed Rate: 5.133% p.a. Floating Rate: Compounded Daily SOFR plus 1.430% p.a. November 6, 2025 to November 6, 2036 Fixed Rate: May 6 and November 6 of each year, beginning on May 6, 2026 and ending on November 6, 2035 Floating Rate: February 6, 2036, May 6, 2036, August 6, 2036 and November 6, 2036 Par Redemption Date: November 6, 2035 Make-Whole Redemption Period: from (and including) May 6, 2026 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025 $500,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280FF11 Floating Rate: Compounded Daily SOFR plus 1.190% p.a. November 6, 2025 to November 6, 2031 February 6, May 6, August 6 and November 6 of each year, beginning on February 6, 2026 and ending on November 6, 2031 November 6, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025 (1) The principal amount of each series of Debt Securities set forth in the table corresponds to the original principal amount of such series on the relevant issue date. (2) Debt Securities denominated in United States dollars ($) are collectively referred to herein as "Dollar-denominated Notes." Debt Securities denominated in pounds sterling (£) are collectively referred to herein as "Sterling-denominated Notes." (3) LIBOR Replacement Provisions means the LIBOR or Mid-Market Swap Rate, as applicable, may be replaced by an alternative benchmark if LIBOR is temporarily or permanently unavailable, as described below under "Interest—Replacement of the Reference Rate—LIBOR Replacement Provisions." Since the relevant USD LIBOR rate in relation to each series of Transitioned Notes which included LIBOR Replacement Provisions in their terms was replaced with Term SOFR, plus a tenor spread adjustment in accordance with the LIBOR Act and related regulations after the Cessation Date (as described below under "Interest–Calculation of Three-Month Term SOFR"), the LIBOR Replacement Provisions are no longer applicable or relevant to such Transitioned Notes. (4) Benchmark Transition Provisions means the benchmark may be replaced by a benchmark replacement if it becomes temporarily or permanently unavailable, as described below under "Interest—Replacement of the Reference Rate—Benchmark Transition Provisions."

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(5) Tax Redemption means that we have the right to redeem the specified series of Debt Securities upon the occurrence of certain Tax Events, as described below under "Redemption—Tax Redemption." (6) Capital Disqualification Event Redemption means that we have the right to redeem the specified series of Debt Securities upon the occurrence of certain regulatory events, on the terms described below under "Redemption—Capital Disqualification Event Redemption." (7) Optional Redemption means that we have the right to redeem the specified series of Debt Securities on the specified Optional Redemption Date, as described below under "Redemption—Optional Redemption." (8) Make-Whole means that we have the right to redeem the specified series of Debt Securities during the Make-Whole Redemption Period, as described below under "Redemption—Make-Whole and Par Redemption." (9) Par Redemption means that we have the right to redeem the specified series of Debt Securities on the Par Redemption Date, as described below under "Redemption—Make-Whole and Par Redemption." (10) LADE Redemption means that we have the option to redeem the specified series of Debt Securities following the occurrence of a Loss Absorption Disqualification Event, as described below under "Redemption—LADE Redemption." (11) Residual Call means that we have the right to redeem the specified series of Debt Securities in connection with a Residual Call, as described below under "Redemption—Residual Call." (12) Subordinated Events of Default and Defaults means that the events of default described below under "Events of Default and Enforcement Events and Remedies— Subordinated Debt Securities—Subordinated Events of Default and Defaults" are applicable to the relevant series of Debt Securities. (13) Extended Events of Default and Defaults means that the events of default described below under "Events of Default and Enforcement Events and Remedies— Senior Debt Securities—Extended Events of Default and Defaults" are applicable to the relevant series of Debt Securities. (14) LADE Provisions means that the events of default applicable to the relevant series of Debt Securities will change upon the occurrence of a Loss Absorption Disqualification Event, as described below under "Events of Default and Enforcement Events and Remedies—Senior Debt Securities—LADE Provisions." (15) Limited Events of Default and Defaults means that the events of default described below under "Events of Default and Enforcement Events and Remedies—Senior Debt Securities—Limited Events of Default and Defaults" are applicable to the relevant series of Debt Securities.

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The summary set out below of the general terms and provisions of our debt securities (the "Description of Terms") does not purport to be complete and is strictly subject to and qualified by reference to all of the definitions and provisions of the relevant indenture (as listed in the Summary of Terms above), any supplement to the relevant indenture and the form of the instrument representing each series of debt securities. Certain terms, unless otherwise defined here, have the meaning given to them in the relevant indenture and/or supplemental indenture (as applicable). General The debt securities of any series are either our senior obligations (the "Senior Debt Securities") or our dated subordinated obligations (the "Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities"). The Debt Securities are not secured by any assets or property of Holdings or any of its subsidiaries or affiliates. Each series of Senior Debt Securities was issued under an indenture entered into between us, The Bank of New York Mellon, London Branch as trustee (the "Trustee") and the other parties thereto (each, a "Senior Debt Securities Indenture"). Each series of Subordinated Debt Securities was issued under an indenture entered into between us, The Bank of New York Mellon, London Branch as Trustee and the other parties thereto (each, a "Subordinated Debt Securities Indenture"). With respect to each series of Debt Securities, the relevant Senior Debt Securities Indenture or Subordinated Debt Securities Indenture (as applicable) and supplements thereto are set forth in the Summary of Key Terms above and are referred to in this Description of Terms (i) in the case of each series of Debt Securities, collectively as the "indenture" and (ii) in the case of all series of Debt Securities, collectively as the "indentures." The terms of the Debt Securities include those stated in the relevant indenture and those terms made part of the relevant indenture by reference to the U.S. Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each series of Debt Securities was issued pursuant to an effective registration statement (including a base prospectus) and a prospectus supplement (or, in the case of Debt Securities issued in connection with an exchange offer, a final prospectus) describing the terms of such series (the "Offering Documents"). The Offering Documents for each series of Debt Securities are set forth in the Summary of Key Terms above. The indentures do not limit the amount of Debt Securities that we may issue; however, such amount may be otherwise limited by applicable law or regulation (including laws and regulations applicable to Holdings' issuance of regulatory capital securities). Unless otherwise provided in the terms of a series of Debt Securities, a series may be reopened, without notice to or consent of any holder of outstanding Debt Securities, for issuances of additional Debt Securities of that series. Holders of Debt Securities have no voting rights with respect to the Debt Securities except as described below under "Modification and Waiver," "Events of Default and Enforcement Events and Remedies" and "Limitation on Suits." The Debt Securities are not subject to any sinking fund. Interest As of December 31, 2025, we had (a) four categories of registered Senior Debt Securities: (i) fixed rate Senior Debt Securities ("Fixed Rate Senior Notes"); (ii) floating rate Senior Debt Securities ("Floating Rate Notes"); (iii) fixed-to-floating rate Senior Debt Securities ("Fixed/Floating Rate Senior Notes"); and (iv) resettable Senior Debt Securities ("Resettable Notes"); (b) two categories of registered Subordinated Debt Securities: (i) fixed rate Subordinated Debt Securities (together with the Fixed Rate Senior Notes, the "Fixed Rate Notes") and (ii) fixed-to-floating rate Subordinated Debt Securities ("Fixed/Floating Rate Subordinated Notes" and, together with the Fixed/Floating Rate Senior Notes, the "Fixed/Floating Rate Notes"). The relevant interest rates, benchmarks, interest reset dates and interest payment dates are set out in the Summary of Key Terms above.

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Interest on the Dollar-denominated Fixed Rate Notes (including the fixed rate interest period of the Fixed/Floating Rate Notes) is computed on the basis of twelve 30-day months (or, in the case of an incomplete month, the actual number of days elapsed), assuming a 360-day year. Interest on the Dollar-denominated Floating Rate Notes (including the floating rate interest period of the Fixed/Floating Rate Notes) is computed on the basis of the actual number of days in each floating rate interest period, assuming a 360-day year. Interest on the Resettable Notes and on the Sterling- denominated Fixed/Floating Rate Notes during the fixed rate interest period is computed on the basis of the actual number of days in the period for which interest is being calculated divided by the actual number of days from and including the last day interest was paid on the notes, to but excluding the next scheduled interest payment date. Interest on the Sterling-denominated Fixed/Floating Rate Notes during the floating rate interest period is computed on the basis of the actual number of days in each floating rate interest period, divided by 365 (or, if any portion of that calculation period falls in a leap year, the sum of (a) the actual number of days in that portion of the calculation period falling in a leap year, divided by 366 and (b) the actual number of days in that portion of the calculation period falling in a non-leap year, divided by 365). Payments So long as the Debt Securities are represented by global securities, payments of principal and interest will be made in immediately available funds. If any scheduled fixed rate or resettable rate interest payment date is not a Business Day (as defined below), we will pay interest on the next succeeding Business Day, but interest on that payment will not accrue during the period from and after the scheduled interest payment date. If any scheduled floating rate interest payment date, other than the maturity date, would fall on a day that is not a Business Day, the floating rate interest payment date will be postponed to the next succeeding Business Day, except that if that Business Day falls in the next succeeding calendar month, the floating rate interest payment date will be the immediately preceding Business Day. The payment of interest due on such postponed or brought- forward floating rate interest payment date will include interest accrued to but excluding such postponed or brought-forward floating rate interest payment date. If the maturity date or date of redemption or repayment of a series of Debt Securities is not a Business Day, we may pay interest and principal on the next succeeding Business Day, but interest on that payment will not accrue during the period from and after the maturity date or date of redemption or repayment. A "Business Day" means any weekday other than one on which banking institutions are closed in London or New York City. Beneficial interests in Dollar-denominated Notes trade in the same-day funds settlement system of DTC, and secondary market trading activity in such interests will therefore settle in same- day funds. Secondary market trading between Clearstream Banking S.A. in Luxembourg ("Clearstream Luxembourg") customers and/or Euroclear Bank SA/NV ("Euroclear") participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream Luxembourg and Euroclear and will be settled using the procedures applicable to conventional Eurobonds in immediately available funds. Beneficial interests in Sterling-denominated Notes trade in accordance with the normal rules and operating procedures of Clearstream Luxembourg and/or Euroclear, and secondary market trading activity in such interests will be settled using the procedures applicable to conventional Eurobonds in immediately available funds. Currency and Exchange Payments of principal and interest in respect of Dollar-denominated Notes and the Sterling- denominated Notes are made in the applicable currency to the holders of record at the close of business on the applicable record date. If pounds sterling is unavailable to us due to it ceasing to be used by the United Kingdom and for the settlement of transactions by public institutions of or within the international banking community, then with respect to each payment date in respect of Sterling-denominated Notes occurring after the final date pounds sterling is used, all payments in respect of such Sterling-

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denominated Notes will be made in U.S. dollars. We must, after learning of the unavailability or cessation of pounds sterling in the above events, notify the Trustee and paying agent immediately specifying the last date on which pounds sterling was used for the payment of any principal (and premium, if any) or interest in respect of such Sterling-denominated Notes. The paying agent will determine (and promptly notify the Trustee of such determination) the amount to be paid in U.S. dollars as of the applicable record date or the 15th day immediately preceding the maturity of any principal (as the case may be), and the amount will be equal to the sum obtained by converting pounds sterling into U.S. dollars at the Exchange Rate on the last such record date on which pounds sterling was so used in either capacity. "Exchange Rate" means the noon selling rate in New York City for cable transfers of pounds sterling on the applicable record date or the fifteenth day immediately preceding the maturity of any principal, as the case may be, as certified for customs purposes by the Federal Reserve Bank of New York. If for any reason such rates are not available with respect to one or more currencies for which an Exchange Rate is required, the exchange rate agent shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major banks in New York City or in the country of issue of the currency in question, or such other quotations as the exchange rate agent shall deem appropriate. All decisions and determinations of the paying agent regarding conversion of pounds sterling into U.S. dollars pursuant to the above will, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon us and all holders of the affected Debt Securities. Floating Rate Interest The Floating Rate Notes and, during the relevant floating rate interest periods for each series of Fixed/Floating Rate Notes, the Fixed/Floating Rate Notes, will bear interest at a floating rate, reset quarterly on the applicable interest reset dates based on a benchmark plus the margin, each as set forth in the Summary of Key Terms above. The Resettable Notes, during the relevant reset interest period, will bear interest at a floating rate, reset on the applicable interest reset date based on a benchmark plus the margin, each as set forth in the Summary of Key Terms above. HSBC Bank USA, National Association, as calculation agent, determines the floating interest rate for each floating rate interest period (including, in the case of Resettable Notes, the applicable reset period, together the "floating rate interest periods") by reference to the then-current benchmark rates on the applicable interest determination date (including, in the case of Resettable Notes, the applicable reset determination date, together the "interest determination dates"). In the case of Resettable Notes, the interest determination date for each floating rate interest period is the second London banking day preceding the applicable interest reset date. A "London banking day" is (i) in the case of Dollar-denominated Notes, any day on which dealings in U.S. dollars are transacted in the London interbank market and (ii) in the case of Sterling-denominated Notes, any day on which dealings in pounds sterling are transacted in the London interbank market. In the case of Fixed/Floating Rate Notes and Floating Rate Notes issued on or after March 10, 2022, the interest determination date for each floating rate interest period is the third business day preceding the applicable Interest Payment Date. For the purposes of these notes "business day" means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England, and in the City of New York, United States. In the case of the 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 issued on March 13, 2017 (US404280BK42 / 404280 BK4), the 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 issued on June 19, 2018 (US404280BT50 / 404280 BT5), and the 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 issued on May 22, 2019 (US404280CC17 / 404280 CC1) (the "Transitioned Notes"), the interest determination date for each floating rate interest period is the second U.S government securities business day prior to the applicable interest reset date. For the purposes of the Transitioned Notes, "U.S government securities business day" means any day except for a Saturday, a Sunday or a

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day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. Calculation of the Mid-Market Swap Rate With respect to each series of Debt Securities for which the benchmark on the relevant interest determination date is the mid-market swap rate ("Mid-Market Swap Rate Notes"), the "Mid- Market Swap Rate" in respect of such interest determination date is the quotation for GBP LIBOR IRS & Swap Spreads as displayed on the Bloomberg ICAP page (or any similar replacement page) as of approximately 11:00 a.m. (London time) on that interest determination date. If no such rate appears for a one-year term, then the Mid-Market Swap Rate will be determined through the use of straight-line interpolation by reference to two rates, one of which will be determined in accordance with the provisions in the preceding paragraph, but as if the floating rate interest period were the period of time for which rates are available next shorter than the length of the actual floating rate interest period and the other of which will be determined in accordance with the provisions in the preceding paragraph, but as if the floating rate interest period were the period of time for which rates are available next longer than the length of the actual floating rate interest period. If on the interest determination date the Bloomberg ICAP page is not available or the Mid- Market Swap Rate does not appear on it, the calculation agent will request the principal office in London of four major banks in the swap, money, securities or other market most closely connected with the relevant Mid-Market Swap Rate (as selected by us on the advice of an investment bank of international repute) to provide us with its Mid-Market Swap Rate Quotation as of approximately 11:00 a.m. (London time) on the interest determination date. If two or more quotations are provided, the interest rate for the floating rate interest period will be the sum of the margin and arithmetic mean of the quotations. If only one or no quotations are provided, the interest rate will be the initial interest rate. "Mid-Market Swap Rate Quotation" means a quotation (expressed as a percentage rate per annum) for the mean of the bid and offered rates for the fixed leg payable semi-annually (calculated on the basis of the actual number of days in the relevant period from (and including) the date on which interest begins to accrue to (but excluding) the date on which it falls due divided by 365) of a fixed-for-floating interest rate swap transaction in pounds sterling which transaction (i) has a one-year term commencing on the applicable interest reset date, (ii) is in an amount that is representative for a single transaction in the pounds sterling swap rate market at 11:00 a.m. (London time) with an acknowledged dealer of good credit in the swap market and (iii) has a floating leg based on six-month LIBOR (calculated on the basis of the actual number of days in the relevant period from (and including) the date on which interest begins to accrue to (but excluding) the date on which it falls due divided by 365). Calculation of Three-Month Term SOFR Following the announcement by the U.K. Financial Conduct Authority (the "FCA"), U.S. dollar LIBOR ("USD LIBOR") ceased to be available or representative after June 30, 2023 (the "Cessation Date"). Pursuant to the Company's announcement on USD LIBOR transition dated June 22, 2023, after the Cessation Date, the relevant USD LIBOR rate in relation to each series of Transitioned Notes was replaced with the CME Term SOFR Reference Rate published for a three- month tenor, as administered by CME Group Benchmark Administration, Ltd. (or any successor administrator thereof) ("Term SOFR"), plus a tenor spread adjustment, in accordance with the U.S. Adjustable Interest Rate (LIBOR) Act of 2021 (the "LIBOR Act") and related regulations. As a result, with respect to the Transitioned Notes, "Three-month Term SOFR" in respect of the relevant interest determination date is Term SOFR as published at 5.00 a.m. (U.S. Central Standard Time) on that interest determination date, plus a tenor spread adjustment of 0.26161%. To the extent that Term SOFR is not available or published on an interest determination date, the most recently available publication of the Term SOFR will apply.

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Calculation of Compounded Daily SOFR With respect to each series of Debt Securities for which the benchmark on the relevant interest determination date is Compounded Daily SOFR, "Compounded Daily SOFR" in relation to a floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SOFR as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: ��1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 360 �- 1 𝑑𝑑0 𝑖𝑖=1 �× 360 𝑑𝑑 "d" means, in relation to any Observation Period, the number of calendar days in such Observation Period; "d0" means, in relation to any Observation Period, the number of USGS Business Days in such Observation Period; "i" means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant USGS Business Day in chronological order from (and including) the first USGS Business Day in such Observation Period; "ni" means, in relation to any USGS Business Day "i" in the relevant Observation Period, the number of calendar days from (and including) such USGS Business Day "i" up to (but excluding) the following USGS Business Day. "Observation Period" means, in relation to each floating rate interest period on the Debt Securities, the period from (and including) the last USGS Business Day falling prior to the related interest determination date for the immediately preceding interest payment date to (but excluding) the last USGS Business Day falling prior to the related interest determination date; provided that the first Observation Period shall commence on (and include) the last USGS Business Day falling prior to the day which is two business days prior to (i) with respect to the Fixed/Floating Rate Notes, the Par Redemption Date, (ii) with respect to the Floating Rate Notes, the Issue Date. "SOFR" means, the daily Secured Overnight Financing Rate for trades made on such day available at or around the Reference Time on the NY Federal Reserve's Website. Where the benchmark is Compounded Daily SOFR, Reference Time means, for each USGS Business Day, 3:00 p.m. (New York time). If no such rate is available at or around the Reference Time for such day (and a Benchmark Transition Event and its related Benchmark Replacement Date have not occurred), the daily Secured Overnight Financing Rate in respect of the last USGS Business Day for which such rate was published on the NY Federal Reserve's Website. "SOFRi" means, in relation to any USGS Business Day "i" in the relevant Observation Period, SOFR in respect of such USGS Business Day. "USGS Business Day" means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association or any successor thereto recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. Notwithstanding the definition of "SOFR" above, if Holdings (in consultation, to the extent practicable, with the calculation agent) or Holdings' designee (in consultation with us) determine on or prior to the relevant interest determination date that a Benchmark Transition Event and related Benchmark Replacement Date have occurred with respect to SOFR, then the "Benchmark Transition Provisions" set forth below under Interest - Benchmark Transition Provisions will thereafter apply. Calculation of Compounded Daily SONIA

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With respect to each series of Debt Securities issued before September 14, 2023, for which the benchmark on the relevant interest determination date is Compounded Daily SONIA, "Compounded Daily SONIA" in respect of any floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SONIA as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: ��1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 365 �- 1 𝑑𝑑0 𝑖𝑖=1 �× 365 𝑑𝑑 "d" means, in relation to any Observation Period, the number of calendar days in such Observation Period; "d0" means, in relation to any Observation Period, the number of SONIA Business Days in such Observation Period; "i" means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant SONIA Business Day in chronological order from (and including) the first SONIA Business Day in such Observation Period; "ni" means, in relation to any SONIA Business Day "i" in the relevant Observation Period, the number of calendar days from (and including) such SONIA Business Day "i" up to (but excluding) the next following SONIA Business Day. "Observation Period" means, in respect of any floating rate interest period on the Debt Securities, the period from (and including) the date which is the related interest determination date for the immediately preceding interest payment date to (but excluding) the date which is the related interest determination date (or the date falling five SONIA Business Days prior to such earlier date, if any, on which the Debt Securities become due and payable); provided that the first Observation Period shall commence on (and include) the date that is five SONIA Business Days prior to the Par Redemption Date. "SONIA" means, in relation to any SONIA Business Day, the rate determined by the calculation agent in accordance with the following provisions: (1) the daily Sterling Overnight Index Average rate for such SONIA Business Day as provided by the administrator of SONIA to authorized distributors and as then published on the Reuters Screen SONIA Page (or, if the Reuters Screen SONIA Page is unavailable, as otherwise published by such authorized distributors) on the SONIA Business Day immediately following such SONIA Business Day. (2) if, in respect of any SONIA Business Day, the rate specified in (1) above is not available on the Reuters Screen SONIA Page or has not otherwise been published by the relevant authorized distributors in respect of such SONIA Business Day, the sum of (i) the Bank of England's Bank Rate prevailing at the close of business on such SONIA Business Day, plus (ii) the mean of the spread of SONIA to the Bank Rate over five days preceding such SONIA Business Day on which SONIA has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads). "SONIAi" means, in relation to any SONIA Business Day "i" in the relevant Observation Period, SONIA in respect of such Business Day. If the rate of interest cannot be determined in accordance with the foregoing provisions, the rate of interest shall be the rate determined by the calculation agent as at the last preceding related interest determination date or if there is no such preceding interest determination date, the initial interest rate. With respect to each series of Debt Securities issued on or after September 14, 2023, for which the benchmark on the relevant interest determination date is Compounded Daily SONIA,

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"Compounded Daily SONIA" in respect of any floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SONIA as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: ��1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 365 �- 1 𝑑𝑑0 𝑖𝑖=1 �× 365 𝑑𝑑 Where: "d" means, in relation to any Observation Period, the number of calendar days in such Observation Period; "d0" means, in relation to any Observation Period, the number of SONIA Business Days in such Observation Period; "i" means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant SONIA Business Day in chronological order from (and including) the first SONIA Business Day in such Observation Period; "ni" means, in relation to any SONIA Business Day "i" in the relevant Observation Period, the number of calendar days from (and including) such SONIA Business Day "i" up to (but excluding) the next following SONIA Business Day; "Observation Period" means, in respect of each Floating Rate Interest Period, the period from (and including) the date which is the Interest Determination Date for the immediately preceding Interest Payment Date to (but excluding) the date which is the Interest Determination Date for such Floating Rate Interest Period (or the date falling five SONIA Business Days prior to such earlier date, if any, on which the Debt Securities become due and payable); provided that the first Observation Period shall commence on (and include) the date that is five SONIA Business Days prior to the Par Redemption Date; "SONIA" means, in relation to any SONIA Business Day, the rate determined by the calculation agent in accordance with the following provisions: (1) the daily Sterling Overnight Index Average ("SONIA") rate for trades made on such SONIA Business Day as provided by the administrator of SONIA (or any successor administrator) to authorized distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorized distributors) on the SONIA Business Day immediately following such SONIA Business Day; (2) if, in respect of any SONIA Business Day "i", the rate specified in (1) above is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorized distributors in respect of such SONIA Business Day "i" and neither (A) an Index Cessation Event and an Index Cessation Effective Date nor (B) an Administrator/Benchmark Event and an Administrator/Benchmark Event Date, in each case with respect to SONIA, have occurred, SONIAi in respect of such SONIA Business Day "i" shall be the SONIA rate in respect of the last SONIA Business Day prior to such SONIA Business Day "i" for which SONIA was available on the Relevant Screen Page or was otherwise so published; or (3) if, in respect of any SONIA Business Day "i", the rate specified in (1) above is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorized distributors and we (in consultation, to the extent practicable, with the calculation agent) determine either that (A) both an Index Cessation Event and Index Cessation Effective Date have occurred or (B) both an Administrator/Benchmark Event and Administrator/Benchmark Event Date have occurred, in each case in respect of SONIA, then:

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(a) SONIAi in respect of each SONIA Business Day "i" falling on or after the Applicable Fallback Effective Date shall be calculated as if references to "SONIA" in the foregoing provisions were to the Recommended Rate; (b) if there is a Recommended Rate before the end of the first SONIA Business Day following the Applicable Fallback Effective Date, but neither the administrator of the Recommended Rate nor authorized distributors provide or publish the Recommended Rate in respect of any SONIA Business Day "i" for which the Recommended Rate is required, then, subject to paragraph (c) below, in respect of any SONIA Business Day "i" for which the Recommended Rate is required, references to the Recommended Rate will be deemed to be references to the last provided or published Recommended Rate prior to such SONIA Business Day "i". If there is no last provided or published Recommended Rate, then in respect of any SONIA Business Day "i" for which the Recommended Rate is required, references to the Recommended Rate will be deemed to be references to the last provided or published SONIA rate (without taking into account any deemed changes to the term "SONIA" pursuant to provision (3)(a) above prior to such SONIA Business Day "i"); and (c) if: (i) there is no Recommended Rate before the end of the first SONIA Business Day following the Applicable Fallback Effective Date referred to in (a) and (b) above; or (ii) there is a Recommended Rate and we (in consultation, to the extent practicable, with the calculation agent) determine either that (A) both an Index Cessation Event and Index Cessation Effective Date have occurred or (B) both an Administrator/Benchmark Event and Administrator/Benchmark Event Date have occurred, in each case with respect to the Recommended Rate, then SONIAi in respect of each SONIA Business Day "i", falling on or after the Applicable Fallback Effective Date shall be calculated as if references to SONIA in the foregoing provisions pertaining to the calculation of SONIA were to the Final Fallback Rate. In respect of any day for which the Final Fallback Rate is required, references to the Final Fallback Rate will be deemed to be references to the last provided or published Final Fallback Rate as at close of business in London, England on that day; "SONIAi" means, in relation to any SONIA Business Day "i" in the relevant Observation Period, SONIA in respect of such SONIA Business Day; "SONIA Business Day" means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London; "Administrator/Benchmark Event" means that it has or will prior to the next Interest Determination Date become unlawful for the calculation agent or us to calculate any payments due to be made to any holder using SONIA or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities (including, without limitation, under Regulation (EU) 2016/1011 as it forms part of domestic law in the United Kingdom by virtue of the EUWA, if applicable); "Administrator/Benchmark Event Date" means the date from which it becomes unlawful for the calculation agent or us to calculate any payments due to be made to any holder using SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); "Applicable Fallback Effective Date" means in respect of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) and an Index Cessation Event or an Administrator/Benchmark Event, the Index Cessation Effective Date or the Administrator/Benchmark Event Date, as applicable; "Final Fallback Rate" means, in respect of any relevant day, the official bank rate as determined by the Monetary Policy Committee of the Bank of England and published by the Bank of England from time to time, in effect on that day;

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"Index Cessation Event" means, in respect of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), the occurrence of one or more of the following events: (1) a public statement or publication of information by or on behalf of the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) announcing that it has ceased or will cease to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) permanently or indefinitely, provided that, at the time of the statement or publication, there is no successor administrator or provider, as applicable, that will continue to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); (2) a public statement or publication of information by the regulatory supervisor for the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), the central bank for the currency of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), an insolvency official with jurisdiction over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), a resolution authority with jurisdiction over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) or a court or an entity with similar insolvency or resolution authority over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), which states that the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) has ceased or will cease to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator or provider that will continue to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); or (3) a public statement or publication of information by the regulatory supervisor for the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) announcing that the regulatory supervisor has determined that SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) is no longer, or as of a specified future date will no longer be, representative of the underlying market and economic reality that SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) is intended to measure and that representativeness will not be restored; "Index Cessation Effective Date" means: (1) in the case of clauses (1) or (2) of the definition of "Index Cessation Event", the first date on which SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) would ordinarily have been published or provided and is no longer published or provided; or (2) in the case of clause (3) of the definition of "Index Cessation Event", the latest of (i) the date of such statement or publication and (ii) the date, if any, specified in such statement or publication as the date on which SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) will no longer be representative; "Recommended Rate" means, in respect of any relevant day, the rate (inclusive of any spreads or adjustments) recommended as the replacement for SONIA by (i) the administrator of SONIA if the administrator of SONIA is a national central bank, or (ii) if the national central bank administrator of SONIA does not make a recommendation or the administrator of SONIA is not a national central bank, a committee designated for this purpose by one or both of the FCA (or any successor thereto) and the Bank of England and as provided by the then administrator or provider of

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that rate, or if that rate is not provided by the then administrator or provider thereof, published by an authorized distributor, in respect of that day; and "Relevant Screen Page" means Reuters Screen SONIA Page or such other page, section or other part as may replace it as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to Compounded Daily SONIA. If the rate of interest cannot be determined in accordance with the foregoing provisions, the rate of interest shall be (A) the rate determined by the calculation agent as at the last preceding Interest Determination Date in relation to a Floating Rate Interest Period or (B) if there is no such preceding Interest Determination Date in relation to a Floating Rate Interest Period, the Initial Interest Rate. In connection with the implementation of any fallback rate determined in accordance with the provisions of the Debt Securities, we (in consultation, to the extent practicable, with the calculation agent) will have the right to make changes to (1) any Interest Determination Date, Floating Rate Period Interest Payment Date, SONIA Business Day, business day convention or Floating Rate Interest Period, (2) the manner, timing and frequency of determining the rate and amounts of interest that are payable on the Debt Securities during any Floating Rate Period and the conventions relating to such determination and calculations with respect to interest, (3) rounding conventions, (4) tenors and (5) any other terms or provisions of the Debt Securities during the Floating Rate Period, in each case that we (in consultation, to the extent practicable, with the calculation agent) determine, from time to time, to be appropriate to reflect the determination and implementation of such fallback rate in a manner substantially consistent with market practice (or, if we (in consultation, to the extent practicable, with the calculation agent) decide that implementation of any portion of such market practice is not administratively feasible or determine that no market practice for use of the relevant fallback rate exists, in such other manner as we (in consultation, to the extent practicable, with the calculation agent) determine is appropriate (acting in good faith)) (the "Fallback Conforming Changes"). Any Fallback Conforming Changes will apply to the Debt Securities for all future Floating Rate Interest Periods. LIBOR Replacement Provisions Following the UK Financial Conduct Authority ("FCA")'s announcement in July 2017 that it would no longer persuade or compel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021, the terms of certain series of Debt Securities issued from May 2018 (specified in the Summary of Key Terms above) include LIBOR Replacement Provisions addressing the cessation of the publication of LIBOR on the relevant screen page as a result of LIBOR having ceased to be calculated or administered for publication thereon. Since the relevant USD LIBOR rate in relation to each series of Transitioned Notes which included LIBOR Replacement Provisions in their terms was replaced with Term SOFR, plus a tenor spread adjustment in accordance with the LIBOR Act and related regulations after the Cessation Date (as described above under "Calculation of Three-Month Term SOFR"), the LIBOR Replacement Provisions are no longer applicable or relevant to such Transitioned Notes. Under the LIBOR Replacement Provisions, if we (in consultation with the calculation agent) determine, upon the occurrence of certain events or announcements regarding LIBOR, that LIBOR has ceased or will cease to be published as specified in the definition of "Mid-Market Swap Rate" above or otherwise in accordance with the terms of the relevant Debt Securities, we will use reasonable efforts to (i) appoint an independent financial institution of international repute or other independent financial adviser experienced in the international capital markets (an "Independent Financial Adviser") to determine the Alternative Base Rate and the Alternative Screen Page (each as defined below); or (ii) if we are unable to appoint an Independent Financial Adviser, or if the Independent Financial Adviser fails to determine the Alternative Base Rate and the Alternative Screen Page, we will determine the Alternative Base Rate and the Alternative Screen Page for the affected Debt Securities. If clause (ii) applies and we do not determine the Alternative Base Rate and the Alternative Screen Page, the interest rate for such floating rate interest period will be equal to the

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interest rate in effect for the immediately preceding floating rate interest period or, in the case of the interest determination date prior to the first (or only) interest reset date, the initial interest rate in respect of such Debt Securities. In the case of either (i) or (ii), we or the Independent Financial Adviser (as applicable) may also, following consultation with the calculation agent, make changes to terms, as specified in the relevant indenture, such as the day count fraction, the business day convention and definition of Business Day, in each case in order to follow market practice, as well as any other changes (including to the margin) that we, following consultation with the Independent Financial Adviser (if appointed), determine in good faith are reasonably necessary to ensure the proper operation of the Alternative Base Rate, as well as the comparability of the interest rate determined by reference to the Alternative Base Rate to the interest rate determined by reference to LIBOR (the "Calculation Changes"). We or the Independent Financial Adviser (as applicable) will make these determinations without need for prior notice to or further consent from each affected holder. We will give prompt notice to the Trustee, the calculation agent and the relevant holders following a determination of the Alternative Base Rate, the Alternative Screen Page and any Calculation Changes. Failure to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such determination. "Alternative Base Rate" means the rate that has replaced LIBOR in customary market usage for determining floating interest rates in respect of Dollar-denominated Notes or Sterling-denominated Notes (as applicable) or, if the Independent Financial Adviser or we (in consultation with the calculation agent and acting in good faith and a commercially reasonable manner), as applicable, determine that there is no such rate, such other rate as the Independent Financial Adviser or we (in consultation with the calculation agent and acting in good faith and a commercially reasonable manner), as applicable, determine is most comparable to LIBOR. "Alternative Screen Page" means the alternative screen page, information service or source on which the Alternative Base Rate appears (or such other successor page, service or source) as may be nominated by the person providing or sponsoring the information appearing on such page for purposes of displaying comparable rates. Benchmark Transition Provisions Following the release by the Alternative Reference Rates Committee ("ARRC") convened by the Board of Governors of the Federal Reserve System and the NY Federal Reserve of their recommended model benchmark fallback provisions, the terms of certain series of Debt Securities issued from November 2019 (as specified in the Summary of Key Terms above) provide for the replacement of the benchmark for such Debt Securities upon the occurrence of one or more Benchmark Transition Events. A "Benchmark Transition Event" means the occurrence of one or more of the following events with respect to the then-current benchmark: (1) a public statement or publication of information by or on behalf of the administrator of the benchmark announcing that such administrator has ceased or will cease to provide the benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the benchmark; (2) a public statement or publication of information by the regulatory supervisor for the administrator of the benchmark, the central bank for the currency of the benchmark, an insolvency official with jurisdiction over the administrator for the benchmark, a resolution authority with jurisdiction over the administrator for the benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the benchmark, which states that the administrator of the benchmark has ceased or will cease to provide the benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the benchmark; or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the benchmark announcing that the benchmark is no longer representative.

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A "Benchmark Replacement Date" means the earliest to occur of the following events with respect to the then-current benchmark: (1) in the case of clause (1) or (2) of the definition of "Benchmark Transition Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the benchmark permanently or indefinitely ceases to provide the benchmark; or (2) in the case of clause (3) of the definition of "Benchmark Transition Event," the date of the public statement or publication of information referenced therein. If we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) determine that a Benchmark Transition Event and related Benchmark Replacement Date have occurred with respect to a series of Debt Securities prior to the applicable reference time in respect of any determination of the benchmark on any date, the applicable Benchmark Replacement will replace the then-current benchmark for all purposes relating to such series during the applicable floating rate interest period in respect of such determination and all determinations on all subsequent dates; provided that if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) are unable to or do not determine a Benchmark Replacement prior to the relevant reference time on the relevant interest determination date, the interest rate for such floating rate interest period will be equal to the interest rate in effect for the immediately preceding floating rate interest period or (i) in the case of the interest determination date prior to the first interest reset date, the initial interest rate in respect of such Debt Securities, and (ii) in the case of the interest determination date prior to the first interest payment date on a series of Floating Rate Notes, the initial interest rate which would have been applicable to such Floating Rate Notes for the first interest period, had the Floating Rate Notes been outstanding for a period equal in duration to the scheduled first interest period for such Floating Rate Notes but ending on (and excluding) the issue date of such Floating Rate Notes (and applying the relevant margin). For Debt Securities issued on or after November 7, 2019, but before June 4, 2020, the "Benchmark Replacement" in respect of a series of Debt Securities is the Interpolated Benchmark with respect to the then-current benchmark, plus the Benchmark Replacement Adjustment for such benchmark; provided that if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) cannot determine the Interpolated Benchmark as of the Benchmark Replacement Date, the Benchmark Replacement will be the first alternative in the following waterfall that can be determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us), plus a Benchmark Replacement Adjustment: (a) term SOFR; (b) compounded SOFR; (c) the alternate rate of interest that has been selected or recommended by the relevant governmental body as the replacement for the then current benchmark for the applicable Corresponding Tenor (if any); (d) the fallback rate adopted by the International Swaps and Derivatives Association, Inc. ("ISDA"); and (v) the alternate rate of interest that has been selected by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) as the replacement for the current benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for Dollar-denominated floating rate notes at such time. "Interpolated Benchmark" with respect to the benchmark means the rate determined for the Corresponding Tenor by interpolating on a linear basis between: (1) the benchmark for the longest period (for which the benchmark is available) that is shorter than the Corresponding Tenor and (2) the benchmark for the shortest period (for which the benchmark is available) that is longer than the Corresponding Tenor. If the benchmark with respect to which the Interpolated Benchmark is being determined is LIBOR, then the term "benchmark" as used in clause (1) and (2) of the foregoing definition means the London interbank offered rate for deposits in U.S. dollars for the applicable periods specified in such clauses.

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"Corresponding Tenor" with respect to a Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding business day adjustments) as the applicable tenor for the then-current benchmark For Debt Securities issued on or after June 4, 2020, the "Benchmark Replacement" in respect of a series of Debt Securities will be the first alternative in the following waterfall that can be determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us), plus a Benchmark Replacement Adjustment: (a) the alternate rate of interest that has been selected or recommended by the relevant governmental body as the replacement for the then current benchmark for the applicable Corresponding Tenor (if any); (b) the fallback rate adopted by the International Swaps and Derivatives Association, Inc. ("ISDA"); and (c) the alternate rate of interest that has been selected by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) as the replacement for the current benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for Dollar-denominated floating rate notes at such time. "SOFR" with respect to any day means the secured overnight financing rate published for such day by the NY Federal Reserve, as the administrator of the benchmark (or a successor administrator), on the NY Federal Reserve's website at http://www. newyorkfed.org (or any successor source). The "Benchmark Replacement Adjustment" will be a spread adjustment determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) in accordance with the following waterfall: (a) the spread adjustment selected, recommended, or calculated according to a model determined by the relevant governmental body; (b) if applicable, the spread adjustment selected by ISDA; or (c) the spread adjustment selected by us or our designee giving due consideration to industry-accepted spread adjustments. In connection with the implementation of a Benchmark Replacement with respect to a series of Debt Securities, we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) will have the right to make changes to terms, as specified in the relevant indenture, such as the manner, timing and frequency of determining the rate and amounts of interest that are payable during the floating rate interest period and the conventions relating to such determination and calculations with respect to interest, in each case in order to follow market practice (or, if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) decide that implementation of any portion of such market practice is not administratively feasible or determine that no market practice for use of the Benchmark Replacement exists, in such other manner as we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) determine is appropriate (acting in good faith)) (the "Benchmark Replacement Conforming Changes"). Any Benchmark Replacement Conforming Changes will apply to the applicable series of Debt Securities for all future floating rate interest periods. We or our designee will make these determinations without need for prior notice to or further consent from each affected holder. Ranking Senior Debt Securities Our Senior Debt Securities constitute our direct, unsecured obligations ranking pari passu with our other senior indebtedness and without any preference among themselves. Senior indebtedness will not include any indebtedness that is expressed to be subordinated to or pari passu with Subordinated Debt Securities. Each series of Senior Debt Securities would be effectively subordinated to any indebtedness or other liabilities of us or our subsidiaries that is secured by property or assets to the extent of the value of the property or assets securing such indebtedness. No such secured indebtedness is currently outstanding.

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Subordinated Debt Securities Our Subordinated Debt Securities constitute our direct, unsecured obligations ranking pari passu without any preference among themselves. In the event of our winding-up, the rights of holders will be subordinated and subject in right of payment to the prior payment in full of all claims of our other creditors, other than claims which are by their terms, or are expressed to be, subordinated to or pari passu with the Subordinated Debt Securities. As of December 31, 2025, the aggregate amount of outstanding indebtedness senior to the Subordinated Debt Securities is $119,990,148,874. No Set-off To the fullest extent permitted by law, holders, by their acceptance of the Debt Securities (other than the senior Debt Securities issued in 2011 and 2012 pursuant to the 2009 Indenture and Debt Securities issued on or after March 4, 2024), are deemed to have waived any right of set-off or counterclaim that they might otherwise have in respect of any claims of such holders to payment of any principal, premium or interest in respect of the Debt Securities. In addition, holders of Subordinated Debt Securities issued prior to November 18, 2024, by their acceptance thereof, covenant and agree that, in the event of a winding-up, they will hold any sums they receive by way of set-off on trust for our Ordinary Creditors and will, without undue delay, pay such sums to the liquidator to apply in payment of claims of Ordinary Creditors. "Ordinary Creditors" means creditors of HSBC Holdings except creditors in respect of Subordinated Indebtedness and creditors in respect of debt securities with no maturity issued pursuant to an indenture of even date as the Subordinated Debt Securities Indenture between HSBC Holdings and The Bank of New York Mellon as trustee. Subject to applicable law, claims in respect of Debt Securities issued on or after March 4, 2024, may not be set off, or be the subject of a counterclaim, by any holder or by the trustee in respect of any claims of such holders to payment of any principal, premium or interest in respect of the Debt Securities or the relevant indenture, against or in respect of any of its obligations to the Company, and every holder and the trustee in respect of any claims of such holders waives, and shall be treated for all purposes as if it had waived, any right that it might otherwise have to set-off, or to raise by way of counterclaim any of its claims in respect of the Debt Securities or the relevant indenture, against or in respect of any of its obligations to the Company. Notwithstanding the preceding sentence, if any of the rights and claims of any holder are discharged by set-off, such holder will immediately pay an amount equal to the amount of such discharge to the Company or, if applicable, the liquidator or trustee or receiver in the Company's bankruptcy and, until such time as payment is made, will hold a sum equal to such amount in trust for the Company or, if applicable, the liquidator or trustee or receiver in the Company's bankruptcy. Accordingly, such discharge will be deemed not to have taken place. Redemption We may, in the circumstances set out below, redeem the Debt Securities prior to their specified maturity date. Holders of the Debt Securities have no right to require us to redeem the Debt Securities. The Debt Securities of any series to be redeemed will also stop bearing interest on the relevant redemption date. We will give prior notice of any proposed redemption to affected holders of Dollar-denominated Notes via DTC and to affected holders of Sterling-denominated Notes via Clearstream, Luxembourg and/or Euroclear (or, if the relevant Debt Securities are held in definitive form, to the holders at their addresses shown on the register for such Debt Securities). For Debt Securities issued before June 4, 2020 and for the 7.35% Subordinated Notes Due 2032 issued on September 16, 2022, the 7.625% Subordinated Notes due 2032 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2036 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2037 issued on September 16, 2022 and the 6.8% Subordinated Notes due 2038 issued on September

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16, 2022, we will provide such notice not less than 30 nor more than 60 days prior to the applicable redemption date. For Debt Securities issued on or after June 4, 2020 except for the 7.35% Subordinated Notes Due 2032 issued on September 16, 2022, the 7.625% Subordinated Notes due 2032 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2036 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2037 issued on September 16, 2022 and the 6.8% Subordinated Notes due 2038 issued on September 16, 2022, we will provide such notice not less than 10 nor more than 60 days prior to the applicable redemption date. Notwithstanding the foregoing, we may redeem the relevant series of Debt Securities only if we have obtained prior relevant supervisory consent for such redemption to the extent that such consent is required by the relevant laws, regulations, requirements, guidelines and policies then in effect in the UK. Relevant supervisory consent is defined in the prospectus supplement for the relevant series of Debt Securities to be redeemed. We may only redeem or purchase the Subordinated Debt Securities prior to their maturity, in each case, if and to the extent required by the relevant rules (i) we have obtained the relevant supervisory consent; (ii) prior to the fifth anniversary of the issue date, (a) we have demonstrated to the satisfaction of the relevant regulator that (x) pursuant to a Capital Disqualification Event Redemption (as described below) the relevant change in the regulatory classification of the Subordinated Debt Securities was not reasonably foreseeable at the issue date or (y) pursuant to a Tax Redemption (as described above) the Tax Event was not reasonably foreseeable at the issue date and such Tax Event is a change in the applicable tax treatment of Subordinated Debt Securities which is material; or (b) in respect of Subordinated Debt Securities issued on or after November 18, 2024, in any relevant circumstances we have (or will have), before or at the same time as such redemption or repurchase, replaced the Subordinated Debt Securities with own funds instruments of equal or higher quality at terms that are sustainable for the Company's income capacity, and the relevant regulator has permitted such action on the basis of the determination that it would be beneficial from a prudential point of view and justified by exceptional circumstances; and/or (c) (except in the case of Subordinated Debt Securities issued pursuant to the First Supplemental Indenture dated March 12, 2014) we have complied with any alternative or additional conditions to redemption or repurchase, as applicable, set out in the relevant rules. For the avoidance of doubt, the requirements in item (i) and (ii) in the paragraph above will not apply if (a) so long as the relevant rules do not otherwise require, the relevant Debt Securities have (or will have, on the date fixed for redemption or purchase) ceased fully to qualify as part of the HSBC Group's regulatory capital, (b) the relevant Debt Securities are purchased for market-making purposes in accordance with any permission given by the relevant regulator pursuant to the relevant rules within the limits prescribed in such permission or (c) the relevant Debt Securities are being redeemed or purchased pursuant to any general prior permission granted by the relevant regulator pursuant to the relevant rules within the limits prescribed in such permission. Tax Redemption We have the right to redeem any series of Debt Securities, in whole but not in part, at a redemption price equal to 100% of their principal amount together with any accrued but unpaid interest, if any, upon the occurrence of certain tax events as described in the relevant prospectus supplement. We will be able to redeem the Subordinated Debt Securities issued pursuant to the 2002 Indenture and the Senior Debt Securities at a redemption price equal to the applicable principal amount thereof together with accrued but unpaid interest (if any), if, at any time, we determine that (a) in making payment under such Debt Securities in respect of principal or interest we have become obligated to pay holders any Additional Amounts (as described below under "Payment of Additional Amounts"), provided such obligation to pay Additional Amounts results from a change in or amendment to the tax laws or regulations of the UK (or any political subdivision or any taxing authority thereof or therein having the power to tax) (a "Taxing Jurisdiction"), or any change in the

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official application or interpretation of such laws (including a decision of any court or tribunal), or any change in, or in the official application or interpretation of, or execution of, or amendment to, any treaty to which the UK is a party, which change, amendment or execution becomes effective after the date of original issuance of the Debt Securities of such series or (b) the payment of interest in respect of such Debt Securities has become or will or would be treated as a "distribution" within the meaning of the applicable UK tax statute, as a result of any change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws including a decision of any court, which change or amendment becomes effective after the date of original issuance of the Debt Securities of such series; provided, however, that in the case of (a) above, no notice of redemption will be given earlier than 90 days prior to the earliest date on which we would be obliged to pay Additional Amounts were a payment in respect of such Debt Securities then due. We will be able to redeem the Subordinated Debt Securities issued prior to November 18, 2024 pursuant to the 2014 Indenture at a redemption price equal to the applicable principal amount thereof together with accrued but unpaid interest (if any) if a Tax Event has occurred; provided, however, that no notice of redemption will be given earlier than 90 days prior to the earliest date on which we would be obliged to pay Additional Amounts were a payment in respect of such Debt Securities then due. A "Tax Event" will be deemed to have occurred if, at any time, we determine that as a result of a change in, or amendment to, the laws of a Taxing Jurisdiction, including any treaty to which the relevant Taxing Jurisdiction is a party, or a change in an official application or interpretation of those laws on or after the issue date, including a decision of any court or tribunal that becomes effective on or after the issue date on a subsequent date for the payment of interest on the Debt Securities, we would be required to pay any Additional Amounts (or, in the case of the 4.375% Fixed Rate Subordinated Notes due 2026 only, (a) if we were to seek to redeem the Debt Securities on a subsequent date (for which purpose no consideration will be given as to whether or not we would otherwise be entitled to redeem the Debt Securities), we would be required to pay any Additional Amounts, or (b) on a subsequent date for the payment of interest on the Debt Securities, interest payments (or our funding costs as recognized in our accounts) under, or with respect to, the Debt Securities are no longer fully deductible for UK corporation tax purposes). We will be able to redeem the Subordinated Debt Securities issued on or after November 18, 2024, in whole but not in part, at the Company's sole discretion, on not less than 10 nor more than 60 days' notice, at any time at a redemption price equal to 100% of the principal amount thereof (and premium, if any), together with accrued but unpaid interest, if any, in respect of such Subordinated Debt Securities to (but excluding) the date fixed for redemption, if, at any time, the Company shall determine that: (i) in making payment under such Subordinated Debt Securities in respect of principal (or premium, if any), interest or missed payment the Company has or will or would become obligated to pay Additional Amounts, provided such obligation to pay Additional Amounts as provided in the relevant indenture results from a change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws (including a decision of any court or tribunal), or any change in, or in the official application or interpretation of, or execution of, or amendment to, any treaty or treaties affecting taxation to which the United Kingdom is a party, which change, amendment or execution becomes effective on or after the issue date; or (ii) the payment of interest in respect of such Subordinated Debt Securities has become or will or would be treated as a "distribution" within the meaning of Section 1000 of the Corporation Tax Act 2010 of the UK (or any statutory modification or reenactment thereof for the time being) as a result of any change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws including a decision of any court, which change or amendment becomes effective on or after the issue date; provided, however, that in the case of (i) above, no notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obliged to pay Additional Amounts were a payment in respect of such Subordinated Debt Securities then due. Optional Redemption We have the right to redeem certain series of Debt Securities on the applicable Optional Redemption Date (as specified in the Summary of Key Terms above) at our option in whole (but not

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in part). The redemption price of the Debt Securities will be equal to 100% of their principal amount plus any accrued and unpaid interest to (but excluding) the Optional Redemption Date. Make-Whole and Par Redemption We have the right to redeem certain series of Debt Securities during the applicable Make- Whole Redemption Period (as specified in the Summary of Key Terms above) in whole at any time during such period or in part from time to time during such period. The redemption price of the Debt Securities will be equal to the greater of: (1) 100% of the principal amount of the Debt Securities to be redeemed; and (2) the sum of the present values of (a) the principal amount of the Debt Securities to be redeemed (discounted from the Par Redemption Date) and (b) (i) for the purposes of Debt Securities issued before March 3, 2025, the remaining payments of interest to be made on any scheduled Interest Payment Date to (and including) the Par Redemption Date for the Debt Securities to be redeemed (not including accrued but unpaid interest to (but excluding) the applicable redemption date, if any, on the principal amount of the Debt Securities), discounted to the applicable redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Reference Treasury Rate plus a margin set out in the relevant prospectus supplement; or (ii) for the purposes of the Debt Securities issued on or after March 3, 2025, the remaining payments of interest to be made on any scheduled Interest Payment Date to (and including) the Par Redemption Date for the Debt Securities to be redeemed, discounted to the applicable redemption date on a semiannual basis (assuming a 360- day year consisting of twelve 30-day months) at the Reference Treasury Rate plus a margin set out in the relevant prospectus supplement, less an amount equal to any accrued and unpaid interest to (but excluding) the applicable redemption date, if any, on the principal amount of relevant Debt Securities to be redeemed, in each case, plus any accrued and unpaid interest on the Debt Securities to be redeemed to (but excluding) the applicable redemption date. For the Debt Securities for which "Make-Whole and Par Redemption" is indicated in the Summary of Key Terms above, on the applicable Par Redemption Date, the relevant Debt Securities can be redeemed in whole (but not in part). This type of redemption is described in the paragraph above under the heading Description of Debt Securities – Redemption – Optional Redemption. Capital Disqualification Event Redemption We have the right to redeem certain series of Subordinated Debt Securities (as specified in the Summary of Key Terms above), in whole but not in part, at a redemption price equal to 100% of the principal amount, if any, if we determine that a Capital Disqualification Event has occurred. With respect to Subordinated Debt Securities issued pursuant to the First Supplemental Indenture dated March 12, 2014, or the Second Supplemental Indenture dated August 18, 2015, a "Capital Disqualification Event" will be deemed to have occurred if we determine, in good faith and after consultation with the relevant regulator, at any time after the issue date, that by reason of the non-compliance with the applicable criteria for Tier 2 capital under the relevant rules, the affected Debt Securities are excluded fully from Holdings' Tier 2 capital (excluding for these purposes any non-recognition due to any applicable limitations on the amount of such of Holdings' capital). With respect to Subordinated Debt Securities issued pursuant to the Third Supplemental Indenture dated November 23, 2016 a "Capital Disqualification Event" will be deemed to have occurred if we determine, at any time after the issue date, that there is a change in the regulatory classification of the Debt Securities that results or will result in their exclusion in whole from HSBC Group's regulatory capital. With respect to Subordinated Debt Securities issued on or after March 29, 2022, a Capital Disqualification Event will be deemed to have occurred if we determine, at any time after the Issue Date, there is a change in the regulatory classification of the relevant Subordinated Debt Securities that results or will result in either their:

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(i) exclusion in whole or in part from the regulatory capital for the HSBC Group; or (ii) reclassification in whole or in part as a form of regulatory capital of the HSBC Group that is lower than Tier 2 capital (if any). LADE Redemption We have the option to redeem the Sterling-denominated Notes issued on March 24, 2021 and the Senior Debt Securities issued on or after March 10, 2022, (as specified in the Summary of Key Terms above) in whole, but not in part, at a redemption price equal to 100% of their principal amount, plus any accrued and unpaid interest to (but excluding) the applicable redemption date, following the occurrence of a Loss Absorption Disqualification Event. For the purposes of the Sterling-denominated Notes issued on March 24, 2021, a "Loss Absorption Disqualification Event" shall be deemed to have occurred if such notes become fully or partially ineligible to meet the Company's or the HSBC Group's minimum requirements for (A) eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company or the HSBC Group, as a result of any: (a) Loss Absorption Regulation becoming effective after the issue date; or (b) amendment to, or change in, any Loss Absorption Regulation, or any change in the application or official interpretation of any Loss Absorption Regulation, in any such case becoming effective on or after the issue date, provided, however, that a Loss Absorption Disqualification Event shall not occur where the exclusion of the notes from the relevant minimum requirement(s) is due to the remaining maturity of the notes being less than any period prescribed by any applicable eligibility criteria for such minimum requirement(s) under the relevant Loss Absorption Regulations effective with respect to Holdings and/or the HSBC Group on the issue date. A "Loss Absorption Disqualification Event" shall be deemed to have occurred if (A) for the purposes of Senior Debt Securities issued on or after March 10, 2022, such Senior Debt Securities become fully or partially ineligible to meet the Company's and/or the HSBC Group's minimum requirements for (i) eligible liabilities and/or (ii) loss absorbing capacity instruments, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company and/or the HSBC Group or (B) for the purposes of Senior Debt Securities issued on or after November 6, 2025, if such Senior Debt Securities become fully or partially ineligible to count towards the Company's and/or the HSBC Group's minimum requirements for (i) own funds and eligible liabilities and/or (ii) loss absorbing capacity, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company and/or the HSBC Group; in each of (A) and (B) as a result of any: (a) Loss Absorption Regulation becoming effective after the issue date; or (b) amendment to, or change in, any Loss Absorption Regulation, or any change in the application or official interpretation of any Loss Absorption Regulation, in any such case becoming effective on or after the issue date, provided, however, that a Loss Absorption Disqualification Event shall not occur where the exclusion of the notes from the relevant minimum requirement(s) is due to the remaining maturity of the notes being less than any period prescribed by any applicable eligibility criteria for such minimum

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requirement(s) under the relevant Loss Absorption Regulations effective with respect to Holdings and/or the HSBC Group on the issue date. We may only redeem or purchase the Debt Securities prior to the maturity date if we have obtained any relevant supervisory consent, if and to the extent then required by the loss absorption regulations. Residual Call Redemption We have the option to redeem the Subordinated Debt Securities issued on or after September 10, 2025 (as specified in the Summary of Key Terms above) pursuant to a Residual Call, as defined below. If the outstanding aggregate principal amount of such series of Subordinated Debt Securities is 25% or less of the aggregate principal amount of the Subordinated Debt Securities originally issued (and, for these purposes, any additional Subordinated Debt Securities issued after the original issue date and consolidated with the relevant Subordinated Debt Securities as part of the same series shall be deemed to have been originally issued), we may, at our option in our sole discretion, redeem the remaining outstanding Subordinated Debt Securities of such series in whole (but not in part) at any time at a redemption price equal to 100% of the principal amount of such outstanding Subordinated Debt Securities plus any accrued and unpaid interest to (but excluding) the date of redemption (a "Residual Call"). It will be sufficient for us to deliver to the trustee an officer's certificate stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the outstanding aggregate principal amount of the relevant series of Subordinated Debt Securities is 25% or less of the aggregate principal amount of the Subordinated Debt Securities of such series originally issued. For these purposes, the trustee and the paying agent will accept such officer's certificate without further inquiry as sufficient evidence of the existence of such circumstances and such officer's certificate will be conclusive and binding on the noteholders. Payment of Additional Amounts All payments made under or with respect to any series of Debt Securities will be paid by us without deduction or withholding for, or on account of, any and all present and future taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Taxes") whatsoever imposed, levied, collected, withheld or assessed by or on behalf of a Taxing Jurisdiction, unless the deduction or withholding is required by law. If at any time a Taxing Jurisdiction requires us to deduct or withhold Taxes, we will pay the additional amounts ("Additional Amounts") of (i) principal and any interest on the Debt Securities issued before August 18, 2020, and (ii) interest only (and not principal) on Debt Securities issued on or after August 18, 2020, as may be necessary so that the net amounts (including Additional Amounts) paid to the holders, after the deduction or withholding, will equal the respective amounts which would have been payable had no such deduction or withholding been required. However, certain exceptions are set forth in the relevant prospectus and/or prospectus supplement for a particular series of Debt Securities. All payments in respect of the Debt Securities issued after March 2017 will be made subject to any withholding or deduction required pursuant to FATCA, and we will not be required to pay any Additional Amounts on account of any such deduction or withholding required pursuant to FATCA. Modification and Waiver We and the Trustee may make certain modifications and amendments to the indenture applicable to each series of Debt Securities without the consent of the holders of the Debt Securities. We may make other modifications and amendments with the consent of the holder(s) of not less than

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a majority in aggregate principal amount of the Debt Securities of the series outstanding under the applicable indenture that are affected by the modification or amendment. However, we may not make any modification or amendment without the consent of the holder of each affected Debt Security that would: • change the terms of any Debt Security to change the stated maturity date of its principal amount, or instalment of interest, or Additional Amounts; • reduce the principal amount of, or any premium, or rate of interest, or related deferred payment, or missed payment, or Additional Amounts payable with respect to any Debt Security; • change our obligation, or any successor's, to pay Additional Amounts (except as contemplated and permitted under the indentures); • reduce the amount of principal on a discount Debt Security that would be due and payable upon an acceleration of the maturity date of any series of Debt Securities; • change the places at which payments are payable or the currency of payment, or any premium, or interest, or related deferred payment; • impair the right to sue for the enforcement of any payment due and payable; • reduce the percentage in aggregate principal amount of outstanding Debt Securities of the series necessary to modify or amend the relevant indenture or to waive compliance with certain provisions of the relevant indenture and any past events of default or their consequences (in each case, as defined in the relevant indenture); • change our obligation to maintain an office or agency in the place and for the purposes specified in the relevant indenture; • modify the terms and conditions of our obligations in respect of the due and punctual payment of the amounts due and payable on the Debt Securities, or the subordination provisions of the affected Debt Securities in the Subordinated Debt Securities Indentures, in either case in a manner adverse to the holders; or • change or eliminate any covenants or provisions included in the relevant indenture solely for the benefit of one or more series of Debt Securities, or the rights of holders with respect to such covenants or provisions. The holders of not less than a majority in principal amount of the outstanding Debt Securities of a series may, on behalf of all holders of Debt Securities of that series, waive, insofar as that series is concerned, our compliance with certain restrictive provisions of the indenture before the time for such compliance. In addition, material variations in the terms and conditions of Debt Securities of any series, including modifications relating to subordination, redemption and events of default may require the consent of the relevant regulator. Events of Default and Enforcement Events and Remedies Senior Debt Securities Extended Events of Default and Defaults With respect to the Senior Debt Securities for which "Extended Events of Default and Defaults" is indicated in the Summary of Key Terms above, each of the following is an "Event of Default":

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i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); ii. An effective shareholders' resolution is validly adopted for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); iii. Failure to pay any principal of any Senior Debt Securities of that series at its maturity date, and the default continues for a period of 30 days; or iv. Failure to pay any interest on any Senior Debt Securities of that series when due and payable, and the default continues for a period of 30 days. Limited Events of Default and Defaults With respect to the Senior Debt Securities for which "Limited Events of Default and Defaults" is indicated in the Summary of Key Terms above, each of the following is an "Event of Default": i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); or ii. An effective shareholders' resolution is validly adopted for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency). Each of the following is a "Default": i. Failure to pay any principal of (or premium, if any) any Senior Debt Securities of that series at its maturity date, and the default continues for a period of 30 days; or ii. Failure to pay any interest on any Senior Debt Securities of that series when due and payable, and the default continues for a period of 30 days. Notwithstanding the foregoing, failure to make any payment in respect of the Senior Debt Securities will not be a Default in respect of the affected Debt Securities if such payment is withheld or refused: a) to comply with any fiscal or other law or regulation or with the order of any court of competent jurisdiction, in each case applicable to such payment; or b) in case of doubt as to the validity or applicability of any such law, regulation or order, in accordance with advice given as to such validity or applicability at any time during the said grace period of 30 days by independent legal advisers acceptable to the Trustee. However, the Trustee may, by notice to us, require us to take such action as the Trustee may be advised in an opinion of counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case we will proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such resolution determines that the relevant payment can be made without violating any applicable law, regulation or order then the provisions of the preceding sentence will cease to have effect and the payment will become due and payable on the expiration of the relevant grace period of 30 days after the Trustee gives written notice to us informing us of such resolution. LADE Provisions With respect to the Senior Debt Securities for which "LADE Provisions" is indicated in the Summary of Key Terms above, on the issue date for such series and for so long as no Loss Absorption

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Disqualification Event has occurred, the Extended Event of Default and Default provisions apply. On and after the date of a Loss Absorption Disqualification Event, the Limited Events of Default and Default provisions apply. A "Loss Absorption Disqualification Event" is deemed to have occurred if either of the events which constitutes a "Default" for purposes of the Limited Event of Default and Default provisions has caused or is likely to cause the Debt Securities to be fully or partially ineligible to meet Holdings' minimum requirements for eligible liabilities and/or loss absorption capacity instruments pursuant to the relevant loss absorption regulations, as a result of any: i. loss absorption regulation becoming effective on or after the applicable issue date for such series; or ii. amendment to, or change in, any loss absorption regulation, or any change in the application or official interpretation of any loss absorption regulation, in any case becoming effective on or after the applicable issue date. Subordinated Events of Default and Defaults With respect to the Subordinated Debt Securities, each of the following is an "Event of Default": i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); or ii. An effective shareholders' resolution is validly adopted, for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency). Each of the following is a "Default" (whatever the reason for such default and whether it will be voluntary or involuntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): i. Failure to pay any interest on any Subordinated Debt Securities of that series when due and payable, and the default continues for a period of 14 days (or, in relation to Subordinated Debt Securities issued on or after November 18, 2024, 30 days); or ii. Failure to pay any principal (or premium, if any) of any Subordinated Debt Securities of that series at its maturity date, and the default continues for a period of 7 days (or, in relation to Subordinated Debt Securities issued on or after November 18, 2024, 30 days). The Subordinated Debt Securities issued pursuant to the 2002 Indenture provide that if we do not make a payment with respect to any notes on any relevant payment date, our obligations to make such payment will be deferred (and the payment will not be due and payable) until: i. in the case of a payment of interest, the date on which a dividend is paid on any class of our share capital; and ii. in the case of a payment of principal, the first Business Day after the date that falls six months after the original payment date. Failure by us to make any such payment prior to such deferred date will not constitute a default by us or allow any holder to sue us for such payment or take any other action. Any payment so deferred will not be treated as due for any purpose (including, without limitation, for the purpose of ascertaining whether or not a Default has occurred) until the relevant deferred date. Notwithstanding the foregoing, failure to make any payment in respect of the Subordinated Debt Securities will not be a Default in respect of the affected Debt Securities if such payment is withheld or refused to (a) comply with any fiscal or other law or regulation or with the order of any

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court of competent jurisdiction, in each case applicable to such payment; or (b) in case of doubt as to the validity or applicability of any such law, regulation or order, in accordance with advice given as to such validity or applicability at any time during the specified grace period by independent legal advisers acceptable to the Trustee. However, the Trustee may, by notice to us, require us to take such action as the Trustee may be advised in an opinion of counsel is appropriate and reasonable in the circumstances to resolve such doubt, in which case we will proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such resolution determines that the relevant payment can be made without violating any applicable law, regulation or order, then the provisions of the preceding sentence will cease to have effect and the payment will become due and payable on the expiration of the specified grace period after the Trustee gives written notice to us informing us of such resolution. Acceleration If a Default occurs in respect of a series of Debt Securities, the Trustee may institute proceedings in England (but not elsewhere) for our winding-up; provided that the Trustee may not, upon the occurrence of a Default, accelerate the maturity of any affected Debt Securities, unless an Event of Default has occurred and is continuing in respect of a series of Debt Securities. If an Event of Default occurs and is continuing, the Trustee may, or if so requested by the holders of at least 25% in outstanding principal amount of the affected series of Debt Securities, will declare by a notice in writing to us (and to the Trustee if given by the holders) such Debt Securities to be due and repayable (and such Debt Securities will become immediately due and repayable) at their outstanding principal amount (or at such other repayment amount as may be specified in or determined in accordance with the relevant indenture) together with accrued but unpaid interest, if any. Subject to the provisions included in the relevant indenture for the indemnification of the Trustee, the holders of a majority in aggregate principal amount of the outstanding Debt Securities of the affected series have the right to direct the Trustee to take enforcement action with respect to that series; provided that such direction does not conflict with any rule of law or the relevant indenture and, if the Trustee, by a responsible officer or responsible officers of the Trustee, determines in good faith that it is not unjustly prejudicial to the holder(s) of any Debt Securities of that series not taking part in the direction. The Trustee may also take any other action, not inconsistent with the direction, that it deems proper. No delay or omission of the Trustee or any holder to exercise any right or remedy accruing upon any Event of Default or Default will impair any such right or remedy or constitute any waiver of any such Event of Default or Default. Every right and remedy given by law or by the relevant indenture to the Trustee or the holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the holders. The Trustee must give notice to each affected holder within 90 days of a Default with respect to the Debt Securities of any series, unless the Default has been cured or waived. However, the Trustee will be entitled to withhold notice if a trust committee of directors and/or responsible officers of the Trustee determine in good faith that withholding of notice is in the interest of the holders. We are required to furnish to the Trustee annually a certificate from our principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of our compliance with all conditions and covenants under the relevant Debt Securities Indenture, whether an Event of Default or Default has occurred with respect to any series of Debt Securities, and, if one has occurred, specifying all such Events of Default or Defaults and the nature thereof of which they may have knowledge. Trust Indenture Act Remedies Notwithstanding the limitation on remedies specified above, (i) the Trustee will have such powers as are required to be authorized to it under the Trust Indenture Act in respect of the rights of the holders of the Debt Securities under the provisions of the relevant indenture and (ii) nothing shall impair the right of a holder of the Debt Securities under the Trust Indenture Act, absent such holder's

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consent, to sue for any payment due but unpaid with respect to the Debt Securities; provided that, in the case of each of (i) and (ii) above, any payments in respect of, or arising from, the Subordinated Debt Securities, including any payments or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the Subordinated Debt Securities, are subject to the subordination provisions set forth in the relevant Subordinated Debt Indenture. Limitation on Suits No holder of Debt Securities will be entitled to proceed directly against us, except as described below. Before a holder of Debt Securities may bypass the Trustee and bring its own lawsuit or other formal legal action or take other steps to enforce its rights or protect its interests relating to the Debt Securities, the following must occur: • The holder must give the Trustee written notice that a Senior or Subordinated Event of Default or Default (as applicable) has occurred and remains uncured. • The holders of at least a majority in aggregate principal amount of all outstanding Debt Securities of the relevant series must make a written request that the Trustee take action because of the default in its own name as Trustee, and the holders must offer to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and other liabilities of taking that action. • The Trustee must not have taken action for 60 days after receipt of the above notice, request and offer of any indemnity (subject to the terms of the relevant indenture), and the Trustee must not have received an inconsistent direction from the majority in principal amount of all outstanding Debt Securities of the relevant series during that period. Notwithstanding any contrary provisions, no holder will have any right to affect, disturb or prejudice the rights of any other such holders, or to obtain priority over any other of such holders in the relevant indenture, or to enforce any right under the relevant indenture except in the manner provided and for the equal and rateable benefit of all such holders. Exercise of UK Bail-in Power The Relevant UK Resolution Authority (which refers to any authority with the ability to exercise a UK Bail-in Power) may exercise the bail-in tool in respect of Holdings, as issuer, and the Debt Securities. Pursuant to the applicable supplemental indenture, each Holder of Debt Securities issued on or after March 12, 2014 (including each beneficial owner and each subsequent Holder and beneficial owner purchasing in the secondary market) is deemed, by its acquisition of such Debt Securities, to acknowledge, agree to be bound by and consent to the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority (as described below). Generally, exercise of any UK Bail-in Power by the Relevant UK Resolution Authority may result in, without limitation, any of the following, or some combination thereof: (i) the reduction of all, or a portion, of the principal amount of, or interest on, the Debt Securities; (ii) the cancellation of the Debt Securities; (iii) the conversion of all, or a portion of, the principal amount of, or interest or Additional Amounts on, the Debt Securities into shares or other securities or other obligations of Holdings or another person, including by means of a variation of the terms of the Debt Securities; or (iv) the amendment or alteration of the maturity or interest payment dates of the Debt Securities, including by suspending payment for a temporary period to give effect to the exercise by the Relevant U.K. Resolution Authority of such U.K. bail-in power. No repayment of the principal amount of, or interest on, the Debt Securities will become due and payable after the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority if and to the extent such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise.

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The exercise of the UK Bail-in Power by the Relevant UK Resolution Authority with respect to the Debt Securities will not constitute an Event of Default or Default. Upon the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority with respect to the Debt Securities, the Trustee will not be required to take any further directions from holders of the Debt Securities pursuant to the applicable indenture which authorises holders of a majority in aggregate principal amount of the outstanding Debt Securities of the relevant series of Debt Securities to direct certain actions relating to the relevant Debt Securities and the applicable indentures impose no duties upon the Trustee whatsoever with respect to the exercise of any UK Bail- in Power by the Relevant UK Resolution Authority. Notwithstanding the foregoing, if, following the completion of the exercise of the UK Bail-in Power by the Relevant UK Resolution Authority in respect of the Debt Securities, the Debt Securities remain outstanding (for example, if the exercise of the UK Bail-in Power results in only a partial write-down of the principal of the Debt Securities), then the Trustee's duties under the relevant Senior Debt Securities Indenture or Subordinated Debt Securities Indenture (as applicable) will apply with respect to the relevant Debt Securities following such completion to the extent agreed by Holdings and the Trustee, pursuant to a supplemental indenture to the applicable indenture, or an amendment thereto. Satisfaction and Discharge We will be discharged from any and all obligations in respect of a series of Debt Securities (with certain exceptions) if, at any time, inter alia, either: • all Debt Securities of such series theretofore authenticated and delivered have been delivered to the Trustee for cancellation; or • all Debt Securities of such series not theretofore delivered to the Trustee for cancellation either (i) have become due and payable, (ii) will become due and payable in accordance with their terms within one year or (iii) are to be called for redemption, exchange or conversion within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and in each case, we have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose (x) US dollars in an amount, (y) US government obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than the due date of any payment in an amount or (z) any combination of (x) and (y) in an amount sufficient to pay and discharge the entire principal (and premium, if any) and interest on the Debt Securities of such series in accordance with the terms of such Debt Securities of such series. The Trustee and Paying Agent The Bank of New York Mellon, London Branch, 160 Queen Victoria Street, London, EC4V 4LA, United Kingdom, acts as the Trustee under the indentures, and HSBC Bank USA, National Association, 66 Hudson Boulevard East, New York, New York 10001, acts as paying agent and calculation agent for the Debt Securities. Governing Law The Debt Securities, the Senior Debt Securities Indentures and the Subordinated Debt Securities Indentures are governed by and construed in accordance with the laws of the State of New York, except that (a) the provisions relating to consent by holders and beneficial owners to the exercise of the UK Bail-in Power in respect of the 5.25% Fixed Rate Subordinated Notes due 2044, (b) the authorization and execution of the Indentures (in addition to the laws of the State of New York relevant to execution), (c) any applicable subordination provisions of each series of Subordinated Debt Securities, and (d) the waiver of set-off provisions of the Debt Securities issued on or after March 4, 2024 are governed by and construed in accordance with English law.

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## Exhibit 4.5

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e) if you commit any serious or persistent breach or non-observance of any of the terms, conditions or stipulations contained in the Terms of Appointment [or the rules of any applicable regulatory authority [including the FCA and/or PRAJ; or f) if you are guilty of any gross misconduct or serious negligence in connection with or affecting the business or affairs of the Company or the wider HSBC group of companies (the "Group"); or g) if you are guilty of conduct which brings or is likely to bring yourself or the Company into disrepute or is materially adverse to the interests of the Company or the Group; or h) if you are convicted of an arrestable criminal offence (other than an offence under road traffic legislation in the United Kingdom or elsewhere for which a non-custodial penalty is imposed); or i) if you are, or become, prohibited by law or the Articles or any regulatory body applicable to the Company from being a director; or j) if you are assessed not to be a fit and proper person to perform your role; or k) if your approval to perform a senior manager function is withdrawn by the FCA. If at any time there are matters which arise to cause you concern about your role, you should discuss them with the Senior Independent Director or the Group Company Secretary. If you have any concerns which cannot be resolved, and you choose to resign for that, or any other reason, you should provide an appropriate written statement to the Senior Independent Director or the Group Company Secretary for circulation to the Board. This letter does not confer any right to hold office for any period, nor give you any right to compensation if you cease to be a Director for any reason. Your appointment with the Company and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England and Wales. Please do not hesitate to contact me should you have any questions. Yours sincerely, Angela McEntee Group Company Secretary /s/Angela McEntee

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For and on behalf of HSBC Holdings pie I have read, understood and agree to the above terms regarding my appointment as a non-executive Group Chair of HSBC Holdings pie. Brendan Nelson Date n .... ,.._ 7 ... ,-, /s/ Brendan Nelson February 18, 2026

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## Exhibit 11.1

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1 CODE FOR HSBC HOLDINGS PLC PDMRS TRANSACTING IN HSBC GROUP SECURITIES 1. Introduction This Code imposes restrictions on transactions in HSBC Group Securities. Its purpose is to ensure that Directors and other Persons Discharging Managerial Responsibilities (PDMRs) and their Closely Associated Persons (CAPs) do not abuse, and do not place themselves under suspicion of abusing, inside information in relation to transactions relating to Group Securities. Nothing in this Code will be deemed to sanction a breach of any market abuse or insider dealing provisions which are beyond the remit of this Code. In this context, PDMR refers to directors and certain senior executives of HSBC Holdings plc, as notified by Corporate Governance & Secretariat (CG&S), who have regular access to inside information and the authority to make managerial decisions impacting HSBC's future. PDMRs should request this pre-approval by contacting pdmr.transactions@hsbc.com . Relevant Group Policies apply to PDMRs, including sections of the Regulatory Compliance Mandatory Procedure on Personal Conflicts, Outside Activities, and Personal Account Dealing. Additionally, local legal and regulatory requirements must be met. This Code contains restrictions on dealings in certain prohibited periods including the closed periods before the announcement of HSBC's annual, interim or quarterly results. An Executive PDMR is also subject to extended closed periods. Schedule 1 sets out the definitions of terms used in this Code. This Code also requires any proposed transaction by PDMRs to be notified as provided in paragraphs 2 and 6, with an indicative list of notifiable transactions being set out in Schedule 2. Failure to observe and comply with the requirements of this Code may result in the Company imposing sanctions against any persons subject to it. Depending on the circumstance, this non-compliance may also be a civil and/or criminal offence. 2. Clearance procedures 2.1 A PDMR or their CAPs must not conduct any transactions on their own account or for the account of a third party on their behalf, directly or indirectly, relating to any Group Securities without obtaining clearance to transact in advance in accordance with this Code. 2.2 A PDMR must not submit an application for clearance if they are in possession of inside information in relation to HSBC. 2.3 A PDMR must notify their (or their CAPs) intention in writing to conduct any transactions on their own account or for the account of a third party on their behalf, which relates directly or indirectly to any Group Securities to CG&S at pdmr.transactions@hsbc.com in order that written clearance for the transaction can be sought from a Designated Director;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2 2.4 A response to a request for clearance to transact must be provided to the relevant PDMR within five business days of the request being made. CG&S will maintain a record of responses. Reasons may not be given when clearance is refused and all refusals for clearance must remain confidential. 2.5 Clearance may be given subject to conditions with which the PDMR must comply. 2.6 The Company may choose to apply a different clearance procedure in relation to certain events under employee share or incentive plans or corporate actions where the Company considers it to be appropriate. Where this is the case, relevant PDMRs will be notified of this fact by CG&S. 2.7 If clearance is provided, the PDMR: (a) will be provided with a written dated notification of clearance; (b) must transact as soon as possible and in any event within one business day of clearance being provided; and (c) must not transact if they come into possession of inside information in relation to HSBC after clearance is provided but before a transaction is concluded. 2.8 A PDMR will not be given clearance to, and must not, conduct any transaction on their own account or for the account of a third party on their behalf, directly or indirectly, relating to any Group Securities during a prohibited period other than in the circumstances set out in paragraph 3 below. 3. Exceptional circumstances 3.1 A PDMR who is not in possession of inside information may be given clearance in a prohibited period: (a) in exceptional circumstances, such as severe financial difficulty requiring the immediate sale of shares; or (b) where it is determined by a Designated Director of HSBC to be appropriate at the time and permitted under the MAR and the HKMC, provided, in each case, that the PDMR must be able to demonstrate that the particular transaction cannot be executed at any other time than during the prohibited period. 3.2 The nature of any "exceptional circumstances" will be required to be set out in an announcement published on the websites of the UK and Hong Kong Stock Exchanges. 4. Transactions by CAPs with a PDMR and Investment Managers 4.1 PDMRs must seek to prevent any transaction by any CAP on that person's own account which directly or indirectly relates to any Group Securities during a closed period or extended closed period, as applicable. In the case of a prohibited period other than a closed period or extended closed period, PDMRs should prevent such a transaction so far as it is consistent with any obligations of confidentiality and any relevant laws or regulations. Accordingly, PDMRs are required to make a notification in writing to CAPs advising them of their obligations during closed periods and extended closed periods; and to keep a copy of these notifications. CG&S will make available draft communications for this purpose.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3 4.2 When a PDMR places funds under management, the PDMR must apply the same restrictions and procedures on the investment manager in its dealings on behalf of the PDMR as apply to the PDMR in relation to Group Securities. Similarly, CAPs should be encouraged to advise their investment managers of their disclosure obligations and restrictions on trading in Group Securities. CG&S will make available draft communications for this purpose. 4.3 PDMRs should advise their CAPs and investment managers that they are obliged to notify the Company in respect of any transactions conducted on their own account or on the account of the PDMRs in Group Securities within one business day of the date of a transaction being concluded. 5. Acting as a trustee 5.1 Where a PDMR is a sole trustee, the provisions of this Code will apply to all transactions conducted by the trust in the same way as if they were transactions conducted on the PDMR's own account. 5.2 A Director who acts as trustee of a trust must advise the other trustees that they are a Director of HSBC. 5.3 A Director who is a beneficiary, but not a trustee, of a trust which conducts any transactions relating to Group Securities must endeavour to ensure that the trustees notify them immediately after they have conducted any transaction relating to Group Securities on behalf of the trust so that they can notify CG&S without delay. For this purpose, the Director must ensure that the trustees are aware that they are a Director of HSBC. 6. Notification 6.1 PDMRs or their CAPs must notify the Company in respect of any transactions conducted on their own account in Group Securities within one business day of the date of a transaction being concluded. 6.2 HSBC will: (a) make the relevant regulatory notifications in respect of transactions on behalf of the PDMRs and CAPs; and (b) announce the details of the transactions no later than three business days following the date of the relevant transaction. 7. Disclosure of information 7.1 A Director must not make any unauthorised disclosure of confidential information, whether to co-trustees or to any other person (even to those to whom they owe a fiduciary duty) or make any use of such information for the advantage of themselves or others. 7.2 Transactions conducted on the account of a Director relating to any Group Securities will be required to be disclosed in HSBC's annual and interim reports including statements to comply with the requirements of the HKMC. 7.3 Directors, in the course of their duties as Directors of HSBC, may come into possession of, or become aware of, inside information regarding other companies. Directors must not deal in the securities of any listed company (including HSBC) when, by virtue of their

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4 position as a director of a listed company, they are in possession of inside information relating to that listed company's securities (including HSBC).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 Schedule 1 Code definitions Definitions In this Code the following definitions apply unless the context requires otherwise: "Beneficiary" includes any discretionary object of a discretionary trust (where the Director is aware of the arrangement) and any beneficiary of a non-discretionary trust; "Business day(s)" means any day which is not a Saturday or Sunday, Christmas Day, Good Friday, or a bank holiday in the United Kingdom; "Closed period" means any of the following: (i) Full year and Half year: the longer of the period from the end of the relevant financial period (31 December and 30 June) or the period of 30 calendar days before announcement of HSBC's results, up to and including 8:30 am (Hong Kong time) on the calendar day following such announcement; and (ii) Quarter 1 and Quarter 3 earnings release: the end of the relevant financial period (31 March and 30 September) up to and including 8:30 am (Hong Kong time) on the calendar day following the announcement of the quarterly earnings release. You will be advised if these periods change. Executive PDMRs are also subject to 'extended closed periods'. "Closely Associated Person" or "CAP" means: (i) a spouse, or a partner considered to be equivalent to a spouse in accordance with national law; (ii) a dependent child in accordance with national law; (iii) a relative who has shared the same household for at least one year on the date of the transaction concerned; (iv) a legal person (including a corporate body), trust or partnership, the managerial responsibilities of which are discharged by a PDMR (or by a person referred to in points (i), (ii) or (iii) above), or which is directly or indirectly controlled by such a person, or which is set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of such a person; or (v) a discretionary trust which is established by a PDMR (or any of the above) where the trustee would be expected to seek that person's consent in the exercise of its discretion, or act in accordance with the person's wishes; "Company" or "HSBC" means HSBC Holdings plc; "Designated Director" means a Director or officer of HSBC who has been designated to provide clearance to a PDMR to transact in terms of this Code and, in relation to PDMRs who are not Directors, may include the Group Company Secretary and Chief Governance Officer; "Director" means a director of HSBC;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6 "Executive PDMR" means an Executive Director or a senior executive of HSBC who falls within clause (ii) of the definition of PDMR; "Extended closed period" means every day except for the following periods of permitted trading in HSBC Group securities ("trading windows"): (i) Full year: the period of approximately five weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of HSBC's annual results; (ii) Quarter 1 and Quarter 3 earnings release: the period of approximately two weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of the quarterly earnings release; and (iii) Half-year: the period of approximately two weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of HSBC's half-yearly results. You will receive advance notification of the specific dates prior to the commencement of each trading window. Only Executive PDMRs are subject to 'extended closed periods.' "Group Securities" means: (i) any securities of HSBC and any securities that are convertible or exchangeable into such securities; (ii) any securities of any subsidiary of HSBC and any securities that are convertible or exchangeable into such securities; (iii) any derivatives or other financial instruments (including structured products) linked to any of the securities referred to in (i), or (ii) above; (iv) the securities of any entity whose assets solely or substantially comprise of the securities referred to in (i), (ii) or (iii) above; and, for the avoidance of doubt, "securities" for these purposes means any publicly traded or quoted shares and debt instruments of the Company or of any of the Company's subsidiaries or subsidiary undertakings. "HKMC" means the Hong Kong Model Code "Inside information" in relation to HSBC means, broadly: (i) Information of a precise or specific nature, which has not been made public, relating, directly or indirectly, to HSBC or to a shareholder or officer of HSBC or to Group Securities which, if it were made public, would be likely to have a significant or material effect on the prices of Group Securities; (ii) Information will be of a precise nature if it indicates a set of circumstances which exists or is reasonably likely to come into existence or an event which has occurred or may reasonably be expected to occur which is specific enough for a conclusion to be drawn as to the possible effect on the prices of Group Securities; (iii) Information likely to have a significant effect on the prices of Group Securities means information a reasonable investor would be likely to use as part of the basis of their investment decisions;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7 (iv) Information is of a specific nature if it contains such particulars as to a transaction, event or matter, or proposed transaction, event or matter, so as to allow that transaction, event or matter to be identified and its nature to be coherently described and understood; Note: As a PDMR of HSBC, the Company will notify you on each occasion that you have been provided with information which is considered to be inside information. The Disclosure Committee (chaired by the Group Chief Financial Officer) determines whether a matter is deemed to constitute inside information in respect of the Company. If you are in possession of inside information, you will be added to an "insider list," which the Company must provide to the FCA upon request. "MAR" means the UK version of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing directives, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018; "Person Discharging Managerial Responsibility" or "PDMR" means: (i) a Director; or (ii) a senior executive of HSBC who: (a) has regular access to inside information relating, directly or indirectly, to HSBC; (b) has power to make managerial decisions affecting the future developments and business prospects of HSBC; and (c) who has been notified by CG&S that they are a PDMR. "Prohibited period" means: (i) any closed period; or (ii) any other period when there exists any matter which constitutes inside information in relation to HSBC; or (iii) for Executive PDMRs only, any extended closed period; "SFO" means the Hong Kong Securities and Futures Ordinance (Cap 571) "Transaction" or "Dealing" (together with corresponding "transact/s" and "deal/s"), interpreted in accordance with MAR (and, where relevant for Directors, the SFO), includes any type of transaction in or relating to Group Securities, including but not limited to purchases, sales, entering into a contract based on fluctuations in the price (CFDs), the exercise of options, stock lending agreements, the receipt of shares under share plans, using Group Securities as security for a loan or other obligation, granting a charge over Group securities, any transaction involving a change of ownership of Group Securities, any other right or obligation, present or future, to acquire or dispose of Group Securities and entering into, amending or terminating any agreement in relation to Group Securities (e.g., a trading plan). Schedule 2 sets out a non-exhaustive list of examples of transactions that are notifiable under MAR and the SFO. Types of transactions are both complex and wide ranging and include, among other things, transactions conducted on behalf of a PDMR by a third party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8 "Wider Group Securities" as that term is used in Schedule 2, means the types of instruments described in the definition of Group Securities in respect of securities of a corporation in which HSBC has an interest of more than 20% of the issued shares of any class of that corporation's share capital.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9 Schedule 2 Notifiable transactions under MAR and the SFO For the avoidance of doubt, clearance to transact must always be obtained prior to: entering into or cancelling any savings scheme; varying the terms of your participation in, or conducting sales of Group Securities within, any savings scheme. Clearance in respect of any savings scheme (or the equivalent) involving Group Securities may be given on terms that subsequent transactions under the scheme do not require clearance (although, as mentioned above, amendment to, or cancellation of any such scheme will require clearance). Transactions conducted on own account relating to Group Securities that are notifiable under MAR and the SFO include, among others, the examples to transact set out below. Unless otherwise indicated, a PDMR should always obtain advance clearance in accordance with paragraph 2 of the Code. (i) subscription, exchange, acquisition, disposal, transfer, (or offer to acquire, dispose of or transfer), stock lending or borrowing, short sale, pledging or lending; (ii) transactions undertaken by professionals arranging or executing transactions, including where discretion is exercised; (iii) transactions made under a life insurance policy where the policyholder is a PDMR or a CAP of the PDMR, the investment risk is borne by the policyholder and the policyholder has the power or discretion to make investment decisions regarding specific instruments in that life insurance policy; (iv) grant, acceptance, acquisition, disposal, transfer, exercise or discharge of any option (whether put or call or both and including options granted as part of a remuneration package) or warrant or rights or obligations to acquire, dispose of or transfer or any interest whether or not for consideration; (v) transactions in or related to (including entering into or exercise of) any type of derivatives, including equity swaps, credit default swaps, contracts for difference (or an auction product based thereon) and cash-settled transactions as well as physically settled transactions; (vi) conditional transactions. Notification of such transactions is required under paragraph 6 of the Code at the time of entering into the transaction and again upon the conditions being fulfilled. Clearance will always be required before such transactions are entered into. However, no further clearance is required upon fulfilment of the conditions provided that no further action is required by the PDMR; (vii) conversion of a financial instrument into another financial instrument, including the exchange of convertible bonds to shares;1 (viii) gifts and donations made or received, and inheritance received; (ix) transactions executed in index-related products, baskets and derivatives based on those products, if the financial instrument provides exposure to a portfolio of assets in which 1 An automatic conversion of such financial instruments will not require advance clearance but will need to be notified to HSBC in accordance with paragraph 6.1 of this Code.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10 the exposure to shares or debt instruments of the Group exceeds 20% of the portfolio's assets;2 (x) transactions executed in shares or units of a collective investment undertaking (including an investment fund), if the exposure to shares or debt instruments of the Group exceeds 20% of the assets held by the collective investment undertaking; Note that, where the manager of the collective investment undertaking does not operate with full discretion (which includes situations where the manager receives any notifications or suggestions on portfolio composition, directly or indirectly, from investors in the collective investment undertaking), transactions executed by the manager directly or indirectly relating to any shares or debt instruments of the Group may also require notification. If you have any influence / discretion whatsoever in relation to the manager or the investments or strategy of the collective investment undertaking you should discuss with CG&S as soon as possible (regardless of whether you are currently proposing to enter into any transaction in the units or shares of the collective investment undertaking) to determine whether any such notification is required; and (xi) transactions executed by a third party under an individual portfolio or asset management mandate on behalf or for the benefit of a PDMR or a person closely associated with such a person. For Directors or their CAPs, in addition to the types of transactions listed above, the term "transaction" for the purpose of disclosures under Part XV of the SFO also includes any event in consequence of which they become, or cease to be, interested in Group Securities or Wider Group Securities (or acquires or ceases to have any short position in respect of such securities), or where the nature of such interest changes. A short position is broadly where a person has a right to require another to take delivery of, or an obligation to deliver, relevant shares at a future time (or equivalent economic exposure). An interest for this purpose is defined very widely and guidance should be sought from CG&S in the event of any doubt. 2 Paragraphs (ix) and (x) will not apply where the PDMR or CAP as applicable does not know, and could not know, the investment composition or exposure of such collective investment undertaking or portfolio of assets in relation to shares or debt instruments of the Group and there is no reason for them to believe that the 20% threshold is exceeded. In this context, if information regarding the investment composition or exposure is available, then the PDMR or CAP as applicable must make all reasonable efforts to avail themselves of that information.

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Personal Account Dealing These procedural requirements support the implementation of the following L1 controls: • L1C-00000855: Personal Conflicts of Interest • L1C-00000871: Personal Account Dealing checks Overview You must not transfer, buy or sell ("deal" in) investments that create a Conflict, or in a way that constitutes market abuse. This requirement, and everything in this procedure, extends to dealing by: • You, on your own behalf; • You, with power of attorney and decision-making authority over somebody else's account; • You, exercising control over somebody else's account; • Somebody else using your account, for example, a joint account; or • Somebody else whom you influence to deal: Influenced Parties. You must always adhere to these requirements, including: • During system outages; • When on business trips or training courses; • For any absences from work of up to six months. If you neither retain access to HSBC systems nor appear on any Insider or Confidential Register, these requirements expire after six months. Minimum reporting and review requirements for Risk Owners are outlined in section 7. MI Requirements Application This procedure applies to all Workers, also referred to as 'you' in this document. Workers means all employees, contractors and consultants of HSBC, as defined in HR Mandatory Procedure 'Recording the details of and classifying individuals working at HSBC'. Certain Workers are called 'Covered Workers'. Covered Workers are those Workers who are more likely to come into possession of client non-public information and certain types of HSBC non-public information, or those who must evidence their independence of mind to perform their role properly. Greater oversight is required of their personal account dealing. Please refer to the Glossary for further details, including a table outlining who would be considered a Covered Worker by default. Please note that this procedure applies to certain non-employees. Please see the Appendix for further details around this and how these individuals should be considered in the context of this Procedure, noting that non-employees can be Covered Workers. All requirements in this procedure apply to Covered Workers and also the dealings of their Influenced Parties. Some requirements apply to All Workers (these are marked). EXTRACT FROM MANDATORY PROCEDURE FOR PERSONAL CONFLICTS OF INTEREST IN RELATION TO PERSONAL ACCOUNT DEALING

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2 Some jurisdictions/business lines have additional rules which are included in the Geography Specific requirements and the Business Line requirements set out in this procedure. You must additionally read the relevant sections to gain a full understanding of your obligations. For any procedure requirement breaches, including line manager breach handling assessment, refer to Personal Conflicts - Line Manager and Breach Guidance. Requirements for All Workers Personal trading, and reviewing personal investment portfolios, must not interfere with you fulfilling your professional duties or compromise your financial circumstances. HSBC therefore prohibits speculative trading activity by all Workers - this includes a requirement for all Workers, including non- Covered Workers, to follow the 30-day rule for Covered Instruments (see definitions of Speculative Trading and Covered Investment in the glossary). It is also important that your trading does not create an impression of wrongdoing by HSBC or you. The risk of sharing Non-Public Information with unauthorised persons is out of risk appetite for HSBC. You must not participate in an Investment Club, because it could appear that you shared or received information without proper authorisation. You, and by extension your Influenced Parties, must not deal in related investments when: • It could appear to conflict with the interests of a client or HSBC, see Examples of Personal Conflicts; • You are in possession of MNPI about HSBC, a Client or a Third Party, known as "insider dealing"; • You are in possession of relevant Non-Public Information as defined in Compliance FIM Regulatory Compliance B.30 Information Barriers and Need To Know requirements about a Client or a Third Party or certain Non-Public Information about HSBC; or • As advised by Compliance from time to time. Insider dealing, as defined in Compliance FIM Regulatory Compliance B.5 Market Abuse, is a criminal offence. Examples of market abuse include: • Front running – dealing in advance, to capitalise on Non-Public Information; • Tailgating – dealing when you are aware that a customer has placed an order; or • Dealing when you are aware of an unannounced acquisition or disposal of substantial assets. If asked for additional supporting evidence or confirmations about your dealing activity, you must provide this. Workers with 'super user' access to the Global Conflict Management System "GCMS" or the Watch List, such as those working in the Global Control Room, must not deal in any Covered Investment, or any asset or instrument covered by Global Research. However, these Workers can: • make elections in relation to HSBC share offerings as normal and/or, • subject to prior approval from the Global Control Room, and where applicable subject to prior approval via My Trades or equivalent, dispose of HSBC shares as normal.

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3 Requirements for Covered Workers In addition to the requirements outlined for All Workers, if you are a Covered Worker, you must do the following in relation to your own dealing and that of your Influenced Parties: • Obtain documented pre-approval using My Trades or your local Personal Account Dealing system, to trade any Covered Investment; and • Hold a Covered Investment for at least 30 days before selling the same Covered Investment, and not purchase a Covered Investment for at least 30 days after selling the same Covered Investment, the "30-day rule". • Pre-approval is not required for the transfer of assets between broker accounts belonging to a Covered Worker where no change in beneficial ownership takes place and no net consideration is paid, including selling and repurchasing the same underlying holding within 24 hours (e.g. to crystallise tax losses). Similarly, pre-approval is not required for the transfer of assets between a Covered Worker and an Influenced Party when no net consideration is paid. You can make a deduction for dealing costs without affecting the status of a sale and repurchase. • Where a Covered Worker's line manager is not available to provide trade pre-approval, an alternative approver is the line manager's line manager or equivalent (e.g. a nominated peer of the line manager). The alternative approver must be senior to the individual making the dealing request. My Trades utilises a drop down box with pre-determined alternative approvers to be selected by the Worker. Approval Windows Approvals to trade are valid within the stipulated time scales as stated in your local Personal Account Dealing system/procedure approval notifications. Each trade requires approval. Trades must not take place until approval is given, or after the approval expires. Please note: • HSBC does not permit you as a Covered Worker to place open-ended or good-till-cancelled "GTC" orders, nor provides perpetual approvals. • Certain countries prohibit limit and stop loss orders, see the Geographic requirements outlined in the Appendix for further information. • Monthly investment plans require pre-approval only at the outset or when you make changes to your investment instructions. • For initial public offerings and private investments, instructions (being a completed application form or email to the company) must be sent to the PAD Operations Team to evidence that the instruction was given within the stipulated time scales stated in the trade approval notification.

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4 • If after approval you decide not to trade, then you must cancel your request in My Trades or your local Personal Account Dealing system/procedure. Evidence and Attestations To demonstrate that you have submitted a complete record of trades, Covered Workers must: • Disclose any active broker accounts, including Computershare accounts (EquatePlus)\*, and in all instances complete the Broker Accounts page – including mobile or electronic trading applications, wallets, or any other platform capable of dealing Covered Investments – held by them or an Influenced Party using My Trades or your local Personal Account Dealing system; • Complete a Mandatory PAD Attestation at least annually and additionally upon becoming a Covered Worker. Where a Covered Worker is absent (e.g. sabbatical, long term sick, maternity leave) then they will complete their attestation upon their return to work. • Ensure that they, their broker, fund manager, fund platform or exchange send independent trade confirmations\*\* evidencing the date and time of execution to the appropriate PAD Operations Team, or upload confirmations via My Trades; • Where execution cannot be evidenced (e.g. by reference to a contract note or Share Purchase Agreement) as having been completed within the stipulated time scales\*\*\* stated in the trade approval notification, you must provide other forms of documentation\*\*\*\*, by uploading into My Trades or sending to the appropriate PAD Operations Team mailbox, to evidence that the execution was done within the stipulated time scales\*\*\*; and • For private investments, initial public offerings, unlisted securities, the appropriate documentations to evidence that the request instruction was sent within the stipulated time scales stated in the trade approval notification must be uploaded into My Trades or sent to the appropriate PAD Operations Team; • If after approval you decide not to trade, then you must cancel your request in My Trades or your local Personal Account Dealing system/procedure. \* If you have a Computershare account (EquatePlus) for an HSBC employee share scheme, please disclose "Computershare Investor Services PLC" as the broker name and your EquatePlus user ID as the account number in My Trades or your local Personal Account Dealing system. \*\* Such as contract notes, Share Purchase Agreement, or regular statements. These can take the form of physical, scanned, electronic or photographed documents, emails or screen grabs. \*\*\* Refers to the trading window (with specific date and time). \*\*\*\* Such as screen grabs of the online trade request at the time of input (to provide evidence of the trade execution date/time), other physical, scanned, electronic or photographed documents or emails. For the avoidance of doubt, Covered Workers could record in writing to their line manager their rationale for determining that someone who might normally be assumed to be an Influenced Party (e.g. partner or spouse of the Worker, dependants of the Worker or anyone to whom the Worker provides material financial support) are not Influenced Party(ies), so their trading account(s) need not be disclosed.

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5 If your trading account only provides regular statements and not individual trade confirmations, you need to submit those statements no later than 30 calendar days after the statement period finishes. You must send any other trade confirmation – such as a contract note – within 14 calendar days of the trade execution. You need not disclose discretionary accounts managed entirely at the discretion of an independent fund manager unless required to do so by any Geography Specific or section Business Line Specific requirements that apply to you. Covered Workers dealing in equities in unlisted companies, via My Trades or your local Personal Account Dealing system, must disclose to the PAD Operations Team the percentage of each company's issued share capital they will cumulatively own as a consequence of a proposed dealing. Such disclosure is not required for Covered Workers using My Trades. Significant Shareholdings create an Outside Activity. Absence or System Outages If you are not able to submit your dealing request via My Trades or your local Personal Account Dealing system because you are travelling or on leave you must submit pre-approval requests via email instead. This requirement continues for six months after you stopped being able to access HSBC systems, or longer if you are still on an Insider or Confidential Register. You must have secured the necessary pre-approvals from your line manager and the PAD Operations Team. In the case of Asset Management and Global Research you must also obtain relevant local Compliance approval before dealing. You must include relevant information in your approval request email: 1. The name, and price or quantity\* of the Covered Investment to be transacted; 2. The code of the security and type of instrument; 3. Whether "buy" or "sell"; 4. Confirmation of compliance with all relevant requirements, including the 30-day rule and that you do not have access to Material Non-Public Information or Non-Public Information about the subject entity; and 5. The relevant broker name and account number. HSBC is not responsible for any losses incurred because you cannot trade due to system failure, we decline your trade request, or there is a delay in processing your request. \*Please do not disclose the price or quantity to your line manager, only to the PAD team (they use this information for reconciliation purposes only). Persons Discharging Managerial Responsibilities "PDMRs" In this context, PDMR refers to directors of HSBC Holdings plc and certain senior executives of HSBC – as notified by Corporate Governance and Secretariat – who have regular access to MNPI and the power to take managerial decisions affecting the future developments and business prospects of HSBC. Subsidiaries and affiliates of HSBC that issue securities within the European Economic Area have their own list of PDMRs, which are maintained by the relevant Corporate Governance and Secretariat team.

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6 PDMRs must seek additional pre-approval from their relevant company secretary to deal in certain HSBC Group securities in accordance with the share dealing code adopted by their particular HSBC Group company; for themselves, and their closely associated person (as defined in the share dealing code). For HSBC Holdings plc, PDMRs must seek this pre-approval by contacting pdmr.transactions@hsbc.com. HSBC Group Securities and Share Schemes Information about who can participate in HSBC employee share plans is available on HR Direct. If you hold MNPI in relation to HSBC, you must not undertake any of the Share Plan Activities listed below. Covered Workers require pre-clearance to undertake certain activities – see the table below. You must not use any personal hedging strategies, or contracts of insurance, to alter the risk alignment between the Bank and your deferred, unvested or retained pay awards of cash or shares. Participating in an Advance Election Facility "AEF" If you participate in any of HSBC's Group share plans – such as ShareMatch, UK Sharesave, Deferred Share Awards, or MRT Share Awards, Computershare (EquatePlus) can offer you the chance to make an advance election before your shares are released or vest. Unless you have received an email specifically restricting your trading – for example due to a closed period –– or you otherwise hold MNPI in relation to HSBC, you are able to make your election at any time. There is no need for you to obtain pre-approval via My Trades or your local Personal Account Dealing system when making an advance election, since Compliance and HR complete this process on your behalf. If somebody adds you to an Insider Register or Confidential Register after you have made an election, the PAD team will inform you and your election might not be honoured. If you are a Covered Worker and wish to exercise or sell shares from a share plan at any time other than via an AEF, you must obtain pre-approval. Please refer to the below table for details of when pre-approval is required by Covered Workers in relation to all HSBC Group share plans. Share Plan Activities including Closed Periods Compliance notifies selected employees – and others with potential MNPI about HSBC – of "close" or "closed" periods or "trading windows", and associated dealing restrictions. If you receive an email advising you that you must not trade HSBC shares or securities for a defined period, or otherwise hold MNPI in relation to HSBC, during that period you must not: • Join an HSBC employee share plan, such as UK Share Incentive Plan [UK SIP] or ShareMatch; • Stop, change or restart contributions to an HSBC employee share plan; • Make an advance election for an HSBC employee share plan; • Exercise an option under Sharesave; • Make or change an election to receive dividends in cash or reinvested into HSBC shares; or • Deal in HSBC shares, debt or derivatives. The table below provides details of when Covered Workers need pre-approval for HSBC Group Share Schemes. Covered Workers must declare their Computershare (EquatePlus)\* broker account before placing a trade, including where they are exercising the option for the shares to vest.

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7 \*If you have a Computershare account (EquatePlus) for an HSBC employee share scheme, please disclose "Computershare Investor Services PLC" as the broker name and your EquatePlus user ID as the account number in My Trades or your local Personal Account Dealing system. PLAN Do I need pre- approval before accepting an invitation to take part in the plan or receive a grant? Do I need pre- approval if I wish to stop, restart or change my contributions? Do I need pre- approval to exercise my Sharesave option? or If I sell my shares from any plan via an AEF at maturity, vesting or retention end date? Do I need pre- approval if I exercise my Sharesave option or otherwise sell shares from any plan outside an AEF? \*\*\* ALL-EMPLOYEE SHARE PLANS Sharesave/SAYE - UK\* No No If you are offered an AEF, then clearance will be requested on your behalf, see above\*\*. Yes UK Share Incentive Plan No, unless subject to closed period restrictions No, unless subject to closed period restrictions N/A Yes ShareMatch No, unless subject to closed period restrictions No, unless subject to closed period restrictions If you are offered an AEF, then clearance will be requested on your behalf, see above\*\*. Yes DISCRETIONARY AWARDS Deferred Share Awards (with or without retention requirements)- including bonus deferral awards, MRT awards, buy-out, Group Performance Shares and FPA Awards (generally granted under No N/A If you are offered an AEF, then clearance will be requested on your behalf, see above\*\*. Yes

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8 the HSBC Share Plan 2011 rules) \* No pre-approval is required if you withdraw from Sharesave and request the refund of your cash savings. \*\* However, you must not make an advance election if you are subject to closed period restrictions or otherwise hold MNPI. \*\*\* Pre-approval is required before exercising your option e.g. 'exercise and keep', 'exercise and sell', and also to sell any resulting shares from the 'exercise and keep'.

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9 Glossary Covered Investments An investment is an asset or instrument that you hold with the hope that it will generate income or appreciate in the future. Investing is different from saving because it involves a greater level of risk, and there is no guarantee that the investor will get their money back. Covered Investments are those where the investor has a choice or influence over the underlying assets, and is not at "arms' length" from the individual investment decisions being taken. This includes debt or equity crowd-funding, because funds transferred with such platforms could be used to choose or influence individual investments. Covered Workers must seek pre-approval to trade Covered Investments. The following table distinguishes between Covered Investments – vehicles and instruments – for which pre-approval is required, and those where pre-approval is not required: Exceptions and Non- Investments. You must also check any Geography and Business Line-Specific Requirements as these can require you to treat certain instruments as Covered / Exceptions / Non-Investments. VEHICLES (subject to any additional requirements in the Geography and Business Line Specific Requirements) Covered Covered Workers require pre-approval to trade; 30-day rule applies Exceptions Pre-approval is not required; 30-day rule does not apply Non-Investments Pre-approval is not required; 30- day rule does not apply Funds: closed-ended[1], non-public, Concentrated, or any self-directed fund in which a Covered Worker or Influenced Parties can influence individual investment decisions. Funds: open-ended, publicly available, and not Concentrated. Discretionary accounts: those where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party Annuities and annuity insurance Exchange Traded Funds "ETFs" that invest in closed- ended or non-public funds, or hold a Concentrated position. All ETFs are Covered Instruments for Covered Workers of AMUS, AMEU, AMGB, HAIL, AMHK, AMSG and AMFR. ETFs are not considered as Covered Investments for Covered workers in other Asset Management entities. ETFs that are open-ended, publicly available and not concentrated. ETFs that invest in funds that are open-ended and publicly available.

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10 Insurance policies (including Life Policies) linked to any Covered Investment in which a Covered Worker or Influenced Parties can influence individual investment decisions. Insurance policies either: 1. not linked to a Covered Investment, such as health or general insurance; or 2. which are linked to a Covered Investment through an internally managed fund that is (i) discretionary; (ii) diversified; and (iii) not available exclusively to the Covered Worker or Influenced Parties. Life policies (except when the covered worker or influenced parties can influence individual investment decisions). Pension schemes or 401(k) accounts that invest in any Covered Investment in which a Covered Worker or Influenced Parties can influence individual investment decisions. Pension schemes or 401(k) accounts either: 1. not linked to a Covered Investment; or 2. which are linked to a Covered Investment through an internally managed fund that is (i) discretionary; (ii) diversified; and (iii) not available exclusively to the Covered Worker or Influenced Parties. Final salary, defined benefit or mandatory retirement schemes Crowd-funding: equity or debt lending Crowd-funding: reward or charitable. When a Covered Worker provides a loan directly to a business or individual, and doesn't hold any equity or formal bonds in return this is not treated as a Covered Investment INSTRUMENTS (subject to any additional requirements in the Geography and Business Line Specific Requirements) Covered Covered Workers require pre-approval to trade; 30-day rule applies Exceptions Pre-approval is not required; 30-day rule does not apply Non-Investments Pre-approval is not required; 30- day rule does not apply

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11 Equity and capital: shares of public and private entities, including the sale of scrip dividends or shares received in a Rights, Private, or Initial Public Offering. This includes free shares, for example, incentives for opening a brokerage account, where you have advanced notice of the name of any instrument. Shares traded through discretionary accounts, where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party. Receipt of equity via Corporate Actions or deferred share awards, such as variable pay, share options or bonuses from HSBC or any other employer. Free shares where you had no advanced notice of the name of any instrument. Savings, deposit, or transactional checking or current accounts Depositary Receipts ADR/GDR, structured deposits structured products, structured investments, synthetic products. Certificates of deposit, term deposits, time deposits. Foreign or virtual currency purely for investment purposes, including dual currency deposits or investments, virtual assets, security tokens and exchange tokens. Foreign or virtual currency for household spending – see below.

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12 Bonds (corporate or convertible), debentures, debt securities, redeemable preference shares, including public offerings of any such security. Bonds, debentures or redeemable preference shares traded through discretionary accounts, where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party. Sovereign or government bonds. Fixed term savings deposits, including savings schemes unless they are traded in a secondary market. Derivatives related to any Covered Investment in this table, including swaps, futures, forwards, warrants, options, covered calls, excess shares, etc. Derivatives embedded in publicly available funds (i.e., trades as part of the fund portfolio). Exchange traded notes. Exchange traded commodities, such as gold\*, precious metals, bullion, carbon offset credits etc. Carbon offset credits purchased as spot contracts for immediate "retirement" Physical commodities in your possession or to which you have access, such as jewellery. Real estate investment trusts: REITs.

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13 Venture capital trusts, venture capital funds. \*including gold token Currencies – including virtual and crypto-currencies can be used to buy things (e.g. Bitcoin), or as an investment, which also includes Non-Fungible Tokens - NFTs (e.g. Opensea) and Decentralised Finance - DeFi (E.g. Aave and Uniswap). Currency held as an investment is a Covered Investment subject to the "30-day rule" and pre-approval for Covered Workers; currency used for household spending is not, and the latter includes spending done via a Crypto Card (e.g. Crypto.com cashback card). Examples of household spending include: • Holiday money; • Payment for an overseas educational course; • Payment of tax bills; • Use in a mobile wallet payment app; • Maintaining an overseas property; • To make retail savings, or trade investments denominated in other currencies; or • Repatriation of funds by ex-pats. If you use foreign or virtual currencies, the PAD team could ask you to evidence how you have used these to demonstrate compliance with this mandatory procedure. Mining or staking of virtual currencies is not considered to constitute dealing, although dealing in any mined coins or tokens does constitute dealing and is subject to pre-approval rules. The HSBC Personal Account Dealing team will apply enhanced scrutiny to requests to trade all derivatives, caps and swaps, as these are often speculative in nature. The PAD Operations team will only approve derivatives for non-speculative purposes; for example, personal borrowing using a cap. Please refer to your local Compliance department for advice if you are uncertain about whether an investment requires pre-approval. Covered Workers Covered Workers are those Workers who are more likely to come into possession of client non-Public Information or certain types of non-public information about HSBC. Greater oversight is required of their personal account dealing. All requirements that apply to Covered Workers also apply to the dealings of their Influenced Parties. Global Businesses must designate any additional Covered Workers – such as individuals in Global Functions or DBS – who directly support their business processes, and advise these to PAD Operations. The following table shows who is a Covered Worker by default: Key Global Banking and Markets "GBM" Commercial Banking "CMB" Wealth and Personal Banking "WPB"

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14 Global Private Banking & Wealth "GPB&W" Digital Business Services "DBS" Business Line, Function or Division MD GCB 3 GCB 4-8 Comments GBM - All business lines and divisions Y Y Y GPS Y Y Y CMB - Corporate Banking: Large Corporates and Middle Market Enterprises Y Y Y CMB - Commercial Real Estate Y Y Y CMB - Originations Office Y Y Y CMB - Business Banking and Commercial Direct Y Y Y\* \*Shall only include any GCB 4-8 who is a Business Banking Relationship Manager, with Acceptably Publicly Listed Entities (APLEs) within their customer portfolios, and their Team Leaders CMB/GBM - Global Trade Solutions "GTS" Y Y Y\* \*GTS Services staff from GCB5- 8 are excluded from being "Covered Workers" Wholesale Chief Operating Office Y Y Y CMB - Commercial Insurance and Investment Y Y

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15 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments CMB - All other product lines and divisions Y Y Y WPB - Global Asset Management "AM" Y Y Y WPB - GPB&W Country Heads, CEOs, Chief Operating Officers, Executive Assistants to GPB ExCo and Country Heads, Job Families [Client Relationship Management, Advisory, Strategy Management, Trading Services, Trading Operations, Balance Sheet Management, Research, Sales], all staff in Germany, US, Italy, Israel and Singapore. Y Y Y WPB - GPB&W - Markets Treasury GPB Y Y Y WPB - GPB&W HSBC Broking Services (Asia) Ltd., HSBC Qianhai Securities Ltd. Y Y Y WPB - GPB&W All other job families/ countries / entities Y WPB - Retail Banking – Country Heads, Country COOs, Job Families [Advisory (006); Leadership (034); Strategy Management (021); Trading Services (004); Legal and Corporate Secretary (022); Research (007)], Job Sub Families [Trading Operations (027); Media Relations (099); Traded Risk (063)] Y Y Y WPB - Retail Banking – Wealth Management, Job Family [Sales (002)] Y Y WPB - Retail Banking - All other job families Y

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16 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments WPB – Insurance – Insurance Investment teams Y Y Y WPB – Insurance – All other roles Y Y Global Functions - Corporate Governance and Secretariat Y Y Y Global Functions - Group Communications and Brand (GCAB) Y Y Global Functions - Finance Y Y Y Global Functions - Global Sustainability: London team Y Y Y Global Functions - Global Sustainability: Outside London Y Y Global Functions - Human Resources Y Y Global Functions - Internal Audit Y Y Y Global Functions - Legal Y Y Y Global Functions - Risk and Compliance Y Y Y Global Functions - Strategy and Planning Y Y Y DBS IT - Cybersecurity, MSS IT Y Y Y DBS IT - Wholesale IT Y Y Y\* \*Only GCB4 are required to be Covered Workers

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17 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments DBS - Innovation and Ventures Y Y Y DBS - Global Transaction Implementation Team Y Y Y DBS - All other divisions Y Y In some cases, additional Workers, not included by default, may be added as Covered Workers. These must be agreed by the respective Business Lines, Global Functions or DBS, and Compliance. This is likely for Workers in DBS or Global Functions that support GBM, or those with incidental access to Non-Public Information - such as personal assistants – or where local requirements dictate. Managers of Service Worker Providers with no access to HSBC systems or Non-Public Information – such as security guards, drivers, office administrators – can request written agreement from their respective LoB, Global Function or DBS, supported by their respective local Compliance, to remove them as Covered Workers where appropriate. If you are not sure which of the lines above applies to you, contact your line manager or local Compliance department. Covered Workers who transition to a new role within HSBC and, as a result, are no longer considered a Covered Worker will not be subject to ongoing monitoring but they must continue to follow the Covered Workers requirements for six months after moving. Correspondingly they remain under a continuing obligation not to trade or act on information obtained while a Covered Worker.

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## Exhibit 12.1

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Exhibit 12.1 Section 302 Certification of Group Chief Executive Officer I, Georges Elhedery, certify that: 1. I have reviewed this annual report on Form 20-F of HSBC Holdings plc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and 5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

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a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting. Dated: February 26, 2026 /s/ Georges Elhedery Georges Elhedery Group Chief Executive Officer

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## Exhibit 12.2

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Exhibit 12.2 Section 302 Certification of Group Chief Financial Officer I, Manveen (Pam) Kaur, certify that: 1. I have reviewed this annual report on Form 20-F of HSBC Holdings plc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and 5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

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a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting. Dated: February 26, 2026 /s/ Manveen (Pam) Kaur Manveen (Pam) Kaur Group Chief Financial Officer

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## Exhibit 13.1

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Exhibit 13.1 Annual Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of HSBC Holdings plc (the "Company"), does hereby certify, to such officer's knowledge, that: The Annual Report on Form 20-F for the year ended December 31, 2025 of the Company fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934 and information contained in the Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 26, 2026 /s/ Georges Elhedery Georges Elhedery Group Chief Executive Officer Dated: February 26, 2026 /s/ Manveen (Pam) Kaur Manveen (Pam) Kaur Group Chief Financial Officer

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## Exhibit 15.1

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-277306) and Form S-8 (Nos. 333-103887; 333-104203; 333-109288; 333-113427; 333-127327; 333-143639; 333-145859; 333-155338; 333- 162565; 333-170525; 333-176732; 333-183806; 333-197839; 333-220458) of HSBC Holdings plc of our report dated February 26, 2026 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers LLP London, United Kingdom February 26, 2026

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## Exhibit 15.6

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Tim Panter Managing Director, Retirement 3 Temple Quay Temple Back East Bristol BS1 6DZ T +44 117 926 6481 D +44 117 989 7407 M +44 780 817 6449 E Tim.Panter@wtwco.com W wtwco.com Towers Watson Limited is registered in England and Wales Registration number: 5379716, Registered address: Watson House, London Road, Reigate, Surrey RH2 9PQ, UK. Authorised and regulated by the Financial Conduct Authority. Page 1 of 1 26 February 2026 The Board of Directors HSBC Holdings plc CONSENT OF WILLIS TOWERS WATSON Willis Towers Watson consents to be named as valuation actuary of the HSBC Bank (UK) Pension Scheme in the Annual Report on Form 20-F for the year ended December 31, 2025 of HSBC Holdings plc and to the incorporation by reference of references to us in the registration statements (nos. 333-92024, 333-103887, 333-104203, 333-109288, 333-113427, 333-127327, 333-126531, 333-135007, 333-143639, 333-145859, 333-155338, 333-158065, 333-162565, 333-170525, 333-176732, 333-180288, 333-183806, 333-197839, 333-202420, 333-220458, 333-223191, 333-253632 and 333-277306). Yours sincerely Tim Panter Fellow of the Institute and Faculty of Actuaries /s/ Tim Panter

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## Ex-97

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&nbsp;&nbsp;&nbsp;&nbsp;HSBC HOLDINGS PLC POLICY FOR THE RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION 1. Purpose. The purpose of this Policy is to describe the circumstances in which Executive Officers will be required to repay or return Erroneously Awarded Compensation to the Company in accordance with the Clawback Rules. Each Executive Officer shall be required to sign and return to the Company the Acknowledgement and Acceptance Form attached hereto as Exhibit A pursuant to which such Executive Officer will acknowledge that he or she is bound by the terms of this Policy; provided, however, that] this Policy shall apply to, and be enforceable against, any Executive Officer and his or her successors (as specified in Section 11 of this Policy) [regardless of whether or not such Executive Officer properly signs and returns to the Company such Acknowledgement and Acceptance Form and regardless of whether or not such Executive Officer is aware of his or her status as such. 2. Administration. Except as specifically set forth herein, this Policy shall be administered by the Administrator. Any determinations made by the Administrator shall be final and binding on all affected individuals and need not be uniform with respect to each individual covered by this Policy. Subject to any limitation under applicable law, the Administrator may authorise and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee). 3. Definitions. For the purposes of this Policy, the following capitalised terms shall have the meanings set forth below. (a) "Accounting Restatement" shall mean an accounting restatement: (i) due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a "Big R" restatement); or (ii) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a "little r" restatement). (b) "Administrator" shall mean the Committee or any other committee designated by the Board to administer the Policy, and in the absence of such designation, the Board. (c) "Board" shall mean the Board of Directors of the Company. (d) "Clawback Eligible Incentive Compensation" shall mean, with respect to each individual who served as an Executive Officer at any time during the applicable performance period for any Incentive-based Compensation (whether or not such individual is serving as an Executive Officer at the time the Erroneously Awarded Compensation is required to be repaid to the Company), all Incentive-based Compensation Received by such individual: (i) on or after the Effective Date; (ii) after beginning service as an Executive Officer; (iii) while the Company has a class of securities listed on the Listing Exchange; and (iv) during the applicable Clawback Period. (e) "Clawback Period" shall mean, with respect to any Accounting Restatement, the three completed fiscal years of the Company immediately preceding the Restatement Date and any transition period (that results from a change in the Company's fiscal year) of less than nine months within or immediately following those three completed fiscal years. (f) "Clawback Rules" shall mean Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC thereunder (including Rule 10D-1 under the Exchange Act) or the Listing Exchange pursuant to Rule 10D-1 under the Exchange Act (including Section

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2 303A.14 of the New York Stock Exchange Listed Company Manual), in each case as may be in effect from time to time. (g) "Committee" shall mean the Group Remuneration Committee of the Board. (h) "Company" shall mean HSBC Holdings plc, together with each of its direct and indirect subsidiaries. (i) "Effective Date" shall mean October 2, 2023. (j) "Erroneously Awarded Compensation" shall mean, with respect to each Executive Officer in connection with an Accounting Restatement, the amount of Clawback Eligible Incentive Compensation that exceeds the amount of Clawback Eligible Incentive Compensation that otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes paid. (k) "Executive Officer" shall mean any individual who is or was an executive officer as determined by the Administrator in accordance with the definition of "executive officer" as set forth in the Clawback Rules and any other senior executive, employee or other personnel of the Company who may from time to time be deemed subject to the Policy by the Administrator. For the avoidance of doubt, the Administrator shall have full discretion to determine which individuals in the Company shall be considered an "Executive Officer" for purposes of this Policy. (l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (m) "Financial Reporting Measures" shall mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return shall for the purposes of this Policy be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented within the Company's financial statements or included in a filing with the SEC. (n) "Incentive-based Compensation" shall mean any compensation that is granted, earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure. (o) "Impracticable" shall mean, in accordance with the good faith determination of the Committee, or if the Committee does not consist of independent directors, a majority of the independent directors serving on the Board, that either: (i) the direct expenses paid to a third party to assist in enforcing the Policy against an Executive Officer would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Erroneously Awarded Compensation, documented such reasonable attempt(s) and provided such documentation to the Listing Exchange; (ii) recovery would violate English law where that law was adopted prior to November 28, 2022, provided that, before concluding that it would be Impracticable to recover any amount of Erroneously Awarded Compensation based on violation of English law, the Company has obtained an opinion of English legal counsel, acceptable to the Listing Exchange, that recovery would result in such a violation and a copy of the opinion is provided to the Listing Exchange; or (iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

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3 (p) "Listing Exchange" shall mean the New York Stock Exchange or such other U.S. national securities exchange or national securities association on which the Company's securities are listed. (q) "Method of Recovery" shall include, but is not limited to: (i) requiring reimbursement of Erroneously Awarded Compensation; (ii) seeking recovery of any gain realised on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity- based awards; (iii) offsetting the Erroneously Awarded Compensation from any compensation otherwise owed by the Company to the Executive Officer; (iv) cancelling outstanding vested or unvested equity awards; and/or (v) taking any other remedial and recovery action permitted by applicable law, as determined by the Administrator. (r) "Policy" shall mean this Policy for the Recovery of Erroneously Awarded Compensation, as the same may be amended and/or restated from time to time. (s) "Received" shall, with respect to any Incentive-based Compensation, mean deemed receipt and Incentive-based Compensation shall be deemed received in the Company's fiscal period during which the Financial Reporting Measure specified in the Incentive-based Compensation award is attained, even if the payment or grant of the Incentive-based Compensation occurs after the end of that period. For the avoidance of doubt, Incentive- Based Compensation that is subject to both a Financial Reporting Measure vesting condition and a service-based vesting condition shall be considered received when the Financial Reporting Measure is achieved, even if the Incentive-Based Compensation continues to be subject to the service-based vesting condition. (t) "Restatement Date" shall mean the earlier to occur of: (i) the date the Board, a committee of the Board or the officer or officers of the Company authorised to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement; or (ii) the date a court, regulator or other legally authorised body directs the Company to prepare an Accounting Restatement. (u) "SEC" shall mean the U.S. Securities and Exchange Commission. 4. Repayment of Erroneously Awarded Compensation. (a) In the event the Company is required to prepare an Accounting Restatement, the Administrator shall reasonably promptly (in accordance with the applicable Clawback Rules) determine the amount of any Erroneously Awarded Compensation for each Executive Officer in connection with such Accounting Restatement and shall reasonably promptly thereafter provide each Executive Officer with written notice containing the amount of Erroneously Awarded Compensation and a demand for repayment or return, as applicable. For Clawback Eligible Incentive Compensation based on stock price or total shareholder return where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined by the Administrator based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Clawback Eligible Incentive Compensation was Received (in which case, the Company shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Listing Exchange). The Administrator is authorised to engage, on behalf of the Company, any third-party advisors it deems advisable in order to perform any calculations contemplated by this Policy. For the avoidance of doubt, recovery under this Policy with respect to an Executive Officer shall not require the finding of any misconduct by such Executive Officer or such Executive Officer being found responsible for the accounting error leading to an Accounting Restatement.

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4 (b) In the event that any repayment of Erroneously Awarded Compensation is owed to the Company, the Administrator shall recover reasonably promptly the Erroneously Awarded Compensation through any Method of Recovery it deems reasonable and appropriate in its discretion based on all applicable facts and circumstances and taking into account the time value of money and the cost to shareholders of delaying recovery. For the avoidance of doubt, except to the extent permitted pursuant to the Clawback Rules, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer's obligations hereunder. Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated in this Section 4(b) if recovery would be Impracticable. In implementing the actions contemplated in this Section 4(b), the Administrator will act in accordance with the listing standards and requirements of the Listing Exchange and with the applicable Clawback Rules. (c) Subject to the discretion of the Administrator, an applicable Executive Officer may be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering Erroneously Awarded Compensation in accordance with Section 4(b). 5. Reporting and Disclosure. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of U.S. federal securities laws, including any disclosure required by applicable SEC rules. 6. Indemnification Prohibition. The Company shall not be permitted to indemnify any Executive Officer against the loss of any Erroneously Awarded Compensation that is repaid, returned or recovered pursuant to the terms of this Policy and/or pursuant to the Clawback Rules, including any payment or reimbursement for the cost of third-party insurance purchased by any Executive Officer to cover any such loss under this Policy and/or pursuant to the Clawback Rules. Further, the Company shall not enter into any agreement that exempts any Incentive-based Compensation from the application of this Policy or that waives the Company's right to recovery of any Erroneously Awarded Compensation and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date). Any such purported indemnification (whether oral or in writing) shall be null and void. 7. Interpretation. The Administrator is authorised to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of the Clawback Rules. The terms of this Policy shall also be construed and enforced in such a manner as to comply with applicable law, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any other law or regulation that the Administrator determines is applicable. In the event any provision of this Policy is determined to be unenforceable or invalid under applicable law, such provision shall be applied to the maximum extent permitted by applicable law and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required by applicable law. 8. Effective Date. This Policy shall be effective as of the Effective Date. 9. Amendment; Termination. The Administrator may modify or amend this Policy, in whole or in part, from time to time in its discretion and shall amend any or all of the provisions of this Policy as it deems necessary, including as and when it determines that it is legally required by the Clawback Rules, or any U.S. federal securities law, SEC rule or Listing Exchange rule. The Administrator may terminate this Policy at any time, and this Policy shall remain in effect only so long as the Clawback Rules apply to the Company. Following termination, the Administrator may continue to apply this Policy to Incentive-based Compensation awarded or Received during such time that the Policy was active. Notwithstanding anything in this Section 9 to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any

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5 actions taken by the Company contemporaneously with such amendment or termination) cause the Company to violate the Clawback Rules, or any U.S. federal securities law, SEC rule or Listing Exchange rule. Furthermore, unless otherwise determined by the Administrator or as otherwise amended, this Policy shall automatically be deemed amended in a manner necessary to comply with any change in the Clawback Rules. 10. Other Recoupment Rights; No Additional Payments. The Administrator intends that this Policy will be applied to the fullest extent permitted by applicable law. The Administrator may require that any employment agreement, equity award agreement, or any other agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require an Executive Officer to agree to abide by the terms of this Policy. Executive Officers shall be deemed to have accepted continuing employment on terms that include compliance with the Policy, to the extent of its otherwise applicable provisions, and to be contractually bound by its enforcement provisions. Executive Officers who cease employment or service with the Company shall continue to be bound by the terms of the Policy with respect to Clawback Eligible Incentive Compensation. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, cash-based bonus plan, equity award agreement or similar agreement and any other legal remedies available to the Company. To the extent that an Executive Officer has already reimbursed the Company for any Erroneously Awarded Compensation Received under any duplicative recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded Compensation that is subject to recovery under this Policy, as determined by the Administrator in its sole discretion. Nothing in this Policy precludes the Company from implementing any additional clawback or recoupment policies with respect to Executive Officers or any other service provider of the Company. Application of this Policy does not preclude the Company from taking any other action to enforce any Executive Officer's obligations to the Company, including termination of employment or institution of civil or criminal proceedings or any other remedies that may be available to the Company with respect to any Executive Officer. 11. Successors. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, estates, heirs, executors, administrators or other legal representatives to the extent required by the Clawback Rules or as otherwise determined by the Administrator. \* \* \*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibit A HSBC HOLDINGS PLC POLICY FOR THE RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION ACKNOWLEDGEMENT AND ACCEPTANCE FORM Capitalised terms used but not otherwise defined in this Acknowledgement and Acceptance Form shall have the meanings ascribed to such terms in the HSBC Holdings plc Policy for the Recovery of Erroneously Awarded Compensation (the "Policy"). By signing below, the undersigned executive officer (the "Executive Officer") acknowledges and confirms that the Executive Officer has received and reviewed a copy of the Policy and, in addition, the Executive Officer acknowledges and agrees as follows: (a) the Executive Officer is and will continue to be subject to the Policy and that the Policy will apply both during and after the Executive Officer's employment with the Company; (b) to the extent necessary to comply with the Policy, the Policy hereby amends any employment agreement, equity award agreement or similar agreement that the Executive Officer is a party to with the Company; (c) the Executive Officer shall abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation to the Company to the extent required by, and in a manner permitted by, the Policy; (d) any amounts payable to the Executive Officer, including any Incentive-based Compensation, shall be subject to the Policy as may be in effect and modified from time to time in the sole discretion of the Administrator or as required by applicable law or the requirements of the Listing Exchange, and that such modification will be deemed to amend this acknowledgment; (e) the Company may recover compensation paid to the Executive Officer through any Method of Recovery the Administrator deems appropriate, and the Executive Officer agrees to comply with any request or demand for repayment by the Company in order to comply with the Policy; and (f) the Company may, to the greatest extent permitted by applicable law, reduce any amount that may become payable to the Executive Officer by any amount to be recovered by the Company pursuant to the Policy to the extent such amount has not been returned by the Executive Officer to the Company prior to the date that any subsequent amount becomes payable to the Executive Officer. Signature Print Name Date

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