hsba201511026k.htm
FORM 6-K
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a - 16 or 15d - 16 of
 
the Securities Exchange Act of 1934
 
 
 
For the month of November
HSBC Holdings plc
 
42nd Floor, 8 Canada Square, London E14 5HQ, England
 
 
 
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).
 
Form 20-F   X              Form 40-F ......
 
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
 
Yes.......          No    X
 
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ..............).
 
 


 
2 November 2015

HSBC Holdings plc – Earnings Release
 
HSBC Holdings plc (‘HSBC’) will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 08.30am GMT. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investor-relations.

 
Table of contents
 
Highlights
4
  
Capital
15
Group Chief Executive’s comments
5
  
Risk-weighted assets
17
Fourth interim dividend
6
  
Leverage
22
Adjusted performance
6
  
Profit before tax by global business and
  
Financial performance commentary
8
  
geographical region
23
Capital and risk-weighted assets commentary
11
  
Summary information – global businesses
24
Goodwill
11
  
Summary information – geographical regions
29
Domicile
11
  
Appendix – selected information
34
Notes
12
  
Reconciliation of reported results to adjusted performance
34
Cautionary statement regarding forward-looking
  
statements
12
  
Gross loans and advances by industry sector and
by geographical region
42
Summary consolidated income statement
13
Summary consolidated balance sheet
14
      

 
Terms and Abbreviations
 
2Q15
Second quarter of 2015
3Q14/3Q15
Third quarter of 2014/2015
9M14/9M15
Nine months to 30 September 2014/2015
AML
Anti-money laundering
BoCom
Bank of Communications Co., Limited, one of China’s largest banks
CET1
Common equity tier 1
CMB
Commercial Banking, a global business
CML
Consumer and Mortgage Lending (US)
Costs to achieve
 
Transformation costs to deliver the cost reduction and productivity outcomes outlined in the Investor Update of June 2015
CRD IV
Capital Requirements Directive IV
DVA
Debit valuation adjustment
FCA
Financial Conduct Authority (UK)
FTEs
Full-time equivalent staff
GB&M
Global Banking and Markets, a global business
GPB
Global Private Banking, a global business
IFRSs
International Financial Reporting Standards
Industrial Bank
Industrial Bank Co. Limited, a national joint-stock bank in mainland China in which Hang Seng Bank Limited has a shareholding
IRB
Internal ratings-based
Jaws
The difference between the rate of growth of revenue and the rate of growth of costs
Legacy Credit
A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backed securities trading and correlation portfolios and derivative transactions entered into with monoline insurers
LICs
Loan impairment charges and other credit risk provisions
MENA
Middle East and North Africa
NCOA
Non-credit obligation assets
Own credit spread
Fair value movements on our long-term debt designated at fair value resulting from changes in credit spread
PBT
Profit before tax
PRA
Prudential Regulation Authority (UK)
Principal RBWM
RBWM excluding the effects of the US run-off portfolio
Revenue
Net operating income before LICs
RBWM
Retail Banking and Wealth Management, a global business
RoRWA
Pre-tax Return on Risk Weighted Assets is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014
RWAs
Risk-weighted assets
STD
Standardised approach
$m/$bn
United States dollar millions/billions
VaR
Value at risk

Note to editors
 
HSBC Holdings plc
 
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,100 offices in 72 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of $2,549bn at 30 September 2015, HSBC is one of the world’s largest banking and financial services organisations.
 

Highlights
 
3Q15 results (vs 3Q14)
 
·  
Reported PBT up 32% in 3Q15 at $6,097m compared with $4,609m in 3Q14. This reflected the impact of a net favourable movement in significant items.
 
·  
Adjusted PBT down 14% in 3Q15 at $5,512m compared with $6,424m in 3Q14.
 
·  
Adjusted revenue down 4% in 3Q15 at $14,044m mainly in RBWM (insurance manufacturing) and GB&M (Credit, Rates and Foreign Exchange).
 
·  
Adjusted operating expenses up 2% in 3Q15 at $8,583m in part reflecting investment in regulatory programmes and compliance.
 
·  
Adjusted operating expenses down 4% from 2Q15, in part reflecting the initial impact of our cost savings initiatives.
 
9M15 results (vs 9M14)
 
·  
Reported PBT up 16% for 9M15 at $19,725m compared with $16,949m for 9M14.
 
·  
Adjusted PBT down 3% for 9M15 at $18,514m compared with $19,119m for 9M14.
 
·  
Adjusted revenue up 2% for 9M15 at $44,816m compared with $44,141m for 9M14, driven by revenue growth in client-facing GB&M, principally in Equities and Foreign Exchange. Revenue also increased in CMB and Principal RBWM.
 
·  
Adjusted operating expenses up 6% at $26,225m compared with $24,830m for 9M14, reflecting investment in growth, and regulatory programmes and compliance costs.
 
Dividends and capital
 
·  
Earnings per ordinary share and dividends per ordinary share (in respect of the period) for 9M15 were $0.73 and $0.30, respectively, compared with $0.67 and $0.30 for 9M14. The third interim dividend was $0.10 per ordinary share.
 
·  
Strong capital base with a CRD IV end point CET1 capital ratio of 11.8%, up from 11.6% at 30 June 2015. This was a result of continued capital generation together with reduced RWAs from the implementation of a broad range of RWA initiatives.
 
·  
Leverage ratio remained strong at 5.0%.
 
   
Nine months ended 30 September
   
2015
  
2014
  
Change
   
$m
  
$m
  
%
Financial highlights and key ratios
            
Reported PBT
  
19,725
  
16,949
  
16
Adjusted PBT
  
18,514
  
19,119
  
(3)
Return on average ordinary shareholders’ equity (annualised)
  
10.7%
  
9.5%
    
Adjusted jaws
  
 (4.1)%
        

   
At
   
 30 Sep
 2015
  
 30 Jun
 2015
  
 31 Dec
 2014
   
%
  
%
  
%
Capital and balance sheet
            
Common equity tier 1 ratio (end point)1
  
11.8
  
11.6
  
11.1
Common equity tier 1 ratio (transitional)1
  
11.8
  
11.6
  
10.9
Leverage ratio
  
5.0
  
4.9
  
4.8
             
   
$m
  
$m
  
$m
             
Loans and advances to customers
  
927,428
  
953,985
  
974,660
Customer accounts
  
1,310,643
  
1,335,800
  
1,350,642
Risk-weighted assets
  
1,143,479
  
1,193,154
  
1,219,765
             
   
$bn
  
$bn
  
$bn
             
Leverage exposure measure
  
2,899
  
2,957
  
2,953
 
1
From 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios became aligned for HSBC Holdings plc due to the recognition of unrealised gains on investment property and available-for-sale securities.

 
Group Chief Executive, Stuart Gulliver, commented:
 
Business performance
 
Our third quarter performance was resilient against a tough market backdrop.
 
Revenue was down compared to the third quarter of 2014.  In particular, the stock market correction in Asia affected Principal Retail Banking & Wealth Management, and revenue was also lower in Global Banking & Markets.
 
Despite slowing growth in the mainland Chinese economy and market volatility in Asia, there has been no visible impact on our Asian credit quality in 3Q15.
 
Our operating expenses were higher than the same period last year, as expected, although our cost programmes have started to gain traction. Our third quarter costs were lower than our second quarter costs.
 
Strategy execution
 
We have continued to implement the strategic actions we announced at our Investor Update in June.
 
Our targeted initiatives reduced risk-weighted assets by an additional $32bn, bringing the total reduction to $82bn since the start of the year. This means we are already nearly 30% of the way towards our targeted reduction of $290bn by the end of 2017. We remain focused on reducing our risk-weighted assets quickly and efficiently.
 
Our cost-reduction measures are beginning to have an impact on our cost base. There is more to achieve on costs and we expect the measures we have already taken to have a further impact in the fourth quarter. We also started a number of additional initiatives in the third quarter that will deliver savings before the end of the year.
 
Achieving our strategic targets remains our primary focus. We will provide a further update on our progress at our full-year results in February.

 

Fourth interim dividend
 
The proposed timetable for the fourth interim dividend is as follows:
 
Annual Report and Accounts 2015 announcement date
  
22 February 2016
ADSs quoted ex-dividend in New York
  
2 March 2016
Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda
  
3 March 2016
Dividend record date in London, Hong Kong, New York, Paris and Bermuda1
  
4 March 2016
Dividend payment date
  
20 April 2016
 
1
Removals to and from the Overseas Branch Register of shareholders in Hong Kong will not be permitted on this date.

 
 
Adjusted performance
 
Adjusted performance is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items which distort period-on-period comparisons.
 
Foreign currency translation differences are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:
 
·  
the income statements for prior periods at the average rates of exchange for 3Q 2015; and
 
·  
the closing prior period balance sheets at the prevailing rates of exchange on 30 September 2015.
 
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. When reference is made to foreign currency translation differences
 

in tables or commentaries, comparative data reported in the functional currencies of HSBC’s operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.
 
We use the term ‘significant items’ to collectively describe the group of individual adjustments which are excluded from reported results when arriving at adjusted performance. Significant items, which are detailed in the following table, are those items which management and investors would ordinarily identify and consider separately when assessing performance in order to better understand the underlying trends in the business.
 
We believe adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believe to be significant and providing insight into how management assesses period-on-period performance.
 


Reconciliation of reported to adjusted PBT
 
   
Nine months ended
30 September
  
Quarter ended
30 September
   
2015
  
2014
  
2015
  
2014
   
$m
  
$m
  
$m
  
$m
Revenue
  
–
      
–
    
Reported
  
48,028
  
46,942
  
15,085
  
15,775
Currency translation
      
(3,746)
      
(1,404)
Significant items
  
(3,212)
  
945
  
(1,041)
  
330
– debit valuation adjustment (‘DVA’) on derivative contracts
  
(416)
  
278
  
(251)
  
123
– fair value movements on non-qualifying hedges
  
353
  
341
  
308
  
19
– (gain)/loss on sale of several tranches of real estate secured accounts in the US
  
–
  
(76)
  
17
  
(91)
– gain on sale of shareholding in Bank of Shanghai
  
–
  
(428)
  
–
  
–
– gain on the partial sale of shareholding in Industrial Bank
  
(1,372)
  
–
  
–
  
–
– impairment on our investment in Industrial Bank
  
–
  
271
  
–
  
271
– own credit spread
  
(1,775)
  
15
  
(1,125)
  
(200)
– (releases)/provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
(2)
  
580
  
10
  
213
– (gain) and trading results from disposals and changes in ownership levels
  
–
  
(36)
  
–
  
(5)
                 
                 
Adjusted
  
44,816
  
44,141
  
14,044
  
14,701
                 
Loan impairment charges and other credit risk provisions (‘LICs’)
                
Reported
  
(2,077)
  
(2,601)
  
(638)
  
(760)
Currency translation
  
–
  
466
  
–
  
205
Significant items
  
–
  
–
  
–
  
(2)
– trading results from disposals and changes in ownership levels
  
–
  
–
  
–
  
(2)
                 
                 
Adjusted
  
(2,077)
  
(2,135)
  
(638)
  
(557)
                 
Operating expenses
                
Reported
  
(28,226)
  
(29,357)
  
(9,039)
  
(11,091)
Currency translation
  
–
  
2,474
  
–
  
997
Significant items
  
2,001
  
2,053
  
456
  
1,702
– Brazil disposal costs
  
54
  
–
  
54
  
–
– charge in relation to settlement agreement with Federal Housing Finance Authority
  
–
  
550
  
–
  
550
– costs to achieve1
  
165
  
–
  
165
  
–
– costs to establish UK ring-fenced bank2
  
28
  
–
  
28
  
–
– regulatory provisions in GPB
  
154
  
–
  
7
  
–
– restructuring and other related costs
  
117
  
150
  
–
  
68
– settlements and provisions in connection with legal matters
  
1,279
  
378
  
135
  
378
– UK customer redress programmes
  
204
  
935
  
67
  
701
– trading results from disposals and changes in ownership levels
  
–
  
40
  
–
  
5
                 
                 
Adjusted
  
(26,225)
  
(24,830)
  
(8,583)
  
(8,392)
                 
Share of profit in associates and joint ventures
                
Reported
  
2,000
  
1,965
  
689
  
685
                 
Currency translation
  
–
  
(22)
  
–
  
(13)
                 
Adjusted
  
2,000
  
1,943
  
689
  
672
                 
Profit before tax
                
Reported
  
19,725
  
16,949
  
6,097
  
4,609
Currency translation
  
–
  
(828)
  
–
  
(215)
Significant items
  
(1,211)
  
2,998
  
(585)
  
2,030
– revenue
  
(3,212)
  
945
  
(1,041)
  
330
– LICs
  
–
  
–
  
–
  
(2)
– operating expenses
  
2,001
  
2,053
  
456
  
1,702
                 
                 
Adjusted
  
18,514
  
19,119
  
5,512
  
6,424
 
1
Transformation cost to deliver the cost reduction and productivity outcomes outlined in the Investor Update of June 2015.
2
From 1 July 2015, costs to establish the UK ring-fenced bank have been classified as a significant item.
 


Adjusted PBT by global businesses and geographical regions
 
   
Nine months ended
30 September
  
Quarter ended
30 September
   
2015
  
2014
  
2015
  
2014
   
$m
  
$m
  
$m
  
$m
By global business
                
Retail Banking and Wealth Management
  
5,309
  
5,878
  
1,498
  
2,103
Commercial Banking
  
6,814
  
6,796
  
2,239
  
2,203
Global Banking and Markets
  
7,474
  
6,849
  
2,047
  
2,020
Global Private Banking
  
409
  
557
  
88
  
208
Other
  
(1,492)
  
(961)
  
(360)
  
(110)
                 
   
18,514
  
19,119
  
5,512
  
6,424
                 
By geographical region
                
Europe
  
3,726
  
4,628
  
969
  
1,718
Asia
  
11,477
  
11,085
  
3,488
  
3,648
Middle East and North Africa
  
1,251
  
1,452
  
352
  
479
North America
  
1,486
  
1,519
  
555
  
481
Latin America
  
574
  
435
  
148
  
98
                 
   
18,514
  
19,119
  
5,512
  
6,424
 
The tables on pages 34 to 41 reconcile reported to adjusted results for each of our geographical segments and global businesses.
 
Financial performance commentary
 
3Q15 compared with 3Q14
 
·  
Reported PBT of $6.1bn for the third quarter of 2015 (‘3Q15’) was $1.5bn or 32% higher than in the same period in the prior year (‘3Q14’). This was mainly due to a net favourable movement in significant items. This reflected lower fines, settlements and UK customer redress (together down by $1.4bn from 3Q14) and favourable movements on our own debt designated at fair value from changes in credit spreads of $1.1bn (favourable movements of $0.2bn in 3Q14).
 
·  
On an adjusted basis, PBT of $5.5bn was $0.9bn or 14% lower than in 3Q14.
 
·  
Reported revenue was $15.1bn in the quarter, $0.7bn or 4% lower than in 3Q14 as a net favourable movement in significant items was broadly offset by the adverse effects of currency translation between the periods.
 
·  
On an adjusted basis, revenue of $14.0bn fell by $0.7bn or 4%, mainly due to lower revenue in RBWM ($0.4bn) and GB&M ($0.2bn). A $0.3bn reduction in revenue in our Principal RBWM business reflected lower Wealth Management income in Hong Kong. This was mainly in our life insurance manufacturing business due to adverse market updates as a result of stock market corrections in Asia in 3Q15. In addition, revenue from overdraft fees fell in the UK. In the US CML portfolio, also part of RBWM, the continued run-off of lending balances led to reduction in revenue of $0.1bn. In GB&M, revenue declined due to a reduction in Rates and Credit reflecting challenging market conditions in 3Q15. Revenue also fell in Foreign Exchange as 3Q14 benefited from higher client flows. By contrast, revenue rose across most other GB&M client-facing businesses. This included Equities partly reflecting strong client flows, and Capital Financing where we recorded gains from hedging activities that help us to manage credit risk across our portfolio.
 

·  
Reported LICs of $0.6bn were $0.1bn or 16% lower than 3Q14 reflecting currency translation between the periods. On an adjusted basis, LICs increased by 15%, primarily in North America driven by lower releases in the US CML run-off portfolio, and in MENA notably in the UAE. These factors were partly offset by lower LICs in Latin America, Europe and Asia reflecting improvement in individually assessed charges notably in Brazil, the UK and mainland China respectively.
 
·  
Reported operating expenses of $9.0bn were $2.1bn 19% lower than 3Q14. This largely reflected a net favourable movement in significant items compared with 3Q14, principally a reduction in fines, settlements and UK customer redress, as well as the favourable effects of currency translation between the periods.
 
·  
On an adjusted basis, operating expenses were $0.2bn or 2% higher than 3Q14. This was driven by inflationary pressures in Latin America and Asia, and higher investment in regulatory programmes and compliance costs, partly offset by lower costs from the US CML run-off portfolio in RBWM and lower performance costs in GB&M.
 
·  
However, compared with 2Q15, operating expenses declined by $0.4bn or 4% as 2Q15 included the Financial Services Compensation Scheme levy in the UK. In addition, performance costs were lower in GB&M and RBWM because of lower revenue in 3Q15. Excluding these items, 3Q15 operating expenses were $0.1bn lower than 2Q15, in part reflecting the initial impact of cost saving initiatives.
 
·  
The effective tax rate was 10.4% in 3Q15 compared with 21.4% in 3Q14.


 
9M15 compared with 9M14
 
·  
Reported PBT of $19.7bn for the first nine months of 2015 (‘9M15’) was $2.8bn or 16% higher than in the same period in 2014 (‘9M14’). This was mainly due to a net favourable movement in significant items, partly offset by the adverse effects of currency translation between the periods.
 
·  
On an adjusted basis, PBT fell by $0.6bn or 3%.
 
·  
Reported revenue of $48.0bn in 9M15, was $1.1bn or 2% higher than in 9M14. Revenue was affected by significant items including, in 9M15, a $1.4bn gain on the partial sale of our shareholding in Industrial Bank and favourable movements on our own debt designated at fair value from changes in credit spreads of $1.8bn, compared with minimal movements in 9M14. The overall favourable movement in significant items was substantially offset by the adverse effect of currency translation between the periods.
 
·  
On an adjusted basis, revenue of $44.8bn was $0.7bn or 2% higher. The main drivers of revenue movements in our global businesses were as follows:
 
−  
in GB&M, revenue of $14.4bn was $0.7bn or 5% higher, reflecting growth of $0.6bn in client-facing GB&M, and an increase of $0.2bn in Balance Sheet Management, in part driven by increased gains on disposal of available-for-sale debt securities. In client-facing GB&M, revenue rose in Equities ($0.5bn) and Foreign Exchange ($0.2bn) reflecting increased volatility in the period. Equities also benefited from higher client flows and favourable movements on own credit spread compared with minimal movements in 9M14. Revenue rose in Securities Services, notably in China, driven by increased client assets and cash balances. By contrast, revenue fell by $0.3bn in Principal Investments reflecting lower gains on disposals than in 9M14 and by $0.1bn in Rates, as client demand was affected by the ECB’s quantitative easing programme. Legacy Credit revenue also fell as we recorded revaluation gains in 9M14.
 
−  
in CMB, revenue of $11.2bn was $0.3bn or 3% higher. This was due to higher revenue from both Credit and Lending and Payments and Cash Management, mainly in Hong Kong and the UK. This reflected balance sheet growth, although demand for credit in Hong Kong has slowed in 2015. In addition, revenue rose in the US reflecting strong lending growth in our Large Corporate segment.
 
 
These factors were partially offset:
 
−  
in RBWM, where revenue of $18.1bn fell by $0.1bn due to lower average balances in the US run-off portfolio (where revenue was down by $0.3bn), which included the impact of portfolio sales. Revenue in Principal RBWM was $0.2bn higher although revenue growth fell from 4% in 1H15 to 1% in 9M15. In Wealth Management, revenue was higher due to growth in Investment Distribution in Asia, notably in 2Q15 following high levels of stock market turnover which more than offset weaker investor sentiment experienced in 3Q15. Life insurance manufacturing revenues were broadly flat as favourable market updates in Europe in 1H15 were mostly offset by adverse market updates in 3Q15 in Asia reflecting stock market corrections. Personal lending revenues were 2% lower than 9M14, with a notable decline in the UK from a reduction in overdraft fees following re-pricing and the introduction of a text message alert service for customers in November 2014. Also in personal lending in the UK, revenue fell due to mortgage spread compression and lower interest income from credit cards.
 
−  
in GPB, where revenue of $1.7bn was $0.1bn or 4% lower, reflecting a managed reduction in client assets. This was partly offset by an increase in revenue in Hong Kong during the first 6 months of the year from a rise in client transaction volumes reflecting strong stock market performance. We continued to grow the parts of the business that fit our target model, attracting $12bn in net new money since the end of 2014, mainly in Hong Kong, the UK and the US.
 
·  
Reported LICs of $2.1bn were $0.5bn or 20% lower mainly reflecting the favourable effects of foreign currency translation between the periods in Latin America. On an adjusted basis, LICs were $0.1bn or 3% lower as reductions in LICs in Latin America and North America were partly offset by an increase in the Middle East and North Africa.
 
LICs declined:
 
−  
in Latin America, in both Mexico and Brazil. In Mexico, the reduction was in RBWM reflecting lower delinquency rates on personal lending, payroll and card portfolios, and in CMB due to lower individually assessed charges notably on homebuilders. In Brazil, LICs decreased mainly driven by the non-recurrence of an individually assessed impairment charge in GB&M in 3Q14, although this was partly offset by higher LICs in RBWM and CMB, in part reflecting the economic slowdown; and
 
−  
in North America, which reflected continued US CML run-off and the non-recurrence of impairment charges recorded in CMB and GB&M in 9M14 following a revision to certain estimates used in our corporate loan impairment calculation.
 
·  
These factors were partly offset by adverse movements in:
 
−  
the Middle East and North Africa, mainly in the UAE in RBWM, which recorded higher charges, primarily on mortgages in part reflecting higher write offs and a review of the portfolio collateral, and in CMB reflecting individually assessed impairment charges in 9M15, on UAE-related exposures.
 
·  
Reported operating expenses for 9M15 of $28.2bn were $1.1bn or 4% lower than in 9M14. This reduction in reported expenses was driven by the favourable effects of currency translation between the periods. Significant items, which were broadly unchanged included one-off transformation costs to deliver the cost reduction and productivity outcomes outlined in the Investor Update (‘Costs to Achieve’) of $0.2bn.
 
·  
On an adjusted basis, operating expenses of $26.2bn were $1.4bn or 6% higher than in 2014 reflecting increases in both run-the-bank and change-the-bank costs.
 
·  
Run-the-bank costs totalled $23.6bn for 9M15, an increase of $0.9bn or 4% on 9M14. This was primarily driven by higher staff costs, including salary inflation in Latin America and Asia. In addition, we recruited new staff to support growth in targeted areas as follows:
 
−  
in GB&M we invested in Payments and Cash Management in Europe;
 
−  
in CMB, we invested in additional revenue generating FTEs in North America and Asia; and
 
−  
in RBWM, costs increased due to investment in additional FTEs, mainly in Asia in our branch network and contact centres to support revenue growth.
 
·  
Run-the-bank costs associated with regulatory programmes and compliance also increased reflecting our ongoing focus on Global Standards, primarily through the investment in the bank’s financial crime compliance capabilities.
 
·  
Change-the-bank costs totalled $2.7bn in 9M15, an increase of $0.5bn or 23% on 9M14. The increase was primarily driven by higher regulatory and compliance costs which included investment in infrastructure changes and systems enhancements for our customer due diligence and sanctions screening. These actions are in line with our strategic target to complete the implementation of Global Standards by the end of 2017.
 
·  
Our total spend on regulatory programmes and compliance in 9M15, including both run-the-bank and change-the-bank elements, was $2.2bn, up by $0.5bn or 33% from 9M14.
 
·  
Adjusted jaws for 9M15 was negative 4.1% compared with negative 2.9% for 1H15. The movement in jaws primarily reflected the slowdown in revenue growth, down to 1.5% in 9M15 from 4.5% in 1H15. However, cost growth also slowed, down to 5.6% in 9M15 from 7.3% in 1H15.
 
·  
The number of employees, expressed in FTEs, at 30 September 2015 was 259,834, an increase of 2,231 FTEs from 31 December 2014. The average number of FTEs adjusted for business disposals increased by 2% compared with 9M14 due to additional FTE requirements for regulatory programmes and compliance.
 
·  
The effective tax rate for 9M15 of 18.0% was slightly lower than the UK corporation tax rate of 20.25%, principally due to non-taxable gains arising on the partial disposal of our shareholding in Industrial Bank.
 
·  
On 5 October 2015, the Board announced a third interim dividend for 2015 of $0.10 per ordinary share.
 
Balance sheet commentary compared with 30 June 2015
 
Total assets reduced by $23.2bn driven by adverse currency translation movements of $66.3bn. Excluding these, total assets increased by $43.1bn.
 
We continued to see growth in lending to CMB customers in the UK and in customer accounts in both RBWM and our Payments and Cash Management business in CMB.
 
·  
Reported loans and advances to customers decreased by $26.6bn during 3Q15 and included the following items:
 
−  
adverse currency translation movements of $24.8bn; and
 
−  
a $3.6bn decrease in corporate overdraft balances in Europe that did not meet the criteria for netting, with a corresponding rise in customer accounts.
 
Excluding these factors, customer lending was marginally higher by $1.8bn driven by higher balances in Europe of $8.8bn primarily reflecting increased term lending to CMB customers in Europe, notably in the UK. This was partly offset by a $4.2bn fall in Asia, where repayments relating to a small number of GB&M clients more than offset an increase in term lending to CMB customers and an increase in mortgage balances. In addition, balances fell in North America by $2.2bn driven by the reclassification of residential mortgage balances to ‘Assets held for sale’ in line with the our strategic focus in reducing our legacy portfolios.
 
·  
Reported customer accounts decreased by $25.2bn during 3Q15 and included the following items:
 
−  
adverse currency translation movements of $32.0bn; and
 
−  
a $3.6bn decrease in corporate current account balances, in line with the increase in corporate overdrafts.
 
Excluding these factors, customer accounts grew by $10.4bn with increases in Asia and Europe. Balances in Asia were higher reflecting growth in our Payments and Cash Management business and in RBWM. In Europe, balances grew mainly in GB&M and in RBWM. In GB&M this partly reflected growth in Payments and Cash Management and Securities Services. Balances grew in RBWM reflecting customers’ continued preference for holding balances in current and savings accounts.
 
·  
Other significant balance sheet movements in the quarter included reductions in cash balances, with growth in reverse repurchase agreements and financial investments as we continued to effectively manage the deployment of our surplus liquidity. In addition, Assets and Liabilities held for sale fell driven by adverse currency translation movements mainly relating to our operations in Brazil and the disposal of the UK Pension business of HSBC Life (UK) Limited.
 
Net interest margin
 
·  
Net interest margin has remained broadly stable since 2Q15, although it decreased in 9M15 compared with the same period in 2014. This was due to the adverse effects of currency translation and the release in the prior year of a tax accrual on uncertain tax positions although these factors were partly offset by the effect of provisions in the prior year arising from the ongoing review of compliance with the Consumer Credit Act in the UK.
 
·  
Excluding these factors, net interest margin fell marginally compared with 9M14, primarily driven by North America due to lower gross yields and higher cost of funds. Gross yields on customer loans fell, primarily due to new lending in CMB and RBWM which was at reduced yields in the current low interest rate environment, and the continued run-off and sales of the CML portfolio. In addition, cost of funds rose due to higher costs on customer accounts, reflecting a change in portfolio mix towards higher-priced wholesale term deposits and higher rates paid on savings accounts due to promotional offers to our Premier customers in RBWM.
 
Capital and risk-weighted assets
 
Our CET1 capital ratio increased to 11.8% from 11.6% at 30 June 2015.
 
Capital generation, in the quarter, contributed $1.9bn to CET1 capital after regulatory adjustments and net of the dividend. Foreign currency translation differences reduced CET1 capital by $4.2bn and RWAs by $27.9bn, which overall had the effect of reducing the CET1 capital ratio by 0.1%.
 
Our plans to reduce Group RWAs by the end of 2017 continue to make significant progress. After foreign currency translation differences, RWAs reduced in the quarter by $21.8bn. This was primarily driven by RWA initiatives in GB&M and CMB, which saved $32.4bn of RWAs net of business growth of $9.6bn.
 
The following comments describe RWA movements, in the quarter, excluding foreign currency translation differences.
 
RWA Initiatives
 
The main drivers of these reductions are:
 
·  
$10.8bn as a result of reduced exposures principally from a decrease in positions subject to the Incremental Risk Charge, client facility reductions and trade compressions; that was mainly in Traded Risk RWAs.
 
·  
$8.4bn as a result of refined calculations including further application of the small and medium-sized enterprise (‘SME’) supporting factor, a more refined application of credit conversion factors and movement of certain exposures from residual to cash flow weighted maturity. In addition, some Project Finance and Business Banking portfolios moved from the standardised to an IRB approach.
 
·  
$7.1bn from process improvements such as better linking of collateral and guarantees to facilities and the use of more granular data resulting in lower credit conversion factors for off balance sheet items.
 
·  
$3.7bn through the continued reduction in GB&M Legacy Credit and US Run off portfolios.
 
Where these RWA initiatives relate to advanced approaches, the saves are included in the categories disclosed in the RWA movement tables by key drivers. These initiatives have resulted in RWAs saves of $11.1bn from the methodology and policy category and $6.3bn from the book size/risk levels category. In the model update category RWA initiatives have increased advanced approach RWAs by $3.6bn with a corresponding reduction of $4.2bn in the standardised approach.
 
Business Growth
 
Business growth increased RWAs by $9.6bn, principally from:
 
·  
CMB from higher term lending to corporate customers, principally in Europe, $6.9bn.
 
·  
Our associates Bank of Communications and Saudi British Bank $4.1bn.
 
·  
Partially offset by reduced institutional exposures in Asia of $1.6bn.
 
Goodwill
 
As described on page 407 of the Annual Report and Accounts 2014, an annual impairment test of goodwill allocated to each cash generating unit (‘CGU’) is performed at 1 July each year.
 
In the annual impairment test undertaken at 1 July 2015 we identified that, as a result of local capital requirements, the recoverable amount (the present value of expected future cash flows) was above, but close to, the carrying value of GB&M – North America. Furthermore, the recoverable amount is sensitive to reasonably possible changes in key assumptions, including discount rate, long-term growth rate and cash flow projections. If the recoverable amount is less than the carrying value of a CGU, an impairment loss is charged to the income statement. At 1 July 2015 GB&M – North America had goodwill of $0.9bn allocated to it.
 
Domicile
 
In April 2015, the HSBC Holdings plc Board of Directors asked management to commence a review to assess the best place for the HSBC Group's headquarters to be located to maximise long-term shareholder value and the Group's future strategic opportunities. Although management is undertaking the review on behalf the Board, it is the Board that will make the final decision regarding the location of the Group's headquarters. The review will focus on long term perspectives, as opposed to short-term factors.
 
Whilst there is a considerable amount of work still to do, a significant amount of work has been carried out, supported by a number of external advisers. In addition, as the review has progressed, further information has been requested by the Board.
 
Whilst the target for completion of the review was initially set as by the end of 2015, this is a self-imposed deadline that can be moved should the Board require further work to be performed. An announcement will be made when the Board makes its final decision and, if necessary, a further update will be provided at the time of the full year results announcement.
 
Notes
 
·  
Income statement comparisons, unless stated otherwise, are between the quarter ended 30 September 2014 and the quarter ended 30 September 2015, or between the nine months ended 30 September 2015 and the corresponding nine months in 2014. Balance sheet comparisons, unless otherwise stated, are between balances at 30 September 2015 and the corresponding balances at 30 June 2015.
 
·  
The financial information on which this Earnings Release is based and the data set out in the appendix to this statement are unaudited and have been prepared in accordance with HSBC’s significant accounting policies as described on pages 345 to 353 of the Annual Report and Accounts 2014.
 
·  
The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy, it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject to the Board’s determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.
 
Cautionary statement regarding forward-looking statements
 
The Earnings Release contains certain forward-looking statements with respect to HSBC’s financial condition, results of operations, capital position and business.
 
Statements that are not historical facts, including statements about HSBC’s beliefs and expectations, are forward-looking statements. Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, 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, 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.
 
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 continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates; volatility in equity markets; lack of liquidity in wholesale funding markets; 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; and consumer perception as to the continuing availability of credit and price competition in the market segments we serve;
 
·  
changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; 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; imposition of levies or taxes designed to change business mix and risk appetite; the conduct of business of financial institutions in serving their retail customers, corporate clients and counterparties; the standards of market conduct; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; 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). 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 we use; and our success in addressing operational, legal and regulatory, and litigation challenges, notably compliance with the Deferred Prosecution Agreement with US authorities.
 

 
For further information contact:
 
Investor Relations
  
Media Relations
UK
USA
Heidi Ashley
Tel: +44 (0) 20 7991 3643
Tel: +1 224 880 7979
Tel: +44 (0) 20 7992 2045
Hong Kong
  
Gareth Hewett
Tel: +852 2822 4908
  
Tel: +852 2822 4929

 
Summary consolidated income statement
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Net interest income
  
24,472
  
26,158
  
8,028
  
8,170
  
8,753
Net fee income
  
11,234
  
12,239
  
3,509
  
4,041
  
4,062
Net trading income
  
7,315
  
5,570
  
2,742
  
1,990
  
2,295
                     
Changes in fair value of long-term debt issued and related derivatives
  
1,947
  
476
  
623
  
1,034
  
38
Net income from other financial instruments designated at fair value
  
(165)
  
1,440
  
(1,507)
  
36
  
218
                     
Net income from financial instruments designated at fair value
  
1,782
  
1,916
  
(884)
  
1,070
  
256
Gains less losses from financial investments
  
2,048
  
915
  
174
  
1,227
  
(31)
Dividend income
  
96
  
289
  
28
  
51
  
201
Net earned insurance premiums
  
8,100
  
9,316
  
2,493
  
2,628
  
3,179
Other operating income
  
1,107
  
861
  
271
  
498
  
323
                     
Total operating income
  
56,154
  
57,264
  
16,361
  
19,675
  
19,038
                     
Net insurance claims and benefits paid and movement in liabilities to policyholders
  
(8,126)
  
(10,322)
  
(1,276)
  
(2,624)
  
(3,263)
                     
Net operating income before loan impairment charges
and other credit risk provisions
  
48,028
  
46,942
  
15,085
  
17,051
  
15,775
                     
Loan impairment charges and other credit risk provisions
  
(2,077)
  
(2,601)
  
(638)
  
(869)
  
(760)
                     
Net operating income
  
45,951
  
44,341
  
14,447
  
16,182
  
15,015
                     
Total operating expenses
  
(28,226)
  
(29,357)
  
(9,039)
  
(10,342)
  
(11,091)
                     
Operating profit
  
17,725
  
14,984
  
5,408
  
5,840
  
3,924
                     
Share of profit in associates and joint ventures
  
2,000
  
1,965
  
689
  
729
  
685
                     
Profit before tax
  
19,725
  
16,949
  
6,097
  
6,569
  
4,609
                     
Tax expense
  
(3,541)
  
(3,009)
  
(634)
  
(1,540)
  
(987)
                     
Profit after tax
  
16,184
  
13,940
  
5,463
  
5,029
  
3,622
                     
Profit attributable to shareholders of the parent company
  
14,847
  
13,177
  
5,229
  
4,359
  
3,431
Profit attributable to non-controlling interests
  
1,337
  
763
  
234
  
670
  
191
                     
   
$
  
$
  
$
  
$
  
$
                     
Basic earnings per ordinary share
  
0.73
  
0.67
  
0.25
  
0.22
  
0.17
Diluted earnings per ordinary share
  
0.72
  
0.67
  
0.25
  
0.22
  
0.17
Dividend per ordinary share (in respect of the period)
  
0.30
  
0.30
  
0.10
  
0.10
  
0.10
                     
   
%
  
%
  
 %
  
 %
  
 %
                     
Return on average ordinary shareholders’ equity (annualised)
  
10.7
  
9.5
  
10.9
  
9.7
  
7.2
Pre-tax return on average risk-weighted assets (annualised)1
  
2.2
  
1.9
  
2.1
  
2.2
  
 1.5
Cost efficiency ratio
  
58.8
  
62.5
  
 59.9
  
60.7
  
 70.3
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 

 
Summary consolidated balance sheet
 
   
At
   
30 Sep
2015
  
30 Jun
2015
  
31 Dec
2014
   
$m
  
$m
  
$m
ASSETS
            
Cash and balances at central banks
  
126,324
  
144,324
  
129,957
Trading assets
  
264,608
  
283,138
  
304,193
Financial assets designated at fair value
  
22,793
  
25,168
  
29,037
Derivatives
  
327,257
  
296,942
  
345,008
Loans and advances to banks
  
119,751
  
109,405
  
112,149
Loans and advances to customers
  
927,428
  
953,985
  
974,660
Reverse repurchase agreements – non-trading
  
164,009
  
149,384
  
161,713
Financial investments
  
414,562
  
404,682
  
415,467
Assets held for sale
  
45,451
  
60,929
  
7,647
Other assets
  
136,340
  
143,756
  
154,308
             
Total assets
  
2,548,523
  
2,571,713
  
2,634,139
             
LIABILITIES AND EQUITY
            
Liabilities
            
Deposits by banks
  
77,880
  
71,140
  
77,426
Customer accounts
  
1,310,643
  
1,335,800
  
1,350,642
Repurchase agreements – non-trading
  
83,904
  
81,506
  
107,432
Trading liabilities
  
180,015
  
181,435
  
190,572
Financial liabilities designated at fair value
  
67,712
  
69,485
  
76,153
Derivatives
  
319,171
  
289,984
  
340,669
Debt securities in issue
  
96,111
  
102,656
  
95,947
Liabilities under insurance contracts
  
69,351
  
69,494
  
73,861
Liabilities of disposal groups held for sale
  
35,961
  
53,226
  
6,934
Other liabilities
  
106,346
  
115,605
  
114,525
             
Total liabilities
  
2,347,094
  
2,370,331
  
2,434,161
             
Equity
            
Total shareholders’ equity
  
192,495
  
192,427
  
190,447
Non-controlling interests
  
8,934
  
8,955
  
9,531
             
Total equity
  
201,429
  
201,382
  
199,978
             
Total equity and liabilities
  
2,548,523
  
2,571,713
  
2,634,139
Ratio of customer advances to customer accounts
  
70.8%
  
71.4%
  
72.2%

 
Capital
 
Capital and RWA movements by major driver – CRD IV end point basis
 
   
Common equity
    
   
tier 1 capital
  
 RWAs
   
 $bn
  
 $bn
         
CRD IV end point basis at 1 July 2015
  
138.1
  
1,193.2
Capital generation from profit
  
1.9
    
– consolidated profits attributable to shareholders of the parent company (including regulatory adjustments)
  
3.8
    
– third interim dividend1 net of planned scrip
  
(1.7)
    
– second interim dividend scrip take-up lower than plan
  
(0.2)
    
RWA initiatives
      
(32.4)
Business growth
      
9.6
Foreign currency translation differences
  
(4.2)
  
(27.9)
Othermovements
  
(0.5)
  
1.0
         
CRD IV end point basis at 30 September 2015
  
135.3
  
1,143.5
 
1
This includes dividends on ordinary shares, quarterly dividends on preference shares and coupons on capital securities, classified as equity.
 
Composition of regulatory capital
 
   
At
   
30 Sep
  
30 Jun
  
31 Dec
   
2015
  
2015
  
2014
   
 $m
  
 $m
  
 $m
Common equity tier 1 capital
            
Shareholders’ equity per balance sheet1
  
192,495
  
192,427
  
190,447
Non-controlling interests
  
3,424
  
3,579
  
4,640
Regulatory adjustments to the accounting basis
  
(31,036)
  
(27,713)
  
(27,386)
Deductions
  
(29,573)
  
(30,213)
  
(31,748)
             
Common equity tier 1 capital on an end point basis
  
135,310
  
138,080
  
135,953
             
Tier 1 and tier 2 capital on a transitional basis
            
Common equity tier 1 capital on an end point basis
  
135,310
  
138,080
  
135,953
Transitional adjustments
  
–
  
–
  
(2,753)
Unrealised gains arising from revaluation of property
  
–
  
–
  
(1,375)
Unrealised gains in available-for-sale debt and equities
  
–
  
–
  
(1,378)
             
Common equity tier 1 capital on a transitional basis
  
135,310
  
138,080
  
133,200
Other tier 1 capital before deductions
  
22,645
  
21,449
  
19,687
Deductions
  
(103)
  
(103)
  
(148)
             
Tier 1 capital on a transitional basis
  
157,852
  
159,426
  
152,739
Total qualifying tier 2 capital before deductions
  
37,291
  
35,924
  
38,213
Total deductions other than from tier 1 capital
  
(240)
  
(240)
  
(222)
             
Total regulatory capital on a transitional basis
  
194,903
  
195,110
  
190,730
             
Total risk-weighted assets
  
1,143,479
  
1,193,154
  
1,219,765
             
             
Capital ratios2
  
%
  
%
  
%
CRD IV end point
            
Common equity tier 1 ratio
  
11.8
  
11.6
  
11.1
             
CRD IV transitional
            
Common equity tier 1 ratio
  
11.8
  
11.6
  
10.9
Tier 1 ratio
  
13.8
  
13.4
  
12.5
Total capital ratio
  
17.0
  
16.3
  
15.6
 
1
Includes externally verified profits for the period ended 30 September 2015.
2
From 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios became aligned for HSBC Holdings plc due to the recognition of unrealised gains on investment property and available-for-sale securities. Transitional provisions, however, continue to apply for additional tier 1 and tier 2 capital; comparatives are shown accordingly for these.
 
 
Reconciliation of regulatory capital from transitional to CRD IV end point basis
 
   
At
   
30 Sep
  
30 Jun
  
31 Dec
   
2015
  
2015
  
2014
   
$m
  
$m
  
$m
 
    
 
      
Common equity tier 1 capital on a transitional basis
  
135,310
  
138,080
  
133,200
Unrealised gains arising from revaluation of property
  
–
  
–
  
1,375
Unrealised gains in available-for-sale debt and equities
  
–
  
–
  
1,378
             
Common equity tier 1 capital on an end point basis
  
135,310
  
138,080
  
135,953
             
Additional tier 1 capital on a transitional basis
  
22,542
  
21,346
  
19,539
Grandfathered instruments:
            
Preference share premium
  
(1,015)
  
(1,015)
  
(1,160)
Preference share non-controlling interests
  
(1,711)
  
(1,711)
  
(1,955)
Hybrid capital securities
  
(9,120)
  
(9,127)
  
(10,007)
Transitional provisions:
            
Allowable non-controlling interest in AT1
  
(1,377)
  
(1,282)
  
(487)
Unconsolidated investments
  
103
  
103
  
148
             
Additional tier 1 capital end point basis
  
9,422
  
8,314
  
6,078
             
Tier 1 capital on an end point basis
  
144,732
  
146,394
  
142,031
             
Tier 2 capital on a transitional basis
  
37,051
  
35,684
  
37,991
Grandfathered instruments:
            
Perpetual subordinated debt
  
(1,941)
  
(1,941)
  
(2,218)
Term subordinated debt
  
(19,034)
  
(19,033)
  
(21,513)
Transitional provisions:
            
Non-controlling interest in tier 2 capital
  
–
  
–
  
(240)
Allowable non-controlling interest in tier 2
  
21
  
14
  
396
Unconsolidated investments
  
(103)
  
(103)
  
(148)
             
Tier 2 capital on an end point basis
  
15,994
  
14,621
  
14,268
             
Total regulatory capital on an end point basis
  
160,726
  
161,015
  
156,299

 

Risk-weighted assets
 
RWAs by risk type
 
   
At
   
30 Sep
2015
  
30 Jun
2015
  
31 Dec
2014
   
$bn
  
$bn
  
$bn
             
Credit risk
  
898.7
  
935.1
  
955.3
Counterparty credit risk
  
77.5
  
83.7
  
90.7
Market risk
  
49.5
  
56.6
  
56.0
Operational risk
  
117.8
  
117.8
  
117.8
             
   
1,143.5
  
1,193.2
  
1,219.8

RWAs by global business1
 
   
At
   
30 Sep
2015
  
30 Jun
2015
  
31 Dec
2014
   
$bn
  
$bn
  
$bn
             
Retail Banking and Wealth Management
  
200.3
  
204.6
  
207.2
Commercial Banking
  
430.1
  
439.6
  
430.3
Global Banking and Markets
  
458.7
  
491.0
  
516.1
Global Private Banking
  
20.5
  
21.1
  
20.8
Other
  
33.9
  
36.9
  
45.4
             
   
1,143.5
  
1,193.2
  
1,219.8
 
1
In the first half of 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.
 
RWAs by geographical region1
 
   
At
   
30 Sep
2015
  
30 Jun
2015
  
31 Dec
2014
   
$bn
  
$bn
  
$bn
             
Europe
  
349.6
  
369.5
  
375.4
Asia
  
472.7
  
487.4
  
499.8
Middle East and North Africa
  
62.5
  
63.1
  
63.0
North America
  
205.5
  
215.7
  
221.4
Latin America
  
76.3
  
82.3
  
88.8
             
   
1,143.5
  
1,193.2
  
1,219.8
 
1
RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
 
Credit risk exposure – RWAs by geographical region
 
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
IRB approach
  
195.3
  
204.6
  
18.6
  
132.2
  
12.7
  
563.4
– IRB advanced approach
  
177.7
  
204.6
  
9.5
  
132.2
  
12.7
  
536.7
– IRB foundation approach
  
17.6
  
–
  
9.1
  
–
  
–
  
26.7
Standardised approach
  
49.1
  
176.9
  
34.7
  
32.1
  
42.5
  
335.3
                         
At 30 September 2015
  
244.4
  
381.5
  
53.3
  
164.3
  
55.2
  
898.7
                         
IRB approach
  
204.0
  
216.2
  
15.5
  
139.4
  
11.5
  
586.6
– IRB advanced approach
  
186.0
  
216.2
  
10.2
  
139.4
  
11.5
  
563.3
– IRB foundation approach
  
18.0
  
–
  
5.3
  
–
  
–
  
23.3
Standardised approach
  
50.7
  
177.7
  
38.6
  
32.5
  
49.0
  
348.5
                         
At 30 June 2015
  
254.7
  
393.9
  
54.1
  
171.9
  
60.5
  
935.1
                         
IRB approach
  
216.1
  
213.1
  
15.6
  
142.0
  
11.6
  
598.4
– IRB advanced approach
  
203.3
  
213.1
  
11.6
  
142.0
  
11.6
  
581.6
– IRB foundation approach
  
12.8
  
–
  
4.0
  
–
  
–
  
16.8
Standardised approach
  
47.1
  
186.0
  
39.0
  
29.6
  
55.2
  
356.9
                         
At 31 December 2014
  
263.2
  
399.1
  
54.6
  
171.6
  
66.8
  
955.3



Credit risk exposure – RWAs by global business
 
   
Principal
RBWM1
  
US run-off
portfolio
  
Total
RBWM
  
CMB1
  
GB&M
  
GPB
  
Other
  
Total
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                                 
IRB approach
  
60.8
  
40.1
  
100.9
  
222.5
  
220.2
  
9.0
  
10.8
  
563.4
– IRB advanced approach
  
60.8
  
40.1
  
100.9
  
204.0
  
213.2
  
8.9
  
9.7
  
536.7
– IRB foundation approach
  
–
  
–
  
–
  
18.5
  
7.0
  
0.1
  
1.1
  
26.7
Standardised approach
  
57.2
  
4.4
  
61.6
  
175.3
  
68.2
  
7.4
  
22.8
  
335.3
                                 
At 30 September 2015
  
118.0
  
44.5
  
162.5
  
397.8
  
288.4
  
16.4
  
33.6
  
898.7
                                 
IRB approach
  
60.1
  
42.6
  
102.7
  
225.6
  
234.8
  
9.5
  
14.0
  
586.6
– IRB advanced approach
  
60.1
  
42.6
  
102.7
  
210.6
  
227.8
  
9.4
  
12.8
  
563.3
– IRB foundation approach
  
–
  
–
  
–
  
15.0
  
7.0
  
0.1
  
1.2
  
23.3
Standardised approach
  
59.8
  
4.3
  
64.1
  
181.9
  
72.0
  
7.7
  
22.8
  
348.5
                                 
At 30 June 2015
  
119.9
  
46.9
  
166.8
  
407.5
  
306.8
  
17.2
  
36.8
  
935.1
                                 
IRB approach
  
56.1
  
47.3
  
103.4
  
217.2
  
255.6
  
10.2
  
12.0
  
598.4
– IRB advanced approach
  
56.1
  
47.3
  
103.4
  
209.2
  
248.1
  
10.0
  
10.9
  
581.6
– IRB foundation approach
  
–
  
–
  
–
  
8.0
  
7.5
  
0.2
  
1.1
  
16.8
Standardised approach
  
61.2
  
4.8
  
66.0
  
181.0
  
70.1
  
6.6
  
33.2
  
356.9
                                 
At 31 December 2014
  
117.3
  
52.1
  
169.4
  
398.2
  
325.7
  
16.8
  
45.2
  
955.3
 
1
In the first half of 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.



RWA movement by geographical region by key driver – credit risk – IRB only
 
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
RWAs at 1 January 2015
  
216.1
 
213.1
  
15.6
  
142.0
 
11.6
  
598.4
  
                           
Foreign exchange movement
  
(6.4)
 
(7.4)
  
(0.6)
  
(3.8)
 
(2.5)
  
(20.7)
  
Acquisitions and disposals
  
(13.9)
 
–
  
–
  
–
 
–
  
(13.9)
  
Book size
  
8.4
 
7.4
  
(0.4)
  
0.6
 
(0.1)
  
15.9
  
Book quality
  
(6.5)
 
(5.8)
  
(1.3)
  
(0.2)
 
3.4
  
(10.4)
  
Model updates
  
1.3
 
(1.2)
  
3.5
  
–
 
0.1
  
3.7
  
– portfolios moving onto IRB approach
  
–
  
–
  
3.5
  
–
 
0.1
  
3.6
  
– new/updated models
  
1.3
  
(1.2)
  
–
  
–
 
–
  
0.1
  
                           
Methodology and policy
  
(3.7)
 
(1.5)
  
1.8
  
(6.4)
 
0.2
  
(9.6)
  
– internal updates
  
(6.3)
 
(3.5)
  
1.7
  
(6.4)
 
0.2
  
(14.3)
  
– external updates – regulatory
  
2.6
 
2.0
  
0.1
  
–
 
–
  
4.7
  
                           
                           
Total RWA movement
  
(20.8)
 
(8.5)
  
3.0
  
(9.8)
 
1.1
  
(35.0)
  
                           
RWAs at 30 September 2015
  
195.3
 
204.6
  
18.6
  
132.2
 
12.7
  
563.4
  
                           
RWAs at 1 July 2015
  
204.0
 
216.2
  
15.5
  
139.4
 
11.5
  
586.6
  
                           
Foreign exchange movement
  
(5.6)
 
(5.2)
  
(0.2)
  
(2.0)
 
(1.5)
  
(14.5)
  
Acquisitions and disposals
  
(1.8)
 
–
  
–
  
–
 
–
  
(1.8)
  
Book size
  
4.8
 
(1.4)
  
0.2
  
(0.7)
 
0.7
  
3.6
  
Book quality
  
(1.5)
 
(2.7)
  
(1.1)
  
0.4
 
1.7
  
(3.2)
  
Model updates
  
(0.3)
 
0.5
  
3.5
  
–
 
0.1
  
3.8
  
– portfolios moving onto IRB approach
  
–
  
–
  
3.5
  
–
  
0.1
  
3.6
  
– new/updated models
  
(0.3)
  
0.5
  
–
  
–
  
–
  
0.2
  
                           
Methodology and policy
  
(4.3)
 
(2.8)
  
0.7
  
(4.9)
 
0.2
  
(11.1)
  
– internal updates
  
(4.3)
 
(2.8)
  
0.7
  
(4.9)
 
0.2
  
(11.1)
  
– external updates – regulatory
  
–
 
–
  
–
  
–
 
–
  
–
  
                           
                           
Total RWA movement
  
(8.7)
 
(11.6)
  
3.1
  
(7.2)
 
1.2
  
(23.2)
  
                           
RWAs at 30 September 2015
  
195.3
 
204.6
  
18.6
  
132.2
 
12.7
  
563.4
  
                         
RWAs at 1 January 2014
  
166.9
  
182.9
  
15.0
  
161.5
  
8.5
  
534.8
  
                           
Foreign exchange movement
  
(4.6)
  
(1.3)
  
(0.2)
  
(1.4)
  
(1.2)
  
(8.7)
  
Acquisitions and disposals
  
(2.3)
  
–
  
(0.5)
  
(3.5)
  
(0.1)
  
(6.4)
  
Book size
  
5.6
  
18.3
  
(0.1)
  
1.6
  
1.8
  
27.2
  
Book quality
  
(3.0)
  
0.7
  
0.4
  
(5.4)
  
0.7
  
(6.6)
  
Model updates
  
14.9
  
0.3
  
–
  
(6.4)
  
–
  
8.8
  
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
–
  
–
  
–
  
– new/updated models
  
14.9
  
0.3
  
–
  
(6.4)
  
–
  
8.8
  
                           
Methodology and policy
  
35.2
  
12.2
  
0.5
  
0.2
  
1.7
  
49.8
  
– internal updates
  
(11.5)
  
(5.6)
  
(0.2)
  
(6.8)
  
(0.1)
  
(24.2)
  
– external updates – regulatory
  
2.2
  
6.7
  
(0.2)
  
0.7
  
0.1
  
9.5
  
– CRD IV impact
  
37.0
  
5.7
  
0.4
  
4.9
  
0.2
  
48.2
  
– NCOA moving from STD to IRB
  
7.5
  
5.4
  
0.5
  
1.4
  
1.5
  
16.3
  
                           
                           
Total RWA movement
  
45.8
  
30.2
  
0.1
  
(14.9)
  
2.9
  
64.1
  
                           
RWAs at 30 September 2014
  
212.7
  
213.1
  
15.1
  
146.6
  
11.4
  
598.9
  
                           
RWAs at 1 July 2014
  
222.6
  
209.9
  
15.3
  
155.3
  
12.0
  
615.1
  
                           
Foreign exchange movement
  
(9.5)
  
(2.1)
  
–
  
(1.3)
  
(0.8)
  
(13.7)
  
Acquisitions and disposals
  
–
  
–
  
–
  
(0.9)
  
–
  
(0.9)
  
Book size
  
2.6
  
5.3
  
0.1
  
2.1
  
(0.1)
  
10.0
  
Book quality
  
(1.3)
  
–
  
(0.3)
  
(3.1)
  
0.3
  
(4.4)
  
Model updates
  
–
  
–
  
–
  
(1.3)
  
–
  
(1.3)
  
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
–
  
–
  
–
  
– new/updated models
  
–
  
–
  
–
  
(1.3)
  
–
  
(1.3)
  
                           
Methodology and policy
  
(1.7)
  
–
  
–
  
(4.2)
  
–
  
(5.9)
  
– internal updates
  
(1.7)
  
–
  
–
  
(4.2)
  
–
  
(5.9)
  
– external updates – regulatory
  
–
  
–
  
–
  
–
  
–
  
–
  
– CRD IV impact
  
–
  
–
  
–
  
–
  
–
  
–
  
– NCOA moving from STD to IRB
  
–
  
–
  
–
  
–
  
–
  
–
  
                           
                           
Total RWA movement
  
(9.9)
  
3.2
  
(0.2)
  
(8.7)
  
(0.6)
  
(16.2)
  
                           
RWAs at 30 September 2014
  
212.7
  
213.1
  
15.1
  
146.6
  
11.4
  
598.9
  



RWA movement by global business by key driver – credit risk – IRB only
 
   
Principal
RBWM1
  
US
run-off
portfolio
  
Total
RBWM
  
CMB1
  
GB&M
  
GPB
  
Other
  
Total
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
RWAs at 1 January 2015
  
56.1
  
47.3
  
103.4
  
217.2
  
255.6
  
10.2
  
12.0
  
598.4
Foreign exchange movement
  
(2.1)
  
–
  
(2.1)
  
(9.1)
  
(8.9)
  
(0.2)
  
(0.4)
  
(20.7)
Acquisitions and disposals
  
–
  
–
  
–
  
–
  
(13.9)
  
–
  
–
  
(13.9)
Book size
  
3.2
  
(4.1)
  
(0.9)
  
13.8
  
3.5
  
(0.3)
  
(0.2)
  
15.9
Book quality
  
(1.4)
  
(3.4)
  
(4.8)
  
4.2
  
(9.3)
  
–
  
(0.5)
  
(10.4)
Model updates
  
0.5
  
–
  
0.5
  
4.6
  
(1.4)
  
–
  
–
  
3.7
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
3.1
  
0.5
  
–
  
–
  
3.6
– new/updated models
  
0.5
  
–
  
0.5
  
1.5
  
(1.9)
  
–
  
–
  
0.1
   
–
                            
Methodology and policy
  
4.5
  
0.3
  
4.8
  
(8.2)
  
(5.4)
  
(0.7)
  
(0.1)
  
(9.6)
– internal updates
  
2.5
  
0.3
  
2.8
  
(8.2)
  
(8.1)
  
(0.7)
  
(0.1)
  
(14.3)
– external updates – regulatory
  
2.0
  
–
  
2.0
  
–
  
2.7
  
–
  
–
  
4.7
                                 
   
–
                            
Total RWA movement
  
4.7
  
(7.2)
  
(2.5)
  
5.3
  
(35.4)
  
(1.2)
  
(1.2)
  
(35.0)
   
–
                            
RWAs at 30 September 2015
  
60.8
  
40.1
  
100.9
  
222.5
  
220.2
  
9.0
  
10.8
  
563.4
                                 
RWAs at 1 July 2015
  
60.1
  
42.6
  
102.7
  
225.6
  
234.8
  
9.5
  
14.0
  
586.6
Foreign exchange movement
  
(1.6)
  
–
  
(1.6)
  
(6.4)
  
(6.1)
  
(0.2)
  
(0.2)
  
(14.5)
Acquisitions and disposals
  
–
  
–
  
–
  
–
  
(1.8)
  
–
  
–
  
(1.8)
Book size
  
1.6
  
(1.4)
  
0.2
  
4.8
  
1.0
  
(0.1)
  
(2.3)
  
3.6
Book quality
  
0.1
  
(1.1)
  
(1.0)
  
2.2
  
(3.8)
  
–
  
(0.6)
  
(3.2)
Model updates
  
0.5
  
–
  
0.5
  
3.0
  
0.3
  
–
  
–
  
3.8
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
3.1
  
0.5
  
–
  
–
  
3.6
– new/updated models
  
0.5
  
–
  
0.5
  
(0.1)
  
(0.2)
  
–
  
–
  
0.2
                                 
Methodology and policy
  
0.1
  
–
  
0.1
  
(6.7)
  
(4.2)
  
(0.2)
  
(0.1)
  
(11.1)
– internal updates
  
0.1
  
–
  
0.1
  
(6.7)
  
(4.2)
  
(0.2)
  
(0.1)
  
(11.1)
– external updates – regulatory
  
–
  
–
  
–
  
–
  
–
  
–
  
–
  
–
                                 
                                 
Total RWA movement
  
0.7
  
(2.5)
  
(1.8)
  
(3.1)
  
(14.6)
  
(0.5)
  
(3.2)
  
(23.2)
                                 
RWAs at 30 September 2015
  
60.8
  
40.1
  
100.9
  
222.5
  
220.2
  
9.0
  
10.8
  
563.4
                                 
RWAs at 1 January 2014
  
58.5
  
72.6
  
131.1
  
189.4
  
198.5
  
10.6
  
5.2
  
534.8
Foreign exchange movement
  
(1.3)
  
–
  
(1.3)
  
(4.0)
  
(3.1)
  
–
  
(0.3)
  
(8.7)
Acquisitions and disposals
  
–
  
–
  
–
  
–
  
(6.4)
  
–
  
–
  
(6.4)
Book size
  
1.4
  
(5.2)
  
(3.8)
  
20.3
  
12.4
  
(0.6)
  
(1.1)
  
27.2
Book quality
  
(2.3)
  
(6.7)
  
(9.0)
  
3.0
  
(0.6)
  
(0.6)
  
0.6
  
(6.6)
Model updates
  
0.1
  
(6.2)
  
(6.1)
  
9.3
  
5.3
  
0.3
  
–
  
8.8
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
–
  
–
  
–
  
–
  
–
– new/updated models
  
0.1
  
(6.2)
  
(6.1)
  
9.3
  
5.3
  
0.3
  
–
  
8.8
                                 
Methodology and policy
  
1.7
  
(3.8)
  
(2.1)
  
(2.1)
  
45.3
  
0.8
  
7.9
  
49.8
– internal updates
  
(2.9)
  
(4.1)
  
(7.0)
  
(5.5)
  
(11.4)
  
(0.3)
  
–
  
(24.2)
– external updates – regulatory
  
–
  
–
  
–
  
2.5
  
6.3
  
0.5
  
0.2
  
9.5
– CRD IV impact
  
–
  
–
  
–
  
(0.7)
  
48.6
  
0.2
  
0.1
  
48.2
– NCOA moving from STD to IRB
  
4.6
  
0.3
  
4.9
  
1.6
  
1.8
  
0.4
  
7.6
  
16.3
                                 
                                 
Total RWA movement
  
(0.4)
  
(21.9)
  
(22.3)
  
26.5
  
52.9
  
(0.1)
  
7.1
  
64.1
                                 
RWAs at 30 September 2014
  
58.1
  
50.7
  
108.8
  
215.9
  
251.4
  
10.5
  
12.3
  
598.9
                                 
RWAs at 1 July 2014 on CRD IV basis
  
60.5
  
60.6
  
121.1
  
213.2
  
256.4
  
11.2
  
13.2
  
615.1
Foreign exchange movement
  
(1.8)
  
–
  
(1.8)
  
(6.2)
  
(5.2)
  
(0.2)
  
(0.3)
  
(13.7)
Acquisitions and disposals
  
–
  
–
  
–
  
–
  
(0.9)
  
–
  
–
  
(0.9)
Book size
  
0.2
  
(1.8)
  
(1.6)
  
8.7
  
3.9
  
(0.2)
  
(0.8)
  
10.0
Book quality
  
(0.5)
  
(2.7)
  
(3.2)
  
0.2
  
(1.3)
  
(0.3)
  
0.2
  
(4.4)
Model updates
  
–
  
(1.3)
  
(1.3)
  
–
  
–
  
–
  
–
  
(1.3)
– portfolios moving onto IRB approach
  
–
  
–
  
–
  
–
  
–
  
–
  
–
  
–
– new/updated models
  
–
  
(1.3)
  
(1.3)
  
–
  
–
  
–
  
–
  
(1.3)
                                 
Methodology and policy
  
(0.3)
  
(4.1)
  
(4.4)
  
–
  
(1.5)
  
–
  
–
  
(5.9)
– internal updates
  
(0.3)
  
(4.1)
  
(4.4)
  
–
  
(1.5)
  
–
  
–
  
(5.9)
– external updates – regulatory
  
–
  
–
  
–
  
–
  
–
  
–
  
–
  
–
                                 
                                 
Total RWA movement
  
(2.4)
  
(9.9)
  
(12.3)
  
2.7
  
(5.0)
  
(0.7)
  
(0.9)
  
(16.2)
                                 
RWAs at 30 September 2014
  
58.1
  
50.7
  
108.8
  
215.9
  
251.4
  
10.5
  
12.3
  
598.9
 
1
In the first half of 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.


RWA movement by key driver – counterparty credit risk – advanced approach
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Sep
2014
   
$bn
  
$bn
  
$bn
  
$bn
                 
RWAs at beginning of period
  
65.5
  
42.2
  
59.4
  
70.8
                 
Book size
  
(5.5)
  
7.4
  
(2.5)
  
4.2
Book quality
  
(0.8)
  
(0.3)
  
(0.2)
  
–
Model updates
  
–
  
0.1
  
–
  
(2.1)
Methodology and policy
  
(4.0)
  
21.2
  
(1.5)
  
(2.3)
– internal updates
  
(4.0)
  
(3.3)
  
(1.5)
  
(2.3)
– external updates – regulatory
  
–
  
7.5
  
–
  
–
– CRD IV impact
  
–
  
17.0
  
–
  
–
                 
                 
Total RWA movement
  
(10.3)
  
28.4
  
(4.2)
  
(0.2)
                 
RWAs at end of period
  
55.2
  
70.6
  
55.2
  
70.6

 

RWA movement by key driver – market risk – internal model based
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Sep
2014
   
$bn
  
$bn
  
$bn
  
$bn
                 
RWAs at beginning of period
  
44.6
  
52.2
  
46.5
  
49.5
                 
Acquisitions and disposals
  
–
  
(2.0)
  
–
  
(2.0)
Movement in risk levels
  
(2.3)
  
(0.1)
  
(5.0)
  
(1.0)
Model updates
  
–
  
–
  
–
  
–
Methodology and policy
  
(1.4)
  
3.1
  
(0.6)
  
6.7
– internal updates
  
(1.4)
  
0.5
  
(0.6)
  
–
– external updates – regulatory
  
–
  
2.6
  
–
  
6.7
                 
   
–
      
–
    
Total RWA movement
  
(3.7)
  
1.0
  
(5.6)
  
3.7
                 
RWAs at end of period
  
40.9
  
53.2
  
40.9
  
53.2

Leverage
 
Leverage ratio
 
   
EU Delegated Act basis at
   
 30 Sep
 2015
  
 30 Jun
 2015
  
 31 Dec
 2014
   
 $bn
  
 $bn
  
 $bn
             
Total assets per regulatory balance sheet
  
2,672
  
2,675
  
2,726
Adjustment to reverse netting of loans and deposits allowable under IFRS
  
35
  
37
  
38
Reversal of accounting values including assets classified as held for sale:
  
(515)
  
(476)
  
(525)
– derivatives
  
(329)
  
(298)
  
(345)
– repurchase agreement and securities finance
  
(186)
  
(178)
  
(180)
Replaced with regulatory values:
  
347
  
355
  
354
– derivatives
  
153
  
168
  
166
– repurchase agreement and securities finance
  
194
  
187
  
188
Addition of off balance sheet commitments and guarantees:
  
393
  
399
  
396
Exclusion of items already deducted from the capital measure
  
(33)
  
(33)
  
(36)
             
Exposure measure after regulatory adjustments
  
2,899
  
2,957
  
2,953
             
Tier 1 capital under CRD IV (end point)
  
145
  
146
  
142
Leverage ratio
  
5.0%
  
4.9%
  
4.8%

 

Profit/(loss) before tax by global business and geographical region
 
   
Nine months ended
  
Quarter ended
   
 30 Sep
 2015
  
 30 Sep
 20141
  
 30 Sep
 2015
  
 30 Jun
 2015
  
 30 Sep
 20141
   
 $m
  
 $m
  
 $m
  
 $m
  
 $m
By global business
                    
Retail Banking and Wealth Management
  
4,522
  
4,305
  
1,160
  
1,752
  
1,303
Commercial Banking
  
6,749
  
7,109
  
2,226
  
2,229
  
2,295
Global Banking and Markets
  
6,895
  
5,974
  
2,141
  
1,713
  
941
Global Private Banking
  
261
  
554
  
81
  
115
  
190
Other
  
1,298
  
(993)
  
489
  
760
  
(120)
                     
   
19,725
  
16,949
  
6,097
  
6,569
  
4,609
                     
By geographical region
                    
Europe
  
3,773
  
2,751
  
1,568
  
641
  
493
Asia
  
12,948
  
11,369
  
3,548
  
5,070
  
3,475
Middle East and North Africa
  
1,260
  
1,476
  
359
  
444
  
487
North America
  
1,169
  
883
  
479
  
213
  
58
Latin America
  
575
  
470
  
143
  
201
  
96
                     
   
19,725
  
16,949
  
6,097
  
6,569
  
4,609
 
1
In Q2 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.
 


Summary information – global businesses
 
Retail Banking and Wealth Management
 
   
Nine months ended
  
Quarter ended
   
 30 Sep
 2015
  
 30 Sep
 20142
  
 30 Sep
 2015
  
 30 Jun
 2015
  
 30 Sep
 20142
   
 $m
  
 $m
  
 $m
  
 $m
  
 $m
Net operating income before loan impairment charges
and other credit risk provisions
  
17,912
  
19,134
  
5,470
  
6,531
  
6,518
Loan impairment charges and other credit risk provisions
  
(1,396)
  
(1,568)
  
(462)
  
(474)
  
(269)
                     
Net operating income
  
16,516
  
17,566
  
5,008
  
6,057
  
6,249
Total operating expenses
  
(12,308)
  
(13,583)
  
(3,954)
  
(4,426)
  
(5,053)
                     
Operating profit
  
4,208
  
3,983
  
1,054
  
1,631
  
1,196
Share of profit in associates and joint ventures
  
314
  
322
  
106
  
121
  
107
                     
Profit before tax
  
4,522
  
4,305
  
1,160
  
1,752
  
1,303
                     
Profit before tax relates to:
                    
Principal RBWM
  
4,698
  
3,878
  
1,181
  
1,937
  
935
US run-off portfolio
  
(176)
  
427
  
(21)
  
(185)
  
368
                     
   
 %
  
 %
  
 %
  
 %
  
 %
                     
Cost efficiency ratio
  
 68.7
  
 71.0
  
 72.3
  
 67.8
  
 77.5
Reported pre-tax RoRWA (annualised)1
  
 3.0
  
 2.6
  
 2.3
  
 3.4
  
 2.4
                     
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Adjusted profit before tax – Principal RBWM
  
4,934
  
5,307
  
1,340
  
1,851
  
1,798
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
2
In Q2 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.
 
Principal RBWM: management view of adjusted revenue
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Current accounts, savings and deposits
  
4,213
  
4,149
  
1,398
  
1,384
  
1,383
Wealth Management products
  
4,921
  
4,561
  
1,316
  
1,945
  
1,554
Investment distribution1
  
2,811
  
2,511
  
845
  
1,070
  
876
Life insurance manufacturing
  
1,286
  
1,283
  
207
  
592
  
417
Asset Management
  
824
  
767
  
264
  
283
  
261
                     
Personal lending
  
7,569
  
7,759
  
2,467
  
2,470
  
2,537
Mortgages
  
2,151
  
2,224
  
720
  
710
  
733
Credit cards
  
2,952
  
2,978
  
958
  
974
  
985
Other personal lending2
  
2,466
  
2,557
  
789
  
786
  
819
                     
Other3
  
503
  
533
  
182
  
135
  
172
                     
Net operating income4
  
17,206
  
17,002
  
5,363
  
5,934
  
5,646
 
1
‘Investment distribution’ includes Investments, which comprises mutual funds (HSBC manufactured and third-party), structured products and securities trading, and Wealth insurance distribution, consisting of HSBC manufactured and third-party life, pension and investment insurance products.
2
‘Other personal lending’ includes personal non-residential closed-end loans and personal overdrafts.
3
‘Other’ mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.
4
Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.

 
Commercial Banking
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
 30 Sep
 20142
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
20142
   
$m
  
 $m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
11,236
  
11,884
  
3,702
  
3,748
  
4,061
               
2
    
Loan impairment charges and other credit risk provisions
  
(757)
  
(874)
  
(246)
  
(295)
  
(386)
                     
Net operating income
  
10,479
  
11,010
  
3,456
  
3,453
  
3,675
                     
Total operating expenses
  
(4,997)
  
(5,146)
  
(1,676)
  
(1,682)
  
(1,819)
                     
Operating profit
  
5,482
  
5,864
  
1,780
  
1,771
  
1,856
               
,
    
Share of profit in associates and joint ventures
  
1,267
  
1,245
  
446
  
458
  
439
                     
Profit before tax
  
6,749
  
7,109
  
2,226
  
2,229
  
2,295
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
44.5
  
43.3
  
45.3
  
44.9
  
44.8
Reported pre-tax RoRWA (annualised)1
  
2.1
  
2.3
  
2.0
  
2.1
  
2.1
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
2
In Q2 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.
 
Management view of adjusted revenue
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Global Trade and Receivables Finance
  
1,841
  
1,852
  
616
  
597
  
638
Credit and lending
  
4,514
  
4,180
  
1,544
  
1,474
  
1,433
Payments and Cash Management, current accounts and savings deposits
  
3,415
  
3,319
  
1,151
  
1,124
  
1,135
Markets products, Insurance and Investments and Other1
  
1,466
  
1,558
  
391
  
498
  
488
                     
Net operating income2
  
11,236
  
10,909
  
3,702
  
3,693
  
3,694
 
1
Includes Foreign Exchange revenue.
2
Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.

 

Global Banking and Markets
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
14,786
  
14,470
  
4,525
  
5,019
  
4,679
                     
Loan impairment recoveries/(charges) and other credit risk provisions
  
90
  
(185)
  
79
  
(97)
  
(136)
                     
Net operating income
  
14,876
  
14,285
  
4,604
  
4,922
  
4,543
                     
Total operating expenses
  
(8,385)
  
(8,687)
  
(2,595)
  
(3,353)
  
(3,729)
                     
Operating profit
  
6,491
  
5,598
  
2,009
  
1,569
  
814
                     
Share of profit in associates and joint ventures
  
404
  
376
  
132
  
144
  
127
                     
Profit before tax
  
6,895
  
5,974
  
2,141
  
1,713
  
941
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
56.7
  
60.0
  
57.3
  
66.8
  
79.7
Reported pre-tax RoRWA (annualised)1
  
1.9
  
1.6
  
1.8
  
1.4
  
0.7
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Management view of adjusted revenue
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Markets
  
5,853
  
5,277
  
1,480
  
2,125
  
1,720
Legacy Credit
  
90
  
172
  
(7)
  
24
  
12
Credit
  
568
  
551
  
76
  
230
  
156
Rates
  
1,374
  
1,496
  
367
  
529
  
469
Foreign Exchange
  
2,349
  
2,130
  
679
  
712
  
787
Equities
  
1,472
  
928
  
365
  
630
  
296
                     
Capital Financing
  
2,874
  
2,833
  
994
  
958
  
912
Payments and Cash Management
  
1,338
  
1,279
  
439
  
433
  
429
Securities Services
  
1,289
  
1,189
  
425
  
428
  
397
Global Trade and Receivables Finance
  
553
  
538
  
183
  
181
  
179
Balance Sheet Management
  
2,305
  
2,116
  
717
  
646
  
747
Principal Investments
  
177
  
433
  
49
  
109
  
115
Other1
  
(1)
  
3
  
(17)
  
29
  
(16)
                     
Net operating income2
  
14,388
  
13,668
  
4,270
  
4,909
  
4,483
 
1
‘Other’ in GB&M includes net interest earned on free capital held in the global business not assigned to products and gains resulting from business disposals. Within the management view of total operating income, notional tax credits are allocated to the businesses to reflect the economic benefit generated by certain activities which is not reflected within operating income, for example notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRSs basis, the offset to these tax credits are included within ‘Other’.
2
Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.



Global Private Banking
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
  
   
$m
  
$m
  
$m
  
$m
  
$m
  
Net operating income before loan impairment charges
and other credit risk provisions
  
1,685
  
1,820
  
508
  
564
  
590
  
                       
Loan impairment (charges)/recoveries  and other credit risk provisions
  
(9)
  
25
  
(4)
  
(3)
  
31
  
                       
Net operating income
  
1,676
  
1,845
  
504
  
561
  
621
  
                       
Total operating expenses
  
(1,427)
  
(1,304)
  
(426)
  
(450)
  
(436)
  
                       
Operating profit
  
249
  
541
  
78
  
111
  
185
  
                       
Share of profit in associates and joint ventures
  
12
  
13
  
3
  
4
  
5
  
                       
Profit before tax
  
261
  
554
  
81
  
115
   
190
  
                     
       
           %
  
           %
  
           %
  
          %
  
%
                     
Cost efficiency ratio
  
       84.7
  
        71.6
  
        83.9
  
       79.8
  
73.9
Reported pre-tax RoRWA (annualised)1
  
         1.7
  
         3.4
  
          1.5
  
         2.2
  
3.5
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Client assets1 by geography
 
   
Quarter ended
   
30 Sep
2015
  
30 Jun
2015
  
31 Mar
2015
  
31 Dec
2014
  
30 Sep
2014
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                     
Europe
  
170
  
179
  
177
  
179
  
191
Asia
  
106
  
117
  
114
  
112
  
111
North America
  
62
  
64
  
65
  
63
  
65
Latin America
  
8
  
10
  
10
  
11
  
13
                     
Total
  
346
  
370
  
366
  
365
  
380

Client assets1
 
   
Quarter ended
   
30 Sep
2015
  
30 Jun
2015
  
31 Mar
2015
  
31 Dec
2014
  
30 Sep
2014
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                     
Opening balance
  
370
  
366
  
365
  
380
  
384
Net new money
  
3
  
–
  
(1)
  
–
  
–
Of which: areas targeted for growth
  
6
  
3
  
3
  
4
  
5
Value change
  
(14)
  
1
  
8
  
3
  
(1)
Exchange and other
  
(13)
  
3
  
(6)
  
(18)
  
(3)
                     
Closing balance
  
346
  
370
  
366
  
365
  
380
 
1
‘Client assets’ are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group’s balance sheet, and customer deposits, which are reported on the Group’s balance sheet.

 
Other1
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges and other credit risk provisions
  
7,227
  
4,170
  
2,540
  
2,856
  
1,513
–of which effect of changes in own credit spread on the
fair value of long-term debt issued
  
1,775
  
(15)
  
1,125
  
352
  
200
                     
Loan impairment (charges)/recoveries and other credit risk provisions
  
(5)
  
1
  
(5)
  
–
  
–
                     
Net operating income
  
7,222
  
4,171
  
2,535
  
2,856
  
1,513
                     
Total operating expenses
  
(5,927)
  
(5,173)
  
(2,048)
  
(2,098)
  
(1,640)
                     
Operating profit/(loss)
  
1,295
  
(1,002)
  
487
  
758
  
(127)
                   
 
Share of profit in associates and joint ventures
  
3
  
9
  
2
  
2
  
7
                     
Profit/(loss) before tax
  
1,298
  
(993)
  
489
  
760
  
(120)
 
1
The main items reported under ‘Other’ are the results of HSBC’s holding company and financing operations, which include net interest earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central management services to HSBC, along with the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. The results also include unallocated investment activities, centrally held investment companies and certain property transactions. In addition, ‘Other’ also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group’s movement on own debt is included in GB&M).

 
Summary information – geographical regions
 
Europe
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
17,472
  
16,774
  
6,003
  
5,850
  
5,901
                     
Loan impairment charges and other credit risk provisions
  
(351)
  
(404)
  
(63)
  
(276)
  
(138)
                     
Net operating income
  
17,121
  
16,370
  
5,940
  
5,574
  
5,763
                     
Total operating expenses
  
(13,354)
  
(13,624)
  
(4,376)
  
(4,933)
  
(5,272)
                     
Operating profit
  
3,767
  
2,746
  
1,564
  
641
  
491
                     
Share of profit in associates and joint ventures
  
6
  
5
  
4
  
–
  
2
                     
Profit before tax
  
3,773
  
2,751
  
1,568
  
641
  
493
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
76.4
  
81.2
  
72.9
  
84.3
  
89.3
Reported pre-tax RoRWA (annualised)1
  
1.4
  
1.0
  
1.7
  
0.7
  
0.5
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Profit/(loss) before tax by global business
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
1,189
  
235
  
326
  
602
  
(245)
Commercial Banking
  
1,945
  
2,145
  
658
  
634
  
594
Global Banking and Markets
  
1,159
  
1,534
  
254
  
(231)
  
109
Global Private Banking
  
(14)
  
262
  
9
  
20
  
86
Other
  
(506)
  
(1,425)
  
321
  
(384)
  
(51)
                     
Profit before tax
  
3,773
  
2,751
  
1,568
  
641
  
493

Reported and adjusted UK profit/(loss) before tax
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Reported profit/(loss) before tax
  
2,781
  
1,930
  
1,356
  
(40)
  
234
Adjusted profit before tax
  
2,631
  
3,686
  
778
  
377
  
1,328

 
 
Asia
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
19,843
  
17,884
  
5,778
  
7,493
  
5,777
                     
Loan impairment charges and other credit risk provisions
  
(365)
  
(387)
  
(119)
  
(151)
  
(171)
                     
Net operating income
  
19,478
  
17,497
  
5,659
  
7,342
  
5,606
                     
Total operating expenses
  
(8,126)
  
(7,690)
  
(2,669)
  
(2,862)
  
(2,681)
                     
Operating profit
  
11,352
  
9,807
  
2,990
  
4,480
  
2,925
                     
Share of profit in associates and joint ventures
  
1,596
  
1,562
  
558
  
590
  
550
                     
Profit before tax
  
12,948
  
11,369
  
3,548
  
5,070
  
3,475
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
41.0
  
43.0
  
46.2
  
38.2
  
46.4
Reported pre-tax RoRWA (annualised)1
  
3.5
  
3.2
  
2.9
  
4.2
  
2.8
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Profit/(loss) before tax by global business
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
3,432
  
3,462
  
901
  
1,292
  
1,123
Commercial Banking
  
3,623
  
3,597
  
1,219
  
1,224
  
1,225
Global Banking and Markets
  
3,962
  
3,538
  
1,279
  
1,363
  
1,123
Global Private Banking
  
209
  
209
  
53
  
71
  
76
Other
  
1,722
  
563
  
96
  
1,120
  
(72)
                     
Profit before tax
  
12,948
  
11,369
  
3,548
  
5,070
  
3,475

Reported and adjusted Hong Kong profit before tax
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Reported profit before tax
  
8,050
  
6,414
  
1,817
  
3,462
  
1,866
Adjusted profit before tax
  
6,663
  
6,294
  
1,804
  
2,452
  
2,144

 
 
Middle East and North Africa
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
1,929
  
1,978
  
640
  
650
  
684
                     
Loan impairment (charges)/recoveries and other credit risk provisions
  
(134)
  
30
  
(103)
  
(22)
  
(20)
                     
Net operating income
  
1,795
  
2,008
  
537
  
628
  
664
                     
Total operating expenses
  
(931)
  
(918)
  
(307)
  
(321)
  
(304)
                     
Operating profit
  
864
  
1,090
  
230
  
307
  
360
                     
Share of profit in associates and joint ventures
  
396
  
386
  
129
  
137
  
127
                     
Profit before tax
  
1,260
  
1,476
  
359
  
444
  
487
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
48.3
  
46.4
  
48.0
  
49.4
  
44.4
Reported pre-tax RoRWA (annualised)1
  
2.7
  
3.1
  
2.3
  
2.8
  
3.1
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Profit/(loss) before tax by global business
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
201
  
273
  
29
  
81
  
91
Commercial Banking
  
388
  
506
  
115
  
126
  
150
Global Banking and Markets
  
682
  
723
  
212
  
243
  
246
Global Private Banking
  
13
  
13
  
5
  
3
  
4
Other
  
(24)
  
(39)
  
(2)
  
(9)
  
(4)
                     
Profit before tax
  
1,260
  
1,476
  
359
  
444
  
487

 

North America
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
6,065
  
6,145
  
1,939
  
2,138
  
2,078
                     
Loan impairment (charges)/recoveries and other credit risk provisions
  
(217)
  
(356)
  
(64)
  
(74)
  
55
                     
Net operating income
  
5,848
  
5,789
  
1,875
  
2,064
  
2,133
                     
Total operating expenses
  
(4,682)
  
(4,918)
  
(1,395)
  
(1,852)
  
(2,081)
                     
Operating profit
  
1,166
  
871
  
480
  
212
  
52
                     
Share of profit/(loss) in associates and joint ventures
  
3
  
12
  
(1)
  
1
  
6
                     
Profit before tax
  
1,169
  
883
  
479
  
213
  
58
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
77.2
  
80.0
  
71.9
  
86.6
  
100.1
Reported pre-tax RoRWA (annualised)1
  
0.7
  
0.5
  
0.9
  
0.4
  
0.1
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Profit/(loss) before tax by global business
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
(168)
  
455
  
4
  
(205)
  
325
Principal RBWM
  
8
  
28
  
25
  
(20)
  
(43)
Run-off portfolio
  
(176)
  
427
  
(21)
  
(185)
  
368
Commercial Banking
  
595
  
642
  
172
  
197
  
256
Global Banking and Markets
  
564
  
(229)
  
208
  
164
  
(543)
Global Private Banking
  
50
  
76
  
13
  
19
  
25
Other
  
128
  
(61)
  
82
  
38
  
(5)
                     
Profit before tax
  
1,169
  
883
  
479
  
213
  
58

 
 
Latin America
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
2014
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
2014
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
5,167
  
6,373
  
1,609
  
1,731
  
2,108
                     
Loan impairment charges and other credit risk provisions
  
(1,010)
  
(1,484)
  
(289)
  
(346)
  
(486)
                     
Net operating income
  
4,157
  
4,889
  
1,320
  
1,385
  
1,622
                     
Total operating expenses
  
(3,581)
  
(4,419)
  
(1,176)
  
(1,185)
  
(1,526)
                     
Operating profit
  
576
  
470
  
144
  
200
  
96
                     
Share of profit in associates and joint ventures
  
(1)
  
–
  
(1)
  
1
  
–
                     
Profit before tax
  
575
  
470
  
143
  
201
  
96
                     
   
%
  
%
  
%
  
%
  
%
                     
Cost efficiency ratio
  
69.3
  
69.3
  
73.1
  
68.5
  
72.4
Reported pre-tax RoRWA (annualised)1
  
0.9
  
0.7
  
0.7
  
1.0
  
0.4
 
1
Pre-tax Return on RWAs is calculated using an average of RWAs at quarter-ends on a Basel 2.5 basis for all periods up to and including 31 December 2013 and a CRD IV end point basis from 1 January 2014.
 
Profit/(loss) before tax by global business
 
   
Nine months ended
  
Quarter ended
   
30 Sep
2015
  
30 Sep
20141
  
30 Sep
2015
  
30 Jun
2015
  
30 Sep
20141
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
(132)
  
(120)
  
(100)
  
(18)
  
9
Commercial Banking
  
198
  
219
  
62
  
48
  
70
Global Banking and Markets
  
528
  
408
  
188
  
174
  
6
Global Private Banking
  
3
  
(6)
  
1
  
2
  
(1)
Other
  
(22)
  
(31)
  
(8)
  
(5)
  
12
                     
Profit before tax
  
575
  
470
  
143
  
201
  
96
 
1
In Q2 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.
 
 
Appendix – selected information
 
Reconciliation of reported results to adjusted performance – geographical regions
 
   
Nine months ended 30 September 2015
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
17,472
  
19,843
  
1,929
  
6,065
  
5,167
  
48,028
  
12,962
  
12,408
Significant items
  
(1,505)
  
(1,486)
  
(11)
  
(119)
  
(91)
  
(3,212)
  
(1,429)
  
(1,397)
– debit valuation adjustment (‘DVA’) on derivative contracts
  
(167)
  
(119)
  
(1)
  
(37)
  
(92)
  
(416)
  
(135)
  
(27)
– fair value movements on non-qualifying hedges
  
196
  
2
  
–
  
154
  
1
  
353
  
196
  
3
– gain on the partial sale of shareholding in Industrial Bank
  
–
  
(1,372)
  
–
  
–
  
–
  
(1,372)
  
–
  
(1,372)
– own credit spread
  
(1,532)
  
3
  
(10)
  
(236)
  
–
  
(1,775)
  
(1,488)
  
(1)
– releases arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
(2)
  
–
  
–
  
–
  
–
  
(2)
  
(2)
  
–
                                 
                                 
Adjusted1
  
15,967
  
18,357
  
1,918
  
5,946
  
5,076
  
44,816
  
11,533
  
11,011
                                 
Loan impairment charges and other credit risk provisions (‘LICs’)
                                
Reported
  
(351)
  
(365)
  
(134)
  
(217)
  
(1,010)
  
(2,077)
  
(52)
  
(119)
                                 
Adjusted
  
(351)
  
(365)
  
(134)
  
(217)
  
(1,010)
  
(2,077)
  
(52)
  
(119)
                                 
Operating expenses
                                
Reported1
  
(13,354)
  
(8,126)
  
(931)
  
(4,682)
  
(3,581)
  
(28,226)
  
(10,135)
  
(4,261)
Significant items
  
1,458
  
15
  
2
  
436
  
90
  
2,001
  
1,279
  
10
– Brazil disposal costs
  
–
  
–
  
–
  
–
  
54
  
54
  
–
  
–
– costs to achieve
  
89
  
7
  
1
  
38
  
30
  
165
  
82
  
4
– costs to establish UK ring-fenced bank
  
28
  
–
  
–
  
–
  
–
  
28
  
28
  
–
– regulatory provisions in GPB
  
154
  
–
  
–
  
–
  
–
  
154
  
–
  
–
– restructuring and other related costs
  
68
  
8
  
1
  
34
  
6
  
117
  
50
  
6
– settlements and provisions in connection with legal matters
  
915
  
–
  
–
  
364
  
–
  
1,279
  
915
  
–
– UK customer redress programmes
  
204
  
–
  
–
  
–
  
–
  
204
  
204
  
–
                                 
                                 
Adjusted1
  
(11,896)
  
(8,111)
  
(929)
  
(4,246)
  
(3,491)
  
(26,225)
  
(8,856)
  
(4,251)
                                 
Share of profit in associates and joint ventures
                                
Reported
  
6
  
1,596
  
396
  
3
  
(1)
  
2,000
  
6
  
22
                                 
Adjusted
  
6
  
1,596
  
396
  
3
  
(1)
  
2,000
  
6
  
22
                                 
Profit before tax
                                
Reported
  
3,773
  
12,948
  
1,260
  
1,169
  
575
  
19,725
  
2,781
  
8,050
Significant items
  
(47)
  
(1,471)
  
(9)
  
317
  
(1)
  
(1,211)
  
(150)
  
(1,387)
– revenue
  
(1,505)
  
(1,486)
  
(11)
  
(119)
  
(91)
  
(3,212)
  
(1,429)
  
(1,397)
– operating expenses
  
1,458
  
15
  
2
  
436
  
90
  
2,001
  
1,279
  
10
                                 
                                 
Adjusted
  
3,726
  
11,477
  
1,251
  
1,486
  
574
  
18,514
  
2,631
  
6,663
 
1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.


Reconciliation of reported results to adjusted performance – geographical regions (continued)
 
   
Nine months ended 30 September 2014
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
16,774
  
17,884
  
1,978
  
6,145
  
6,373
  
46,942
  
11,988
  
10,491
Currency translation1
  
(1,738)
  
(477)
  
(36)
  
(186)
  
(1,373)
  
(3,746)
  
(936)
  
5
Significant items
  
914
  
(59)
  
(30)
  
141
  
(21)
  
945
  
646
  
(127)
– DVA on derivative contracts
  
194
  
59
  
4
  
15
  
6
  
278
  
165
  
22
– fair value movements on non-qualifying hedges
  
152
  
4
  
–
  
185
  
–
  
341
  
(18)
  
10
– gain on sale of several tranches of real estate secured accounts in the US
  
–
  
–
  
–
  
(76)
  
–
  
(76)
  
–
  
–
– gain on sale of shareholding in Bank of Shanghai
  
–
  
(428)
  
–
  
–
  
–
  
(428)
  
–
  
(428)
– impairment of our investment in Industrial Bank
  
–
  
271
  
–
  
–
  
–
  
271
  
–
  
271
– own credit spread
  
(12)
  
3
  
7
  
17
  
–
  
15
  
(81)
  
(2)
– provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
580
  
–
  
–
  
–
  
–
  
580
  
580
  
–
– (gain)/loss and trading results from disposals and changes in ownership levels
  
–
  
32
  
(41)
  
–
  
(27)
  
(36)
  
–
  
–
                                 
                                 
Adjusted1
  
15,950
  
17,348
  
1,912
  
6,100
  
4,979
  
44,141
  
11,698
  
10,369
                                 
LICs
                                
Reported
  
(404)
  
(387)
  
30
  
(356)
  
(1,484)
  
(2,601)
  
12
  
(159)
Currency translation
  
88
  
18
  
–
  
9
  
351
  
466
  
11
  
1
                                 
Adjusted
  
(316)
  
(369)
  
30
  
(347)
  
(1,133)
  
(2,135)
  
23
  
(158)
                                 
Operating expenses
                                
Reported1
  
(13,624)
  
(7,690)
  
(918)
  
(4,918)
  
(4,419)
  
(29,357)
  
(10,075)
  
(3,948)
Currency translation1
  
1,213
  
248
  
10
  
92
  
975
  
2,474
  
664
  
(2)
Significant items
  
1,402
  
6
  
31
  
581
  
33
  
2,053
  
1,372
  
3
– charge in relation to settlement agreement with Federal Housing Finance Authority
  
–
  
–
  
–
  
550
  
–
  
550
  
–
  
–
– restructuring and other related costs
  
89
  
6
  
–
  
31
  
24
  
150
  
59
  
3
– settlements and provisions in connection with legal matters
  
378
  
–
  
–
  
–
  
–
  
378
  
378
  
–
– UK customer redress programmes
  
935
  
–
  
–
  
–
  
–
  
935
  
935
  
–
– trading results from disposals and changes in ownership levels
  
–
  
–
  
31
  
–
  
9
  
40
  
–
  
–
                                 
                                 
Adjusted1
  
(11,009)
  
(7,436)
  
(877)
  
(4,245)
  
(3,411)
  
(24,830)
  
(8,039)
  
(3,947)
                                 
Share of profit in associates and joint ventures
                                
Reported
  
5
  
1,562
  
386
  
12
  
–
  
1,965
  
5
  
30
Currency translation
  
(2)
  
(20)
  
1
  
(1)
  
–
  
(22)
  
(1)
  
–
                                 
Adjusted
  
3
  
1,542
  
387
  
11
  
–
  
1,943
  
4
  
30
                                 
Profit before tax
                                
Reported
  
2,751
  
11,369
  
1,476
  
883
  
470
  
16,949
  
1,930
  
6,414
Currency translation
  
(439)
  
(231)
  
(25)
  
(86)
  
(47)
  
(828)
  
(262)
  
4
Significant items
  
2,316
  
(53)
  
1
  
722
  
12
  
2,998
  
2,018
  
(124)
– revenue
  
914
  
(59)
  
(30)
  
141
  
(21)
  
945
  
646
  
(127)
– operating expenses
  
1,402
  
6
  
31
  
581
  
33
  
2,053
  
1,372
  
3
                                 
                                 
Adjusted
  
4,628
  
11,085
  
1,452
  
1,519
  
435
  
19,119
  
3,686
  
6,294
 
1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.


Reconciliation of reported results to adjusted performance – geographical regions (continued)

 
   
Quarter ended 30 September 2015
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
6,003
  
5,778
  
640
  
1,939
  
1,609
  
15,085
  
4,716
  
3,278
Significant items
  
(925)
  
(67)
  
(8)
  
38
  
(79)
  
(1,041)
  
(890)
  
(17)
- debit valuation adjustment ('DVA') on derivative contracts
  
(88)
  
(69)
  
-
  
(15)
  
(79)
  
(251)
  
(68)
  
(13)
- fair value movements on non-qualifying hedges
  
173
  
2
  
-
  
133
  
-
  
308
  
152
  
(2)
- loss on sale of several tranches of real estate secured accounts in the US
  
-
  
-
  
-
  
17
  
-
  
17
  
-
  
-
- own credit spread
  
(1,020)
  
-
  
(8)
  
(97)
  
-
  
(1,125)
  
(984)
  
(2)
- provisions arising from the ongoing
review of compliance with the Consumer Credit Act in the UK
  
10
  
-
  
-
  
-
  
-
  
10
  
10
  
-
                                 
                                 
Adjusted1
  
5,078
  
5,711
  
632
  
1,977
  
1,530
  
14,044
  
3,826
  
3,261
                                 
Loan impairment charges and other credit risk provisions ('LICs')
                                
Reported
  
(63)
  
(119)
  
(103)
  
(64)
  
(289)
  
(638)
  
20
  
(62)
                                 
Adjusted
  
(63)
  
(119)
  
(103)
  
(64)
  
(289)
  
(638)
  
20
  
(62)
                                 
Operating expenses
                                
Reported1
  
(4,376)
  
(2,669)
  
(307)
  
(1,395)
  
(1,176)
  
(9,039)
  
(3,382)
  
(1,405)
Significant items
  
326
  
7
  
1
  
38
  
84
  
456
  
312
  
4
- Brazil disposal costs
  
-
  
-
  
-
  
-
  
54
  
54
  
-
  
-
- costs to achieve
  
89
  
7
  
1
  
38
  
30
  
165
  
82
  
4
- costs to establish UK ring-fenced bank
  
28
  
-
  
-
  
-
  
-
  
28
  
28
  
-
- regulatory provisions in GPB
  
7
  
-
  
-
  
-
  
-
  
7
  
-
  
-
- settlements and provisions in connection with legal matters
  
135
  
-
  
-
  
-
  
-
  
135
  
135
  
-
- UK customer redress programmes
  
67
  
-
  
-
  
-
  
-
  
67
  
67
  
-
                                 
                                 
Adjusted1
  
(4,050)
  
(2,662)
  
(306)
  
(1,357)
  
(1,092)
  
(8,583)
  
(3,070)
  
(1,401)
                                 
Share of profit in associates and joint ventures
                                
Reported
  
4
  
558
  
129
  
(1)
  
(1)
  
689
  
2
  
6
                                 
Adjusted
  
4
  
558
  
129
  
(1)
  
(1)
  
689
  
2
  
6
                                 
Profit before tax
                                
Reported
  
1,568
  
3,548
  
359
  
479
  
143
  
6,097
  
1,356
  
1,817
Significant items
  
(599)
  
(60)
  
(7)
  
76
  
5
  
(585)
  
(578)
  
(13)
- revenue
  
(925)
  
(67)
  
(8)
  
38
  
(79)
  
(1,041)
  
(890)
  
(17)
- operating expenses
  
326
  
7
  
1
  
38
  
84
  
456
  
312
  
4
                                 
                                 
Adjusted
  
969
  
3,488
  
352
  
555
  
148
  
5,512
  
778
  
1,804
 
1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.



Reconciliation of reported results to adjusted performance – geographical regions (continued)
 
   
Quarter ended 30 September 2014
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
5,901
  
5,777
  
684
  
2,078
  
2,108
  
15,775
  
4,330
  
3,271
Currency translation1
  
(526)
  
(222)
  
(14)
  
(79)
  
(591)
  
(1,404)
  
(276)
  
1
Significant items
  
165
  
275
  
(3)
  
(107)
  
–
  
330
  
3
  
277
– DVA on derivative contracts
  
115
  
6
  
1
  
1
  
–
  
123
  
108
  
7
– fair value movements on non-qualifying hedges
  
8
  
–
  
–
  
11
  
–
  
19
  
(112)
  
–
– gain on sale of several tranches of real estate secured accounts in the US
  
–
  
–
  
–
  
(91)
  
–
  
(91)
  
–
  
–
– impairment of our investment in Industrial Bank
  
–
  
271
  
–
  
–
  
–
  
271
  
–
  
271
– own credit spread
  
(171)
  
(2)
  
1
  
(28)
  
–
  
(200)
  
(206)
  
(1)
– provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
213
  
–
  
–
  
–
  
–
  
213
  
213
  
–
– gain and trading results from disposals and changes in ownership levels
  
–
  
–
  
(5)
  
–
  
–
  
(5)
  
–
  
–
                                 
                                 
Adjusted1
  
5,540
  
5,830
  
667
  
1,892
  
1,517
  
14,701
  
4,057
  
3,549
                                 
LICs
                                
Reported
  
(138)
  
(171)
  
(20)
  
55
  
(486)
  
(760)
  
(18)
  
(59)
Currency translation
  
44
  
9
  
1
  
3
  
148
  
205
  
20
  
1
Significant items
  
–
  
–
  
–
  
–
  
(2)
  
(2)
  
–
  
–
– trading results from disposals and changes in ownership levels
  
–
  
–
  
–
  
–
  
(2)
  
(2)
  
–
  
–
                                 
                                 
Adjusted
  
(94)
  
(162)
  
(19)
  
58
  
(340)
  
(557)
  
2
  
(58)
                                 
Operating expenses
                                
Reported1
  
(5,272)
  
(2,681)
  
(304)
  
(2,081)
  
(1,526)
  
(11,091)
  
(4,080)
  
(1,351)
Currency translation1
  
426
  
119
  
3
  
40
  
437
  
997
  
249
  
(1)
Significant items
  
1,115
  
4
  
5
  
568
  
10
  
1,702
  
1,098
  
–
– charge in relation to settlement agreement with Federal Housing Finance Authority
  
–
  
–
  
–
  
550
  
–
  
550
  
–
  
–
– restructuring and other related costs
  
36
  
4
  
–
  
18
  
10
  
68
  
19
  
–
– settlements and provisions in connection with legal matters
  
378
  
–
  
–
  
–
  
–
  
378
  
378
  
–
– UK customer redress programmes
  
701
  
–
  
–
  
–
  
–
  
701
  
701
  
–
– trading results from disposals and changes in ownership levels
  
–
  
–
  
5
  
–
  
–
  
5
  
–
  
–
                                 
                                 
Adjusted1
  
(3,731)
  
(2,558)
  
(296)
  
(1,473)
  
(1,079)
  
(8,392)
  
(2,733)
  
(1,352)
                                 
Share of profit in associates and joint ventures
                                
Reported
  
2
  
550
  
127
  
6
  
–
  
685
  
2
  
5
Currency translation
  
1
  
(12)
  
–
  
(2)
  
–
  
(13)
  
–
  
–
                                 
Adjusted
  
3
  
538
  
127
  
4
  
–
  
672
  
2
  
5
                                 
Profit before tax
                                
Reported
  
493
  
3,475
  
487
  
58
  
96
  
4,609
  
234
  
1,866
Currency translation
  
(55)
  
(106)
  
(10)
  
(38)
  
(6)
  
(215)
  
(7)
  
1
Significant items
  
1,280
  
279
  
2
  
461
  
8
  
2,030
  
1,101
  
277
– revenue
  
165
  
275
  
(3)
  
(107)
  
–
  
330
  
3
  
277
– LICs
  
–
  
–
  
–
  
–
  
(2)
  
(2)
  
–
  
–
– operating expenses
  
1,115
  
4
  
5
  
568
  
10
  
1,702
  
1,098
  
–
                                 
                                 
Adjusted
  
1,718
  
3,648
  
479
  
481
  
98
  
6,424
  
1,328
  
2,144
 
1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.


Reconciliation of reported results to adjusted performance – global businesses
 
   
Nine months ended 30 September 2015
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
17,912
  
11,236
  
14,786
  
1,685
  
7,227
  
48,028
Significant items
  
152
  
–
  
(398)
  
(25)
  
(2,941)
  
(3,212)
– DVA on derivative contracts
  
–
  
–
  
(416)
  
–
  
–
  
(416)
– fair value movements on non-qualifying hedges
  
130
  
–
  
18
  
(1)
  
206
  
353
– gain on the partial sale of shareholding in Industrial Bank
  
–
  
–
  
–
  
–
  
(1,372)
  
(1,372)
– own credit spread
  
–
  
–
  
–
  
–
  
(1,775)
  
(1,775)
– provisions/(releases) arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
22
  
–
  
–
  
(24)
  
–
  
(2)
                         
                         
Adjusted1
  
18,064
  
11,236
  
14,388
  
1,660
  
4,286
  
44,816
                         
LICs
                        
Reported
  
(1,396)
  
(757)
  
90
  
(9)
  
(5)
  
(2,077)
                         
Adjusted
  
(1,396)
  
(757)
  
90
  
(9)
  
(5)
  
(2,077)
                         
Operating expenses
                        
Reported1
  
(12,308)
  
(4,997)
  
(8,385)
  
(1,427)
  
(5,927)
  
(28,226)
Significant items
  
635
  
65
  
977
  
173
  
151
  
2,001
– Brazil disposal costs
  
34
  
6
  
6
  
–
  
8
  
54
– costs to achieve
  
56
  
13
  
20
  
1
  
75
  
165
– costs to establish UK ring-fenced bank
  
–
  
–
  
–
  
–
  
28
  
28
– regulatory provisions in GPB
  
–
  
–
  
–
  
154
  
–
  
154
– restructuring and other related costs
  
32
  
5
  
22
  
18
  
40
  
117
– settlements and provisions in connection with legal matters
  
350
  
–
  
929
  
–
  
–
  
1,279
– UK customer redress programmes
  
163
  
41
  
–
  
–
  
–
  
204
                         
                         
Adjusted1
  
(11,673)
  
(4,932)
  
(7,408)
  
(1,254)
  
(5,776)
  
(26,225)
                         
Share of profit in associates and joint ventures
                        
Reported
  
314
  
1,267
  
404
  
12
  
3
  
2,000
                         
Adjusted
  
314
  
1,267
  
404
  
12
  
3
  
2,000
                         
Profit before tax
                        
Reported
  
4,522
  
6,749
  
6,895
  
261
  
1,298
  
19,725
Significant items
  
787
  
65
  
579
  
148
  
(2,790)
  
(1,211)
– revenue
  
152
  
–
  
(398)
  
(25)
  
(2,941)
  
(3,212)
– operating expenses
  
635
  
65
  
977
  
173
  
151
  
2,001
                         
                         
Adjusted
  
5,309
  
6,814
  
7,474
  
409
  
(1,492)
  
18,514
 
1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
 
 
Reconciliation of reported results to adjusted performance – global businesses (continued)
 
   
Nine months ended 30 September 2014
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
19,134
  
11,884
  
14,470
  
1,820
  
4,170
  
46,942
Currency translation1
  
(1,705)
  
(963)
  
(1,076)
  
(109)
  
(93)
  
(3,746)
Significant items
  
743
  
(12)
  
274
  
20
  
(80)
  
945
– DVA on derivative contracts
  
–
  
–
  
278
  
–
  
–
  
278
– fair value movements on non-qualifying hedges
  
302
  
(1)
  
11
  
–
  
29
  
341
– gain on sale of several tranches of real estate secured accounts in the US
  
(76)
  
–
  
–
  
–
  
–
  
(76)
– gain on sale of shareholding in Bank of Shanghai
  
–
  
–
  
–
  
–
  
(428)
  
(428)
– impairment of our investment in Industrial Bank
  
–
  
–
  
–
  
–
  
271
  
271
– own credit spread
  
–
  
–
  
–
  
–
  
15
  
15
– provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
544
  
16
  
–
  
20
  
–
  
580
– (gain)/loss and trading results from disposals and changes in ownership levels
  
(27)
  
(27)
  
(15)
  
–
  
33
  
(36)
                         
                         
Adjusted1
  
18,172
  
10,909
  
13,668
  
1,731
  
3,997
  
44,141
                         
LICs
                        
Reported
  
(1,568)
  
(874)
  
(185)
  
25
  
1
  
(2,601)
Currency translation
  
261
  
121
  
81
  
1
  
2
  
466
Significant items
  
2
  
(2)
  
–
  
–
  
–
  
–
– trading results from disposals and changes in ownership levels
  
2
  
(2)
  
–
  
–
  
–
  
–
                         
                         
Adjusted
  
(1,305)
  
(755)
  
(104)
  
26
  
3
  
(2,135)
                         
Operating expenses
                        
Reported1
  
(13,583)
  
(5,146)
  
(8,687)
  
(1,304)
  
(5,173)
  
(29,357)
Currency translation1
  
1,397
  
474
  
598
  
81
  
124
  
2,474
Significant items
  
877
  
83
  
1,002
  
8
  
83
  
2,053
– charge in relation to settlement agreement with Federal Housing Finance Authority
  
17
  
–
  
533
  
–
  
–
  
550
– restructuring and other related costs
  
29
  
10
  
20
  
8
  
83
  
150
– settlements and provisions in connection with legal matters
  
–
  
–
  
378
  
–
  
–
  
378
– UK customer redress programmes
  
810
  
59
  
66
  
–
  
–
  
935
– trading results from disposals and changes in ownership levels
  
21
  
14
  
5
  
–
  
–
  
40
                         
                         
Adjusted1
  
(11,309)
  
(4,589)
  
(7,087)
  
(1,215)
  
(4,966)
  
(24,830)
                         
Share of profit in associates and joint ventures
                        
Reported
  
322
  
1,245
  
376
  
13
  
9
  
1,965
Currency translation
  
(2)
  
(14)
  
(4)
  
2
  
(4)
  
(22)
                         
Adjusted
  
320
  
1,231
  
372
  
15
  
5
  
1,943
                         
Profit before tax
                        
Reported
  
4,305
  
7,109
  
5,974
  
554
  
(993)
  
16,949
Currency translation
  
(49)
  
(382)
  
(401)
  
(25)
  
29
  
(828)
Significant items
  
1,622
  
69
  
1,276
  
28
  
3
  
2,998
– revenue
  
743
  
(12)
  
274
  
20
  
(80)
  
945
– LICs
  
2
  
(2)
  
–
  
–
  
–
  
–
– operating expenses
  
877
  
83
  
1,002
  
8
  
83
  
2,053
                         
                         
Adjusted
  
5,878
  
6,796
  
6,849
  
557
  
(961)
  
19,119
 
1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.


Reconciliation of reported results to adjusted performance – global businesses (continued)
 
   
Quarter ended 30 September 2015
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
5,470
  
3,702
  
4,525
  
508
  
2,540
  
15,085
Significant items
  
175
  
–
  
(255)
  
(1)
  
(960)
  
(1,041)
– DVA on derivative contracts
  
–
  
–
  
(251)
  
–
  
–
  
(251)
– fair value movements on non-qualifying hedges
  
148
  
–
  
(4)
  
(1)
  
165
  
308
– loss on sale of several tranches of real estate secured accounts in the US
  
17
  
–
  
–
  
–
  
–
  
17
– own credit spread
  
–
  
–
  
–
  
–
  
(1,125)
  
(1,125)
– provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
10
  
–
  
–
  
–
  
–
  
10
                         
                         
Adjusted1
  
5,645
  
3,702
  
4,270
  
507
  
1,580
  
14,044
                         
LICs
                        
Reported
  
(462)
  
(246)
  
79
  
(4)
  
(5)
  
(638)
                         
Adjusted
  
(462)
  
(246)
  
79
  
(4)
  
(5)
  
(638)
                         
Operating expenses
                        
Reported1
  
(3,954)
  
(1,676)
  
(2,595)
  
(426)
  
(2,048)
  
(9,039)
Significant items
  
163
  
13
  
161
  
8
  
111
  
456
– Brazil disposal costs
  
34
  
6
  
6
  
–
  
8
  
54
– costs to achieve
  
56
  
13
  
20
  
1
  
75
  
165
– costs to establish UK ring-fenced bank
  
–
  
–
  
–
  
–
  
28
  
28
– regulatory provisions in GPB
  
–
  
–
  
–
  
7
  
–
  
7
– settlements and provisions in connection with legal matters
  
–
  
–
  
135
  
–
  
–
  
135
– UK customer redress programmes
  
73
  
(6)
  
–
  
–
  
–
  
67
                         
                         
Adjusted1
  
(3,791)
  
(1,663)
  
(2,434)
  
(418)
  
(1,937)
  
(8,583)
                         
Share of profit in associates and joint ventures
                        
Reported
  
106
  
446
  
132
  
3
  
2
  
689
                         
Adjusted
  
106
  
446
  
132
  
3
  
2
  
689
                         
Profit before tax
                        
Reported
  
1,160
  
2,226
  
2,141
  
81
  
489
  
6,097
Significant items
  
338
  
13
  
(94)
  
7
  
(849)
  
(585)
– revenue
  
175
  
–
  
(255)
  
(1)
  
(960)
  
(1,041)
– operating expenses
  
163
  
13
  
161
  
8
  
111
  
456
                         
                         
Adjusted
  
1,498
  
2,239
  
2,047
  
88
  
(360)
  
5,512
 
1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.

 
Reconciliation of reported results to adjusted performance – global businesses (continued)
 
   
Quarter ended 30 September 2014
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
6,518
  
4,061
  
4,679
  
590
  
1,513
  
15,775
Currency translation1
  
(669)
  
(365)
  
(379)
  
(35)
  
(42)
  
(1,404)
Significant items
  
167
  
(2)
  
183
  
20
  
(38)
  
330
– DVA on derivative contracts
  
–
  
–
  
123
  
–
  
–
  
123
– fair value movements on non-qualifying hedges
  
68
  
(1)
  
61
  
–
  
(109)
  
19
– gain on sale of several tranches of real estate secured accounts in the US
  
(91)
  
–
  
–
  
–
  
–
  
(91)
– impairment of our investment in Industrial Bank
  
–
  
–
  
–
  
–
  
271
  
271
– own credit spread
  
–
  
–
  
–
  
–
  
(200)
  
(200)
– provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
191
  
2
  
–
  
20
  
–
  
213
– gain and trading results from disposals and changes in ownership levels
  
(1)
  
(3)
  
(1)
  
–
  
–
  
(5)
                         
                         
Adjusted1
  
6,016
  
3,694
  
4,483
  
575
  
1,433
  
14,701
                         
LICs
                        
Reported
  
(269)
  
(386)
  
(136)
  
31
  
–
  
(760)
Currency translation
  
78
  
56
  
71
  
(1)
  
1
  
205
Significant items
  
(1)
  
(1)
  
–
  
–
  
–
  
(2)
– trading results from disposals and changes in ownership levels
  
(1)
  
(1)
  
–
  
–
  
–
  
(2)
                         
                         
Adjusted
  
(192)
  
(331)
  
(65)
  
30
  
1
  
(557)
                         
Operating expenses
                        
Reported1
  
(5,053)
  
(1,819)
  
(3,729)
  
(436)
  
(1,640)
  
(11,091)
Currency translation1
  
584
  
183
  
237
  
28
  
51
  
997
Significant items
  
642
  
45
  
969
  
6
  
40
  
1,702
– charge in relation to settlement agreement with Federal Housing Finance Authority
  
17
  
–
  
533
  
–
  
–
  
550
– restructuring and other related costs
  
7
  
4
  
11
  
6
  
40
  
68
– settlements and provisions in connection with legal matters
  
–
  
–
  
378
  
–
  
–
  
378
– UK customer redress programmes
  
616
  
39
  
46
  
–
  
–
  
701
– trading results from disposals and changes in ownership levels
  
2
  
2
  
1
  
–
  
–
  
5
                         
                         
Adjusted1
  
(3,827)
  
(1,591)
  
(2,523)
  
(402)
  
(1,549)
  
(8,392)
                         
Share of profit in associates and joint ventures
                        
Reported
  
107
  
439
  
127
  
5
  
7
  
685
Currency translation
  
(1)
  
(8)
  
(2)
  
–
  
(2)
  
(13)
                         
Adjusted
  
106
  
431
  
125
  
5
  
5
  
672
                         
Profit before tax
                        
Reported
  
1,303
  
2,295
  
941
  
190
  
(120)
  
4,609
Currency translation
  
(8)
  
(134)
  
(73)
  
(8)
  
8
  
(215)
Significant items
  
808
  
42
  
1,152
  
26
  
2
  
2,030
– revenue
  
167
  
(2)
  
183
  
20
  
(38)
  
330
– LICs
  
(1)
  
(1)
  
–
  
–
  
–
  
(2)
– operating expenses
  
642
  
45
  
969
  
6
  
40
  
1,702
                         
                         
Adjusted
  
2,103
  
2,203
  
2,020
  
208
  
(110)
  
6,424
 
1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.


Gross loans and advances by industry sector and by geographical region
 
   
Europe
  
 Asia
  
 MENA
  
            NorthAmerica
  
            LatinAmerica
  
 Total
  
 As a %
of total
 gross
   
 $m
  
 $m
  
 $m
  
 $m
  
 $m
  
 $m
  
 loans
At 30 September 2015
                            
Personal
  
172,466
  
130,277
  
6,740
  
59,242
  
5,986
  
374,711
  
35.4
– first lien residential mortgages
  
126,891
  
94,957
  
2,650
  
50,804
  
1,943
  
277,245
  
26.2
– other personal
  
45,575
  
35,320
  
4,090
  
8,438
  
4,043
  
97,466
  
9.2
                             
Wholesale
                            
Corporate and commercial
  
196,720
  
216,793
  
22,285
  
61,947
  
11,675
  
509,420
  
48.3
– manufacturing
  
41,910
  
34,790
  
2,411
  
17,184
  
2,697
  
98,992
  
9.4
– international trade and services
  
62,639
  
74,949
  
10,013
  
12,585
  
3,353
  
163,539
  
15.5
– commercial real estate
  
28,163
  
32,835
  
709
  
7,296
  
1,354
  
70,357
  
6.7
– other property-related
  
8,648
  
37,096
  
1,754
  
9,778
  
54
  
57,330
  
5.4
– government
  
2,692
  
1,114
  
1,573
  
161
  
822
  
6,362
  
0.6
– other commercial
  
52,668
  
36,009
  
5,825
  
14,943
  
3,395
  
112,840
  
10.7
                             
Financial
  
26,925
  
13,647
  
2,634
  
8,433
  
654
  
52,293
  
5.0
                             
Banks
  
28,135
  
70,923
  
9,408
  
7,778
  
3,543
  
119,787
  
11.3
                             
Total gross loans and advances
  
424,246
  
431,640
  
41,067
  
137,400
  
21,858
  
1,056,211
  
100.0
                             
Percentage of total
  
40.2%
  
40.9%
  
3.9%
  
12.9%
  
2.1%
  
100.0%
    
                             
At 30 June 2015
                            
Personal
  
177,311
  
132,375
  
6,648
  
62,990
  
5,976
  
385,300
  
35.9
– first lien residential mortgages
  
130,909
  
95,176
  
2,642
  
53,995
  
2,031
  
284,753
  
26.5
– other personal
  
46,402
  
37,199
  
4,006
  
8,995
  
3,945
  
100,547
  
9.4
                             
Wholesale
                            
Corporate and commercial
  
200,188
  
225,249
  
22,833
  
63,524
  
12,413
  
524,207
  
48.9
– manufacturing
  
43,465
  
35,599
  
2,570
  
17,392
  
3,072
  
102,098
  
9.5
– international trade and services
  
65,459
  
76,683
  
10,109
  
13,720
  
3,508
  
169,479
  
15.8
– commercial real estate
  
26,925
  
34,249
  
721
  
7,444
  
1,418
  
70,757
  
6.6
– other property-related
  
8,209
  
39,518
  
1,691
  
9,652
  
39
  
59,109
  
5.5
– government
  
2,260
  
1,117
  
1,552
  
164
  
947
  
6,040
  
0.6
– other commercial
  
53,870
  
38,083
  
6,190
  
15,152
  
3,429
  
116,724
  
10.9
                             
Financial
  
27,163
  
15,413
  
2,896
  
8,055
  
691
  
54,218
  
5.0
                             
Banks
  
23,460
  
66,286
  
9,014
  
7,372
  
3,311
  
109,443
  
10.2
                             
Total gross loans and advances
  
428,122
  
439,323
  
41,391
  
141,941
  
22,391
  
1,073,168
  
100.0
Percentage of total
  
39.9%
  
40.9%
  
3.9%
  
13.2%
  
2.1%
  
100.0%
    
                             
At 31 December 2014
                            
Personal
  
178,531
  
129,515
  
6,571
  
65,400
  
13,537
  
393,554
  
35.8
– first lien residential mortgages
  
131,000
  
93,147
  
2,647
  
55,577
  
4,153
  
286,524
  
26.1
– other personal
  
47,531
  
36,368
  
3,924
  
9,823
  
9,384
  
107,030
  
9.7
                             
Wholesale
                            
Corporate and commercial
  
212,523
  
220,799
  
20,588
  
57,993
  
30,722
  
542,625
  
49.4
– manufacturing
  
39,456
  
37,767
  
2,413
  
15,299
  
12,051
  
106,986
  
9.7
– international trade and services
  
76,629
  
72,814
  
9,675
  
13,484
  
8,189
  
180,791
  
16.4
– commercial real estate
  
28,187
  
35,678
  
579
  
6,558
  
2,291
  
73,293
  
6.7
– other property-related
  
7,126
  
34,379
  
1,667
  
8,934
  
281
  
52,387
  
4.8
– government
  
2,264
  
1,195
  
1,552
  
164
  
968
  
6,143
  
0.6
– other commercial
  
58,861
  
38,966
  
4,702
  
13,554
  
6,942
  
123,025
  
11.2
                             
Financial
  
23,103
  
13,997
  
3,291
  
9,034
  
1,393
  
50,818
  
4.6
                             
Banks
  
21,978
  
62,960
  
10,495
  
7,405
  
9,360
  
112,198
  
10.2
                             
Total gross loans and advances
  
436,135
  
427,271
  
40,945
  
139,832
  
55,012
  
1,099,195
  
100.0
                             
Percentage of total
  
39.7%
  
38.9%
  
3.7%
  
12.7%
  
5.0%
  
100.0%
    



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http://www.rns-pdf.londonstockexchange.com/rns/1231E_-2015-11-1.pdf
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
HSBC Holdings plc
 
 
 
                                                      By:
 
                                                                                      Name: Ben J S Mathews
 
                                                                                                Title: Group Company Secretary
                     
                      
                                                                                   Date: 02 November 2015