N/A		United Kingdom
(Translation of Registrant’s name into English)		(Jurisdiction of incorporation or organisation)

8 Canada Square

London E14 5HQ

United Kingdom

(Address of principal executive offices)

Anthony J Bloomfield

8 Canada Square

London E14 5HQ

United Kingdom

Tel +44 (0) 20 7991 8888

Fax +44 (0) 20 7992 4880

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

Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value US$0.50 each (GB0005405286)	HSBA	London Stock Exchange
	5	Hong Kong Stock Exchange
	HSB	Euronext Paris
	HSBC.BH	Bermuda Stock Exchange
	HSBC	New York Stock Exchange*
American Depository Shares, each representing 5 Ordinary Shares of nominal value US$0.50 each (US4042804066)	HSBC	New York Stock Exchange

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

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changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment and credit-worthy customers beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates, including the accounting impact resulting from financial reporting in respect of hyperinflationary economies; volatility in equity markets; lack of liquidity in wholesale funding or capital markets, which may affect our ability to meet our obligations under financing facilities or to fund new loans, investments and businesses; other unfavourable political or diplomatic developments producing social instability or legal uncertainty, such as the unrest in Hong Kong, which in turn may affect demand for our products and services; the coronavirus outbreak, which may have adverse impacts on income due to lower lending and transaction volumes; climate change, which may cause both idiosyncratic and systemic risks resulting in potential financial impacts; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks’ policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; consumer perception as to the continuing availability of credit; exposure to counterparty risk, including third parties using us as a conduit for illegal activities without our knowledge; the expected discontinuation of certain key Ibors and the development of alternative risk-free benchmark rates, which may require us to enhance our capital position and/or position additional capital in specific subsidiaries; price competition in the market segments we serve; and deviations from the market and economic assumptions that form the basis for our ECL measurements;

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changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities in the principal markets in which we operate and the consequences thereof; 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 practices, pricing or responsibilities of financial institutions serving their consumer markets; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; the UK’s exit from the EU which may result in a prolonged period of uncertainty, unstable economic conditions and market volatility, including currency fluctuations; general changes in government policy that may significantly influence investor decisions; the costs, effects and outcomes of regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies; and

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factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques); our ability to achieve our targets which may result in our failure to achieve any of the expected benefits of our strategic initiatives; model limitations or failure, which may require us to hold additional capital and incur losses; changes to the judgments, estimates and assumptions we base our financial statements on; changes in our ability to meet the requirements of regulatory stress tests; a reduction in the credit rating assigned to us or any of our subsidiaries, which could increase the cost or decrease the availability of our funding and affect our liquidity position and net interest margin; changes to the reliability and security of

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•	Reported profit attributable to ordinary shareholders down 53% to $6.0bn, materially impacted by a goodwill impairment of $7.3bn. Reported profit before tax down 33% to $13.3bn. Reported revenue up 4% and reported operating expenses up 22% due to a goodwill impairment of $7.3bn.

•	Goodwill impairment of $7.3bn, primarily $4.0bn related to Global Banking and Markets (‘GB&M’) and $2.5bn in Commercial Banking (‘CMB’) in Europe. This reflected lower long-term economic growth rate assumptions, and additionally for GB&M, the planned reshaping of the business.

•	Adjusted revenue up 5.9% to $55.4bn and adjusted profit before tax up 5% to $22.2bn, reflecting good revenue growth in Retail Banking and Wealth Management (‘RBWM’), Global Private Banking (‘GPB’) and CMB, together with improved cost control.

•	Adjusted revenue in Asia up 7% to $30.5bn and adjusted profit before tax up 6% to $18.6bn. Within this, there was a resilient performance in Hong Kong, with adjusted profit before tax up 5% to $12.1bn.

•	Adjusted expected credit losses and other credit impairment charges (‘ECL’) up $1.1bn to $2.8bn from higher charges in CMB and RBWM.

•	Positive adjusted jaws of 3.1%, reflecting improving cost discipline. Adjusted operating expense growth of 2.8%, well below the growth rate in 2018 (compared with 2017).

•	Return on average tangible equity (‘RoTE’) down 20 basis points (‘bps’) to 8.4%, supported by a resilient Hong Kong performance.

•	Earnings per share of $0.30, including a $0.36 per share impact of the goodwill impairment.

•	a gross risk-weighted asset (‘RWA’) reduction of over $100bn by the end of 2022, with these RWAs to be reinvested, resulting in broadly flat RWAs between 2019 and 2022;

•	a reduced adjusted cost base of $31bn or below in 2022, underpinned by a new cost reduction plan of $4.5bn; and

•	a reported RoTE in the range of 10% to 12% in 2022, with the full benefit of our cost reductions and redeployed RWAs flowing into subsequent years.

2	HSBC Holdings plc

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Key financial metrics

	For the year ended
Reported results	2019		2018		2017
Reported revenue ($m)	56,098		53,780		51,445
Reported profit before tax ($m)1	13,347		19,890		17,167
Reported profit after tax ($m)1	8,708		15,025		11,879
Profit attributable to the ordinary shareholders of the parent company ($m)1	5,969		12,608		9,683
Basic earnings per share ($)1	0.30		0.63		0.48
Diluted earnings per share ($)1	0.30		0.63		0.48
Return on average ordinary shareholders’ equity (%)1	3.6		7.7		5.9
Return on average tangible equity (%)	8.4		8.6		6.8
Net interest margin (%)	1.58		1.66		1.63
Adjusted results
Adjusted revenue ($m)	55,409		52,331		50,173
Adjusted profit before tax ($m)	22,212		21,182		20,556
Adjusted jaws (%)	3.1		(1.2	)	1.0
Cost efficiency ratio (%)	59.2		61.0		60.3
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances to customers (%)	0.27		0.17		0.18
	At 31 December
Balance sheet	2019		2018		2017
Total assets ($m)	2,715,152		2,558,124		2,521,771
Net loans and advances to customers ($m)	1,036,743		981,696		962,964
Customer accounts ($m)	1,439,115		1,362,643		1,364,462
Average interest-earning assets ($m)	1,922,822		1,839,346		1,726,120
Loans and advances to customers as % of customer accounts (%)	72.0		72.0		70.6
Total shareholders’ equity ($m)	183,955		186,253		190,250
Tangible ordinary shareholders’ equity ($m)	144,144		140,056		144,915
Net asset value per ordinary share at period end ($)2	8.00		8.13		8.35
Tangible net asset value per ordinary share at period end ($)	7.13		7.01		7.26
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)3	14.7		14.0		14.5
Risk-weighted assets ($m)3	843,395		865,318		871,337
Total capital ratio (%)3	20.4		20.0		20.9
Leverage ratio (%)3	5.3		5.5		5.6
High-quality liquid assets (liquidity value) ($bn)	601		567		513
Liquidity coverage ratio (%)	150		154		142
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions)	20,206		19,981		19,960
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	20,280		20,059		20,065
Average basic number of $0.50 ordinary shares outstanding (millions)	20,158		19,896		19,972
Dividend per ordinary share (in respect of the period) ($)	0.51		0.51		0.51

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•	We maintain a privileged position in high-growth markets, particularly in Asia and the Middle East.

•	We have a strong wealth business with client assets of $1.4tn, supported by a premier international wealth proposition and leading, full-scale retail banking operations in Hong Kong, the UK and Mexico.

•	We are a leading trade and payments and cash management bank with $17bn of transaction banking adjusted revenue. This is supported by our international network of 64 markets, which covers approximately 90% of global GDP, trade and capital flows.

•	We maintain a strong capital, funding and liquidity position.

•	We operate a diversified business model with low earnings volatility.

•	We have a foundation for sustaining our dividend and a strong capacity for distribution to shareholders.

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•	For further details on our business model, see page 5.

•	For further details on our principal risks and how they are managed, see pages 38 to 40.

•	For further details on Board diversity beyond gender, see page 208.

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		Target	Performance in 2019
	Environmental
	Sustainable finance and investment	Provide and facilitate1 $100bn by the end of 2025	$52.4bn cumulative progress since 20171
	Reduce operational CO2 emissions	2.0 tonnes used per full-time equivalent (‘FTE’) by the end of 20202	2.26 tonnes used per FTE2
	Climate-related disclosures	Continued implementation of the Financial Stability Board’s	We published our 3rd TCFD,
		TCFD	which can be found on pages 22 and 23
	Social
	Customer satisfaction	Customer satisfaction improvements in 8 scale markets3	6 RBWM markets sustained top-three rank and/or improved in customer satisfaction3
			4 CMB markets sustained top-three rank and/or improved in customer satisfaction3
	Employee advocacy	69% of employees recommending HSBC as a great place to work by the end of 20194	66% of employees would recommend HSBC as a great place to work4 (2018: 66%)
	Employee gender diversity	30% women in senior leadership roles by the end of 20205	29.4% women in senior leadership roles5
	Governance
	Achieve sustained delivery of global conduct outcomes and effective financial crime risk management	98% of staff to complete annual conduct training	98.2% of staff completed conduct training in 2019

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Employee Snapshot results

	2019	2018
I am seeing the positive impact of our strategy	58%	67%
I feel confident about HSBC’s future	66%	75%
I trust the senior leadership in my area	65%	64%
I am proud to say I work for HSBC	74%	76%
I would recommend this company as a great place to work	66%	66%
Conditions in my job allow me to be as productive as I can be	63%	65%
I feel able to speak up when I see behaviour which I consider to be wrong	74%	74%
I believe HSBC is genuine in its commitment to encourage colleagues to speak up	72%	74%

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1	Combined executive committee and direct reports includes HSBC executive Directors, Group Managing Directors, Group Company Secretary and Chief Governance Officer and their direct reports (excluding administrative staff).

2	Senior leadership refers to employees performing roles classified as 0, 1, 2 and 3 in our global career band structure.

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Facilitation	Financing	Investments
We provide advisory services to facilitate the flow of capital and to provide access to capital markets. Products include: green, social and sustainable bonds; finance advisory mandates; short-term debt; debt capital markets; and equity capital markets.	We provide lending for specific finance activities. Products include project finance (e.g. financing of renewable infrastructure projects), and green loans (e.g. financing of eligible green products).	We invest in funds that are defined as socially responsible investments (‘SRI’). These funds primarily avoid investing in companies that can have a negative impact on society, such as tobacco or gambling. Some of the SRI funds are investing in companies that aim to reduce the detrimental impacts that climate change can create, while others have defined transition strategies. These transition strategies may include using alternative energy, clean technology and developing sustainable products and/or seeking to increase the beneficial impacts on our society, such as health, housing and clean water.
Cumulative progress1 ($bn) 38.0	Cumulative progress1 ($bn) 12.0	Cumulative progress ($bn) 2.4
2019 highlights - We ranked number two in Dealogic’s green, social and sustainability bonds league table and number one in the sustainability bonds table. - We supported several green bond issuances that were market firsts in the public and private sectors, including as joint lead manager for the inaugural sovereign green bonds for Hong Kong, Chile and the Republic of Ireland.	2019 highlights - HSBC UK aligned its green lending offering to the Loan Market Association’s green loan principles. The range, which is available for SMEs through to large corporates, includes a green loan, a UK industry first green revolving credit facility and a green hire purchase, lease and asset loan. - We acted as a mandated lead arranger in the refinancing of the Beatrice offshore wind farm off the north-east coast of Scotland.	2019 highlights - HSBC Global Asset Management announced the creation of a new green bond fund, the HSBC Real Economy Green Investment Opportunity GEM Bond Fund. The fund’s aim is to enable investors to achieve real economy impact to deliver against the Paris Agreement and SDGs. - We achieved a rating of A+/A using the United Nations Principles of Responsible Investment (‘UN PRI’).
	For further details on the refinancing of the Beatrice offshore wind farm, see page 46.

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*	Green: Projects that align to the eligible green project category as defined by the International Capital Markets Association’s Green Bond Principles, or a company whose core business operates in one of the categories.

*	Social: Projects that align to the eligible social project category as defined by the International Capital Markets Association.

*	Sustainability: Projects that mix green and social purposes that align to the above principles.

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Transition risk sector	Oil and gas	Building and construction	Chemicals	Automotive	Power and utilities	Metals and mining	Total
% of total wholesale loans and advances to customers and banks in 20191,2,3	≤ 3.8%	≤ 3.9%	≤ 3.9%	≤ 3.2%	≤ 3.2%	≤ 2.7%	≤ 20.6%
% of total wholesale loans and advances to customers and banks in 20181,2,3	≤ 3.9%	≤ 3.8%	≤ 3.9%	≤ 3.4%	≤ 3.0%	≤ 2.8%	≤ 20.8%

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Memberships

Founding member, the Climate Finance Leadership Initiative

Founding member, Chapter Zero: The Directors’ Climate Forum

Member, the FCA and PRA’s Climate Financial Risk Forum (‘CFRF’)

Chair, climate risk working group of the CFRF

For further details of our sustainability-related memberships, see www.hsbc.com/our-approach/esg-information/sustainability-memberships.

Table 2: Customers’ questionnaire responses and pilot carbon intensity metrics

	Oil and gas		Building and construction		Chemicals		Automotive		Power and utilities	Metals and mining	Total
Proportion of sector for which questionnaires were completed4	33	%	37	%	27	%	39	%	30%	44%	34%
Proportion of questionnaire responses that reported either having a board policy or a management plan4	84	%	51	%	85	%	64	%	94%	62%	72%
Sector weight as proportion of high transition risk sector4	18	%	19	%	19	%	15	%	15%	13%	100%
Pilot as % of total sector4	38	%	41	%	30	%	52	%	42%	46%	41%
Proportion of pilot that report carbon intensity metric through CDP4	49	%	53	%	38	%	48	%	38%	30%	44%
Weighted average carbon emissions per million dollars of revenue (total client emissions/revenue weighted by exposure)4,5	688		408		517		301		7,235	787

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•	the US Foreign Account Tax Compliance Act (‘FATCA’);

•	the OECD Standard for Automatic Exchange of Financial Account Information (the ‘Common Reporting Standard’);

•	the Capital Requirements (Country by Country Reporting) Regulations;

•	the OECD Base Erosion and Profit Shifting (‘BEPS’) initiative; and

•	the UK legislation on the corporate criminal offence (‘CCO’) of failing to prevent the facilitation of tax evasion.

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•	a $7.3bn impairment of goodwill, primarily $4.0bn related to our GB&M business, reflecting lower long-term economic growth rate assumptions and the planned reshaping of this business, and $2.5bn in CMB in Europe, reflecting lower long-term economic growth rate assumptions;

•	customer redress programme costs of $1.3bn, of which $1.2bn related to payment protection insurance (‘PPI’), mainly driven by a higher than expected increase in the volume of complaints prior to the deadline in August 2019, compared with $0.1bn in 2018; and

•	restructuring and other related costs of $0.8bn, which included $753m of severance costs, related to cost efficiency measures across our global business and functions. We expect annualised cost savings from these measures to be approximately equal to 2019 severance costs.

•	the non-recurrence of settlements and provisions in connection with legal and regulatory matters of $0.8bn in 2018.

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$0.30

(2018: $0.63)

Reported results	2019 $m		2018 $m		2017 $m
Net operating income before change in expected credit losses and other credit impairment charges (‘revenue’)	56,098		53,780		51,445
ECL/LICs	(2,756	)	(1,767	)	(1,769	)
Net operating income	53,342		52,013		49,676
Total operating expenses	(42,349	)	(34,659	)	(34,884	)
Operating profit	10,993		17,354		14,792
Share of profit in associates and joint ventures	2,354		2,536		2,375
Profit before tax	13,347		19,890		17,167
Tax expense	(4,639	)	(4,865	)	(5,288	)
Profit after tax	8,708		15,025		11,879

•	the year-on-year effects of foreign currency translation differences; and

•	the effect of significant items that distort year-on-year comparisons, which are excluded in order to improve understanding of the underlying trends in the business.

Adjusted results<>	2019 $m		2018 $m			Adverse $m		Favourable $m		%
Net operating income before change in expected credit losses and other credit impairment charges (‘revenue’)	55,409		52,331					3,078		6	%
ECL/LICs	(2,756	)	(1,689	)		(1,067	)			(63	)%
Total operating expenses	(32,795	)	(31,906	)		(889	)			(3	)%
Operating profit	19,858		18,736					1,122		6	%
Share of profit in associates and joint ventures	2,354		2,446			(92	)			(4	)%
Profit before tax	22,212		21,182					1,030		5	%

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	2019 $m		2018 $m
Reported profit before tax	13,347		19,890
Currency translation	—		(520	)
Significant items:	8,865		1,812
– costs of structural reform	158		361
– customer redress programmes	1,444		93
– disposals, acquisitions and investment in new businesses	(768	)	165
– fair value movements on financial instruments	(84	)	100
– goodwill impairment	7,349		—
– past service costs of guaranteed minimum pension benefits equalisation	—		228
– restructuring and other related costs	827		66
– settlements and provisions in connection with legal and regulatory matters	(61	)	816
– currency translation on significant items	—		(17	)
Adjusted profit before tax	22,212		21,182

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In RBWM, revenue increased by $2.0bn or 9%, mainly in Retail Banking, reflecting growth in deposit and lending balances, primarily in Hong Kong and the UK. Margins remained stable compared with 2018, although they began to contract during the second half of 2019. In Wealth Management, revenue growth reflected higher insurance manufacturing revenue, which included a favourable movement in market impacts of $0.5bn, as 2019 recorded a favourable movement of $0.1bn compared with an adverse movement of $0.3bn in 2018, and more favourable actuarial assumption changes of $0.2bn. These increases were partly offset by lower investment distribution revenue, mainly in Hong Kong, reflecting less favourable market conditions compared with 2018.

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In CMB, revenue increased by $0.8bn or 6%, with growth in all major products and regions. Growth was primarily in GLCM, particularly in Hong Kong from wider deposit margins, and in the UK and Latin America from wider margins and growth in average deposit balances. While deposit margins were wider than in 2018, they began to contract during the second half of 2019 following interest rate cuts. Revenue increased in C&L due to balance sheet growth in most markets, partly offset by margin compression.

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In GB&M, revenue decreased by $0.1bn or 1%. This reflected a reduction in revenue in Global Markets and Global Banking as economic uncertainty resulted in lower market activity, primarily in Europe. These decreases were partly offset by a strong performance in GLCM, GTRF and Securities Services businesses as we continued to grow balances. Revenue included a net favourable movement of $0.2bn on credit and funding valuation adjustments.

•	In GPB, revenue increased by $0.1bn or 5%, mainly reflecting growth in investment revenue and lending revenue, primarily in Asia and Europe. These increases were partly offset by lower deposit revenue, notably in the US and Europe.

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In Corporate Centre, revenue increased by $0.2bn. This was mainly in Central Treasury from favourable fair value movements in 2019 of $147m relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives (2018: $136m adverse) and from a non-repeat of a 2018 swap mark-to-market loss on a bond reclassification of $177m, although there was lower revenue in Balance Sheet Management (‘BSM’).

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Adjusted results<>	2019 $m		2018 $m		2017 $m		2019 vs 2018
							$m		%
Net operating income	23,400		21,374		19,708		2,026		9
ECL/LICs	(1,390	)	(1,134	)	(941	)	(256	)	(23	)
Operating expenses	(14,017	)	(13,255	)	(12,386	)	(762	)	(6	)
Share of profit in associates and JVs	55		33		12		22		67
Profit before tax	8,048		7,018		6,393		1,030		15
RoTE excluding significant items and UK bank levy (%)	20.5		21.0		21.6

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In Retail Banking, revenue was up $1.0bn or 7%, driven by growth in Hong Kong, Latin America and the UK, partly offset by lower revenue in the US. The increase in revenue reflected deposit balance growth of $40bn or 6%, particularly in Hong Kong, the UK and North America and lending balance growth of $27bn or 7%, notably from mortgages in the UK and Hong Kong. A favourable interest rate environment contributed to higher retail margins in the first half of 2019, which began to contract in the second half following policy rate reductions. Overall, margins remained stable compared with 2018.

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In Wealth Management, revenue of $6.7bn was up $0.8bn or 13%. This increase reflected higher life insurance manufacturing revenue (up $0.8bn or 51%), primarily in Hong Kong, France and mainland China. This was driven by favourable market impacts of $0.5bn as 2019 recorded a favourable movement of $0.1bn, compared with an adverse movement of $0.3bn in 2018. This increase also reflected more favourable actuarial assumption changes of $0.2bn and growth in the value of new business written (up $0.1bn or 12%). The increase in life insurance manufacturing revenue was partly offset by lower investment distribution revenue (down $0.1bn or 2%), mainly in Hong Kong, driven by lower fees from less favourable market conditions compared with 2018 and a change in the product mix of clients’ investments to lower risk and lower margin products.

Management view of adjusted revenue<>	2019 $m		2018 $m		2017 $m		2019 vs 2018
							$m		%
Retail Banking	15,840		14,866		13,107		974		7
Current accounts, savings and deposits	9,492		8,356		6,146		1,136		14
Personal lending	6,348		6,510		6,961		(162	)	(2	)
– mortgages	1,610		1,867		2,301		(257	)	(14	)
– credit cards	2,893		2,804		2,814		89		3
– other personal lending	1,845		1,839		1,846		6		—
Wealth Management	6,746		5,986		6,103		760		13
– investment distribution	3,269		3,324		3,229		(55	)	(2	)
– life insurance manufacturing	2,455		1,625		1,835		830		51
– asset management	1,022		1,037		1,039		(15	)	(1	)
Other1	814		522		498		292		56
Net operating income2	23,400		21,374		19,708		2,026		9

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Adjusted results<>	2019 $m		2018 $m		2017 $m		2019 vs 2018
							$m		%
Net operating income	15,292		14,465		12,883		827		6
ECL/LICs	(1,184	)	(712	)	(468	)	(472	)	(66	)
Operating expenses	(6,801	)	(6,275	)	(5,770	)	(526	)	(8	)
Share of profit in associates and JVs	—		—		—		—		—
Profit before tax	7,307		7,478		6,645		(171	)	(2	)
RoTE excluding significant items and UK bank levy (%)	12.4		14.0		14.0

•	In GLCM, revenue was $0.3bn or 6% higher, with growth across all regions except North America. The increase was mainly in Hong Kong, primarily reflecting wider margins, and in Latin America and the UK from wider margins and growth in average deposit balances. While deposit margins were wider than in 2018, they began to contract during the second half of 2019 following interest rate cuts.

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•	In C&L, revenue growth of $0.3bn or 5% reflected continued lending growth in all regions, partly offset by the effects of margin compression.

•	In GTRF, revenue increased by $26m or 1%, mainly from wider margins in Asia, partly offset by lower balances in Hong Kong. Revenue increased across all other regions, primarily reflecting balance growth.

•	Revenue growth in ‘Other’ products included net gains on the revaluation of shares of $43m in Europe, and a disposal gain of $24m in Latin America.

•	Revenue across our three main products was adversely affected by customer redress provisions of $0.1bn in the UK.

Management view of adjusted revenue<>	2019 $m		2018 $m		2017 $m		2019 vs 2018
							$m		%
Global Trade and Receivables Finance	1,833		1,807		1,782		26		1
Credit and Lending	5,441		5,168		4,960		273		5
Global Liquidity and Cash Management	5,978		5,647		4,644		331		6
Markets products, Insurance and Investments and Other1	2,040		1,843		1,497		197		11
Net operating income2	15,292		14,465		12,883		827		6

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Adjusted results<>	2019 $m		2018 $m		2017 $m		2019 vs 2018
							$m		%
Net operating income	14,916		15,025		14,823		(109	)	(1	)
ECL/LICs	(153	)	31		(439	)	(184	)	(594	)
Operating expenses	(9,417	)	(9,170	)	(8,709	)	(247	)	(3	)
Share of profit in associates and JVs	—		—		—		—		—
Profit before tax	5,346		5,886		5,675		(540	)	(9	)
RoTE excluding significant items and UK bank levy (%)	9.2		10.5		10.6		—

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•	Global Markets revenue decreased by $0.5bn or 8%, driven by low market volatility and reduced client activity due to ongoing economic uncertainty, as well as continued spread compression.

•	Global Banking revenue decreased $0.1bn or 2%, reflecting a non-repeat of gains in 2018 on corporate lending restructuring, lower fees from reduced event-driven activity and the impact of tightening credit spreads on portfolio hedges. These reductions were partly offset by higher lending revenue as we grew balances, notably in Asia.

•	GLCM revenue increased by $0.2bn or 7%, primarily driven by higher average deposit balances in Asia and Latin America, and wider margins in the UK from an interest rate rise in 2018, partly offset by lower revenue in the US due to lower average balances and interest rate decreases.

•	Securities Services revenue rose by $0.1bn or 6%, mainly from higher interest rates in Hong Kong and the UK, as well as increased fee income reflecting higher assets under custody (up 6%) and assets under management (up 9%), although this was partly offset by margin compression.

•	GTRF revenue increased by 3% from growth in all regions except Europe, particularly from wider spreads and higher fees in Asia, while we continued to reduce RWAs in all regions.

Management view of adjusted revenue<>	Footnotes	2019 $m		2018 $m		2017 $m		2019 vs 2018
								$m		%
Global Markets		5,763		6,274		6,800		(511	)	(8	)
– FICC		4,770		5,093		5,544		(323	)	(6	)
Foreign Exchange		2,690		2,916		2,556		(226	)	(8	)
Rates		1,465		1,432		2,071		33		2
Credit		615		745		917		(130	)	(17	)
– Equities		993		1,181		1,256		(188	)	(16	)
Securities Services		2,030		1,922		1,730		108		6
Global Banking		3,905		4,005		3,942		(100	)	(2	)
Global Liquidity and Cash Management		2,753		2,583		2,169		170		7
Global Trade and Receivables Finance		808		787		743		21		3
Principal Investments		260		216		319		44		20
Credit and funding valuation adjustments	1	44		(181	)	(262	)	225		124
Other	2	(647	)	(581	)	(618	)	(66	)	(11	)
Net operating income	3	14,916		15,025		14,823		(109	)	(1	)

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Adjusted results<>	Footnotes	2019 $m		2018 $m		2017 $m		2019 vs 2018
								$m		%
Net operating income		1,848		1,757		1,698		91		5
ECL/LICs		(22	)	7		(17	)	(29	)	(414	)
Operating expenses		(1,424	)	(1,425	)	(1,384	)	1		—
Profit before tax		402		339		297		63		19
RoTE excluding significant items and UK bank levy (%)		11.1		9.9		7.1

•	Investment revenue increased by $71m or 10%, mainly in Asia and Europe from higher brokerage revenue, and in Europe from increased annuity fee income as a result of growth in discretionary and advisory client mandates.

•	Lending revenue was $41m or 11% higher, with growth in most of our markets, notably from increased marketable securities-backed lending.

•	Deposit revenue fell by $29m or 6%, mainly in the US from margin compression and the impact of repositioning, and in Europe from margin compression. This was partly offset by balance growth and wider margins in Asia.

Management view of adjusted revenue<>	Footnotes	2019 $m		2018 $m		2017 $m		2019 vs 2018
								$m		%
Investment revenue		777		706		690		71		10
Lending		424		383		385		41		11
Deposit		462		491		400		(29	)	(6	)
Other		185		177		223		8		5
Net operating income	1	1,848		1,757		1,698		91		5

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•	favourable fair value movements relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives of $147m in 2019, compared with adverse movements of $136m in 2018; and

•	the non-recurrence of a $177m loss in 2018 arising from adverse swap mark-to-market movements following a bond reclassification under IFRS 9 ‘Financial Instruments’.

•	lower revenue in BSM reflecting a fall in net interest income as our holdings of low yielding, liquid assets increased.

Management view of adjusted revenue<>	Footnotes	2019 $m		2018 $m		2017 $m		2019 vs 2018
								$m		%
Central Treasury		859		511		1,710		348		68
- Balance Sheet Management	1	2,292		2,402		2,663		(110	)	(5	)
- Holdings net interest expense		(1,325	)	(1,337	)	(888	)	12		1
- Valuation differences on long-term debt and associated swaps		147		(313	)	120		460		147
- Other central treasury		(255	)	(241	)	(185	)	(14	)	(6	)
Legacy portfolios		(111	)	(91	)	(29	)	(20	)	(22	)
Other		(795	)	(710	)	(620	)	(85	)	(12	)
Net operating income	2	(47	)	(290	)	1,061		243		84
RoTE excluding significant items and UK bank levy (%)		(3.5	)%	(5.7	)%	(5.2	)%

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•	risks that we accept as part of doing business, such as credit risk, market risk, and capital and liquidity risk, which are controlled through both active risk management and our risk appetite;

•	risks that we incur as part of doing business, such as non-financial risks, which are actively managed to remain below an acceptable appetite; and

•	risks for which we have zero tolerance, such as knowingly engaging in activities where foreseeable reputational risk has not been considered.

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	Risk	Trend	Mitigants
	Externally driven
	Economic outlook and capital flows	^	We actively monitor our credit and trading portfolios, in particular the UK and Hong Kong, given the developments in 2019. We undertake stress tests to identify sectors and customers that may come under stress due to: escalating tariffs and other trade restrictions; an economic slowdown in the eurozone, Hong Kong and mainland China; and adverse outcomes of trade negotiations following the UK’s exit from the EU. In light of the coronavirus outbreak, we are reviewing our credit portfolios and operations to help maintain continued business resilience.
	Geopolitical risk	^	We continually assess the impact of geopolitical events in Asia-Pacific, Europe and the Middle East on our businesses and exposures, and take steps to mitigate them, where required, to help ensure we remain within our risk appetite. We strengthen physical security at our premises where the threat landscape is heightened.
	The credit cycle	^	We undertake detailed reviews of our portfolios and proactively assess customers and sectors likely to come under stress as a result of geopolitical or macroeconomic events, in particular in the UK and Hong Kong, reducing limits where appropriate.
	Cyber threat and unauthorised access to systems	>	We continue to strengthen our cyber-control framework and improve our resilience and cybersecurity capabilities, including: threat detection and analysis; access control; payment systems controls; data protection; network controls; and back-up and recovery. We actively engage in national cyber resilience programmes as we execute our cybersecurity maturity improvement programme.
	Regulatory developments including conduct, with adverse impact on business model and profitability	>	We engage with regulators to help ensure new regulatory requirements such as the Basel III programme are effectively implemented, and work with them in relation to their investigations into historical activities.
	Financial crime risk environment	>	In 2019, we continued to improve our financial crime risk management capabilities and to integrate those capabilities into our day-to-day operations. We are investing in the next generation of tools to fight financial crime through the application of advanced analytics and artificial intelligence.
	Ibor transition	^	We are focused on developing alternative rate products, and the supporting processes and systems, to replace Ibors to make them available to our customers. Our programme is concurrently developing the capability to transition, through repapering, outstanding Libor and Eonia contracts. We continue to engage with industry participants and the official sector to support an orderly transition.
	Climate-related risks	^	We continue to incorporate climate-related risk, both physical and transition, into how we manage and oversee risks. Our Board-approved risk appetite statement contains a qualitative statement, which will be further enhanced in 2020. Our risk management priorities focus on assessing the transition and physical risk in our wholesale credit portfolio, reviewing retail mortgage exposures in respect of natural hazard risk, and developing scenarios for internal use in risk management, planning and bottom-up stress testing. We continue to proactively engage our customers, investors and regulators in order to support the transition to a low-carbon economy, in particular with regard to compiling the related data and disclosures.
	Internally driven
	IT systems infrastructure and resilience	>	We actively monitor and improve service resilience across our technology infrastructure. We are enhancing the end-to-end mapping of key processes, and strengthening our problem diagnosis/resolution and change execution capabilities to reduce service disruption to our customers.
	Risks associated with workforce capability, capacity and environmental factors with potential impact on growth	>	We continue to monitor workforce capacity and capability requirements in line with our published growth strategy and any emerging issues in the markets in which we operate. These issues can include changes to immigration and tax rules as well as industry-wide regulatory changes.
	Risks arising from the receipt of services from third parties	>	We have set up a third-party risk management programme so that we can better identify, understand, mitigate and manage the risks that arise from the outsourcing of services. The programme aims to ensure adherence to our internal third-party risk policy and framework, which seeks to create a consistent approach to the understanding and effective management of the risks associated with our third-party service providers. The programme was established to oversee and monitor this work through to conclusion in the second half of 2020.
	Enhanced model risk management expectations	^	We continue to strengthen the second line of defence Model Risk Management function and model oversight. We have Model Risk Committees in our key regions, an enhanced model risk governance framework and we include model risk management as a standing agenda item in each of the global business risk management meetings.
	Data management	>	We continue to enhance and advance our data insights, data aggregation, reporting and decisions. We carry out ongoing improvement and investments in data governance, data quality, data privacy, data architecture, machine learning and artificial intelligence capabilities.

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•	We seek to ensure pay is fair, appropriate and free from bias.

•	We reward and recognise sustainable performance and values-aligned behaviour.

•	We pay competitive, simple and transparent compensation packages.

•	We support a culture of continuous feedback through manager and employee empowerment.

Mechanisms	Outcomes
Behavioural rating for all employees	Subject to compliance with local labour laws, employees receive a behaviour rating based on their adherence to HSBC Values to ensure performance is judged not only on what is achieved, but also how it is achieved.
Performance management	Performance objectives define what, how and when our people need to achieve, in line with business and role priorities. Objectives are initially created by our employees at the start of the year. Objectives are tracked and updated by employees throughout the year as priorities change.
	Performance management for all our people is underpinned by our ‘Everyday Performance and Development’ programme. This involves frequent, holistic and meaningful conversations throughout the year between a manager and employee. The conversations provide an opportunity to discuss progress and provide feedback. They also help to recognise behaviours, identify any support that may be needed and address issues that could be affecting the employee’s well-being.
Conduct recognition	The employee recognition and conduct framework provides a set of guidelines designed to reward exceptional conduct and handle any conduct breaches consistently across the Group.
	Rewarding positive conduct may take the form of use of our global recognition programme ‘At Our Best’, or via positive adjustments to performance and behaviour ratings and variable pay.
	The framework also provides guidance on applying negative adjustments to performance and behaviour ratings and to variable pay, alongside disciplinary sanctions, where conduct breaches have been identified.

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7

An LTI award was made in February 2017 (in respect of 2016) at a share price of £6.503 for which the performance period ended on 31 December 2019. The value has been computed based on a share price of £5.896, the average share price during the three-month period to 31 December 2019. This includes dividend equivalents of £237,030, equivalent to 40,202 shares at a share price of £5.896. See the ‘Determining executive Directors’ performance’ section of the Directors’ remuneration report for details of the assessment outcomes.