hsba201605036k2.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 May
 
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- ..............)
 
 

3 May 2016
 
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 08.15am BST. 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
Group Chief Executive's comments
  
5
Adjusted performance
  
6
Financial performance commentary
  
8
Cautionary statement regarding forward-looking statements
  
13
Summary consolidated income statement
  
14
Summary consolidated balance sheet
  
15
Capital
  
16
 
Risk-weighted assets
  
17
Leverage
  
18
Profit/(loss) before tax by global business and geographical region
  
19
 
 
Summary information - global businesses
  
20
Summary information - geographical regions
  
25
Appendix - selected information
  
30
Reconciliation of reported results to adjusted
performance
  
30
       Gross loans and advances by industry sector and by geographical region
  
36
     
Capital
  
37
Risk-weighted assets
  
38
First interim dividend
  
40
Dividend on Series A dollar preference shares
  
40
 
 
Terms and Abbreviations
 
1Q16
First quarter of 2016
1Q15
First quarter of 2015
4Q15
Fourth quarter of 2015
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
CRS
Card and Retail Services
DVA
Debit valuation adjustment
EBA
European Banking Authority
FCA
Financial Conduct Authority (UK)
FTEs
Full-time equivalent staff
FX
Foreign Exchange
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 credit correlation portfolios and derivative transactions entered into directly 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 RWAs is calculated using an average of RWAs at quarter-ends
 
RWAs
Risk-weighted assets
SME
Small and medium-sized enterprise
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 6,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of $2,596bn at 31 March 2016, HSBC is one of the world's largest banking and financial services organisations.
 
 
 
 
Highlights
1Q16 compared with 1Q15
•   Reported PBT of $6,106m in 1Q16, down by $953m or 14%, a resilient performance despite challenging market conditions.
•   Adjusted PBT of $5,434m in 1Q16, down by $1,162m or 18%.
•   Adjusted revenue of $13,914m, down by $543m or 4% in challenging market conditions. This was mainly in GB&M (FX, Equities and Credit) and RBWM (life insurance manufacturing), partly offset by continued momentum in CMB.
•   Adjusted LICs of $1,161m, up by $692m from higher specific charges across a number of countries.
•   Adjusted operating expenses down $76m or 1% at $7,874m. Excluding the UK bank levy, operating expenses were broadly unchanged reflecting tight cost control and the continued impact of cost saving plans.
 
1Q16 compared with 4Q15
•   Reported PBT up by $6,964m and adjusted PBT up by $3,577m. Operating expenses excluding the bank levy down by $236m and significantly lower LICs, down by $450m.
 
Dividends and capital
•   Earnings per share in respect of 1Q16 were $0.20 compared with $0.26 for the equivalent period in 2015.
•   Dividends per ordinary share in respect of 1Q16 were $0.10 compared with $0.10 for the equivalent period in 2015.
•   CET1 ratio remained strong at 11.9%.
•   Leverage ratio remained strong at 5.0%.
•   Issued TLAC securities of $10.5bn, the largest fund-raising by a bank since 2008.
 
 
   
Quarter ended 31 March
   
2016
  
2015
  
Change
   
$m
  
$m
  
%
 Financial highlights and key ratios
            
 Reported PBT
  
6,106
7,059
  
(14)
 Adjusted PBT
  
5,434
6,596
  
(18)
 Return on average ordinary shareholders' equity (annualised)
  
9.0%
11.5%
    
 Adjusted jaws
  
(2.8)%
        
 
   
At
   
31 Mar
  
31 Dec
   
2016
  
2015
   
%
  
%
     Capital and balance sheet
        
 Common equity tier 1 ratio1
  
11.9
  
11.9
 Leverage ratio
  
5.0
  
5.0
         
   
$m
  
$m
 Loans and advances to customers
  
920,139
  
924,454
 Customer accounts
  
1,315,058
  
1,289,586
 Risk-weighted assets
  
1,115,172
  
1,102,995
 
1   From 1 January 2015 the 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 first quarter performance was resilient in tough market conditions that affected the entire banking sector. Profits were down against a very strong first quarter of 2015, but we increased market share in many of the product areas that are critical to our strategy.
Market uncertainty led to extreme levels of volatility in January and February, which affected our ability to generate revenue in our Markets and Wealth Management businesses. However, our diversified, universal-banking business model helped to cushion the impact through growth in other parts of the bank. Commercial Banking continued its momentum in spite of the slow-down in global trade, and we increased market share across our strategic trade corridors. We also grew revenue elsewhere in Retail Banking and Wealth Management, particularly from current and savings accounts in Hong Kong and the UK, and personal lending in Asia and Mexico.
A combination of tight cost management and the increasing impact of our cost-saving programmes reduced operating expenses relative to the fourth quarter of 2015.
Credit quality remains robust. As anticipated at our Annual Results in February, there were additional loan impairment charges in the quarter related to the oil and gas, and metals and mining sectors.
Strategy execution
Our targeted initiatives removed another $15bn of risk-weighted assets in the first quarter. Risk-weighted assets increased overall due to an increase in corporate lending. Higher market volatility and some corporate credit downgrades also increased risk-weighted assets. We remain on track to hit our risk-weighted asset reduction target.
All of our cost-reduction programmes are now under way and we have a good grip on operating expenses. We are confident of hitting our cost target by the end of 2017.
The technical body of the Brazilian Competition Agency has now recommended to its Board that the sale of our Brazil business be approved. We await a final decision from the Competition Agency. This is the final regulatory approval required prior to the completion of the transaction.
Our Asia businesses continue to gain momentum. We made important market share gains in debt capital markets, China M&A and syndicated lending in the first quarter, and had strong business wins on the back of our investment in Asia. We also extended our leadership in services related to renminbi internationalisation.
We maintain sharp focus on implementing the strategic actions from our Investor Update last June.
 
 
 
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. 'Significant items' are excluded from adjusted performance because management and investors would ordinarily identify and consider them separately in order to better understand the underlying trends in a business.
These items, which are detailed in the reconciliation of reported and adjusted profit before tax tables on page 7 and within the appendix, include:
•   fines, penalties, customer redress and associated provisions, together with settlements and provisions relating to legal matters when their size or historical nature mean they warrant separate consideration;
•   costs incurred to achieve the productivity and cost reduction targets outlined in the Investor Update of June 2015; and
•   credit spread movements on our long-term debt designated at fair value.
We consider 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.

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 1Q16; and
•   the closing prior period balance sheets at the prevailing rates of exchange on 31 March 2016.
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.
 
 
 
 
 
Reconciliation of reported to adjusted PBT
 
Quarter ended
 31 March
   
2016
  
2015
   
$m
  
$m
Revenue
        
Reported
  
14,976
  
15,892
Currency translation
      
(949)
Significant items
  
(1,062)
  
(486)
- disposal costs of Brazilian operations
  
14
  
-
- DVA on derivative contracts
  
(158)
  
(98)
- fair value movements on non-qualifying hedges
  
233
  
285
- gain on the partial sale of shareholding in Industrial Bank
  
-
  
(363)
- own credit spread
  
(1,151)
  
(298)
- releases arising from the ongoing review of compliance with the Consumer Credit Act in the UK
  
-
  
(12)
         
Adjusted
  
13,914
  
14,457
         
LICs
        
Reported
  
(1,161)
  
(570)
Currency translation
      
101
         
Adjusted
  
(1,161)
  
(469)
         
Operating expenses
        
Reported
  
(8,264)
  
(8,845)
Currency translation
      
576
Significant items
  
390
  
319
- costs-to-achieve1
  
341
  
-
- costs to establish UK ring-fenced bank2
  
31
  
-
- disposal costs of Brazilian operations
  
17
  
-
- regulatory provisions in GPB
  
1
  
139
- restructuring and other related costs
  
-
  
43
- UK customer redress programmes
  
-
  
137
         
Adjusted
  
(7,874)
  
(7,950)
         
Share of profit in associates and joint ventures
        
Reported
  
555
  
582
Currency translation
      
(24)
         
Adjusted
  
555
  
558
         
Profit before tax
        
Reported
  
6,106
  
7,059
Currency translation
      
(296)
Significant items
  
(672)
  
(167)
- revenue
  
(1,062)
  
(486)
- operating expenses
  
390
  
319
         
Adjusted
  
5,434
  
6,596
           
1   Transformation costs 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
 
   
Quarter ended
 31 March
   
2016
  
2015
   
$m
  
$m
  By global business
        
      Retail Banking and Wealth Management
  
1,359
  
1,844
      Commercial Banking
  
2,076
  
2,232
      Global Banking and Markets
  
2,000
  
2,787
      Global Private Banking
  
112
  
181
      Other
  
(113)
  
(448)
         
   
5,434
  
6,596
         
      By geographical region
        
      Europe
  
1,033
  
1,690
      Asia
  
3,464
  
3,838
      Middle East and North Africa
  
513
  
450
      North America
  
361
  
454
      Latin America
  
63
  
164
         
   
5,434
  
6,596
The tables on pages 30 to 35 reconcile reported to adjusted results for each of our geographical regions and global businesses.
 
 
Financial performance commentary
1Q16 compared with 1Q15 - Reported results
Reported PBT of $6.1bn in 1Q16 was $1.0bn or 14% lower than in 1Q15. This was despite favourable fair value movements on our own debt designated at fair value, which  more than offset the adverse effect of foreign currency movements.
Excluding the effects of significant items and currency translation, profit before tax was down by $1.2bn or 18% from 1Q15. We describe the drivers of our adjusted performance below.
Reported revenue of $15.0bn in 1Q16 was $0.9bn or 6% lower than in 1Q15 as the overall favourable movement in significant items of $0.6bn was more than offset by the adverse effect of currency translation between the periods of $0.9bn. Significant items included:
 
•   higher favourable fair value movements on our own debt designated at fair value from changes in credit spreads of $1.2bn in 1Q16, compared with $0.3bn in 1Q15; partly offset by
•   a $0.4bn gain on the partial sale of our shareholding in Industrial Bank Co. Ltd in 1Q15.
 
Reported LICs of $1.2bn were $0.6bn higher than in 1Q15, reflecting increases across GB&M, CMB and RBWM, partly offset by the favourable effect of currency translation between the periods.
Reported operating expenses of $8.3bn were $0.6bn or 7% lower than in 1Q15. This reduction in reported expenses was largely driven by the favourable effects of currency translation of $0.6bn between the periods. Significant items increased by $0.1bn and included one-off transformation costs to deliver cost reductions and productivity outcomes ('costs-to-achieve') of $0.3bn in 1Q16.
Reported income from associates of $0.6bn was broadly unchanged.
 
 
1Q16 compared with 1Q15 - Adjusted results
 
On an adjusted basis, PBT of $5.4bn was $1.2bn or 18% lower than in 1Q15. This was primarily driven by lower revenue and higher LICs, whilst our operating expenses were broadly unchanged.
 
Movement in adjusted revenue compared with 1Q15 $m
   
1Q16
  
1Q15
  
Var
  
%
 Principal RBWM
  
5,071
  
5,341
  
(270)
  
(5)
 RBWM run-off portfolio
  
237
  
302
  
(65)
  
(20)
 CMB
  
3,623
  
3,556
  
67
  
2
     Client facing GB&M and BSM
  
4,354
  
4,812
  
(458)
  
(10)
 Legacy credit
  
(39)
  
71
  
(110)
  
(>100)
 GPB
  
487
  
574
  
(87)
  
(15)
 Other1
  
180
  
(199)
  
379
  
>100
           
-
    
Total
  
13,914
  
14,457
  
(543)
  
(4)
  
 1  Other includes Intersegment
 
Adjusted revenue of $13.9bn was $0.5bn or 4% lower, notably:
•   in GB&M, total revenue was $0.6bn or 12% lower than in 1Q15, driven partly by a decrease in our client facing business (down $0.3bn or 7%). This was driven by Markets, notably in FX, Equities and Credit, due to market volatility which led to reduced client activity, particularly in the first two months of the year, with a partial recovery in March.     Revenue increased in Rates due to favourable movements on credit spreads within structured liabilities. In addition, there was a $0.2bn fall in revenue in Balance Sheet Management, in part due to lower gains on disposal of available-for-sale debt securities. In Legacy Credit, revenue was $0.1bn lower, due to higher revaluation losses in 1Q16;
•   in RBWM, revenue decreased by $0.3bn or 6%, mainly in our Principal RBWM business, driven by lower revenue in life insurance manufacturing in both Europe and Asia due to adverse market updates as a result of stock market movements, and lower investment distribution revenue in Asia due to lower equity turnover. By contrast, current account     and savings revenue increased reflecting growth in customer deposits in Hong Kong and the UK. In addition, there was growth in personal lending revenue, notably in Latin America and Asia, from increased balances, partly offset by spread compression. In our US run-off portfolio, revenue decreased by $0.1bn reflecting lower average lending     balances and the impact of portfolio sales; and
•   in GPB, revenue fell by $0.1bn or 15% driven by lower brokerage and trading activity in both Europe and Asia reflecting adverse market sentiment in unfavourable market conditions. However, in 1Q16 we continued to grow the parts of the business that fit our desired model, attracting net new money of $4bn, notably in the UK, partly offset by net     outflows in Hong Kong.
These factors were partially offset:
•   in CMB, where revenue rose by $0.1bn or 2% driven by higher average balances in Payments and Cash Management, notably in Hong Kong and the UK, and in Credit and Lending, primarily in the UK from continued loan growth. This was partly offset by lower revenue in Global Trade and Receivables Finance, notably in Asia, reflecting     lower commodity prices and reduced demand; and
•   in Other (as described on page 24) where revenue grew by $0.4bn, primarily reflecting the fair value measurement and presentation of long-term debt issued by HSBC Holdings and related hedging instruments. This included higher favourable fair value movements relating to the economic hedging of interest and exchange rate risk on our long-term     debt by long-term derivatives. In addition, there were lower adverse movements arising from intra-group adjustments in Other which were fully or partly offset within the global businesses.
 
LIC's trend 1Q15 to 1Q16 $m
Click on the attached PDF to view chart
 
http://www.rns-pdf.londonstockexchange.com/rns/9446W_2-2016-5-2.pdf
 
Personal
  
Wholesale
  
Other credit risk provisions
 
 
Adjusted LICs of $1.2bn were $0.7bn higher, reflecting increases in our GB&M, CMB and RBWM businesses:
•   in GB&M (up $0.3bn), we incurred individually assessed charges, notably in the oil and gas, and metals and mining sectors in 1Q16, compared with net releases in 1Q15. In addition, 1Q16 included impairments on available-for-sale debt securities, compared with a net release in 1Q15;
•   in CMB (up $0.2bn), our individually assessed charges increased in a small number of countries, notably in Brazil where economic conditions have deteriorated, as well as in Canada and Spain, mainly in the energy sector. In addition, there was an increase in collectively assessed charges in the UK; and
•   in RBWM (up $0.2bn), notably in Brazil and the UAE, due to a rise in delinquency rates following the deterioration of economic conditions. This also included an adjustment of $0.1bn in our US run-off portfolio.
 
Operating expenses trend 1Q15 to 1Q16 $m
Click on the attached PDF to view chart
http://www.rns-pdf.londonstockexchange.com/rns/9446W_2-2016-5-2.pdf
 
 
 
Operating expenses trend
  
Bank levy
 
 
 
Adjusted operating expenses of $7.9bn were $0.1bn lower than in 1Q15. This reflected an increased credit relating to the prior year bank levy charge. Excluding this, costs were broadly unchanged.
Run-the-bank costs of $7.2bn were broadly unchanged compared with  1Q15, despite inflationary pressures and continued investment for growth, notably in our branch network in Asia. This reflected lower performance-related costs in GB&M in Asia, Europe and the US, as well as the effect of our cost saving initiatives. These included simplified organisation structure and process optimisation within our lending, on-boarding and servicing platforms in CMB, and savings from our branch optimisation programme in RBWM.
Change-the-bank costs in 1Q16 were $0.8bn, broadly in line with 1Q15.
Included within the above, our total expenditure on regulatory programmes and compliance, comprising both run-the-bank and change-the-bank elements, was $0.7bn, up by $0.1bn or 19% from 1Q15. This reflected the continued implementation of our Global Standards programme to enhance our financial crime risk controls and capabilities, and meet our external commitments.
Excluding investment in regulatory programmes and compliance, and the UK bank levy credit, adjusted operating expenses declined by 2% compared with 1Q15.
The number of employees expressed in FTEs at 31 March 2016 was 254,212, a decrease of 991 from 31 December 2015. This was driven by reductions across global businesses and global functions, offset by investment in compliance of 536 FTEs and costs-to-achieve FTEs of 1,357.
Adjusted income from associates of $0.6bn was broadly unchanged.
The effective tax rate for 1Q16 of 25.7% was higher than the 19.4% in 1Q15, principally due to the 8% surcharge on UK banking profits.
The Board announces a first interim dividend for 2016 of $0.10 per ordinary share, further details of which are set out at the end of this release.
 
1Q16 compared with 4Q15 - Reported results
 
Reported PBT of $6.1bn was $7.0bn higher than in 4Q15. This was mainly due to a net favourable movement in significant items. This reflected:
•   favourable fair value movements on our own debt designated at fair value of $1.2bn compared with adverse movements of $0.8bn in 4Q15; and
•   lower costs to achieve, fines, settlements and UK customer redress (together lower by $1.1bn).
In addition in 4Q15, we recognised a UK bank levy charge of $1.5bn compared with a credit of $106m in 1Q16 relating to the previous year's charge.
 
1Q16 compared with 4Q15 - Adjusted results
 
On an adjusted basis, PBT of $5.4bn was $3.6bn higher than in 4Q15, reflecting higher revenue and lower operating expenses and LICs.
 
Adjusted revenue of $13.9bn increased by $1.3bn or 10%, mainly due to higher revenue in GB&M of $0.8bn and Other of $0.4bn, partly offset by a decrease in RBWM of $0.3bn:
 
•   despite the market volatility which led to reduced client activity particularly in the first two months of the year, revenue in GB&M increased. In Markets, revenue rose by $0.7bn, notably in Equities, Rates and Foreign Exchange, in part reflecting better client flows, notably from an improvement in the challenging market conditions seen in 4Q15;
•   in Other, revenue rose, notably from favourable fair value movements of $248m relating to the hedging of our long-term debt, compared with adverse movements of $129m in 4Q15; however
•   in RBWM, revenue fell. In Principal RBWM, revenue fell by $0.3bn, notably driven by lower revenue in life insurance manufacturing in both Europe and Asia due to adverse market updates as a result of stock market movements. This was partly offset by an increase in current account and savings revenue, reflecting increased customer deposits in     Hong Kong and the UK. In our US run-off portfolio, revenue fell by $0.1bn as we continued to reduce the size of the balances in our US CML portfolio.
 
Adjusted LICs of $1.2bn were $0.5bn or 28% lower. The fall was mainly in CMB (down $0.6bn) as 4Q15 included an increase in specific LICs in a small number of countries, largely reflecting local factors and collective LICs related to oil and gas.
Adjusted operating expenses of $7.9bn were $1.8bn lower, primarily due to the UK bank levy charge of $1.5bn recorded in 4Q15. Excluding this charge adjusted operating expenses declined by $0.2bn or 3%, partly reflecting the impact of our cost saving programmes.
 
Balance sheet commentary compared with 31 December 2015
 
Total assets grew by $186.0bn driven by increases in derivative and trading assets. Total customer lending  fell by $4.3bn, including the transfer of balances to 'Assets held for sale' in North America. Lending also fell in Asia from weakening demand in trade finance products. By contrast lending continued to rise in the UK in our CMB and GB&M businesses.
 
Customer accounts grew in RBWM and in our Payments and Cash Management business in GB&M.
Reported loans and advances to customers decreased by $4.3bn during 1Q16 and included the following items:
 
•   favourable currency translation movements of $1.3bn; and
•   a $3.0bn increase 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 fell by $8.6bn partly reflecting our strategic focus on reducing legacy portfolios. In North America this included a $4.9bn transfer to 'Assets held for sale' of US first lien mortgage balances in RBWM, together with a transfer of commercial loans in GB&M of $1.1bn.  Balances also decreased in Asia by $10.5bn, largely driven by trade lending in CMB, reflecting the effect of commodity prices and weakening demand. Lending in GB&M also fell reflecting weaker demand and repayments.
By contrast, lending balances grew in Europe by $7.0bn from increased term lending in CMB and in GB&M, in Capital Financing. In addition, residential mortgage balances also increased mainly in the UK.
Reported customer accounts increased by $25.5bn during 1Q16 and included the following items:
 
•   adverse currency translation of $0.2bn; and
•   a $3.0bn increase in corporate current account balances, in line with the increase in corporate overdrafts.
 
Excluding these factors, customer accounts grew by $22.3bn with increases in Europe and Asia. Both regions recorded growth in GB&M, reflecting higher Payments and Cash Management balances, and in RBWM, primarily in Hong Kong and the UK.
Other significant balance sheet movements in the quarter included an increase in derivative assets and liabilities, notably in Europe, reflecting shifts in major yield curves. Trading assets and liabilities also increased, driven by higher settlement accounts with the former also affected by an increase in holdings of debt securities and a fall in the holdings of equity securities.
 
Net interest margin
 
Net interest margin decreased since 1Q15 and fell marginally since 4Q15. This was primarily due to the adverse effects of currency translation. Excluding this, net interest margin was broadly unchanged. Gross yields on customer lending remained under pressure, notably in mortgages and term lending in the UK, as well as from the continued run-off and sales in the US CML portfolio. However, the effects of this were largely offset by: a reduction in the cost of customer accounts in Asia, primarily from a portfolio shift towards current accounts from higher-cost savings accounts; and lower central bank rates in mainland China, Australia and India. In Latin America, we benefited from the effects of central bank rate rises
 
 
Notes
 
•    Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2015 and the quarter ended 31 March 2016. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2016 and the corresponding balances at 31 December 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 347 to 358 of the
     Annual Report and Accounts 2015
.
•    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. Details of the first interim dividend for 2016 and the series A dollar preference share dividend are set out at the end of this       release.
 
 
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
  
UK - Morgan Bone
Tel: +44 (0) 20 7991 3643
  
Tel: +44 (0) 20 7991 1898
 
Hong Kong
  
Hong Kong - Gareth Hewett
Tel: +852 2822 4908
  
Tel: +852 2822 4929
 
 
 
Summary consolidated income statement
 
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
     Net interest income
  
7,913
  
8,059
  
8,028
   8,170  
       
8,274 
     Net fee income
  
3,197
  
3,471
  
3,509
  
4,041
   3,684 
     Net trading income
  
2,836
  
1,408
  
2,742
  
1,990
   2,583 
                     
     Changes in fair value of long-term debt issued
          and related derivatives
  
690
  
(1,084)
  
623
  
1,034
   290 
     Net income/(expense) from other financial
        instruments designated at fair value
  
5
  
834
  
(1,507)
  
36
   1,306 
                     
     Net income/(expense) from financial instruments designated at fair value
  
695
  
(250)
  
(884)
  
1,070
  
1,596
     Gains less losses from financial investments
  
192
  
20
  
174
  
1,227
  
647
     Dividend income
  
28
  
27
  
28
  
51
  
17
     Net earned insurance premiums
  
2,915
  
2,255
  
2,493
  
2,628
  
2,979
     Other operating income/(expense)
  
172
  
(52)
  
271
  
498
  
338
                     
     Total operating income
  
17,948
  
14,938
  
16,361
  
19,675
  
20,118
                     
     Net insurance claims and benefits paid and 
         movement in liabilities to policyholders
  
(2,972)
  
(3,166)
  
(1,276)
  
(2,624)
  
(4,226)
                     
     Net operating income before loan impairment charges
     and other credit risk provisions
  
14,976
  
11,772
  
15,085
  
17,051
  
15,892
     Loan impairment charges and other credit risk provisions
  
(1,161)
  
(1,644)
  
(638)
  
(869)
  
(570)
                     
     Net operating income
  
13,815
  
10,128
  
14,447
  
16,182
  
15,322
     Total operating expenses
  
(8,264)
  
(11,542)
  
(9,039)
  
(10,342)
  
(8,845)
                     
     Operating profit/(loss)
  
5,551
  
(1,414)
  
5,408
  
5,840
  
6,477
      Share of profit in associates and joint ventures
  
555
  
556
  
689
  
729
  
582
                     
     Profit/(loss) before tax
  
6,106
  
(858)
  
6,097
  
6,569
  
7,059
     Tax expense
  
(1,571)
  
(230)
  
(634)
  
(1,540)
  
(1,367)
                     
     Profit/(loss) after tax
  
4,535
  
(1,088)
  
5,463
  
5,029
  
5,692
                     
     Profit/(loss) attributable to shareholders of the
   parent company
  
4,301
  
(1,325)
  
5,229
  
4,359
  
5,259
     Profit attributable to non-controlling interests
  
234
  
237
  
234
  
670
  
433
                     
   
$
      
$
  
$
  
$
                     
     Basic earnings per ordinary share
  
0.20
  
(0.07)
  
0.25
  
0.22
  
0.26
     Diluted earnings per ordinary share
  
0.20
  
(0.07)
  
0.25
  
0.22
  
0.26
     Dividend per ordinary share (in respect of the
      period)
  
0.10
  
0.21
  
0.10
  
0.10
  
0.10
                     
   
%
  
%
  
%
  
%
  
%
                     
     Return on average ordinary shareholders' equity
   (annualised)
  
9.0
  
(4.0)
  
10.9
  
9.7
  
11.5
     Pre-tax return on average risk-weighted assets
   (annualised)
  
2.2
  
(0.3)
  
2.1
  
2.2
  
2.4
     Cost efficiency ratio
  
55.2
  
98.0
  
59.9
  
60.7
  
55.7
 
 
Summary consolidated balance sheet
 
At
   
31 Mar
 2016
  
31 Dec
 2015
   
$m
  
   $m
ASSETS
        
Cash and balances at central banks
  
126,265
  
98,934
Trading assets
  
268,941
  
224,837
Financial assets designated at fair value
  
23,957
  
23,852
Derivatives
  
342,681
  
288,476
Loans and advances to banks
  
97,991
  
90,401
Loans and advances to customers
  
920,139
  
924,454
Reverse repurchase agreements - non-trading
  
170,966
  
146,255
Financial investments
  
444,297
  
428,955
Assets held for sale
  
54,260
  
43,900
Other assets
  
146,169
  
139,592
         
Total assets
  
2,595,666
  
2,409,656
         
LIABILITIES AND EQUITY
        
Liabilities
        
Deposits by banks
  
68,760
  
54,371
Customer accounts
  
1,315,058
  
1,289,586
Repurchase agreements - non-trading
  
93,934
  
80,400
Trading liabilities
  
184,865
  
141,614
Financial liabilities designated at fair value
  
73,433
  
66,408
Derivatives
  
338,433
  
281,071
Debt securities in issue
  
99,093
  
88,949
Liabilities under insurance contracts
  
72,694
  
69,938
Liabilities of disposal groups held for sale
  
40,179
  
36,840
Other liabilities
  
108,850
  
102,961
         
Total liabilities
  
2,395,299
  
2,212,138
         
Equity
        
Total shareholders' equity
  
191,568
  
188,460
Non-controlling interests
  
8,799
  
9,058
         
Total equity
  
200,367
  
197,518
         
Total equity and liabilities
  
2,595,666
  
2,409,656
         
Ratio of customer advances to customer accounts
  
70.0
%
  
71.7
%
 
 
Capital
Composition of regulatory capital
   
At
   
31 Mar
  
31 Dec
   
2016
  
2015
   
%
  
%
Capital ratios
        
 Common equity tier 1 ratio1
  
11.9
  
11.9
 Tier 1 transitional ratio
  
13.7
  
13.9
 Total transitional capital ratio
  
16.8
  
17.2
 
   
At
 
   
31 Mar
  
31 Dec
   
2016
  
2015
   
$m
  
$m
Common equity tier 1 capital1
        
         
Shareholders' equity per balance sheet2
  
191,568
  
188,460
Non-controlling interests
  
3,632
  
3,519
Regulatory adjustments to the accounting basis
  
(32,636)
  
(32,352)
Deductions
  
(29,694)
  
(28,764)
         
Common equity tier 1 capital1
  
132,870
  
130,863
         
Tier 1 and tier 2 capital on a transitional basis
        
         
Other tier 1 capital before deductions
  
20,543
  
22,621
Deductions
  
(144)
  
(181)
         
Tier 1 capital on a transitional basis
  
153,269
  
153,303
         
Total qualifying tier 2 capital before deductions
  
34,160
  
36,852
Total deductions other than from tier 1 capital
  
(376)
  
(322)
         
Total regulatory capital on a transitional basis
  
187,053
  
189,833
         
Total risk-weighted assets
  
1,115,172
  
1,102,995
1   From 1 January 2015 the 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.
2   Includes externally verified profits for the period ended 31 March 2016.
 
 
Our CET1 capital ratio remained strong at 11.9%.
Our CET1 capital increased by $2.0bn, mainly from favourable foreign currency translation differences of $1.0bn, and $0.8bn of capital generation through profits net of dividends and scrip.
 
RWAs
 
After foreign currency translation differences, RWAs increased in the quarter by $6.6bn. This was primarily driven by book size movements which increased RWAs by $11.8bn and deterioration of credit quality, increasing RWAs by $8.9bn, partly offset by RWA initiatives, mainly in GB&M and CMB, which reduced RWAs by $15.0bn.
The following comments describe RWA movements in the quarter, excluding foreign currency translation differences.
 
RWA initiatives
 
The main drivers of these reductions were:
•   $6.6bn through the continued reduction in GB&M Legacy Credit and US run-off portfolios; and
•   $8.4bn as a result of reduced exposures, refined calculations and process improvements.
 
Book size
 
Book size movements increased RWAs by $11.8bn, principally from:
•   increased corporate lending in GB&M and CMB in Europe and North America, increasing RWAs by $5.8bn;
•   a reduction in corporate and institution exposures in Asia across CMB and GB&M of $5.6bn, of which $3.9bn was accounted for by BoCom, our associate;
•   financial market movements and client driven activity which increased market risk and counterparty credit risk by $8.3bn; and
•   sovereign RWAs across Europe, North America and Asia which increased by $1.6bn.
 
Book quality
Deterioration of credit quality across regions increased credit risk RWAs by $8.9bn, mainly driven by:
•   corporate downgrades in North America in the oil and gas sector, increasing RWAs by $2.9bn;
•   corporate downgrades in Asia and Europe increasing RWAs by $3.8bn; and
•   the downgrade of Brazil's internal credit rating, increasing RWAs by $1.3bn.
 
Risk-weighted assets
RWA movement by geographical region by key driver
   
Credit risk and operational risk
  
Market
risk
  
Total
RWAs
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
        
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                             
 RW As at 1 January 2016
  
306.4
  
437.8
  
59.4
  
185.0
    
71.9
  
42.5
  
1,103.0
 RWA movements
                            
 RWA initiatives
  
(8.9)
  
(1.4)
  
(0.6)
  
(4.7)
  
-
  
0.6
  
(15.0)
     Foreign exchange movement
  
(2.0)
  
4.1
  
(1.0)
  
1.9
  
2.6
  
-
  
5.6
 Acquisitions and disposals
  
-
  
-
  
-
  
-
  
-
  
-
  
-
 Book size1
  
8.9
  
(5.5)
  
0.9
  
5.2
  
(0.3)
  
2.6
  
11.8
 Book quality
  
1.2
  
2.9
  
0.2
  
3.1
  
1.5
  
-
  
8.9
 Model updates
  
(0.1)
  
-
  
-
  
(1.2)
  
-
  
-
  
(1.3)
         - portfolios moving onto IRB approach
  
(0.1)
  
-
  
-
  
-
  
-
  
-
  
(0.1)
         - new/updated models
  
-
  
-
  
-
  
(1.2)
  
-
  
-
  
(1.2)
                             
     Methodology and policy
  
1.8
  
-
  
-
  
0.1
  
0.3
  
-
  
2.2
         - internal updates
  
1.8
  
-
  
-
  
0.1
  
0.3
  
-
  
2.2
         - external updates - regulatory
  
-
  
-
  
-
  
-
  
-
  
-
  
-
                             
 Total RWA movement
  
0.9
  
0.1
  
(0.5)
  
4.4
  
4.1
  
3.2
  
12.2
                             
 RWAs at 31 March 2016
  
307.3
  
437.9
  
58.9
  
189.4
  
76.0
  
45.7
  
1,115.2
                               
1   Book size now includes market risk movements previously categorised as movements in risk levels.
 
RWA movement by global businesses by key driver
   
Credit risk and operational risk
  
Market risk
  
Total RWAs
   
Principal
RBWM
  
(US
run-off
portfolio)
  
Total
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
        
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                                     
     RWAs at 1 January 2016
  
150.1
  
39.5
  
189.6
  
421.0
  
398.4
  
19.3
  
32.2
  
42.5
  
1,103.0
 RWA movements
                                    
 RWA initiatives
   (0.1 )   (1.6 )   (1.7 )   (2.4 )   (11.5 )  
-
  
-
  
0.6
   (15.0 )
     Foreign exchange
      movement
  
1.1
  
-
  
1.1
  
2.7
  
1.6
  
-
  
0.2
  
-
  
5.6
     Acquisitions and
         disposals
  
-
  
-
  
-
  
-
  
-
  
-
  
-
  
-
  
-
 Book size1
  
1.1
  
-
  
1.1
   (1.6 )  
9.3
   (0.3 )  
0.7
  
2.6
  
11.8
 Book quality
  
-
  
-
  
-
  
2.5
  
6.2
  
0.3
   (0.1 )  
-
  
8.9
 Model updates
   (1.2 )  
-
   (1.2 )  
-
   (0.1 )  
-
  
-
  
-
   (1.3 )
        - portfolios moving onto IRB approach
  
-
  
-
  
-
  
-
   (0.1 )  
-
  
-
  
-
   (0.1 )
        - new/updated models
   (1.2 )  
-
   (1.2 )  
-
  
-
  
-
  
-
  
-
   (1.2 )
                                     
     Methodology and policy
   (0.8 )  
-
   (0.8 )   (0.3 )  
2.5
  
-
  
0.8
  
-
  
2.2
         - internal updates
   (0.8 )  
-
   (0.8 )   (0.3 )  
2.5
  
-
  
0.8
  
-
  
2.2
         - external updates - regulatory
  
-
  
-
  
-
  
-
  
-
  
-
  
-
  
-
  
-
                                     
 Total RWA movement
  
0.1
   (1.6 )   (1.5 )  
0.9
  
8.0
  
-
  
1.6
  
3.2
  
12.2
                                     
 RWAs at 31 March 2016
  
150.2
  
37.9
  
188.1
  
421.9
  
406.4
  
19.3
  
33.8
  
45.7
  
1,115.2
1   Book size now includes market risk movements previously categorised as movements in risk levels.
 
 
 
Leverage
Leverage ratio
     
EU delegated act basis at
     
31 Mar
2016
  
31 Dec
2015
Ref1
    
$bn
  
$bn
           
 
     Total assets per regulatory balance sheet
  
2,710
  
2,528
 
     Adjustment to reverse netting of loans and deposits allowable under IFRSs
  
28
  
32
 
     Reversal of accounting values including assets classified as held for sale:
   (542 )   (456 )
 
          - derivatives
   (345 )   (290 )
 
          - repurchase agreement and securities finance
   (197 )   (166 )
           
 
     Replaced with regulatory values:
  
355
  
322
 
          - derivatives
  
150
  
149
 
          - repurchase agreement and securities finance
  
205
  
173
           
 
      Addition of off-balance sheet commitments and guarantees
  
311
  
401
           
 
      Exclusion of items already deducted from the capital measure
   (35 )   (33 )
           
     21
      Exposure measure after regulatory adjustments
  
2,827
  
2,794
           
     20
      Tier 1 capital under CRD IV end point
  
142
  
140
           
     22
      Leverage ratio
  
5.0%
   5.0 %
           
 
      Exposure measure after regulatory adjustments - quarterly average2
  
2,813
    
 
      Leverage ratio - quarterly average2
  
5.0%
    
1       The references identify the lines prescribed in the EBA template.
2       Quarterly average is defined as the arithmetic mean of the values on the last day of each month in the quarter.
 
At 31 March 2016, our minimum leverage ratio requirement of 3% was supplemented with an additional leverage ratio buffer of 0.2% that translates to a value of $6.2bn, and a countercyclical leverage ratio buffer which results in no capital impact. We comfortably exceed these leverage requirements.
 
 
 
Profit/(loss) before tax by global business and geographical region
   
Quarter ended
   
31 Mar
2016
  
31 Dec
2015
  
30 Sep
2015
  
30 Jun
2015
  
31 Mar
2015
   
$m
  
$m
  
$m
  
$m
  
$m
By global business
                    
Retail Banking and Wealth Management
  
1,133
  
445
  
1,160
  
1,752
  
1,610
Commercial Banking
  
2,050
  
1,224
  
2,226
  
2,229
  
2,294
Global Banking and Markets
  
2,121
  
1,015
  
2,141
  
1,713
  
3,041
Global Private Banking
  
110
  
83
  
81
  
115
  
65
Other
  
692
  
(3,625)
  
489
  
760
  
49
                     
   
6,106
  
(858)
  
6,097
  
6,569
  
7,059
                     
By geographical region
                    
Europe
  
1,688
  
(3,130)
  
1,568
  
641
  
1,564
Asia
  
3,530
  
2,815
  
3,548
  
5,070
  
4,330
Middle East and North Africa
  
519
  
277
  
359
  
444
  
457
North America
  
364
  
(555)
  
479
  
213
  
477
Latin America
  
5
  
(265)
  
143
  
201
  
231
                     
   
6,106
  
(858)
  
6,097
  
6,569
  
7,059
 
 
Summary information - global businesses
Retail Banking and Wealth Management
 
 
   
Quarter ended
   
31 Mar
2016
  
31 Dec
2015
  
30 Sep
2015
  
30 Jun
2015
  
31 Mar
2015
   
$m
  
$m
  
$m
  
$m
  
$m
     Net operating income before loan impairment charges
             and other credit risk provisions
  
5,160
  
5,604
  
5,470
  
6,531
  
5,911
     Loan impairment charges and other credit risk provisions
  
(581)
  
(543)
  
(462)
  
(474)
  
(460)
                     
     Net operating income
  
4,579
  
5,061
  
5,008
  
6,057
  
5,451
     Total operating expenses
  
(3,532)
  
(4,712)
  
(3,954)
  
(4,426)
  
(3,928)
                     
     Operating profit
  
1,047
  
349
  
1,054
  
1,631
  
1,523
     Share of profit in associates and joint ventures
  
86
  
96
  
106
  
121
  
87
                     
     Profit before tax
  
1,133
  
445
  
1,160
  
1,752
  
1,610
                     
     Profit before tax related to:
                    
       -  Principal RBWM
  
1,250
  
889
  
1,181
  
1,937
  
1,580
       -  US run-off portfolio
  
(117)
  
(444)
  
(21)
  
(185)
  
30
                     
   
%
  
%
  
%
  
%
  
%
                     
 Cost efficiency ratio
  
68.4
  
84.1
  
72.3
  
67.8
  
66.5
 Reported pre-tax RoRWA (annualised)
  
2.4
  
0.9
  
2.3
  
3.4
  
3.2
                     
   
$m
  
$m
  
$m
  
$m
  
$m
                     
 Adjusted profit before tax - Principal RBWM
  
1,335
  
1,408
  
1,305
  
1,812
  
1,718
 
 
 
Principal RBWM: management view of adjusted revenue
   
Quarter ended
   
31 Mar
2016
  
31 Dec
2015
  
30 Sep
2015
  
30 Jun
2015
  
31 Mar
2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
     Current accounts, savings and deposits
  
1,398
  
1,340
  
1,325
  
1,315
  
1,303
     Wealth products
  
1,197
  
1,334
  
1,267
  
1,900
  
1,559
           Investment distribution1
  
739
  
689
  
825
  
1,048
  
851
           Life insurance manufacturing
  
215
  
388
  
188
  
578
  
449
          Asset Management
  
243
  
257
  
254
  
274
  
258
                     
     Personal lending
  
2,325
  
2,323
  
2,340
  
2,338
  
2,312
          Mortgages
  
682
  
702
  
690
  
681
  
684
          Credit cards
  
895
  
888
  
913
  
924
  
912
          Other personal lending2
  
748
  
733
  
737
  
733
  
716
                     
     Other3
  
151
  
328
  
174
  
127
  
167
                     
     Revenue
  
5,071
  
5,325
  
5,106
  
5,680
  
5,341
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.
 
 
 
Commercial Banking
 
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
     Net operating income before loan impairment charges
        and other credit risk provisions
  
3,623
  
3,634
  
3,702
  
3,748
  
3,786
     Loan impairment charges and other credit risk provisions
  
(390)
  
(1,013)
  
(246)
  
(295)
  
(216)
                     
     Net operating income
  
3,233
  
2,621
  
3,456
  
3,453
  
3,570
     Total operating expenses
  
(1,524)
  
(1,747)
  
(1,676)
  
(1,682)
  
(1,639)
                     
     Operating profit
  
1,709
  
874
  
1,780
  
1,771
  
1,931
     Share of profit in associates and joint ventures
  
341
  
350
  
446
  
458
  
363
                     
     Profit before tax
  
2,050
  
1,224
  
2,226
  
2,229
  
2,294
                     
   
%
  
%
  
%
  
%
  
%
                     
 Cost efficiency ratio
  
42.1
  
48.1
  
45.3
  
44.9
  
43.3
 Reported pre-tax RoRWA (annualised)
  
2.0
  
1.1
  
2.0
  
2.1
  
2.2
 
 
 
Management view of adjusted revenue
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
     Global Trade and Receivables Finance
  
543
  
553
  
597
  
579
  
581
     Credit and Lending
  
1,412
  
1,404
  
1,440
  
1,376
  
1,351
     Payments and Cash Management, current accounts and savings deposits
  
1,159
  
1,155
  
1,134
  
1,110
  
1,092
     Markets products, Insurance and Investments and Other
  
509
  
435
  
374
  
474
  
532
                     
     Revenue
  
3,623
  
3,547
  
3,545
  
3,539
  
3,556
 
The table above has been re-presented to reclassify certain cards revenue. In 1Q16, 'Payments and Cash Management' included cards revenue of $36m previously included within 'Credit and Lending' (4Q15: $42m, 3Q15: $40m, 2Q15: $39m, 1Q15: $41m).
 
 
 
Global Banking and Markets
 
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
     Net operating income before loan impairment charges
        and other credit risk provisions
  
4,466
  
3,447
  
4,525
  
5,019
  
5,242
     Loan impairment (charges)/recoveries and other credit risk provisions
  
(193)
  
(90)
  
79
  
(97)
  
108
                     
     Net operating income
  
4,273
  
3,357
  
4,604
  
4,922
  
5,350
     Total operating expenses
  
(2,278)
  
(2,449)
  
(2,595)
  
(3,353)
  
(2,437)
                     
     Operating profit
  
1,995
  
908
  
2,009
  
1,569
  
2,913
     Share of profit in associates and joint ventures
  
126
  
107
  
132
  
144
  
128
                     
     Profit before tax
  
2,121
  
1,015
  
2,141
  
1,713
  
3,041
                     
   
%
  
%
  
%
  
%
  
%
                     
 Cost efficiency ratio
  
51.0
  
71.0
  
57.3
  
66.8
  
46.5
 Reported pre-tax RoRWA (annualised)
  
1.9
  
0.9
  
1.8
  
1.4
  
2.4
 
 
Management view of adjusted revenue
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
     Markets
  
1,726
  
1,005
  
1,432
  
2,042
  
2,122
         Legacy Credit
  
(39)
  
(27)
  
(6)
  
26
  
70
         Credit
  
159
  
90
  
74
  
223
  
252
         Rates
  
546
  
255
  
356
  
503
  
452
         Foreign Exchange
  
757
  
557
  
660
  
684
  
889
         Equities
  
303
  
130
  
348
  
606
  
459
                     
     Capital Financing
  
875
  
893
  
962
  
927
  
873
     Payments and Cash Management
  
465
  
452
  
425
  
418
  
433
     Securities Services
  
383
  
402
  
413
  
416
  
414
     Global Trade and Receivables Finance
  
176
  
163
  
177
  
175
  
171
     Balance Sheet Management
  
703
  
620
  
695
  
624
  
875
     Principal Investments
  
1
  
62
  
48
  
106
  
19
     Other1
  
(13)
  
(38)
  
(50)
  
24
  
(24
                     
Revenue
  
4,316
  
3,559
  
4,102
  
4,732
  
4,883
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'.
 
 
 
Global Private Banking
 
 
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
     Net operating income before loan impairment charges
        and other credit risk provisions
  
487
  
487
  
508
  
564
  
613
     Loan impairment charges and other credit risk provisions
  
-
  
(3)
  
(4)
  
(3)
  
(2)
                     
     Net operating income
  
487
  
484
  
504
  
561
  
611
     Total operating expenses
  
(379)
  
(405)
  
(426)
  
(450)
  
(551)
                     
     Operating profit
  
108
  
79
  
78
  
111
  
60
     Share of profit in associates and joint ventures
  
2
  
4
  
3
  
4
  
5
                     
     Profit before tax
  
110
  
83
  
81
  
115
  
65
                     
   
%
  
%
  
%
  
%
  
%
                     
     Cost efficiency ratio
  
77.8
  
83.2
  
83.9
  
79.8
  
89.9
     Reported pre-tax RoRWA (annualised)
  
2.3
  
1.7
  
1.5
  
2.2
  
1.3
 
 
Client assets1 by geography
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                     
     Europe
  
163
  
168
  
170
  
179
  
178
 Asia
  
108
  
112
  
106
  
117
  
114
 North America
  
62
  
61
  
62
  
64
  
65
 Latin America
  
8
  
8
  
8
  
10
  
10
                     
Total
  
341
  
349
  
346
  
370
  
366
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.
 
Client assets1
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
                     
     Opening balance
  
349
  
346
  
370
  
366
  
365
 Net new money
  
(5)
  
(1)
  
3
  
-
  
(1)
        Of which: areas targeted for growth
  
4
  
2
  
6
  
3
  
3
 Value change
  
(6)
  
6
  
(14)
  
1
  
8
 Exchange and other
  
3
  
(2)
  
(12)
  
3
  
(7)
                     
Closing balance
  
341
  
349
  
346
  
370
  
366
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
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
     Net operating income before loan impairment charges and other credit risk provisions
  
2,658
  
377
  
2,540
  
2,856
  
1,831
- of which effect of changes in own credit spread on the
        fair value of long-term debt issued 
 
 
  
1,151
  
(773)
  
1,125
  
352
  
298
     Loan impairment recoveries/(charges) and other credit risk provisions
  
3
  
5
  
(5)
  
-
  
-
                     
     Net operating income
  
2,661
  
382
  
2,535
  
2,856
  
1,831
     Total operating expenses
  
(1,969)
  
(4,006)
  
(2,048)
  
(2,098)
  
(1,781)
                     
     Operating profit/(loss)
  
692
  
(3,624)
  
487
  
758
  
50
     Share of profit/(loss) in associates and joint ventures
  
-
  
(1)
  
2
  
2
  
(1)
                     
     Profit/(loss) before tax
  
692
  
(3,625)
  
489
  
760
  
49
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
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
    Net operating income before loan impairment charges
    and other credit risk provisions
  
5,765
  
3,586
    
6,003
    
5,850
    
5,619
  
    Loan impairment charges and other credit risk provisions
  
(169)
  
(339
)
  
(63
)
  
(276
)
  
(12
)
                     
    Net operating income
  
5,596
  
3,247
    
5,940
    
5,574
    
5,607
  
    Total operating expenses
  
(3,909)
  
(6,379
)
  
(4,376
)
  
(4,933
)
  
(4,045
)
                     
    Operating profit/(loss)
  
1,687
  
(3,132
)
  
1,564
    
641
    
1,562
  
    Share of profit in associates and joint ventures
  
1
  
2
    
4
    
-
    
2
  
                     
Profit/(loss) before tax
  
1,688
  
(3,130
)
  
1,568
    
641
    
1,564
  
   
%
  
%
  
%
  
%
  
%
Cost efficiency ratio
  
67.8
  
177.9
    
72.9
    
84.3
    
72.0
  
Reported pre-tax RoRWA (annualised)
  
2.0
  
(3.6
)
  
1.7
    
0.7
    
1.7
  
 
Profit/(loss) before tax by global business
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
222
  
5
    
326
    
602
    
261
  
Commercial Banking
  
566
  
374
    
658
    
634
    
653
  
Global Banking and Markets
  
350
  
(111
)
  
254
    
(231
)
  
1,136
  
Global Private Banking
  
20
  
28
    
9
    
20
    
(43
)
Other
  
530
  
(3,426
)
  
321
    
(384
)
  
(443
)
                     
Profit/(loss) before tax
  
1,688
  
(3,130
)
  
1,568
    
641
    
1,564
  
 
Reported and adjusted UK profit/(loss) before tax
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Reported profit/(loss) before tax
  
1,587
    
(3,081
)
  
1,356
    
(40
)
  
1,465
  
                     
Adjusted profit/(loss) before tax
  
844
    
(1,382
)
  
692
    
361
    
1,386
  
 
 
Asia
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
   $m
  
   $m
  
   $m
  
$m
  
   $m
Net operating income before loan impairment charges
and other credit risk provisions
  
5,833
    
5,460
    
5,778
    
7,493
    
6,572
  
Loan impairment charges and other credit risk provisions
  
(190
)
  
(328
)
  
(119
)
  
(151
)
  
(95
)
                     
Net operating income
  
5,643
    
5,132
    
5,659
    
7,342
    
6,477
  
Total operating expenses
  
(2,543
)
  
(2,763
)
  
(2,669
)
  
(2,862
)
  
(2,595
)
                     
Operating profit
  
3,100
    
2,369
    
2,990
    
4,480
    
3,882
  
Share of profit in associates and joint ventures
  
430
    
446
    
558
    
590
    
448
  
                     
Profit before tax
  
3,530
    
2,815
    
3,548
    
5,070
    
4,330
  
   
%
  
%
  
%
  
%
  
%
Cost efficiency ratio
  
43.6
    
50.6
    
46.2
    
38.2
    
39.5
  
Reported pre-tax RoRWA (annualised)
  
3.1
    
2.4
    
2.9
    
4.2
    
3.5
  
 
Profit/(loss) before tax by global business
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
   $m
  
   $m
  
   $m
  
$m
  
   $m
                     
Retail Banking and Wealth Management
  
1,021
    
954
    
901
    
1,292
    
1,239
  
Commercial Banking
  
1,143
    
885
    
1,219
    
1,224
    
1,180
  
Global Banking and Markets
  
1,241
    
972
    
1,279
    
1,363
    
1,320
  
Global Private Banking
  
66
    
43
    
53
    
71
    
85
  
Other
  
59
    
(39
)
  
96
    
1,120
    
506
  
                     
Profit before tax
  
3,530
    
2,815
    
3,548
    
5,070
    
4,330
  
 
Reported and adjusted Hong Kong profit before tax
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
   $m
  
   $m
  
   $m
  
$m
  
   $m
                     
Reported profit before tax
  
2,089
    
1,756
    
1,817
    
3,462
    
2,771
  
                     
Adjusted profit before tax
  
2,086
    
1,804
    
1,798
    
2,441
    
2,401
  
 
 
Middle East and North Africa
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges
and other credit risk provisions
  
702
    
636
    
640
    
650
    
639
  
Loan impairment charges and other credit risk provisions
  
(28
)
  
(165
)
  
(103
)
  
(22
)
  
(9
)
                     
Net operating income
  
674
    
471
    
537
    
628
    
630
  
Total operating expenses
  
(280
)
  
(303
)
  
(307
)
  
(321
)
  
(303
)
                     
Operating profit
  
394
    
168
    
230
    
307
    
327
  
Share of profit in associates and joint ventures
  
125
    
109
    
129
    
137
    
130
  
                     
Profit before tax
  
519
    
277
    
359
    
444
    
457
  
                     
   
%
  
%
  
%
  
%
  
%
Cost efficiency ratio
  
39.9
    
47.6
    
48.0
    
49.4
    
47.4
  
Reported pre-tax RoRWA (annualised)
  
3.5
    
1.8
    
2.3
    
2.8
    
2.9
  
 
Profit/(loss) before tax by global business
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
86
    
71
    
29
    
81
    
91
  
Commercial Banking
  
160
    
20
    
115
    
126
    
147
  
Global Banking and Markets
  
275
    
191
    
212
    
243
    
227
  
Global Private Banking
  
2
    
3
    
5
    
3
    
5
  
Other
  
(4
)
  
(8
)
  
(2
)
  
(9
)
  
(13
)
                     
Profit before tax
  
519
    
277
    
359
    
444
    
457
  
 
North America
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
   $m
  
   $m
  
   $m
  
   $m
  
   $m
Net operating income before loan impairment charges
and other credit risk provisions
  
1,994
    
1,592
    
1,939
    
2,138
    
1,988
  
Loan impairment charges and other credit risk provisions
  
(328
)
  
(327
)
  
(64
)
  
(74
)
  
(79
)
                     
Net operating income
  
1,666
    
1,265
    
1,875
    
2,064
    
1,909
  
Total operating expenses
  
(1,302
)
  
(1,819
)
  
(1,395
)
  
(1,852
)
  
(1,435
)
                     
Operating profit/(loss)
  
364
    
(554
)
  
480
    
212
    
474
  
Share of profit/(loss) in associates and joint ventures
  
-
    
(1
)
  
(1
)
  
1
    
3
  
                     
Profit/(loss) before tax
  
364
    
(555
)
  
479
    
213
    
477
  
   
%
  
%
  
%
  
%
  
%
Cost efficiency ratio
  
65.3
    
114.3
    
71.9
    
86.6
    
72.2
  
Reported pre-tax RoRWA (annualised)
  
0.8
    
(1.1
)
  
0.9
    
0.4
    
0.9
  
 
Profit/(loss) before tax by global business
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
   $m
  
   $m
  
   $m
  
   $m
  
   $m
                     
Retail Banking and Wealth Management
  
(87
)
  
(477
)
  
4
    
(205
)
  
33
  
Principal RBWM
  
30
    
(33
)
  
25
    
(20
)
  
3
  
Run-off portfolio
  
(117
)
  
(444
)
  
(21
)
  
(185
)
  
30
  
Commercial Banking
  
159
    
(22
)
  
172
    
197
    
226
  
Global Banking and Markets
  
125
    
29
    
208
    
164
    
192
  
Global Private Banking
  
19
    
9
    
13
    
19
    
18
  
Other
  
148
    
(94
)
  
82
    
38
    
8
  
                     
Profit/(loss) before tax
  
364
    
(555
)
  
479
    
213
    
477
  
 
 
Latin America
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
Net operating income before loan impairment charges and other credit risk provisions
  
1,419
    
1,425
    
1,609
    
1,731
    
1,827
  
Loan impairment charges and other credit risk provisions
  
(446
)
  
(485
)
  
(289
)
  
(346
)
  
(375
)
                     
Net operating income
  
973
    
940
    
1,320
    
1,385
    
1,452
  
Total operating expenses
  
(967
)
  
(1,205
)
  
(1,176
)
  
(1,185
)
  
(1,220
)
                     
Operating profit/(loss)
  
6
    
(265
)
  
144
    
200
    
232
  
Share of (loss)/profit in associates and joint ventures
  
(1
)
  
-
    
(1
)
  
1
    
(1
)
                     
Profit/(loss) before tax
  
5
    
(265
)
  
143
    
201
    
231
  
   
%
  
%
  
%
  
%
  
%
Cost efficiency ratio
  
68.1
    
84.6
    
73.1
    
68.5
    
66.8
  
Reported pre-tax RoRWA (annualised)
  
0.0
    
(1.4
)
  
0.7
    
1.0
    
1.1
  
 
Profit/(loss) before tax by global business
   
Quarter ended
   
31 Mar
 2016
  
31 Dec
 2015
  
30 Sep
 2015
  
30 Jun
 2015
  
31 Mar
 2015
   
$m
  
$m
  
$m
  
$m
  
$m
                     
Retail Banking and Wealth Management
  
(109
)
  
(108
)
  
(100
)
  
(18
)
  
(14
)
Commercial Banking
  
22
    
(33
)
  
62
    
48
    
88
  
Global Banking and Markets
  
130
    
(66
)
  
188
    
174
    
166
  
Global Private Banking
  
3
    
-
    
1
    
2
    
-
  
Other
  
(41
)
  
(58
)
  
(8
)
  
(5
)
  
(9
)
                     
Profit/(loss) before tax
  
5
    
(265
)
  
143
    
201
    
231
  
 
 
 
Appendix - selected information
 
Reconciliation of reported results to adjusted performance -
 
geographical regions
 
   
Quarter ended 31 March 2016
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
5,765
    
5,833
    
702
    
1,994
    
1,419
    
14,976
    
4,524
    
3,498
  
Significant items
  
(973
)
  
(69
)
  
(8
)
  
(52
)
  
40
    
(1,062
)
  
(986
)
  
(22
)
- disposal costs of Brazilian operations
  
-
    
-
    
-
    
-
    
14
    
14
    
-
    
-
  
- DVA on derivative contracts
  
(99
)
  
(64
)
  
-
    
(22
)
  
27
    
(158
)
  
(86
)
  
(24
)
- fair value movements on 
       non
-
qualifying hedges
  
111
    
4
    
-
    
119
    
(1
)
  
233
    
73
    
8
  
- own credit spread
  
(985
)
  
(9
)
  
(8
)
  
(149
)
  
-
    
(1,151
)
  
(973
)
  
(6
)
                                 
Adjusted1
  
4,792
    
5,764
    
694
    
1,942
    
1,459
    
13,914
    
3,538
    
3,476
  
                                 
LICs
                                
Reported
  
(169
)
  
(190
)
  
(28
)
  
(328
)
  
(446
)
  
(1,161
)
  
(89
)
  
(44
)
                                 
Adjusted
  
(169
)
  
(190
)
  
(28
)
  
(328
)
  
(446
)
  
(1,161
)
  
(89
)
  
(44
)
                                 
Operating expenses
                                
Reported1
  
(3,909
)
  
(2,543
)
  
(280
)
  
(1,302
)
  
(967
)
  
(8,264
)
  
(2,847
)
  
(1,372
)
Significant items
  
318
    
3
    
2
    
49
    
18
    
390
    
243
    
19
  
-  costs-to-achieve
  
286
    
3
    
2
    
49
    
1
    
341
    
212
    
19
  
-  costs to establish UK ring-fenced
        bank
  
31
    
-
    
-
    
-
    
-
    
31
    
31
    
-
  
- disposal costs of Brazilian operations
 
 
  
-
    
-
    
-
    
-
    
17
    
17
    
-
    
-
  
- regulatory provisions in GPB
  
1
    
-
    
-
    
-
    
-
    
1
    
-
    
-
  
                                 
Adjusted1
  
(3,591
)
  
(2,540
)
  
(278
)
  
(1,253
)
  
(949
)
  
(7,874
)
  
(2,604
)
  
(1,353
)
                                 
Share of profit/(loss) in associates and
   joint ventures
                                
Reported
  
1
    
430
    
125
    
-
    
(1
)
  
555
    
(1
)
  
7
  
                                 
Adjusted
  
1
    
430
    
125
    
-
    
(1
)
  
555
    
(1
)
  
7
  
                                 
Profit before tax
                                
Reported
  
1,688
    
3,530
    
519
    
364
    
5
    
6,106
    
1,587
    
2,089
  
Significant items
  
(655
)
  
(66
)
  
(6
)
  
(3
)
  
58
    
(672
)
  
(743
)
  
(3
)
- revenue
  
(973
)
  
(69
)
  
(8
)
  
(52
)
  
40
    
(1,062
)
  
(986
)
  
(22
)
- operating expenses
  
318
    
3
    
2
    
49
    
18
    
390
    
243
    
19
  
                                 
Adjusted
  
1,033
    
3,464
    
513
    
361
    
63
    
5,434
    
844
    
2,086
  
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 31 December 2015
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
3,586
    
5,460
    
636
    
1,592
    
1,425
    
11,772
    
2,531
    
3,208
  
Currency translation1
  
(188
)
  
(30
)
  
(3
)
  
(9
)
  
(125
)
  
(346
)
  
(189
)
  
(9
)
Significant items
  
847
    
56
    
2
    
217
    
55
    
1,177
    
834
    
14
  
- disposal costs of Brazilian operations
  
-
    
-
    
-
    
-
    
18
    
18
    
-
    
-
  
- DVA on derivative contracts
  
70
    
61
    
1
    
17
    
37
    
186
    
57
    
14
  
- fair value movements on
       non
-
qualifying hedges
  
3
    
1
    
-
    
(30
)
  
-
    
(26
)
  
8
    
3
  
- loss on sale of several tranches of
     real estate secured accounts
      in the US
 
 
  
-
    
-
    
-
    
214
    
-
    
214
    
-
    
-
  
- own credit spread
  
762
    
(6
)
  
1
    
16
    
-
    
773
    
757
    
(3
)
- provisions arising from the
      ongoing review of compliance with
      the Consumer Credit Act in the UK
  
12
    
-
    
-
    
-
    
-
    
12
    
12
    
-
  
                                 
                                 
Adjusted1
  
4,245
    
5,486
    
635
    
1,800
    
1,355
    
12,603
    
3,176
    
3,213
  
                                 
LICs
                                
Reported
  
(339
)
  
(328
)
  
(165
)
  
(327
)
  
(485
)
  
(1,644
)
  
(196
)
  
(36
)
Currency translation
  
10
    
(1
)
  
-
    
3
    
21
    
33
    
11
    
-
  
                                 
Adjusted
  
(329
)
  
(329
)
  
(165
)
  
(324
)
  
(464
)
  
(1,611
)
  
(185
)
  
(36
)
                                 
Operating expenses
                                
Reported1
  
(6,379
)
  
(2,763
)
  
(303
)
  
(1,819
)
  
(1,205
)
  
(11,542
)
  
(5,420
)
  
(1,425
)
Currency translation1
  
167
    
18
    
2
    
7
    
91
    
276
    
172
    
4
  
Significant items
  
947
    
115
    
13
    
415
    
95
    
1,585
    
872
    
39
  
- costs-to-achieve
  
511
    
115
    
13
    
65
    
39
    
743
    
454
    
39
  
- costs to establish UK ring-fenced bank
  
61
    
-
    
-
    
-
    
-
    
61
    
61
    
-
  
- disposal costs of Brazilian operations
  
-
    
-
    
-
    
-
    
56
    
56
    
-
    
-
  
- regulatory provisions in GPB
  
18
    
-
    
-
    
-
    
-
    
18
    
-
    
-
  
- settlements and provisions in
         connection with legal matters
 
  
20
    
-
    
-
    
350
    
-
    
370
    
20
    
-
  
- UK customer redress programmes
  
337
    
-
    
-
    
-
    
-
    
337
    
337
    
-
  
                                 
Adjusted1
  
(5,265
)
  
(2,630
)
  
(288
)
  
(1,397
)
  
(1,019
)
  
(9,681
)
  
(4,376
)
  
(1,382
)
                                 
Share of profit/(loss) in associates and
       joint ventures
                                
Reported
  
2
    
446
    
109
    
(1
)
  
-
    
556
    
4
    
9
  
Currency translation
  
1
    
(10
)
  
(1
)
  
-
    
-
    
(10
)
  
(1
)
  
-
  
                                 
Adjusted
  
3
    
436
    
108
    
(1
)
  
-
    
546
    
3
    
9
  
                                 
Profit/(loss) before tax
                                
Reported
  
(3,130
)
  
2,815
    
277
    
(555
)
  
(265
)
  
(858
)
  
(3,081
)
  
1,756
  
Currency translation
  
(10
)
  
(23
)
  
(2
)
  
1
    
(13
)
  
(47
)
  
(7
)
  
(5
)
Significant items
  
1,794
    
171
    
15
    
632
    
150
    
2,762
    
1,706
    
53
  
- revenue
  
847
    
56
    
2
    
217
    
55
    
1,177
    
834
    
14
  
- operating expenses
  
947
    
115
    
13
    
415
    
95
    
1,585
    
872
    
39
  
                                 
Adjusted
  
(1,346
)
  
2,963
    
290
    
78
    
(128
)
  
1,857
    
(1,382
)
  
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 31 March 2015
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
  
UK
  
Hong
Kong
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                                
Reported1
  
5,619
    
6,572
    
639
    
1,988
    
1,827
    
15,892
    
4,225
    
4,083
  
Currency translation1
  
(286
)
  
(172
)
  
(11
)
  
(41
)
  
(464
)
  
(949
)
  
(214
)
  
(9
)
Significant items
  
(84
)
  
(391
)
  
1
    
(7
)
  
(5
)
  
(486
)
  
(159
)
  
(366
)
- DVA on derivative contracts
  
(54
)
  
(27
)
  
-
    
(12
)
  
(5
)
  
(98
)
  
(46
)
  
(7
)
- fair value movements on
      non-qualifying hedges
  
190
    
(1
)
  
-
    
96
    
-
    
285
    
120
    
3
  
- gain on the partial sale of
       shareholding in Industrial Bank
  
-
    
(363
)
  
-
    
-
    
-
    
(363
)
  
-
    
(363
)
- own credit spread
  
(208
)
  
-
    
1
    
(91
)
  
-
    
(298
)
  
(221
)
  
1
  
- releases arising from the
      ongoing review of compliance with
      the Consumer Credit Act in the UK
  
(12
)
  
-
    
-
    
-
    
-
    
(12
)
  
(12
)
  
-
  
                                 
Adjusted1
  
5,249
    
6,009
    
629
    
1,940
    
1,358
    
14,457
    
3,852
    
3,708
  
                                 
LICs
                                
Reported
  
(12
)
  
(95
)
  
(9
)
  
(79
)
  
(375
)
  
(570
)
  
78
    
(2
)
Currency translation
  
4
    
6
    
1
    
1
    
89
    
101
    
(3
)
  
-
  
                                 
Adjusted
  
(8
)
  
(89
)
  
(8
)
  
(78
)
  
(286
)
  
(469
)
  
75
    
(2
)
                                 
Operating expenses
                                
Reported1
  
(4,045
)
  
(2,595
)
  
(303
)
  
(1,435
)
  
(1,220
)
  
(8,845
)
  
(2,840
)
  
(1,316
)
Currency translation1
  
182
    
87
    
2
    
22
    
308
    
576
    
126
    
3
  
Significant items
  
309
    
3
    
-
    
2
    
5
    
319
    
170
    
2
  
- regulatory provisions in GPB
  
139
    
-
    
-
    
-
    
-
    
139
    
-
    
-
  
- restructuring and other related costs
  
33
    
3
    
-
    
2
    
5
    
43
    
33
    
2
  
- UK customer redress programmes
  
137
    
-
    
-
    
-
    
-
    
137
    
137
    
-
  
                                 
Adjusted1
  
(3,554
)
  
(2,505
)
  
(301
)
  
(1,411
)
  
(907
)
  
(7,950
)
  
(2,544
)
  
(1,311
)
                                 
Share of profit/(loss) in associates and
       joint ventures
                                
Reported
  
2
    
448
    
130
    
3
    
(1
)
  
582
    
2
    
6
  
Currency translation
  
1
    
(25
)
  
-
    
-
    
-
    
(24
)
  
1
    
-
  
                                 
Adjusted
  
3
    
423
    
130
    
3
    
(1
)
  
558
    
3
    
6
  
                                 
Profit/(loss) before tax
                                
Reported
  
1,564
    
4,330
    
457
    
477
    
231
    
7,059
    
1,465
    
2,771
  
Currency translation
  
(99
)
  
(104
)
  
(8
)
  
(18
)
  
(67
)
  
(296
)
  
(90
)
  
(6
)
Significant items
  
225
    
(388
)
  
1
    
(5
)
  
-
    
(167
)
  
11
    
(364
)
- revenue
  
(84
)
  
(391
)
  
1
    
(7
)
  
(5
)
  
(486
)
  
(159
)
  
(366
)
- operating expenses
  
309
    
3
    
-
    
2
    
5
    
319
    
170
    
2
  
                                 
Adjusted
  
1,690
    
3,838
    
450
    
454
    
164
    
6,596
    
1,386
    
2,401
  
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
   
Quarter ended 31 March 2016
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
5,160
    
3,623
    
4,466
    
487
    
2,658
    
14,976
  
Significant items
  
148
    
-
    
(150
)
  
-
    
(1,060
)
  
(1,062
)
- disposal costs of Brazilian operations
  
-
    
-
    
-
    
-
    
14
    
14
  
- DVA on derivative contracts
  
-
    
-
    
(158
)
  
-
    
-
    
(158
)
- fair value movements on non-qualifying hedges
  
148
    
-
    
8
    
-
    
77
    
233
  
- own credit spread
  
-
    
-
    
-
    
-
    
(1,151
)
  
(1,151
)
                         
Adjusted1
  
5,308
    
3,623
    
4,316
    
487
    
1,598
    
13,914
  
                         
LICs
                        
Reported
  
(581
)
  
(390
)
  
(193
)
  
-
    
3
    
(1,161
)
                         
Adjusted
  
(581
)
  
(390
)
  
(193
)
  
-
    
3
    
(1,161
)
                         
Operating expenses
                        
Reported1
  
(3,532
)
  
(1,524
)
  
(2,278
)
  
(379
)
  
(1,969
)
  
(8,264
)
Significant items
  
78
    
26
    
29
    
2
    
255
    
390
  
- costs-to-achieve
  
66
    
23
    
30
    
2
    
220
    
341
  
- costs to establish UK ring-fenced bank
  
-
    
-
    
-
    
-
    
31
    
31
  
- disposal costs of Brazilian operations
  
12
    
3
    
(1
)
  
-
    
3
    
17
  
- regulatory provisions in GPB
  
-
    
-
    
-
    
-
    
1
    
1
  
                         
Adjusted1
  
(3,454
)
  
(1,498
)
  
(2,249
)
  
(377
)
  
(1,714
)
  
(7,874
)
                         
Share of profit in associates and joint ventures
                        
Reported
  
86
    
341
    
126
    
2
    
-
    
555
  
                         
Adjusted
  
86
    
341
    
126
    
2
    
-
    
555
  
                         
Profit before tax
                        
Reported
  
1,133
    
2,050
    
2,121
    
110
    
692
    
6,106
  
Significant items
  
226
    
26
    
(121
)
  
2
    
(805
)
  
(672
)
- revenue
  
148
    
-
    
(150
)
  
-
    
(1,060
)
  
(1,062
)
- operating expenses
  
78
    
26
    
29
    
2
    
255
    
390
  
                         
Adjusted
  
1,359
    
2,076
    
2,000
    
112
    
(113
)
  
5,434
  
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 31 December 2015
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
5,604
    
3,634
    
3,447
    
487
    
377
    
11,772
  
Currency translation1
  
(156
)
  
(104
)
  
(87
)
  
(4
)
  
(14
)
  
(346
)
Significant items
  
174
    
17
    
199
    
(6
)
  
793
    
1,177
  
- disposal costs of Brazilian operations
  
-
    
-
    
-
    
-
    
18
    
18
  
- DVA on derivative contracts
  
-
    
-
    
186
    
-
    
-
    
186
  
- fair value movements on non-qualifying hedges
  
(40
)
  
(1
)
  
13
    
-
    
2
    
(26
)
- loss on sale of several tranches of real estate secured accounts
       in the US
  
214
    
-
    
-
    
-
    
-
    
214
  
- own credit spread
  
-
    
-
    
-
    
-
    
773
    
773
  
- provisions/(releases) arising from the ongoing review of
       compliance with the Consumer Credit Act in the UK
 
  
-
    
18
    
-
    
(6
)
  
-
    
12
  
                         
Adjusted1
  
5,622
    
3,547
    
3,559
    
477
    
1,156
    
12,603
  
                         
LICs
                        
Reported
  
(543
)
  
(1,013
)
  
(90
)
  
(3
)
  
5
    
(1,644
)
Currency translation
  
13
    
20
    
2
    
(1
)
  
(1
)
  
33
  
                         
Adjusted
  
(530
)
  
(993
)
  
(88
)
  
(4
)
  
4
    
(1,611
)
                         
Operating expenses
                        
Reported1
  
(4,712
)
  
(1,747
)
  
(2,449
)
  
(405
)
  
(4,006
)
  
(11,542
)
Currency translation1
  
139
    
49
    
70
    
4
    
33
    
276
  
Significant items
  
902
    
137
    
58
    
33
    
455
    
1,585
  
- costs-to-achieve
  
142
    
150
    
49
    
15
    
387
    
743
  
- costs to establish UK ring-fenced bank
  
-
    
-
    
-
    
-
    
61
    
61
  
- disposal costs of Brazilian operations
  
32
    
10
    
8
    
1
    
5
    
56
  
- regulatory provisions in GPB
  
-
    
-
    
-
    
17
    
1
    
18
  
- settlements and provisions in connection with legal matters
  
350
    
-
    
20
    
-
    
-
    
370
  
- UK customer redress programmes
  
378
    
(23
)
  
(19
)
  
-
    
1
    
337
  
                         
Adjusted1
  
(3,671
)
  
(1,561
)
  
(2,321
)
  
(368
)
  
(3,518
)
  
(9,681
)
                         
Share of profit/(loss) in associates and joint ventures
                        
Reported
  
96
    
350
    
107
    
4
    
(1
)
  
556
  
Currency translation
  
(1
)
  
(6
)
  
(2
)
  
(1
)
  
-
    
(10
)
                         
Adjusted
  
95
    
344
    
105
    
3
    
(1
)
  
546
  
                         
Profit/(loss) before tax
                        
Reported
  
445
    
1,224
    
1,015
    
83
    
(3,625
)
  
(858
)
Currency translation
  
(5
)
  
(41
)
  
(17
)
  
(2
)
  
18
    
(47
)
Significant items
  
1,076
    
154
    
257
    
27
    
1,248
    
2,762
  
- revenue
  
174
    
17
    
199
    
(6
)
  
793
    
1,177
  
- operating expenses
  
902
    
137
    
58
    
33
    
455
    
1,585
  
                         
Adjusted
  
1,516
    
1,337
    
1,255
    
108
    
(2,359
)
  
1,857
  
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 31 March 2015
   
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
Revenue
                        
Reported1
  
5,911
    
3,786
    
5,242
    
613
    
1,831
    
15,892
  
Currency translation1
  
(438
)
  
(230
)
  
(269
)
  
(15
)
  
(49
)
  
(949
)
Significant items
  
170
    
-
    
(90
)
  
(24
)
  
(542
)
  
(486
)
- DVA on derivative contracts
  
-
    
-
    
(98
)
  
-
    
-
    
(98
)
- fair value movements on non-qualifying hedges
  
158
    
-
    
8
    
-
    
119
    
285
  
- gain on the partial sale of shareholding in Industrial Bank
  
-
    
-
    
-
    
-
    
(363
)
  
(363
)
- own credit spread
  
-
    
-
    
-
    
-
    
(298
)
  
(298
)
- provisions/(releases) arising from the ongoing review of
       compliance with the Consumer Credit Act in the UK
 
 
  
12
    
-
    
-
    
(24
)
  
-
    
(12
)
                         
Adjusted1
  
5,643
    
3,556
    
4,883
    
574
    
1,240
    
14,457
  
                         
LICs
                        
Reported
  
(460
)
  
(216
)
  
108
    
(2
)
  
-
    
(570
)
Currency translation
  
78
    
25
    
(2
)
  
-
    
-
    
101
  
                         
Adjusted
  
(382
)
  
(191
)
  
106
    
(2
)
  
-
    
(469
)
                         
Operating expenses
                        
Reported1
  
(3,928
)
  
(1,639
)
  
(2,437
)
  
(551
)
  
(1,781
)
  
(8,845
)
Currency translation1
  
332
    
112
    
107
    
18
    
59
    
576
  
Significant items
  
95
    
49
    
4
    
139
    
32
    
319
  
- regulatory provisions in GPB
  
-
    
-
    
-
    
139
    
-
    
139
  
- restructuring and other related costs
  
5
    
2
    
4
    
-
    
32
    
43
  
- UK customer redress programmes
  
90
    
47
    
-
    
-
    
-
    
137
  
                         
Adjusted1
  
(3,501
)
  
(1,478
)
  
(2,326
)
  
(394
)
  
(1,690
)
  
(7,950
)
                         
Share of profit/(loss) in associates and joint ventures
                        
Reported
  
87
    
363
    
128
    
5
    
(1
)
  
582
  
Currency translation
  
(3
)
  
(18
)
  
(4
)
  
(2
)
  
3
    
(24
)
                         
Adjusted
  
84
    
345
    
124
    
3
    
2
    
558
  
                         
Profit/(loss) before tax
                        
Reported
  
1,610
    
2,294
    
3,041
    
65
    
49
    
7,059
  
Currency translation
  
(31
)
  
(111
)
  
(168
)
  
1
    
13
    
(296
)
Significant items
  
265
    
49
    
(86
)
  
115
    
(510
)
  
(167
)
- revenue
  
170
    
-
    
(90
)
  
(24
)
  
(542
)
  
(486
)
- operating expenses
  
95
    
49
    
4
    
139
    
32
    
319
  
                         
Adjusted
  
1,844
    
2,232
    
2,787
    
181
    
(448
)
  
6,596
  
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
  
North America
  
Latin America
  
Total
  
As a %
of total gross loans
   
$m
  
$m
  
$m
  
$m
  
$m
  
$m
  
At 31 March 2016
                            
Personal
  
168,429
    
134,105
    
6,635
    
54,199
    
6,122
    
369,490
    
36.0
  
First lien residential mortgages
  
122,228
    
96,413
    
2,354
    
46,244
    
2,052
    
269,291
    
26.2
  
Other personal
  
46,201
    
37,692
    
4,281
    
7,955
    
4,070
    
100,199
    
9.8
  
                             
Wholesale
                            
Corporate and commercial
  
198,326
    
204,101
    
22,500
    
64,547
    
11,728
    
501,202
    
48.8
  
- manufacturing
  
39,032
    
32,495
    
2,304
    
18,357
    
2,528
    
94,716
    
9.2
  
- international trade and services
  
67,791
    
68,811
    
9,617
    
11,769
    
2,686
    
160,674
    
15.7
  
- commercial real estate
  
24,286
    
32,282
    
610
    
7,324
    
1,446
    
65,948
    
6.4
  
- other property-related
  
8,130
    
34,926
    
1,816
    
9,222
    
461
    
54,555
    
5.3
  
- government
  
2,811
    
940
    
1,697
    
356
    
722
    
6,526
    
0.6
  
- other commercial
  
56,276
    
34,647
    
6,456
    
17,519
    
3,885
    
118,783
    
11.6
  
Financial
  
51,642
    
76,195
    
10,967
    
14,086
    
3,834
    
156,724
    
15.2
  
- non-bank financial institutions
  
33,157
    
14,213
    
2,446
    
8,145
    
754
    
58,715
    
5.7
  
- banks
  
18,485
    
61,982
    
8,521
    
5,941
    
3,080
    
98,009
    
9.5
  
Total wholesale
  
249,968
    
280,296
    
33,467
    
78,633
    
15,562
    
657,926
    
64.0
  
                             
Total gross loans and advances at 31 March 2016
  
418,397
    
414,401
    
40,102
    
132,832
    
21,684
    
1,027,416
    
100.0
  
Percentage of total gross loans and advances
  
40.7
%
  
40.3
%
  
3.9
%
  
13.0
%
  
2.1
%
  
100.0
%
    
                             
                             
At 31 December 2015
                            
Personal
  
170,526
    
132,707
    
6,705
    
58,186
    
5,958
    
374,082
    
36.5
  
First lien residential mortgages
  
125,544
    
94,606
    
2,258
    
50,117
    
1,986
    
274,511
    
26.8
  
Other personal
  
44,982
    
38,101
    
4,447
    
8,069
    
3,972
    
99,571
    
9.7
  
                             
Wholesale
                            
Corporate and commercial
  
191,765
    
211,224
    
22,268
    
62,882
    
11,374
    
499,513
    
48.8
  
- manufacturing
  
39,003
    
34,272
    
2,504
    
17,507
    
2,572
    
95,858
    
9.4
  
- international trade and services
  
62,667
    
72,199
    
9,552
    
11,505
    
3,096
    
159,019
    
15.5
  
- commercial real estate
  
26,256
    
32,371
    
690
    
7,032
    
1,577
    
67,926
    
6.7
  
- other property-related
  
7,323
    
35,206
    
1,908
    
8,982
    
45
    
53,464
    
5.2
  
- government
  
3,653
    
1,132
    
1,695
    
203
    
772
    
7,455
    
0.7
  
- other commercial
  
52,863
    
36,044
    
5,919
    
17,653
    
3,312
    
115,791
    
11.3
  
Financial
  
51,969
    
68,321
    
10,239
    
16,308
    
3,996
    
150,833
    
14.7
  
- non-bank financial institutions
  
33,621
    
13,969
    
2,321
    
9,822
    
681
    
60,414
    
5.9
  
- banks
  
18,348
    
54,352
    
7,918
    
6,486
    
3,315
    
90,419
    
8.8
  
Total wholesale
  
243,734
    
279,545
    
32,507
    
79,190
    
15,370
    
650,346
    
63.5
  
                             
Total gross loans and advances at 31 December 2015
  
414,260
    
412,252
    
39,212
    
137,376
    
21,328
    
1,024,428
    
100.0
  
Percentage of total gross loans and advances
  
40.4
%
  
40.3
%
  
3.8
%
  
13.4
%
  
2.1
%
  
100.0
%
    
 
 
Capital
Reconciliation of regulatory capital from transitional to end point basis
   
At
   
31 Mar
  
31 Dec
   
2016
  
2015
   
$m
  
$m
         
Common equity tier 1 capital
  
132,870
    
130,863
  
         
Additional tier 1 capital on a transitional basis
  
20,399
    
22,440
  
Grandfathered instruments:
        
Preference share premium
  
(870
)
  
(1,015
)
Preference share non-controlling interests
  
(1,466
)
  
(1,711
)
Hybrid capital securities
  
(8,046
)
  
(9,088
)
Transitional provisions:
        
Allowable non-controlling interest in additional tier 1
  
(726
)
  
(1,377
)
Unconsolidated investments
  
84
    
121
  
         
Additional tier 1 capital end point basis
  
9,375
    
9,370
  
         
Tier 1 capital on an end point basis
  
142,245
    
140,233
  
         
Tier 2 capital on a transitional basis
  
33,784
    
36,530
  
Grandfathered instruments:
        
Perpetual subordinated debt
  
(1,664
)
  
(1,941
)
Term subordinated debt
  
(16,314
)
  
(19,034
)
Transitional provisions:
        
Allowable non-controlling interest in tier 2
  
17
    
21
  
Unconsolidated investments
  
(84
)
  
(121
)
         
Tier 2 capital on an end point basis
  
15,739
    
15,455
  
         
Total regulatory capital on an end point basis
  
157,984
    
155,688
  
 
 
Transitional own funds disclosure
         
CRD IV
  
Final
     
31 Mar
  
prescribed
  
CRD IV
     
2016
  
residual amount
  
 text
Ref1
    
$m
  
$m
  
$m
               
6
Common equity tier 1 capital: before regulatory adjustments
  
169,449
    
-
    
169,449
  
28
Total regulatory adjustments to common equity tier 1 (CET1)
  
(36,579
)
  
-
    
(36,579
)
29
Common equity tier 1 (CET1) capital
  
132,870
    
-
    
132,870
  
36
Additional tier 1 capital: before regulatory adjustments
  
20,543
    
(11,108
)
  
9,435
  
43
Total regulatory adjustments to Additional tier 1 (AT1) capital
  
(144
)
  
84
    
(60
)
44
Additional tier 1 (AT1) capital
  
20,399
    
(11,024
)
  
9,375
  
45
Tier 1 capital (T1 = CET1 + AT1)
  
153,269
    
(11,024
)
  
142,245
  
51
Tier 2 (T2) capital before regulatory adjustments
  
34,160
    
(17,961
)
  
16,199
  
57
Total regulatory adjustments to T2 capital
  
(376
)
  
(84
)
  
(460
)
               
58
Tier 2 (T2) capital
  
33,784
    
(18,045
)
  
15,739
  
               
59
Total capital (TC = T1 + T2)
  
187,053
    
(29,069
)
  
157,984
  
60
Total risk-weighted assets
  
1,115,172
    
-
    
1,115,172
  
 
Capital ratios
            
61
Common equity tier 1
  
11.9
%
      
11.9
%
62
Tier 1
  
13.7
%
      
12.8
%
63
Total capital
  
16.8
%
      
14.2
%
1   The references identify the lines prescribed in the EBA template.
 
 
Risk-weighted assets
RWAs by risk type
   
RWAs at
  
Capital required1 at
   
31 Mar
2016
  
31 Dec
2015
  
31 Mar
2016
  
31 Dec
2015
   
   $bn
  
   $bn
  
   $bn
  
   $bn
                 
    Credit risk
  
880.1
    
875.9
    
70.4
    
70.1
  
Standardised approach
  
330.4
    
332.7
    
26.4
    
26.6
  
IRB foundation approach
  
29.0
    
27.4
    
2.3
    
2.2
  
IRB advanced approach
  
520.7
    
515.8
    
41.7
    
41.3
  
    Counterparty credit risk
  
74.0
    
69.2
    
5.9
    
5.5
  
Standardised approach
  
20.6
    
19.1
    
1.6
    
1.5
  
       - CCR standardised approach
  
4.7
    
4.7
    
0.4
    
0.4
  
        - Credit valuation adjustment
  
13.7
    
12.2
    
1.0
    
0.9
  
        - Central counterparty
  
2.2
    
2.2
    
0.2
    
0.2
  
     Advanced approach
  
53.4
    
50.1
    
4.3
    
4.0
  
        - CCR IRB approach
  
49.9
    
46.8
    
4.0
    
3.7
  
        - Credit valuation adjustment
  
3.5
    
3.3
    
0.3
    
0.3
  
    Market risk
  
45.7
    
42.5
    
3.7
    
3.4
  
     Internal model based
  
38.3
    
34.9
    
3.1
    
2.8
  
        - VaR
  
7.1
    
7.7
    
0.6
    
0.6
  
        - Stressed VaR
  
10.3
    
9.8
    
0.8
    
0.8
  
        - Incremental risk charge
  
12.3
    
11.4
    
1.0
    
0.9
  
        - Other VaR and stressed VaR
  
8.6
    
6.0
    
0.7
    
0.5
  
     Standardised approach
  
7.4
    
7.6
    
0.6
    
0.6
  
        - Interest rate positions risk
  
3.2
    
3.0
    
0.3
    
0.3
  
        - Foreign exchange position risk
  
0.4
    
0.6
    
-
    
-
  
        - Equity position risk
  
1.2
    
1.3
    
0.1
    
0.1
  
        - Commodity position risk
  
-
    
-
    
-
    
-
  
       - Securitisation
  
2.6
    
2.6
    
0.2
    
0.2
  
       - Options
  
-
    
0.1
    
-
    
                                  -
Operational risk
  
115.4
    
115.4
    
9.2
    
9.2
  
   
1,115.2
    
1,103.0
    
89.2
    
88.2
  
Of which:
                
   Run-off portfolios
 
  
62.7
    
69.3
    
5.0
    
5.6
  
     - legacy credit in GB&M
  
24.8
    
29.8
    
2.0
    
2.4
  
     - US CML and Other
  
37.9
    
39.5
    
3.0
    
3.2
  
1   'Capital required' represents the Pillar 1 capital charge at 8% of RWAs.
 
 
RWAs by geographical region
   
Europe
  
Asia
  
MENA
  
North
America
  
Latin
America
  
Total
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
IRB approach
  
189.5
    
200.3
    
19.4
    
125.5
    
15.0
    
549.7
  
- IRB advanced approach
  
170.4
    
200.3
    
9.5
    
125.5
    
15.0
    
520.7
  
- IRB foundation approach
  
19.1
    
-
    
9.9
    
-
    
-
    
29.0
  
Standardised approach
  
47.5
    
174.4
    
31.7
    
32.7
    
44.1
    
330.4
  
NCCR
  
237.0
    
374.7
    
51.1
    
158.2
    
59.1
    
880.1
  
CCR
  
35.4
    
16.1
    
1.6
    
17.1
    
3.8
    
74.0
  
Market risk1
  
34.7
    
23.7
    
0.6
    
8.8
    
1.8
    
45.7
  
Operational risk
  
34.9
    
47.1
    
6.2
    
14.1
    
13.1
    
115.4
  
                         
At 31 March 2016
  
342.0
    
461.6
    
59.5
    
198.2
    
77.8
    
1,115.2
  
                         
IRB approach
  
192.6
    
195.9
    
19.4
    
122.5
    
12.8
    
543.2
  
- IRB advanced approach
  
175.1
    
195.9
    
9.5
    
122.5
    
12.8
    
515.8
  
- IRB foundation approach
  
17.5
    
-
    
9.9
    
-
    
-
    
27.4
  
Standardised approach
  
46.8
    
177.7
    
32.0
    
33.9
    
42.3
    
332.7
  
NCCR
  
239.4
    
373.6
    
51.4
    
156.4
    
55.1
    
875.9
  
CCR
  
32.1
    
17.1
    
1.8
    
14.6
    
3.6
    
69.2
  
Market risk1
  
31.0
    
21.9
    
1.0
    
6.5
    
1.6
    
42.5
  
Operational risk
  
34.9
    
47.1
    
6.2
    
14.1
    
13.1
    
115.4
  
                         
At 31 December 2015
  
337.4
    
459.7
    
60.4
    
191.6
    
73.4
    
1,103.0
  
1   RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
RWAs by global business
   
Principal
RBWM
  
US
run-off
portfolio
  
Total
RBWM
  
CMB
  
GB&M
  
GPB
  
Other
  
Total
   
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
  
$bn
IRB approach
  
58.5
    
31.6
    
90.1
    
221.0
    
218.9
    
8.3
    
11.4
    
549.7
  
-  IRB advanced approach
  
58.5
    
31.6
    
90.1
    
201.3
    
210.8
    
8.2
    
10.3
    
520.7
  
- IRB foundation approach
  
-
    
-
    
-
    
19.7
    
8.1
    
0.1
    
1.1
    
29.0
  
Standardised approach
  
58.2
    
3.9
    
62.1
    
169.9
    
68.9
    
7.4
    
22.1
    
330.4
  
NCCR
  
116.7
    
35.5
    
152.2
    
390.9
    
287.8
    
15.7
    
33.5
    
880.1
  
CCR
  
-
    
-
    
-
    
-
    
73.5
    
0.3
    
0.2
    
74.0
  
Market risk1
  
-
    
-
    
-
    
-
    
45.4
    
-
    
0.3
    
45.7
  
Operational risk
  
33.5
    
2.4
    
35.9
    
31.0
    
45.1
    
3.3
    
0.1
    
115.4
  
                                 
At 31 March 2016
  
150.2
    
37.9
    
188.1
    
421.9
    
451.8
    
19.3
    
34.1
    
1,115.2
  
                                 
IRB advanced approach
  
59.0
    
33.2
    
92.2
    
199.0
    
207.5
    
8.4
    
8.7
    
515.8
  
IRB foundation approach
  
-
    
-
    
-
    
19.0
    
7.3
    
0.1
    
1.0
    
27.4
  
Standardised approach
  
57.6
    
3.8
    
61.4
    
172.0
    
69.7
    
7.2
    
22.4
    
332.7
  
NCCR
  
116.6
    
37.0
    
153.6
    
390.0
    
284.5
    
15.7
    
32.1
    
875.9
  
CCR
  
-
  
-
  
-
  
-
  
68.7
    
0.3
    
0.2
    
69.2
  
Market risk1
  
-
  
-
  
-
  
-
  
42.2
    
-
  
0.3
    
42.5
  
Operational risk
  
33.5
    
2.4
    
35.9
    
31.0
    
45.2
    
3.3
    
-
  
115.4
  
                                 
At 31 December 2015
  
150.1
    
39.4
    
189.5
    
421.0
    
440.6
    
19.3
    
32.6
    
1,103.0
  
1   RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
 
 
First interim dividend for 2016
 
The Directors of HSBC Holdings plc have declared a first interim dividend of $0.10 per ordinary share in respect of the year ending 31 December 2016 in accordance with their intention, as set out in the
Annual Report and Accounts 2015
, to pay quarterly dividends on the ordinary shares in a pattern of three equal dividends with a variable fourth interim dividend. The ordinary shares will be quoted ex-dividend in London, Hong Kong, Paris and Bermuda on 19 May 2016. The American Depositary Shares will be quoted ex-dividend in New York on 18 May 2016. The dividend will be payable on 6 July 2016 to holders of record on 20 May 2016.
 
The first interim dividend will be payable on 6 July 2016 in cash in United States dollars, sterling or Hong Kong dollars, or a combination of these currencies, at the forward exchange rates quoted by HSBC Bank plc in London at or about 11.00am on 27 June 2016, or as a scrip dividend alternative. Particulars of these arrangements will be mailed to holders of ordinary shares on or about 3 June 2016 and elections will be required to be made by 23 June 2016.
 
Any person who has acquired ordinary shares registered on the Principal register in the United Kingdom, the Hong Kong Overseas Branch register or the Bermuda Overseas Branch register but who has not lodged the share transfer with the Principal Registrar, Hong Kong or Bermuda Overseas Branch Registrar should do so before 4.00pm local time on 20 May 2016 in order to receive the dividend.
 
Ordinary shares may not be removed to or from the Principal register in the United Kingdom, the Hong Kong Overseas Branch register or the Bermuda Overseas Branch register on 20 May 2016. Any person wishing to remove ordinary shares to or from each register must do so before 4.00pm local time on 19 May 2016.
 
The dividend will be payable on ordinary shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, on 6 July 2016 to the holders of record on 20 May 2016. The dividend will be payable by Euroclear France in cash, in euros, at the forward exchange rate quoted by HSBC France at or about 12.00pm on 27 June 2016, or as a scrip dividend. Particulars of these arrangements will be announced through Euronext Paris on 6 May, 27 May and 27 June 2016.
 
The dividend will be payable on American Depositary Shares, each of which represents five ordinary shares, on 6 July 2016 to holders of record on 20 May 2016. The dividend of $0.50 per American Depositary Share will be payable by the depositary in cash in US dollars or as a scrip dividend of new American Depositary Shares. Particulars of these arrangements will be mailed to holders on or about 3 June 2016 and elections will be required to be made by 17 June 2016. Alternatively, the cash dividend may be invested in additional American Depositary Shares for participants in the dividend reinvestment plan operated by the depositary.
 
In order to be eligible to receive the dividend, American Depositary Shares must be registered on the books of the depositary by close of business on 20 May 2016.
 
Dividend on 6.20% non-cumulative US dollar preference shares, series A ('Series A Dollar Preference Shares')
 
In 2005, 1,450,000 Series A Dollar Preference Shares were issued for a consideration of $1,000 each, and Series A American Depositary Shares, each of which represents one-fortieth of a Series A Dollar Preference Share, were listed on the New York Stock Exchange.
 
A non-cumulative fixed-rate dividend of 6.20% per annum is payable on the Series A Dollar Preference Shares on 15 March, 15 June, 15 September and 15 December 2016 for the quarter then ended at the sole and absolute discretion of the Board of HSBC Holdings plc. Accordingly, the Board of HSBC Holdings plc has declared a dividend of $0.3875 per Series A American Depositary Share for the quarter ending 15 June 2016.
 
The dividend will be payable on 15 June 2016 to holders of record on 31 May 2016.
 
Any person who has acquired Series A American Depositary Shares but who has not lodged the transfer documentation with the depositary should do so before 12.00pm on 31 May 2016 in order to receive the dividend.
 
For and on behalf of
 
HSBC Holdings plc
 
Ben J S Mathews
Group Company Secretary
 
The Board of Directors of HSBC Holdings plc as at the date of this announcement are: Douglas Flint, Stuart Gulliver, Phillip Ameen†, Kathleen Casey†, Laura Cha†, Henri de Castries†, Lord Evans of Weardale†, Joachim Faber†, Sam Laidlaw†, Irene Lee†, John Lipsky†, Rachel Lomax†, Iain Mackay, Heidi Miller†, Marc Moses, David Nish†, Jonathan Symonds†, Pauline van der Meer Mohr† and Paul Walsh†.
 
† Independent non-executive Director
 
Please click on the following link to view the HSBC Holdings plc Data Pack for Q1 2016:
 
http://www.rns-pdf.londonstockexchange.com/rns/9446W_1-2016-5-2.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: 03 May 2016