Q3 2023 HSBC Holdings PLC Earnings Call

October 30, 2023

Georges Elhedery: Our purpose, ambition, values, and strategy have been helping us drive the results that I am going to talk about today. Some highlights to begin with. First of all, the year-to-date performance clearly demonstrates that we have had three consecutive strong quarters, reflecting the successful execution of our strategy. Year-to-date reported profit before tax was $29.4 billion, which is an increase of $17.4 billion on the same period last year, supported by higher interest rates and enabled by our strong balance sheet and the nonrecurrence of notable items. We have delivered an annualized return on tangible equity of 17.1%, excluding strategic transactions. For the avoidance of doubt, these transactions are the reversal earlier this year of the impairments relating to the planned sale of our retail banking operations in France and the gain on acquisition from SVB UK.

Georges Elhedery: This ambition, values and strategy has been helping us drive the results that I am going to talk about today.

Yeah.

Georges Elhedery: Some highlights to begin with, first of all the year to date performance clearly demonstrates that we have had three consecutive strong quarters, reflecting the successful execution of our strategy, year to date reported profit before tax was $29.4 billion dollars, which is an increase of $17.4 billion dollars on the same period last year supported by higher interest rates and enabled by our strong balance sheet and the non recurrence of notable items. We have delivered an annualized return on tangible equity of 17, 1% excluding strategic transactions. For the avoidance of doubt. These transactions are the reversal earlier this year of the impairments relating to the planned sale of our. Our retail banking operations in France. And the gain on acquisition from SPD U K. Okay. We've announced another share buyback of up to $3 billion, bringing total buybacks announced this year up to $7. And we've announced three quarterly dividends, which totaled 30 cents per share. Yeah.

The year to date performance clearly demonstrates that we have had three consecutive strong quarters, reflecting the successful execution of our strategy.

Year to date reported profit before tax was $29 $4 billion, which is an increase of $17 $4 billion on the same period last year supported by higher interest rates and enabled by our strong balance sheet and the non recurrence of notable items.

We have delivered an annualized return on tangible equity of 17, 1% excluding strategic transactions.

Georges Elhedery: We have delivered an annualized return on tangible equity of 17.1% excluding strategic transactions, for the avoidance of doubt, these transactions are the reversal earlier this year of the impairments relating to the planned sale of our retail banking operations in France and the gain on acquisition from SVB UK, We've announced another share buyback of up to $3 billion dollars, bringing total buybacks announced this year up to $7 billion dollars and we've announced three quarterly dividends, which totaled 30 cents per share. Yeah. We have also exhibited good growth across our businesses. Wholesale transaction banking revenue was up 50% year to date, primarily due to higher rates and reflecting the strength of our deposit franchise. When it's had another good quarter. While balances were up by 12% compared to the same quarter of last year. And we're also very pleased that we attracted $34 billion of net invested assets in the quarter. Bringing the rolling 12 months total of $277 billion, which is a strong performance and testament to our strategy. The planned acquisition of cities wealth business in mainland China will also help accelerate our growth plans for this business. And our two home markets of Hong Kong and the U K. We are also seeing good growth areas. In Hong Kong insurance, New business, Yes, N was up 40% year on year. And our mortgage books in Asia, and the U K grew by a total of $11 billion compared to the third quarter of last year. Let me now move on to the third quarter numbers. Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%. On last year's third quarter on a constant currency basis. This was driven firstly by group net interest income of $9 $2 billion.

For the avoidance of doubt.

These transactions are the reversal earlier this year of the impairments relating to the planned sale of our.

Our retail banking operations in France.

And the gain on acquisition from SPD U K.

Okay.

Georges Elhedery: We've announced another share buyback of up to $3 billion, bringing total buybacks announced this year up to $7 billion. We've announced three quarterly dividends, which total $0.30 per share. We have also exhibited good growth across our businesses. Wholesale transaction banking revenue was up 50% year-to-date, primarily due to higher rates and reflecting the strength of our deposit franchise. Wealth had another good quarter. Wealth balances were up by 12% compared to the same quarter of last year. We are also very pleased that we attracted $34 billion of net new invested assets in the quarter, bringing the rolling twelve-month total to $77 billion, which is a strong performance and testament to our strategy. The planned acquisition of Citi's wealth business in mainland China will also help accelerate our growth plans for this business.

Georges Elhedery: We've announced another share buyback of up to $3 billion dollars, bringing total buybacks announced this year up to $7 billion dollars and we've announced three quarterly dividends, which totaled 30 cents per share, We have also exhibited good growth across our businesses, Wholesale transaction banking revenue was up 50% year to date, primarily due to higher rates and reflecting the strength of our deposit franchise. When it's had another good quarter. While balances were up by 12% compared to the same quarter of last year. And we're also very pleased that we attracted $34 billion of net invested assets in the quarter. Bringing the rolling 12 months total of $277 billion, which is a strong performance and testament to our strategy. The planned acquisition of cities wealth business in mainland China will also help accelerate our growth plans for this business. And our two home markets of Hong Kong and the U K. We are also seeing good growth areas. In Hong Kong insurance, New business, Yes, N was up 40% year on year. And our mortgage books in Asia, and the U K grew by a total of $11 billion compared to the third quarter of last year. Let me now move on to the third quarter numbers. Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%. On last year's third quarter on a constant currency basis. This was driven firstly by group net interest income of $9 $2 billion.

We've announced another share buyback of up to $3 billion, bringing total buybacks announced this year up to $7.

And we've announced three quarterly dividends, which totaled 30 cents per share.

Yeah.

We have also exhibited good growth across our businesses.

Wholesale transaction banking revenue was up 50% year to date, primarily due to higher rates and reflecting the strength of our deposit franchise.

Georges Elhedery: Wealth had another good quarter, wealth balances were up by 12% compared to the same quarter of last year and we're also very pleased that we attracted $34 billion dollars of net new invested assets in the quarter, bringing the rolling 12 months total of $277 billion dollars, which is a strong performance and testament to our strategy. The planned acquisition of cities wealth business in mainland China will also help accelerate our growth plans for this business. And our two home markets of Hong Kong and the U K. We are also seeing good growth areas. In Hong Kong insurance, New business, Yes, N was up 40% year on year. And our mortgage books in Asia, and the U K grew by a total of $11 billion compared to the third quarter of last year. Let me now move on to the third quarter numbers. Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%. On last year's third quarter on a constant currency basis. This was driven firstly by group net interest income of $9 $2 billion.

When it's had another good quarter.

While balances were up by 12% compared to the same quarter of last year.

And we're also very pleased that we attracted $34 billion of net invested assets in the quarter.

Bringing the rolling 12 months total of $277 billion, which is a strong performance and testament to our strategy.

Georges Elhedery: The planned acquisition of Citi's wealth business in mainland China will also help accelerate our growth plans for this business. And our two home markets of Hong Kong and the U K. We are also seeing good growth areas. In Hong Kong insurance, New business, Yes, N was up 40% year on year. And our mortgage books in Asia, and the U K grew by a total of $11 billion compared to the third quarter of last year. Let me now move on to the third quarter numbers. Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%. On last year's third quarter on a constant currency basis. This was driven firstly by group net interest income of $9 $2 billion.

Georges Elhedery: The planned acquisition of Citi's wealth business in mainland China will also help accelerate our growth plans for this business.

The planned acquisition of cities wealth business in mainland China will also help accelerate our growth plans for this business.

Georges Elhedery: In our two home markets of Hong Kong and the U.K. We are also seeing good growth areas, in Hong Kong insurance new business CSM was up 40% year on year and our mortgage books in Asia, and the U.K. grew by a total of $11 billion dollars compared to the third quarter of last year. Let me now move on to the third quarter numbers. Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%. On last year's third quarter on a constant currency basis. This was driven firstly by group net interest income of $9 $2 billion.

Georges Elhedery: In our two home markets of Hong Kong and the UK, we are also seeing good growth areas. In Hong Kong, insurance new business CSM was up 40% year on year. Our mortgage books in Asia and the UK grew by a total of $11 billion compared to the Q3 of last year. Let me now move on to the Q3 numbers. Revenue was $16.2 billion, which was up $4.6 billion or 40% on last year's Q3 on a constant currency basis. This was driven firstly by group net interest income of $9.2 billion, which was up by $1.3 billion on the same period last year.

And our two home markets of Hong Kong and the U K. We are also seeing good growth areas.

In Hong Kong insurance, New business, Yes, N was up 40% year on year.

And our mortgage books in Asia, and the U K grew by a total of $11 billion compared to the third quarter of last year.

Georges Elhedery: Let me now move on to the third quarter numbers, revenue was $16.2 billion dollars, which was up $4.6 billion of 40% on last year's third quarter on a constant currency basis, this was driven firstly by group net interest income of $9.2 billion dollars. Which was up by $1.3 billion dollars from the same period last year and secondly, non-NII was $6.9 billion dollars up by $3.3 billion dollars primarily due to, first, the non-recurrence of a $2.5 billion impairment in last year's third quarter relating to the planned sale of our retail banking operations in France. Second. One 6 billion or higher revenue offset into non NII from the central cost of funding, Japan EM trading activity. And three offset by poor. Not $6 billion of treasury disposal losses taken for structural hedging and risk management purposes or balance sheet. Banking NII. $11 $5 billion was up $2 $8 billion on last year's third quarter and broadly stable on the second quarter. Expected credit losses of $1 $1 billion were broadly stable on the same period last year. And included in North of $5 billion charge in relation to our mainland China commercial real estate portfolio booked in Hong Kong. Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend a higher performance related pay accrual. And costs from HSBC innovation banking. Lending balances and deposits were both broadly stable. And our CET one ratio was 14, 9% an increase of 20 basis points on the second quarter. Finally, we announced the third quarter. We announced the third consecutive quarter of strong capital returns. With a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February. The next slide shows that our global businesses all performed well. Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Let me now move on to the third quarter numbers.

Revenue was up was revenue was $16 $2 billion, which was up four $6 billion or 40%.

On last year's third quarter on a constant currency basis.

This was driven firstly by group net interest income of $9 $2 billion.

Which was up by $1 $3 billion from the same period last year.

Georges Elhedery: Secondly, non-NII was $6.9 billion, up by $3.3 billion, primarily due to, first, the nonrecurrence of the $2.5 billion impairment in last year's Q3 relating to the planned sale of our retail banking operations in France, second, $1.6 billion higher revenue offsetting to non-NII from the central cost of funding GBM trading activity, and third, offset by $0.6 billion of treasury disposal losses taken for structural hedging and risk management purposes for our balance sheet. Banking NII of $11.5 billion was up $2.8 billion on last year's Q3 and broadly stable on the Q2.

And secondly, non NII was $6 $9 billion up by $3 $3 billion.

Primarily due to first the non recurrence of a $2 5 billion impairment in last year's third quarter relating to the planned sale of our retail banking operations in France.

Georges Elhedery: Second, a $1.6 billion or higher revenue offset into non-NII from the central cost of funding GBM trading activity and three, offset by $0.6 billion dollars of treasury disposal losses taken for structural hedging and risk management purposes for our balance sheet. Banking NII. $11 $5 billion was up $2 $8 billion on last year's third quarter and broadly stable on the second quarter. Expected credit losses of $1 $1 billion were broadly stable on the same period last year. And included in North of $5 billion charge in relation to our mainland China commercial real estate portfolio booked in Hong Kong. Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend a higher performance related pay accrual. And costs from HSBC innovation banking. Lending balances and deposits were both broadly stable. And our CET one ratio was 14, 9% an increase of 20 basis points on the second quarter. Finally, we announced the third quarter. We announced the third consecutive quarter of strong capital returns. With a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February. The next slide shows that our global businesses all performed well. Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Second.

One 6 billion or higher revenue offset into non NII from the central cost of funding, Japan EM trading activity.

And three offset by poor.

Not $6 billion of treasury disposal losses taken for structural hedging and risk management purposes or balance sheet.

Georges Elhedery: Banking NII of $11.5 billion dollars was up $2.8 billion dollars on last year's third quarter and broadly stable on the second quarter, expected credit losses of $1.1 billion dollars were broadly stable on the same period last year and included a $0.5 billion dollars charge in relation to our mainland China commercial real estate portfolio booked in Hong Kong. Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend a higher performance related pay accrual. And costs from HSBC innovation banking. Lending balances and deposits were both broadly stable. And our CET one ratio was 14, 9% an increase of 20 basis points on the second quarter. Finally, we announced the third quarter. We announced the third consecutive quarter of strong capital returns. With a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February. The next slide shows that our global businesses all performed well. Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Banking NII.

$11 $5 billion was up $2 $8 billion on last year's third quarter and broadly stable on the second quarter.

Georges Elhedery: Expected credit losses of $1.1 billion were broadly stable on the same period last year and included a $0.5 billion charge in relation to our mainland China commercial real estate portfolio booked in Hong Kong. Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend, a higher performance-related pay accrual, and costs from HSBC Innovation Banking. Lending balances and deposits were both broadly stable, and our CET1 ratio was 14.9%, an increase of 20 basis points on Q2. Finally, we announced the third consecutive quarter of strong capital returns with a quarterly dividend of $0.10 per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February.

Expected credit losses of $1 $1 billion were broadly stable on the same period last year.

And included in North of $5 billion charge in relation to our mainland China commercial real estate portfolio booked in Hong Kong.

Georges Elhedery: Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend, a higher performance related pay accrual and costs from HSBC innovation banking, lending balances and deposits were both broadly stable and our CET1 ratio was 14.9% an increase of 20 basis points on the second quarter. Finally, we announced the third quarter. We announced the third consecutive quarter of strong capital returns. With a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February. The next slide shows that our global businesses all performed well. Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Costs were up 1% in the quarter as lower restructuring costs were offset by higher technology spend a higher performance related pay accrual.

And costs from HSBC innovation banking.

Lending balances and deposits were both broadly stable.

And our CET one ratio was 14, 9% an increase of 20 basis points on the second quarter.

Georges Elhedery: Finally, we announced the third consecutive quarter of strong capital returns with a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion dollars, which we expect to complete before the full year results in February. The next slide shows that our global businesses all performed well. Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Finally, we announced the third quarter.

We announced the third consecutive quarter of strong capital returns.

With a quarterly dividend of 10 cents per share and a further share buyback of up to $3 billion, which we expect to complete before the full year results in February.

Georges Elhedery: The next slide shows that our global businesses all performed well, Wealth and Personal Banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France. Within this well. <unk> was up by 6% as our ongoing investment in that business continued to gain traction. Personal banking also had another good quarter up by 21% due mainly to higher rates. Across commercial banking and global banking markets Global payments services had revenues of more than $43 billion, which was an increase of 56% on the third quarter of 2022. And then our trade business lending balances were up 3%. In the quarter, mainly in Asia, reversing the declining trend from previous quarters. Global banking markets also performed well up by 2%. This included a resilient performance in foreign exchange compared to a strong third quarter last year. And the good performance in securities financing and debt markets. On this next slide reported net interest income was $9 $2 billion, which was broadly stable in the second quarter. Banking NII was 11 $5 billion up $2 $8 billion on last year's third quarter and stable on the second quarter of this year. As a reminder, banking NII in the second quarter was favorably impacted by a north point $4 billion year to date catch up due to methodology changes. Approximately half of which was attributable to the first quarter. Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis. The net interest margin remained broadly stable at 170 basis points. We are not updating our 'twenty to 'twenty three NII guidance. Also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

Georges Elhedery: The next slide shows that our global businesses all performed well. Wealth and Personal Banking had a strong quarter with revenues up 71% or 7%, excluding the impairment taken in last year's Q3 relating to the sale of our retail banking operations in France. Within this, Wealth was up 6% as our ongoing investment in that business continued to gain traction. Personal banking also had another good quarter, up 21%, due mainly to higher rates. Across Commercial Banking and Global Banking and Markets, Global Payment Solutions had revenues of more than $4.3 billion, which was an increase of 56% on Q3 2022. In our trade business, lending balances were up 3% in the quarter, mainly in Asia, reversing the declining trend from previous quarters.

The next slide shows that our global businesses all performed well.

Wealth and personal banking had a strong quarter with revenues up by 71% or by 7% excluding the impairment taken in last year's third quarter relating to the sale of our retail banking operations in France.

Georges Elhedery: Within this, wealth was up by 6% as our ongoing investment in that business continued to gain traction and Personal banking also had another good quarter up by 21% due mainly to higher rates. Across commercial banking and global banking markets Global payments services had revenues of more than $43 billion, which was an increase of 56% on the third quarter of 2022. And then our trade business lending balances were up 3%. In the quarter, mainly in Asia, reversing the declining trend from previous quarters. Global banking markets also performed well up by 2%. This included a resilient performance in foreign exchange compared to a strong third quarter last year. And the good performance in securities financing and debt markets. On this next slide reported net interest income was $9 $2 billion, which was broadly stable in the second quarter. Banking NII was 11 $5 billion up $2 $8 billion on last year's third quarter and stable on the second quarter of this year. As a reminder, banking NII in the second quarter was favorably impacted by a north point $4 billion year to date catch up due to methodology changes. Approximately half of which was attributable to the first quarter. Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis. The net interest margin remained broadly stable at 170 basis points. We are not updating our 'twenty to 'twenty three NII guidance. Also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

Within this well.

<unk> was up by 6% as our ongoing investment in that business continued to gain traction.

Personal banking also had another good quarter up by 21% due mainly to higher rates.

Georges Elhedery: Across Commercial Banking and Global Banking and Markets, Global Payments Services had revenues of more than $4.3 billion dollars, which was an increase of 56% on the third quarter of 2022 and then in our trade business, lending balances were up 3% in the quarter, mainly in Asia, reversing the declining trend from previous quarters. Global banking markets also performed well up by 2%. This included a resilient performance in foreign exchange compared to a strong third quarter last year. And the good performance in securities financing and debt markets. On this next slide reported net interest income was $9 $2 billion, which was broadly stable in the second quarter. Banking NII was 11 $5 billion up $2 $8 billion on last year's third quarter and stable on the second quarter of this year. As a reminder, banking NII in the second quarter was favorably impacted by a north point $4 billion year to date catch up due to methodology changes. Approximately half of which was attributable to the first quarter. Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis. The net interest margin remained broadly stable at 170 basis points. We are not updating our 'twenty to 'twenty three NII guidance. Also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

Across commercial banking and global banking markets Global payments services had revenues of more than $43 billion, which was an increase of 56% on the third quarter of 2022.

And then our trade business lending balances were up 3%.

In the quarter, mainly in Asia, reversing the declining trend from previous quarters.

Georges Elhedery: Global banking and markets also performed well up by 2%, this included a resilient performance in foreign exchange compared to a strong third quarter last year and a good performance in securities financing and debt markets. On this next slide reported net interest income was $9 $2 billion, which was broadly stable in the second quarter. Banking NII was 11 $5 billion up $2 $8 billion on last year's third quarter and stable on the second quarter of this year. As a reminder, banking NII in the second quarter was favorably impacted by a north point $4 billion year to date catch up due to methodology changes. Approximately half of which was attributable to the first quarter. Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis. The net interest margin remained broadly stable at 170 basis points. We are not updating our 'twenty to 'twenty three NII guidance. Also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

Georges Elhedery: Global Banking and Markets also performed well, up by 2%. This included a resilient performance in foreign exchange compared to a strong Q3 last year, and a good performance in securities financing and debt markets. On this next slide, reported net interest income was $9.2 billion, which was broadly stable on the Q2. Banking NII was $11.5 billion, up $2.8 billion on last year's Q3 and stable on the Q2 of this year. As a reminder, banking NII in the Q2 was favorably impacted by a $0.4 billion year-to-date catch-up due to methodology changes, approximately half of which was attributable to the Q1. Adjusting for this, banking NII was slightly up in the quarter, in this Q3 on a like-for-like basis.

Global banking markets also performed well up by 2%. This included a resilient performance in foreign exchange compared to a strong third quarter last year.

And the good performance in securities financing and debt markets.

Georges Elhedery: On this next slide, reported net interest income was $9.2 billion dollars, which was broadly stable in the second quarter, Banking NII was $11.5 billion dollars up $2.8 billion dollars on last year's third quarter and stable on the second quarter of this year, as a reminder, banking NII in the second quarter was favorably impacted by a $0.4 billion dollars year to date catch up due to methodology changes, approximately half of which was attributable to the first quarter. Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis. The net interest margin remained broadly stable at 170 basis points. We are not updating our 'twenty to 'twenty three NII guidance. Also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

On this next slide reported net interest income was $9 $2 billion, which was broadly stable in the second quarter.

Banking NII was 11 $5 billion up $2 $8 billion on last year's third quarter and stable on the second quarter of this year.

As a reminder, banking NII in the second quarter was favorably impacted by a north point $4 billion year to date catch up due to methodology changes.

Approximately half of which was attributable to the first quarter.

Georges Elhedery: Adjusting for this, banking NII was slightly up in the quarter, in this third quarter on a like for like basis, the net interest margin remained broadly stable at 170 basis points, We are not updating our 2023 NII guidance and are also not expecting consensus to change. Hi. Next. Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter. Primarily due to number one. $2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

Adjusting for this banking NII was slightly up in the quarter in this third quarter on a like for like basis.

Georges Elhedery: The net interest margin remained broadly stable at 170 basis points. We are not updating our 2023 NII guidance and are also not expecting consensus to change. Next, constant currency non-NII of $6.9 billion was up $3.3 billion on last year's Q3, primarily due to, number one, a $2.3 billion favorable movement in notable items and foreign exchange, as last year's Q3 included a $2.5 billion impairment relating to the planned sale of our retail banking operations in France. This year's Q3 included a $0.6 billion of treasury disposal losses. Number two, a $1.6 billion increase in the revenue offset into non-NII from the central cost of funding GBM trading activity.

The net interest margin remained broadly stable at 170 basis points.

We are not updating our 'twenty to 'twenty three NII guidance.

Also not expecting consensus to change.

Georges Elhedery: Next, Constant currency non-NII of $6.9 billion dollars was up $3.3 billion dollars on last year's third quarter primarily due to, number one, a $2.3 billion dollars favorable movement in notable items and foreign exchange as last year's third quarter included a $2.5 billion dollar impairment relating to the planned sale of our retail banking operations in France and this year's third quarter included the $0.6 billion of Treasury disposal losses. Number two the $1 $6 billion increase in the revenue offset into non NII from the central cost of funding, Japan EM trading activity. And number three and north point $3 billion decrease in other which includes solar market Treasury income. Yeah. We continue to reposition our treasury portfolio as part of our balance sheet structural hedging and risk management initiatives. In the third quarter. This resulted in north point $6 billion of Treasury disposal losses. These losses do not have a material impact on CET, one capital, which enough as they have already been taken through reserves last year. Although they will have a modest benefit to our CET one ratio this year. The disposal proceeds are reinvested into higher yielding or higher duration assets. Disposal losses are forecast to be more than recovered through NII with the majority over the next five years. Further restructuring of the treasury portfolio, leading to a loss of around <unk> $4 billion. As expected in the fourth quarter, which will also be reported as a notable item and have modest CET one upside. Turning now to credit. Our third quarter ECL charge was $1 $1 billion, which was stable on the same period last year. It includes and North point $5 billion charge related to our mainland China commercial real estate exposure booked in Hong Kong. Growing and North point $4 billion charge in the same quarter last year. The remaining wholesale charge was north of $3 billion. The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending.

Georges Elhedery: Next, constant currency non-NII of $6.9 billion dollars was up $3.3 billion dollars on last year's third quarter, primarily due to, number one, a $2.3 billion dollars favorable movement in notable items and foreign exchange as last year's third quarter included a $2.5 billion dollar impairment relating to the planned sale of our retail banking operations in France and this year's third quarter included the $0.6 billion dollars of Treasury disposal losses, number two, a $1.6 billion increase in the revenue offset into non-NII from the central cost of funding GBM trading activity and number three, a $0.3 billion decrease in other, which includes lower market Treasury income.

Hi.

Next.

Constant currency non NII of $6 9 billion was up $3 $3 billion on last year's third quarter.

Primarily due to number one.

$2 $3 billion of favorable movement in notable items and foreign exchange as last year's third quarter included a $2 5 billion dollar impairment relating to the planned sale of our retail banking operations in France.

This year's third quarter included the North point $6 billion of Treasury disposal losses.

Georges Elhedery: Number two, a $1.6 billion increase in the revenue offset into non-NII from the central cost of funding GBM trading activity and number three, a $0.3 billion decrease in other, which includes lower market Treasury income. Yeah. We continue to reposition our treasury portfolio as part of our balance sheet structural hedging and risk management initiatives. In the third quarter. This resulted in north point $6 billion of Treasury disposal losses. These losses do not have a material impact on CET, one capital, which enough as they have already been taken through reserves last year. Although they will have a modest benefit to our CET one ratio this year. The disposal proceeds are reinvested into higher yielding or higher duration assets. Disposal losses are forecast to be more than recovered through NII with the majority over the next five years. Further restructuring of the treasury portfolio, leading to a loss of around <unk> $4 billion. As expected in the fourth quarter, which will also be reported as a notable item and have modest CET one upside. Turning now to credit. Our third quarter ECL charge was $1 $1 billion, which was stable on the same period last year. It includes and North point $5 billion charge related to our mainland China commercial real estate exposure booked in Hong Kong. Growing and North point $4 billion charge in the same quarter last year. The remaining wholesale charge was north of $3 billion. The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending.

Number two the $1 $6 billion increase in the revenue offset into non NII from the central cost of funding, Japan EM trading activity.

Georges Elhedery: Number three, a $0.3 billion decrease in other, which includes lower market treasury income. We continue to reposition our treasury portfolio as part of our balance sheet structural hedging and risk management initiatives. In Q3, this resulted in $0.6 billion of treasury disposal losses. These losses do not have a material impact on CET1 capital or TNAV, as they have already been taken through reserves last year. Although they will have a modest benefit to our CET1 ratio this year. The disposal proceeds are reinvested into higher yielding or higher duration assets. Disposal losses are forecast to be more than recovered through NII, with the majority over the next five years.

And number three and north point $3 billion decrease in other which includes solar market Treasury income.

Georges Elhedery: We continue to reposition our treasury portfolio as part of our balance sheet structural hedging and risk management initiatives, in the third quarter, this resulted in $0.6 billion dollars of Treasury disposal losses, these losses do not have a material impact on CET1 capital or TNAV, as they have already been taken through reserves last year, although they will have a modest benefit to our CET1 ratio this year. The disposal proceeds are reinvested into higher yielding or higher duration assets. Disposal losses are forecast to be more than recovered through NII with the majority over the next five years. Further restructuring of the treasury portfolio, leading to a loss of around <unk> $4 billion. As expected in the fourth quarter, which will also be reported as a notable item and have modest CET one upside. Turning now to credit. Our third quarter ECL charge was $1 $1 billion, which was stable on the same period last year. It includes and North point $5 billion charge related to our mainland China commercial real estate exposure booked in Hong Kong. Growing and North point $4 billion charge in the same quarter last year. The remaining wholesale charge was north of $3 billion. The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending.

Yeah.

We continue to reposition our treasury portfolio as part of our balance sheet structural hedging and risk management initiatives.

In the third quarter.

This resulted in north point $6 billion of Treasury disposal losses.

These losses do not have a material impact on CET, one capital, which enough as they have already been taken through reserves last year.

Although they will have a modest benefit to our CET one ratio this year.

Georges Elhedery: The disposal proceeds are reinvested into higher yielding or higher duration assets, disposal losses are forecast to be more than recovered through NII with the majority over the next five years, further restructuring of the treasury portfolio, leading to a loss of around $0.4 billion dollars, is expected in the fourth quarter, which will also be reported as a notable item and have modest CET1 upside. Turning now to credit. Our third quarter ECL charge was $1 $1 billion, which was stable on the same period last year. It includes and North point $5 billion charge related to our mainland China commercial real estate exposure booked in Hong Kong. Growing and North point $4 billion charge in the same quarter last year. The remaining wholesale charge was north of $3 billion. The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending.

The disposal proceeds are reinvested into higher yielding or higher duration assets.

Disposal losses are forecast to be more than recovered through NII with the majority over the next five years.

Georges Elhedery: Further restructuring of the treasury portfolio, leading to a loss of around $0.4 billion, is expected in Q4, which will also be reported as a notable item and have modest CET1 upside. Turning now to credit. Our Q3 ECL charge was $1.1 billion, which was stable on the same period last year. It includes a $0.5 billion charge related to our Mainland China commercial real estate exposure booked in Hong Kong, following a $0.4 billion charge in the same quarter last year. The remaining wholesale charge was $0.3 billion. The $0.2 billion personal lending charge included modest UK releases, although we retain overlays to address the current risks in the economic outlook.

Further restructuring of the treasury portfolio, leading to a loss of around <unk> $4 billion.

As expected in the fourth quarter, which will also be reported as a notable item and have modest CET one upside.

Georges Elhedery: Turning now to credit, our third quarter ECL charge was $1.1 billion dollars which was stable on the same period last year, it includes a $0.5 billion dollars charge related to our mainland China commercial real estate exposure booked in Hong Kong following Growing a $0.4 billion dollars charge in the same quarter last year. The remaining wholesale charge was north of $3 billion. The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending. Including held for sale balances. Focusing now on our mainland China commercial real estate portfolio. Our principal areas of focus remains the portfolio booked in Hong Kong. As you can see our total exposure stands at seven $5 billion, which is down by north of $5 billion from the half year, primarily due to write offs. In February this year, we communicated the management assess plausible downside scenario of around $1 billion. The deterioration in the third quarter. It means that we crystallize that all of the $500 million of provisions into the P&L that were part of this plausible downside. We're encouraged by recent policy measures, which will help the sector, but need time to take effect. So the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

Turning now to credit.

Our third quarter ECL charge was $1 $1 billion, which was stable on the same period last year.

It includes and North point $5 billion charge related to our mainland China commercial real estate exposure booked in Hong Kong.

Growing and North point $4 billion charge in the same quarter last year.

Georges Elhedery: The remaining wholesale charge was $0.3 billion dollars, the $0.2 billion dollars personal lending charge, included modest U.K. releases, although we retain overlays to address the current risks and the economic outlook. Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans. We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending. Including held for sale balances. Focusing now on our mainland China commercial real estate portfolio. Our principal areas of focus remains the portfolio booked in Hong Kong. As you can see our total exposure stands at seven $5 billion, which is down by north of $5 billion from the half year, primarily due to write offs. In February this year, we communicated the management assess plausible downside scenario of around $1 billion. The deterioration in the third quarter. It means that we crystallize that all of the $500 million of provisions into the P&L that were part of this plausible downside. We're encouraged by recent policy measures, which will help the sector, but need time to take effect. So the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

The remaining wholesale charge was north of $3 billion.

The north point $2 billion personal lending charge included modest U K releases, although we retain overlays to address the current risks and the economic outlook.

Georges Elhedery: Stage three balances of $19 billion were down $1 billion dollars on the second quarter and account for 2% of total loans, We continue to expect the 2023 three ECL charge off around 40 basis points of average gross customer lending. Including held for sale balances. Focusing now on our mainland China commercial real estate portfolio. Our principal areas of focus remains the portfolio booked in Hong Kong. As you can see our total exposure stands at seven $5 billion, which is down by north of $5 billion from the half year, primarily due to write offs. In February this year, we communicated the management assess plausible downside scenario of around $1 billion. The deterioration in the third quarter. It means that we crystallize that all of the $500 million of provisions into the P&L that were part of this plausible downside. We're encouraged by recent policy measures, which will help the sector, but need time to take effect. So the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

Georges Elhedery: Stage three balances of $19 billion were down $1 billion dollars on the second quarter and account for 2% of total loans, We continue to expect the 2023 ECL charge of around 40 basis points of average gross customer lending, including held for sale balances.

Georges Elhedery: Stage 3 balances of $19 billion were down $1 billion on Q2 and account for 2% of total loans. We continue to expect a 2023 ECL charge of around 40 basis points of average gross customer lending, including held for sale balances. Focusing now on our Mainland China commercial real estate portfolio, our principal area of focus remains the portfolio booked in Hong Kong. As you can see, our total exposure stands at $7.5 billion, which is down by $0.5 billion from H1, primarily due to write-offs. In February this year, we communicated a management-assessed plausible downside scenario of around $1 billion. The deterioration in Q3 means that we crystallized around $500 million of provisions into the PNL that were part of this plausible downside.

Stage three balances of $19 billion were down $1 billion on the second quarter and account for 2% of total loans.

We continue to expect the 'twenty to 'twenty, three ECL charge off around 40 basis points of average gross customer lending.

Georges Elhedery: Focusing now on our mainland China commercial real estate portfolio, our principal areas of focus remains the portfolio booked in Hong Kong, as you can see our total exposure stands at $7.5 billion dollars, which is down by $0.5 billion from the half year, primarily due to write offs. In February this year, we communicated the management assess plausible downside scenario of around $1 billion. The deterioration in the third quarter. It means that we crystallize that all of the $500 million of provisions into the P&L that were part of this plausible downside. We're encouraged by recent policy measures, which will help the sector, but need time to take effect. So the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

Including held for sale balances.

Focusing now on our mainland China commercial real estate portfolio.

Our principal areas of focus remains the portfolio booked in Hong Kong.

As you can see our total exposure stands at seven $5 billion, which is down by north of $5 billion from the half year, primarily due to write offs.

Georges Elhedery: In February this year, we communicated the management assess plausible downside scenario of around $1 billion dollars, the deterioration in the third quarter means that we crystallized around $500 million dollars of provisions into the P&L that were part of this plausible downside. We're encouraged by recent policy measures, which will help the sector, but need time to take effect. So the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

In February this year, we communicated the management assess plausible downside scenario of around $1 billion.

The deterioration in the third quarter.

It means that we crystallize that all of the $500 million of provisions into the P&L that were part of this plausible downside.

Georges Elhedery: We're encouraged by recent policy measures, which will help the sector but need time to take effect, so the plausible downside scenario does now look more realistic for full year 2023. Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers.

Georges Elhedery: We're encouraged by recent policy measures, which will help the sector, but need time to take effect. The plausible downside scenario does now look more realistic for full year 2023. Our exposures rated strong, good, and satisfactory were broadly stable on the Q3 last year. Around half of these exposures is lending to state-owned enterprises. The other half is primarily lending to privately-owned enterprises that are not residential property developers. This is reflected in the minimal ECL allowance in this part of the portfolio. If I now turn to the table at the bottom of the slide, against unsecured credit-impaired exposures, we already have now 73% coverage ratio. Against unsecured substandard exposures, we have a coverage ratio of just under 10%. This is clearly an area that we will continue to monitor closely.

We're encouraged by recent policy measures, which will help the sector, but need time to take effect.

So the plausible downside scenario does now look more realistic for full year 2023.

Georges Elhedery: Our exposure is rated strong good and satisfactory. Were broadly stable in the third quarter last year. Around half of these exposures is lending to state owned enterprises. The other half is primarily lending to privately owned enterprises that are not residential property developers. This is reflected in the minimal ECL allowance in this part of the portfolio. And if I now turn to the table at the bottom of the slide. Against unsecured credit impaired exposures. Do you have now 73% coverage ratio. And against unsecured substandard exposures, we have a coverage ratio of just under 10%. This is clearly an area that we will continue to monitor closely. But to reiterate. We continue to expect the 2023 ECL charge of around 40 basis points of average customer lending, including held for sale balances. Next on costs. Reported costs for the first nine months of 2023 were down 2% on last year, primarily due to lower restructuring costs. Our cost efficiency ratio for the same period was 44% improved. Improved from 66% last year. On a constant currency basis costs went up by 1% on last year's third quarter as the lower restructuring costs were offset by increased technology and operation spend. The higher performance related pay accrual M. And the acquisition and investment costs from HSBC innovation banking, which were not included in our original plan. On our cost target basis. We now expect our 2023 costs to be around 4% higher than 2022. This is around 1% or $300 million. More than previously guided. Due to higher technology and operation spending. Which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business. In addition to this we are contemplating an increase in performance related pay in the fourth quarter, depending on the outturn of outperformance and ongoing execution of our strategy in the fourth quarter. This would represent a further increase of around 1%.

Georges Elhedery: Our exposure is rated strong, good and satisfactory, we're broadly stable in the third quarter last year around half of these exposures is lending to state-owned enterprises, the other half is primarily lending to privately-owned enterprises that are not residential property developers, this is reflected in the minimal ECL allowance in this part of the portfolio. And if I now turn to the table at the bottom of the slide. Against unsecured credit impaired exposures. Do you have now 73% coverage ratio. And against unsecured substandard exposures, we have a coverage ratio of just under 10%. This is clearly an area that we will continue to monitor closely. But to reiterate. We continue to expect the 2023 ECL charge of around 40 basis points of average customer lending, including held for sale balances.

Our exposure is rated strong good and satisfactory.

Were broadly stable in the third quarter last year.

Around half of these exposures is lending to state owned enterprises.

The other half is primarily lending to privately owned enterprises that are not residential property developers.

This is reflected in the minimal ECL allowance in this part of the portfolio.

Georges Elhedery: And if I now turn to the table at the bottom of the slide, against unsecured credit impaired exposures, we already have now 73% coverage ratio and against unsecured sub-standard exposures, we have a coverage ratio of just under 10%, this is clearly an area that we will continue to monitor closely but to reiterate, we continue to expect the 2023 ECL charge of around 40 basis points of average customer lending, including held for sale balances.

And if I now turn to the table at the bottom of the slide.

Against unsecured credit impaired exposures.

Do you have now 73% coverage ratio.

And against unsecured substandard exposures, we have a coverage ratio of just under 10%.

This is clearly an area that we will continue to monitor closely.

Georges Elhedery: To reiterate, we continue to expect the 2023 ECL charge of around 40 basis points of average gross customer lending, including held for sale balances. Next on cost. Reported costs for the first nine months of 2023 were down 2% on last year, primarily due to lower restructuring costs. Our cost efficiency ratio for the same period was 44%, improved from 66% last year. On a constant currency basis, costs were up by 1% on last year's Q3, as the lower restructuring costs were offset by increased technology and operations spend, a higher performance-related pay accrual, and the acquisition and investment costs from HSBC Innovation Banking, which were not included in our original plans. On our cost target basis, we now expect our 2023 costs to be around 4% higher than 2022.

But to reiterate.

We continue to expect the 2023 ECL charge of around 40 basis points of average customer lending, including held for sale balances.

Georges Elhedery: Next on costs. Reported costs for the first nine months of 2023 were down 2% on last year, primarily due to lower restructuring costs. Our cost efficiency ratio for the same period was 44% improved. Improved from 66% last year. On a constant currency basis costs went up by 1% on last year's third quarter as the lower restructuring costs were offset by increased technology and operation spend. The higher performance related pay accrual M. And the acquisition and investment costs from HSBC innovation banking, which were not included in our original plan. On our cost target basis. We now expect our 2023 costs to be around 4% higher than 2022. This is around 1% or $300 million. More than previously guided. Due to higher technology and operation spending. Which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business. In addition to this we are contemplating an increase in performance related pay in the fourth quarter, depending on the outturn of outperformance and ongoing execution of our strategy in the fourth quarter. This would represent a further increase of around 1%. We have provided a full reconciliation from reported costs toward a target basis cost on slide 15 of the deck. And to reiterate tight cost discipline remains my priority and a priority across the whole group. My next slide shows our strong capital position.

Georges Elhedery: Next on costs, reported costs for the first nine months of 2023 were down 2% on last year, primarily due to lower restructuring costs, our cost efficiency ratio for the same period was 44% improved from 66% last year, on a constant currency basis, costs went up by 1% on last year's third quarter as the lower restructuring costs were offset by increased technology and operation spend, a higher performance related pay accrual and the acquisition and investment costs from HSBC Innovation Banking, which were not included in our original plan. On our cost target basis. We now expect our 2023 costs to be around 4% higher than 2022. This is around 1% or $300 million. More than previously guided. Due to higher technology and operation spending. Which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business. In addition to this we are contemplating an increase in performance related pay in the fourth quarter, depending on the outturn of outperformance and ongoing execution of our strategy in the fourth quarter. This would represent a further increase of around 1%. We have provided a full reconciliation from reported costs toward a target basis cost on slide 15 of the deck. And to reiterate tight cost discipline remains my priority and a priority across the whole group.

Next on costs.

Reported costs for the first nine months of 2023 were down 2% on last year, primarily due to lower restructuring costs.

Our cost efficiency ratio for the same period was 44% improved.

Improved from 66% last year.

On a constant currency basis costs went up by 1% on last year's third quarter as the lower restructuring costs were offset by increased technology and operation spend.

The higher performance related pay accrual M.

And the acquisition and investment costs from HSBC innovation banking, which were not included in our original plan.

Georges Elhedery: On our cost target basis, we now expect our 2023 costs to be around 4% higher than 2022, this is around 1% or $300 million dollars more than previously guided, due to higher technology and operation spending which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business. In addition to this we are contemplating an increase in performance related pay in the fourth quarter, depending on the outturn of outperformance and ongoing execution of our strategy in the fourth quarter. This would represent a further increase of around 1%. We have provided a full reconciliation from reported costs toward a target basis cost on slide 15 of the deck. And to reiterate tight cost discipline remains my priority and a priority across the whole group.

On our cost target basis.

We now expect our 2023 costs to be around 4% higher than 2022.

Georges Elhedery: This is around 1% or $300 million more than previously guided due to higher technology and operations spending, which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business. In addition to this, we are contemplating an increase in performance-related pay in Q4, depending on the outturn of our performance and ongoing execution of our strategy in Q4. This would represent a further increase of around 1%. We have provided a full reconciliation from reported cost to our target basis cost on slide 15 of the deck. To reiterate, tight cost discipline remains my priority and a priority across the whole group. The next slide shows our strong capital position. Our CET1 ratio was 14.9%, which was up 20 basis points on Q2.

This is around 1% or $300 million.

More than previously guided.

Due to higher technology and operation spending.

Which we believe is appropriate given the importance of digitization to the group and the strong financial performance of the business.

Georges Elhedery: In addition to this, we are contemplating an increase in performance-related pay in the fourth quarter, depending on the outturn of our performance and ongoing execution of our strategy in the fourth quarter, this would represent a further increase of around 1%, We have provided a full reconciliation from reported costs to our target basis cost on slide 15 of the deck and to reiterate tight cost discipline remains my priority and a priority across the whole group.

In addition to this we are contemplating an increase in performance related pay in the fourth quarter, depending on the outturn of outperformance and ongoing execution of our strategy in the fourth quarter.

This would represent a further increase of around 1%.

We have provided a full reconciliation from reported costs toward a target basis cost on slide 15 of the deck.

And to reiterate tight cost discipline remains my priority and a priority across the whole group.

Georges Elhedery: My next slide shows our strong capital position, our CET1 ratio was 14.9%, which was up 20 basis points on the second quarter. A few things to draw your attention to, number one, the dividend accrued year to date is 9.6 billion dollars or 49 cents per share, while we have announced dividends of $5.9 billion dollars or 30 cents per share. Number two we have announced a further share buyback of up to $3 billion, which is expected to have a circa 40 basis point impact on our CET one ratio in the fourth quarter. We are aiming to completed before the full year results in February. Number three. We also expect to reclassify, our retail banking operations in France as held for sale in the fourth quarter. Ahead of completion of the plant sale. On the first of January 2024, which would have a further impact on the CET one ratio of around 30 basis points. Finally, the planned sale of our Canada banking business also remains on track to complete in the first quarter of 'twenty 'twenty four and as a reminder, profits from our Canada banking business accrue to the buyer and are not include no dividend calculations for the year. We estimate the gain on sale will be around $5 $5 billion, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion. Upon completion of the transaction it remains our intention to consider a special dividend. 21 cents per share as a priority use of the proceeds MSP base you have announced. So in summary, there.

My next slide shows our strong capital position.

Our CET one ratio was 14, 9%, which was up 20 basis points on the second quarter.

Georges Elhedery: A few things to draw your attention to. Number one, the dividend accrued year to date is $9.6 billion or 49 cents per share. While we have announced dividends of $5.9 billion or 30 cents per share. Number two, we have announced a further share buyback of up to $3 billion, which is expected to have a circa 40 basis points impact on our CET1 ratio in Q4. We are aiming to complete it before the full year results in February. Number three, we also expect to reclassify our retail banking operations in France as held for sale in Q4 ahead of completion of the planned sale on 1 January 2024, which would have a further impact on the CET1 ratio of around 30 basis points.

A few things to draw your attention to.

Number one.

The dividend accrued year to date is nine $6 billion or 49 cents per share.

While we have announced dividends of $5 $9 billion or 30 cents per share.

Georges Elhedery: Number two, we have announced a further share buyback of up to $3 billion dollars, which is expected to have a circa 40 basis point impact on our CET1 ratio in the fourth quarter, we are aiming to complete it before the full year results in February. Number three, we also expect to reclassify our retail banking operations in France as held for sale in the fourth quarter ahead of completion of the plant sale on the first of January 2024, which would have a further impact on the CET1 ratio of around 30 basis points. Finally, the planned sale of our Canada banking business also remains on track to complete in the first quarter of 'twenty 'twenty four and as a reminder, profits from our Canada banking business accrue to the buyer and are not include no dividend calculations for the year. We estimate the gain on sale will be around $5 $5 billion, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion. Upon completion of the transaction it remains our intention to consider a special dividend. 21 cents per share as a priority use of the proceeds MSP base you have announced. So in summary, there.

Number two we have announced a further share buyback of up to $3 billion, which is expected to have a circa 40 basis point impact on our CET one ratio in the fourth quarter.

We are aiming to completed before the full year results in February.

Number three.

We also expect to reclassify, our retail banking operations in France as held for sale in the fourth quarter.

Ahead of completion of the plant sale.

On the first of January 2024, which would have a further impact on the CET one ratio of around 30 basis points.

Georges Elhedery: Finally, the planned sale of our Canada banking business, also remains on track to complete in the first quarter of 2024 and as a reminder, profits from our Canada banking business accrue to the buyer and are not included in our dividend calculations for the year. We estimate the gain on sale will be around $5 $5 billion, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion. Upon completion of the transaction it remains our intention to consider a special dividend. 21 cents per share as a priority use of the proceeds MSP base you have announced. So in summary, there.

Georges Elhedery: Finally, the planned sale of our Canada banking business also remains on track to complete in Q1 2024. As a reminder, profits from our Canada banking business accrue to the buyer and are not included in our dividend calculations for the year. We estimate the gain on sale will be around $5.5 billion, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion. Upon completion of the transaction, it remains our intention to consider a special dividend of $0.21 per share as a priority use of the proceeds and as previously announced. In summary, this was another strong quarter. We delivered a good profit performance and an annualized return on tangible equity of 17.1%, excluding strategic transactions, reflecting the successful execution of our strategy.

Finally, the planned sale of our Canada banking business also remains on track to complete in the first quarter of 'twenty 'twenty four and as a reminder, profits from our Canada banking business accrue to the buyer and are not include no dividend calculations for the year.

We estimate the gain on sale will be around $5 $5 billion, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion.

Georges Elhedery: We estimate the gain on sale will be around $5.5 billion dollars, which we will recognize through a combination of earnings from Canada and the remaining gain on sale at completion, upon completion of the transaction, it remains our intention to consider a special dividend of 21 cents per share as a priority use of the proceeds and as previously announced. So in summary, there.

Upon completion of the transaction it remains our intention to consider a special dividend.

21 cents per share as a priority use of the proceeds MSP base you have announced.

So in summary, there.

Georges Elhedery: So in summary, this was another strong quarter, we delivered a good profit performance and an annualized return on tangible equity of 17.1%, excluding strategic transactions, reflecting the successful execution of our strategy, transaction banking and wealth, both performed well and continued investment will help accelerate the growth of our wealth business, We continue to expect the 2023 ECL charge off around 40 basis points of average gross customer lending, We remain committed to tight cost discipline and we have a strong capital position and have increased return to shareholders by way of dividends and share buybacks. And with that operator can we please open it up for questions. Thank you.

This was another strong quarter, we delivered a good profit performance and an annualized return on tangible equity of 17, 1%.

Excluding strategic transactions, reflecting the successful execution of our strategy.

Georges Elhedery: Transaction banking and wealth both performed well, and continued investment will help accelerate the growth of our wealth business. We continue to expect the 2023 ECL charge of around 40 basis points of average gross customer lending. We remain committed to tight cost discipline, and we have a strong capital position and have increased return to shareholders by way of dividends and share buybacks. With that, operator, can we please open it up for questions? Thank you.

Transaction banking and wealth, both performed well and continued investment will help accelerate the growth of our wealth business.

We continue to expect the 2023 ECL charge off around 40 basis points of average gross customer lending.

We remain committed to tight cost discipline.

And we have a strong capital position and have increased return to shareholders by way of dividends and share buybacks.

Georges Elhedery: And with that operator can we please open it up for questions. Thank you.

And with that operator can we please open it up for questions. Thank you.

Operator 1: Thank you, George. If you would like to ask a question today, please use the raise hand function in Zoom. Please also turn your camera on now if you wish to be visible on screen. If you are invited to ask a question, please accept the prompt to unmute your line.

Operator: Thank you, Georges. If you would like to ask a question today, please use the raise hand function in Zoom. Please also turn your camera on now if you wish to be visible on screen. If you are invited to ask a question, please accept the prompt to unmute your line.

Operator: Thank you George, if you would like to ask a question today, please use the raise hand option in zoom, please also turn your camera on now if you wish to be visible on screen, if you are invited to ask a question, please accept the prompt to unmute your line, if you find your question has been answered you remove yourself from the queue by lowering your hand. Our first question today comes from Aman <unk> from Barclays. Please accept the prompt to mute your line.

If you would like to ask a question state police use of race and Akshay James.

Page all search on your camera now if you wish to be visible on screen.

You are invited to ask a question. Please accept the prompt to on mute your line.

Operator 2: If you find your question has been answered, remove yourself from the queue by lowering your hand. Our first question today comes from Aman Rakkar from Barclays. Please accept the prompt to unmute your line.

Operator: If you find your question has been answered, remove yourself from the queue by lowering your hand. Our first question today comes from Aman Rakkar from Barclays. Please accept the prompt to unmute your line.

If you find your question has been answered you.

You may remove yourself from the queue by Larry go ahead.

Our first question today comes from Aman <unk> from Barclays. Please accept the prompt to mute your line.

Operator: Our first question today comes from Aman Rakkar from Barclays. Please accept the prompt to unmute your line.

Okay.

Aman Rakkar: Good morning, Georges. Hope you can hear me okay.

Aman Rakkar: Good morning George, I think you can hear me, okay.

Georges Elhedery: We can hear you very well.

Aman Rakkar: Thank you so much. Two questions please. Firstly on costs. Can I just probe you a little bit more on exactly what's changed around costs? Because I think as recently as mid-September, HSBC, you know, were reiterating their expectations for costs very much in line with the existing guide and the commitment to the cost base. So, you know, particularly around the point around compensating the staff for potentially compensating staff for performance, I understand that it's been a strong year for profits, but it doesn't look like the view of profitability changed materially since you last spoke to us. That component there would be interesting. The related point then is to what extent should we expect that element of cost growth to roll over into next year?

Georges Elhedery: We can hear you.

Aman Rakkar: Thank you so much, two questions please on, firstly on costs, can I just probe you a little bit more on exactly what has changed around costs, expecting as recently as mid September, HSBC were reiterating their expectations of costs very much in line with the existing guide and the commitments to the cost base, so particularly around the point, around compensating staff, potentially compensating staff performance, I understand that it's been a strong year or profits, but it doesn't look like the view of profitability changed materially, since you las spoke to us so that component there would be interesting and the related point then is to what extent should we expect that element of cost growth to roll over into next year? I got it. That's all I'm trying to get a sense of what the underlying cost. A great finish that you're currently seeing sort of the business. And then the second question was around margins I was wondering if you could just help us with a bit on your experience deposit beta. Time deposit mix. Particularly in Hong Kong, but also a comment on the UK would be helpful and yeah. That's part of that what your expectations are for NIM. Today's marketplace. Thank you.

Two questions. Please on.

Firstly on costs.

Can I, just probably be a little bit more of them.

Exactly what was changed around costs them, because I think as recently as mid September.

HSBC.

We're reiterating their expectations for cost very much in line with.

The existing guys didnt make commitments at the cost base.

So, particularly around the point around compensate and stuff.

Essentially compensating stuff, that's a performance I understand that it's been a strong year profits, but it.

It doesn't look like the view if profitability changed materially.

Since you all speak to I'll say.

I've got that component that would be interesting.

On a related point Ben is to what extent should we expect that element.

Cost Christ.

Aman Rakkar: And I guess that at it's heart, I'm trying to get a sense of what the underlying cost growth is that you're currently seeing through the business, and then the second question was around margins, I was wondering if you could just help us with a bit on your experience on deposit beta and term deposit mix, particularly in Hong Kong, but also a comment on the U.K. would be helpful and as part of that what your expectations are for NIM in both of those markets please. Thank you.

The roll over into next year.

Aman Rakkar: I guess at its heart, I'm trying to get a sense of what the underlying cost growth is that you're currently seeing through the business. The second question was around margins. I was wondering if you could just help us with a bit on your experience on deposit beta and term deposit mix, particularly in Hong Kong, but also a comment on the UK would be helpful and, you know, as part of that, what your expectations are for NIM in both of those markets, please. Thank you.

I got it.

That's all I'm trying to get a sense of what the underlying cost.

A great finish that you're currently seeing sort of the business.

And then the second question was around margins I was wondering if you could just help us with a bit on your experience deposit beta.

Time deposit mix.

Particularly in Hong Kong, but also a comment on the UK would be helpful and yeah. That's part of that what your expectations are for NIM.

Today's marketplace. Thank you.

Georges Elhedery: Sure. Thank you, Aman. First on costs. I think with regards to the 1% cost we contemplate for Q4. Look, we have to put this in the perspective of the financial performance. Obviously, at the start of the year, we weren't necessarily realizing the performance of the group. We obviously need to wait for Q4, both to assess the financial performance, but equally to assess how we continue to deliver on our strategy.

Georges Elhedery: Sure, Thank you Aman. So first on costs, I think with regards to this 1% cost we contemplate for Q4, so we have to put this in the perspective of the financial performance, obviously at the start of the year, we weren't necessarily realizing the performance of the group, we obviously need to wait for Q4, both to assess the financial performance, but equally to assess how we continue to deliver on our strategy, it ultimately would be a matter for the board and the remuneration committee to decide but we felt it appropriate and fair to recognize that our colleagues have contributed, participated for the last many years through the whole strategic reshaping of the firm through ensuring having a great deposit franchise and a strong balance sheet and obviously delivering the growth we've seen in wealth and transaction banking that We can channel 1% or the equivalent of $300 million dollars towards performance related pay, again all this is at the stage of contemplation and that's what we will reaffirm at the year end and again subject to our remuneration committees opinion. in terms of next year, we're not giving guidance for next year, but I think we are reflecting in this performance related pay a year on year material change in our performance as you've seen from a returns and. Our PBT. Which are you know obviously, what that quantum probably not expect for next year right. In terms of margins I'm on. So as we indicated at these levels of rates in mostly in the U K uncertainty in a number of western markets and put our wholesale businesses at these levels of rates, we were expecting to have a materially higher betas than. And then 50% we you know we've expected that additional rate hikes from here would be mostly for the benefit of our customers. If you look at the overall VITAS in the in the U K overall overall beta is around 50, you just north of 50%. So while the margin the VITAS have exceeded 80%. The overall is in the range of 50%. Term deposit mix, Hong Kong kind of same trend as we've seen through the nine months coming to this quarter. About 1% migration per month. So we have seen 4% over the quarter after 2% previous quarter and two 3% in the quarter one that took the total. 10 deposit mix to 31%. In our Hong Kong. D D. No we have not seen a deterioration of the trend. We so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwind we were calling out before to continue. Just to put in perspective the. The U K. Time deposit mix. It makes us just single digit percentage points. So we'd be you know, it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward. George if I could just add. If I could just add a couple of comments on the V P. There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position. Now we had an eye to V P. And we had a very strong first six months of the year. It was a lot of economic uncertainty around that time inflation interest rates are.

So first one on costs I think with regards to the.

This 1%.

Cost me contemplate for Q4.

So do you have to put this in the perspective of the financial performance, obviously at the start of the year, we werent necessarily realizing the performance of the group.

We obviously need to wait for Q4, both to assess the financial performance, but equally to assess how we continued to deliver.

Georges Elhedery: It ultimately would be a matter for the board and the remuneration committee to decide but we felt it appropriate and fair to recognize that our colleagues have contributed, participated for the last many years through the whole strategic reshaping of the firm through ensuring having a great deposit franchise and a strong balance sheet and obviously delivering the growth we've seen in wealth and transaction banking that We can channel 1% or the equivalent $300 million dollars towards performance related pay, again all this is at the stage of contemplation and that's what we will reaffirm at the year end and again subject to our remuneration committees opinion.

On our strategy.

Georges Elhedery: It ultimately will be a matter for the board and the remuneration committee to decide, but we felt it appropriate and fair to recognize that, you know, our colleagues have contributed, participated for the last many years through the whole strategic reshaping of the firm, through ensuring we have a great deposit franchise and a strong balance sheet, and obviously delivering the growth we've seen in wealth and transaction banking, that we can channel 1% or the equivalent $300 million towards performance-related pay. Again, all this is at the stage of contemplation, a matter we will reaffirm at the year-end, and again, subject to our remuneration committee's opinion.

It ultimately would be a matter for the board and the remuneration committee to decide but we felt it appropriate and fad.

I recognize.

Hum our colleagues have contributed but stated for the last many years through the whole strategic.

Reshaping of the firm.

Through ensuring they have a great deposit franchise and a strong balance sheet and obviously delivering the growth we've seen in wealth and transaction banking.

We can turn in 1% or the equivalent of $300 million.

Towards performance related pay again.

All this is at the stage of contemplation and Thats, who we will reaffirm at the year end and again subject to our remuneration committees opinion in terms of next year, we're not giving guidance for next year, but I think we are reflecting in this performance related pay a year on year material change in our performance as you've seen from a returns and.

Georges Elhedery: In terms of next year, we're not giving guidance for next year, but I think we are reflecting in this performance related pay a year on year material change in our performance, as you've seen from a returns and our PBT, which are you know obviously, whith that quantum probably not expected for next year right. In terms of margins I'm on. So as we indicated at these levels of rates in mostly in the U K uncertainty in a number of western markets and put our wholesale businesses at these levels of rates, we were expecting to have a materially higher betas than. And then 50% we you know we've expected that additional rate hikes from here would be mostly for the benefit of our customers. If you look at the overall VITAS in the in the U K overall overall beta is around 50, you just north of 50%. So while the margin the VITAS have exceeded 80%. The overall is in the range of 50%. Term deposit mix, Hong Kong kind of same trend as we've seen through the nine months coming to this quarter. About 1% migration per month. So we have seen 4% over the quarter after 2% previous quarter and two 3% in the quarter one that took the total. 10 deposit mix to 31%. In our Hong Kong. D D. No we have not seen a deterioration of the trend. We so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwind we were calling out before to continue. Just to put in perspective the. The U K. Time deposit mix. It makes us just single digit percentage points. So we'd be you know, it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward. George if I could just add. If I could just add a couple of comments on the V P. There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position. Now we had an eye to V P. And we had a very strong first six months of the year. It was a lot of economic uncertainty around that time inflation interest rates are.

Georges Elhedery: In terms of next year, now we're not giving guidance for next year, but I think we are reflecting in this performance-related pay a year-on-year material change in our performance, as you've seen from our returns and our PBT, which you know, obviously with that quantum, probably not expect for next year, right? In terms of margins, Aman, as we indicated, at these levels of rates, mostly in the UK and certainly in a number of Western markets and for our wholesale businesses, at these levels of rates, we were expecting to have a materially higher betas than 50%. We, you know, we've expected that additional rate hikes from here would be mostly for the benefit of our customers.

Our PBT.

Which are you know obviously, what that quantum probably not expect for next year right.

Georges Elhedery: In terms of margins Aman, so as we indicated at these levels of rates in, mostly in the U.K. and certainly in a number of western markets we put our wholesale businesses, at these levels of rates, we were expecting to have a materially higher betas than 50% we, you know we've expected that additional rate hikes from here would be mostly for the benefit of our customers, If you look at the overall betas in the in the U.K. overall, overall beta is around 50, just north of 50%, so while the margin of betas have exceeded 80%, the overall is in the range of 50% term deposit mix, Hong Kong kind of same trend as we've seen through the nine months coming to this quarter, about 1% migration per month. So we have seen 4% over the quarter after 2% previous quarter and two 3% in the quarter one that took the total term deposit mix to 31% in our Hong Kong.No we have not seen a deterioration of the trend. We so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwind we were calling out before to continue. Just to put in perspective the. The U K. Time deposit mix. It makes us just single digit percentage points. So we'd be you know, it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward. George if I could just add. If I could just add a couple of comments on the V P. There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position. Now we had an eye to V P. And we had a very strong first six months of the year. It was a lot of economic uncertainty around that time inflation interest rates are.

Georges Elhedery: In terms of margins Aman, so as we indicated at these levels of rates in, mostly in the U.K. and certainly in a number of western markets and for our wholesale businesses, at these levels of rates, we were expecting to have a materially higher betas than 50% we, you know we've expected that additional rate hikes from here would be mostly for the benefit of our customers.

In terms of margins I'm on.

So as we indicated at these levels of rates in mostly in the U K uncertainty in a number of western markets and put our wholesale businesses at these levels of rates, we were expecting to have a materially higher betas than.

And then 50% we you know we've expected that additional rate hikes from here would be mostly for the benefit of our customers.

Georges Elhedery: If you look at the overall betas in the in the U.K. overall beta is around 50, just north of 50%, so while the margin of betas have exceeded 80%, the overall is in the range of 50% term deposit mix, Hong Kong kind of same trend as we've seen through the nine months coming to this quarter, about 1% migration per month. So we have seen 4% over the quarter after 2% previous quarter and two 3% in the quarter one that took the total term deposit mix to 31% in our Hong Kong, we have not seen a deterioration of the trend, so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwinds we were calling out before to continue.

Georges Elhedery: If you look at the overall betas in the UK, overall, you know, overall beta is around 50, just north of 50%. While the marginal betas have exceeded 80%, the overall is in the range of 50%. Term deposit mix, Hong Kong, kind of same trend as we've seen through the nine months coming to this quarter. About 1% migration per month. We have seen 4% over the quarter after 2% previous quarter and 3% in Q1. That took the total term deposit mix to 31%, in Hong Kong.

If you look at the overall VITAS in the in the U K overall overall beta is around 50, you just north of 50%. So while the margin the VITAS have exceeded 80%. The overall is in the range of 50%.

Term deposit mix, Hong Kong kind of same trend as we've seen through the nine months coming to this quarter.

Georges Elhedery: So we have seen 4% over the quarter after 2% previous quarter and 3% in the quarter one that took the total term deposit mix to 31% in Hong Kong, we have not seen a deterioration of the trend, so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwinds we were calling out before to continue.

About 1% migration per month.

So we have seen 4% over the quarter after 2% previous quarter and two 3% in the quarter one that took the total.

Georges Elhedery: We have not seen a deterioration of the trend, so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwinds we were calling out before to continue. Just to put in perspective the. The U K. Time deposit mix. It makes us just single digit percentage points. So we'd be you know, it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward. George if I could just add. If I could just add a couple of comments on the V P. There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position. Now we had an eye to V P. And we had a very strong first six months of the year. It was a lot of economic uncertainty around that time inflation interest rates are.

10 deposit mix to 31%.

In our Hong Kong.

Georges Elhedery: You know, we have not seen a deterioration of the trend, so we expect the trend to remain the same as we look into potential headwinds in the future, but equally, we continue to see some of the tailwinds we were calling out before to continue. Just to put in perspective, the UK term deposit mix is just single digit percentage points, so, you know, it's a modest increase in Q3, but it's not a main contributor to the dynamic of our NIM.

D D.

No we have not seen a deterioration of the trend.

We so we expect the trend to remain the same as we look into potential headwinds in the future, but equally we continue to see some of the tailwind we were calling out before to continue.

Georges Elhedery: Just to put in perspective, the U.K. term deposit mix it's just single digit percentage points, so we'd be, you know it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward. George if I could just add. If I could just add a couple of comments on the V P. There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position. Now we had an eye to V P. And we had a very strong first six months of the year. It was a lot of economic uncertainty around that time inflation interest rates are.

Just to put in perspective the.

The U K.

Time deposit mix.

It makes us just single digit percentage points. So we'd be you know, it's a modest increase in Q3, but it's not the main contributor to the to the dynamic going forward.

Noel Quinn: George if I could just add a couple of comments on the V.P. There are two factors that are really coming to play in Q3 at the half year, when we talked about our cost position, now we had an eye to V.P. and we had a very strong first six months of the year, there was a lot of economic uncertainty around at that time, inflation, interest rates, ECL's, China commercial real estate, so we didn't want to anticipate exactly what the financial performance would be in the final six months of the year. We're confident of mid teen returns, but we needed to make sure that in the final six months traded well. I think as we've gone through Q3, we've continued to trade well. So I think all our expectations now on a full year right. So. I'll, probably higher than they would've been when we started this year and starting to build the financial plan for this year. So in the context of things, we we've given an indication. Given the strong profit performance and if it continues into Q4, it would be right in profit to share some of that upside in profit compared to original expectations with all colleagues the way that we. We intend to share the upside and expectations with our shareholders on both dividends and buybacks and a 1% 300 million top up to VP for the level of performance that could well I turn this year. He's a reasonable amounts of additional VP to put in Ottawa. And I will remind you that V P. He's not a continuum on a baseline it is assessed each year on the profit of the bank against targets. Can go up from 10 go down, but as a final determination will make at the end of the year. I'm, just trying to be fair to all colleagues and what they've done, but it's a factor of <unk>. Uncertainty at the half year. Over trading performance. He can lessen Sutton as we've gone into Q3 and you've seen the numbers. And we hope will continue in Q4 in a strong manner. If that's the case, we feel we should reward our colleagues for a very strong performance this year. So it's that's the background to it we remain both myself and George remain absolutely committed. It's a strong cost discipline.

Noel Quinn: George, if I could just add a couple of comments on the VP. There are two factors that have really come into play in Q3. At H1 when we talked about our cost position, we had an eye on VP, and we had a very strong H1. There was a lot of economic uncertainty around at that time, inflation, interest rates, ECLs, China commercial real estate. We didn't want to anticipate exactly what the financial performance would be in H2. We were confident of mid-teen returns, but we needed to make sure that H2 traded well. I think as we've gone through Q3, we've continued to trade well.

Noel Quinn: Georges, if I could just add a couple of comments on the VP. There are two factors that have really come into play in Q3. At H1 when we talked about our cost position, we had an eye on VP, and we had a very strong H1. There was a lot of economic uncertainty around at that time, inflation, interest rates, ECLs, China commercial real estate. We didn't want to anticipate exactly what the financial performance would be in H2. We were confident of mid-teen returns, but we needed to make sure that H2 traded well. I think as we've gone through Q3, we've continued to trade well.

George if I could just add.

If I could just add a couple of comments on the V P.

There are two factors that were really come into play in Q3 at the half year, when we talked about our cost position.

Now we had an eye to V P.

And we had a very strong first six months of the year.

It was a lot of economic uncertainty around that time inflation interest rates are.

Noel Quinn: So we didn't want to anticipate exactly what the financial performance would be in the final six months of the year, we were confident of mid-teen returns, but we needed to make sure that in the final six months traded well. I think as we've gone through Q3, we've continued to trade well. So I think all our expectations now on a full year right. So. I'll, probably higher than they would've been when we started this year and starting to build the financial plan for this year. So in the context of things, we we've given an indication. Given the strong profit performance and if it continues into Q4, it would be right in profit to share some of that upside in profit compared to original expectations with all colleagues the way that we. We intend to share the upside and expectations with our shareholders on both dividends and buybacks and a 1% 300 million top up to VP for the level of performance that could well I turn this year. He's a reasonable amounts of additional VP to put in Ottawa. And I will remind you that V P. He's not a continuum on a baseline it is assessed each year on the profit of the bank against targets. Can go up from 10 go down, but as a final determination will make at the end of the year. I'm, just trying to be fair to all colleagues and what they've done, but it's a factor of <unk>. Uncertainty at the half year. Over trading performance. He can lessen Sutton as we've gone into Q3 and you've seen the numbers. And we hope will continue in Q4 in a strong manner. If that's the case, we feel we should reward our colleagues for a very strong performance this year. So it's that's the background to it we remain both myself and George remain absolutely committed. It's a strong cost discipline.

Icl's, China commercial real estate. So we didn't want to anticipate exactly what the financial performance would be in the final six months of the year.

We're confident of mid teen returns, but we needed to make sure that in the final six months traded well.

Noel Quinn: I think as we've gone through Q3, we've continued to trade well, so I think our expectations now on a full year outturn are probably higher than they would've been when we started this year and started to build the financial plan for this year, so in the context of things we've given an indication, given the strong profit performance and if it continues into Q4, it would be right in profit to share some of that upside in profit, compared to original expectations with our colleagues the way that we intend to share the upside in expectations with our shareholders on both dividends and buybacks and a 1% $300 million top up to V.P. for the level of performance that could well outturn this year, is a reasonable amounts of additional VP to put in, and I will remind you that V.P. is not a continuum on a baseline, it is assessed each year on the profit of the bank against targets and can go up and can go down, but that's a final determination we'll make at the end of the year, I'm just trying to be fair to our colleagues and what they've done, but it's a factor of uncertainty at the half year over trading performance has become less uncertain as we've gone into Q3 and you've seen the numbers and we hope will continue in Q4 in a strong manner and if that's the case, we feel we should reward our colleagues for a very strong performance this year but it's, that's the background to it, we remain both myself and George remain absolutely committed to a strong cost discipline.

I think as we've gone through Q3, we've continued to trade well. So I think all our expectations now on a full year right. So.

Noel Quinn: I think our expectations now on a full year out are probably higher than they would have been when we started this year and started to build a financial plan for this year. In the context of things, we've given an indication that given the strong profit performance and if it continues into Q4, it would be right and proper to share some of that upside in profit compared to original expectations with our colleagues, the way that we intend to share the upside in expectations with our shareholders on both dividends and buybacks. A 1% $300 million top up to VP for the level of performance that could well outturn this year is a reasonable amount of additional VP to put in. I will remind you that VP is not a continuum and a baseline.

I'll, probably higher than they would've been when we started this year and starting to build the financial plan for this year.

So in the context of things, we we've given an indication.

Given the strong profit performance and if it continues into Q4, it would be right in profit to share some of that upside in profit compared to original expectations with all colleagues the way that we.

Noel Quinn: The way that we intend to share the upside in expectations with our shareholders on both dividends and buybacks and a 1% $300 million top up to V.P. for the level of performance that could well outturn this year, is a reasonable amounts of additional VP to put in, and I will remind you that V.P. is not a continuum on a baseline, it is assessed each year on the profit of the bank against targets and can go up and can go down, but that's a final determination we'll make at the end of the year, I'm just trying to be fair to our colleagues and what they've done, but it's a factor of uncertainty at the half year over trading performance has become less uncertain as we've gone into Q3 and you've seen the numbers and we hope will continue in Q4 in a strong manner and if that's the case, we feel we should reward our colleagues for a very strong performance this year but it's, that's the background to it, we remain both myself and George remain absolutely committed to a strong cost discipline.

We intend to share the upside and expectations with our shareholders on both dividends and buybacks and a 1% 300 million top up to VP for the level of performance that could well I turn this year.

He's a reasonable amounts of additional VP to put in Ottawa.

And I will remind you that V P. He's not a continuum on a baseline it is assessed each year on the profit of the bank against targets.

Noel Quinn: It is assessed each year on the profit of the bank against targets, and can go up and can go down, but that's the final determination we'll make at the end of the year. We're just trying to be fair to our colleagues and what they've done. It's a factor of uncertainty at H1, overall trading performance has become less uncertain as we've gone into Q3 and you've seen the numbers, and we hope we'll continue in Q4 in a strong manner. If that's the case, we feel we should reward our colleagues for a very strong performance this year. That's the background to it. We remain, both myself and George, absolutely committed to strong cost discipline.

Can go up from 10 go down, but as a final determination will make at the end of the year.

Noel Quinn: And we're just trying to be fair to our colleagues and what they've done, but it's a factor of uncertainty at the half year, our over trading performance has become less uncertain as we've gone into Q3 and you've seen the numbers and we hope will continue in Q4 in a strong manner and if that's the case, we feel we should reward our colleagues for a very strong performance this year but it's, that's the background to it, we remain both myself and George, remain absolutely committed to a strong cost discipline.

I'm, just trying to be fair to all colleagues and what they've done, but it's a factor of <unk>.

Uncertainty at the half year.

Over trading performance.

He can lessen Sutton as we've gone into Q3 and you've seen the numbers.

And we hope will continue in Q4 in a strong manner.

If that's the case, we feel we should reward our colleagues for a very strong performance this year.

So it's that's the background to it we remain both myself and George remain absolutely committed.

It's a strong cost discipline.

Georges Elhedery: Thank you, Aman. Next question, please.

Georges Elhedery: Thank you Aman, next question please.

Next question please.

Operator 1: Our next question today comes from Joseph Dickerson from Jefferies. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Joseph Dickerson from Jefferies. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Joseph Dickerson from Jefferies, Please accept the prompt to unmute your line and ask your question.

Yeah.

Joseph Dickerson: Hi, can you hear me?

Joseph Dickerson: Alright can you hear me.

Georges Elhedery: Yes, Joseph. Carry on.

Georges Elhedery: Yes, Joseph, carry on

Joseph Dickerson: Thank you, very much for taking my question, Georges Elhedery. Just following up on cost. I suppose how much of the tech and op cost spend was, if you will, necessary versus discretionary in terms of, you know, needing to keep up with competitors, and so forth. Then the other aspect would be on the trading book funding cost you've guided to greater than $7 billion for the full year. Under my numbers, you're already at $6.2 billion. That implies a material step down in that cost, unless we should be emphasizing on the in excess of 7 element. Is there any color on that front would also be helpful. Many thanks.

Joseph Dickerson: Thank you very much for taking my question, just on the, just following up on costs, I suppose how much of the tech and op cost spend was, if you will, necessary versus discretionary in terms of needing to keep up with competitors and so forth and then the other aspect would be on the on the trading book funding costs, you've guided to greater than $7 billion for the full year and on my numbers, you're already at $6.2 billions so that implies a material step down in that cost, unless we should be emphasizing in the, in excess of seven element are there any, any color on that front would also be a helpful. Many thanks.

And so forth.

The other aspect would be on the on the trading book funding costs, you've guided to greater than.

<unk> 7 billion for the full year on my numbers, you're already at six point too.

So that implies a material step down in that cost.

We should be emphasizing them that in excess of seven element there any any color on that front, but also be a helpful. Many thanks.

Georges Elhedery: Thank you, Joseph. Maybe I'll answer your second question fairly easy. You should definitely, as you mentioned, emphasize the in excess of $7 billion. We actually haven't revised our guidance. We felt by and large that the consensus is in the right place and didn't need to to influence it. We expect the trading balances-

Georges Elhedery: Thank you Joseph, so first maybe I'll answer your second question, is fairly easy, you should definitely as you mentioned emphasize them in excess of 7 billion, we actually haven't revised our guidance, we felt by and large that the consensus is in the right place and didn't need to influence it. We expect the trading better similar run rate quarter, similar quarterly run rate, we should be thinking about so purely for the funding cost of the trading books, you should expect that the trading balances will remain broadly stable at around $130 billion. For the quarter, and then kind of the math or simple. It's just at times. The me in the short term. Cliff is essentially in USD. As you as you look at the overall banking NII. Income the indications is that we'd go in north point $1 billion Q2 to Q3, we haven't given an indication for. Q4, again feel comfortable with where the consensus is for Q4 and just to. Today, the banking NII is probably a better measure because it kind of gets you immunize for some of these trade the choices, we make and how much we fund the trading book. Yes. With regards to your first question about tech and ops. It's a mix of necessary and discretionary. We we made the decision on the basis that one first when we put our cost base at the start of the year. We we had the a materially higher inflation than in some areas in some geographies and some pockets than than we anticipated for the year. And we felt that it would be. Adverse for certain customer outcomes, if if we needed to take a more restrictive action in it and this is putting it in the context that over nine months year to date reported cost is down 2% a year. Yeah, It was down 2% year on year so. So this is why we were willing to tolerate to the continued investment in tech and ops I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending all the money now in the future.

So maybe I'll answer your second question Sylvia Easy you said definitely as you mentioned the emphasize that in excess of 7 billion, we actually haven't revised our guidance we said.

By and large that the consensus in the right place and didn't need to.

To influence it.

We expect the trading better similar run rate quarter, similar quarterly run rate, we should be thinking about so purely for the funding cost of the trading books, you should expect that the trading balances will remain broadly stable at around $130 billion.

Joseph Dickerson: It's a similar quarterly run rate we should be thinking about?

Georges Elhedery: So it's a similar quarterly run rate we should be thinking about? so purely for the funding cost of the trading books, you should expect that the trading balances will remain broadly stable at around $130 billion. For the quarter, and then kind of the math or simple. It's just at times. The me in the short term. Cliff is essentially in USD. As you as you look at the overall banking NII. Income the indications is that we'd go in north point $1 billion Q2 to Q3, we haven't given an indication for. Q4, again feel comfortable with where the consensus is for Q4 and just to. Today, the banking NII is probably a better measure because it kind of gets you immunize for some of these trade the choices, we make and how much we fund the trading book. Yes. With regards to your first question about tech and ops. It's a mix of necessary and discretionary. We we made the decision on the basis that one first when we put our cost base at the start of the year. We we had the a materially higher inflation than in some areas in some geographies and some pockets than than we anticipated for the year. And we felt that it would be. Adverse for certain customer outcomes, if if we needed to take a more restrictive action in it and this is putting it in the context that over nine months year to date reported cost is down 2% a year. Yeah, It was down 2% year on year so. So this is why we were willing to tolerate to the continued investment in tech and ops I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending all the money now in the future.

Joseph Dickerson: So it's a similar quarterly run rate we should be thinking about?

Georges Elhedery: Purely for the funding cost of the trading books, you should expect that the trading balances will remain broadly stable at around $130 billion for the quarter. The math are simple. It's just that times the short-term rate levels essentially in USD. As you look at the overall Banking NII, I think the indication is that we've grown $0.1 billion Q2 to Q3. We haven't given indication for Q4. Again, feel comfortable with where the consensus is for Q4 and just reiterate the Banking NII is probably a better measure because it kind of gets you immunized for some of these trading choices we make in how much we fund the trading book with.

Georges Elhedery: So purely for the funding cost of the trading books, you should expect that the trading balances will remain broadly stable at around $130 billion dollars for the quarter, then kind of the math are simple it's just at times the short rate level is essentially in USD, and as you as you look at the overall banking NII, I think the indications is that we'd go in $0.1 billion Q2 to Q3, we haven't given indication for. Q4, again feel comfortable with where the consensus is for Q4 and just to reiterate the Banking NII is probably a better measure because it kind of gets you immunized for some of these trade choices we make and how much we fund the trading book with, With regards to your first question about tech and ops. It's a mix of necessary and discretionary. We we made the decision on the basis that one first when we put our cost base at the start of the year. We we had the a materially higher inflation than in some areas in some geographies and some pockets than than we anticipated for the year. And we felt that it would be. Adverse for certain customer outcomes, if if we needed to take a more restrictive action in it and this is putting it in the context that over nine months year to date reported cost is down 2% a year. Yeah, It was down 2% year on year so. So this is why we were willing to tolerate to the continued investment in tech and ops I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending all the money now in the future.

For the quarter, and then kind of the math or simple. It's just at times. The me in the short term.

Cliff is essentially in USD.

As you as you look at the overall banking NII.

Income the indications is that we'd go in north point $1 billion Q2 to Q3, we haven't given an indication for.

Q4, again feel comfortable with where the consensus is for Q4 and just to.

Today, the banking NII is probably a better measure because it kind of gets you immunize for some of these trade the choices, we make and how much we fund the trading book.

Georges Elhedery: With regards to your first question about tech and ops it's a mix of necessary and discretionary, we made the decision on the basis that, well first when we put our cost base at the start of the year, we had a materially higher inflation than in some areas, in some geographies and some pockets than we anticipated for the year and we felt that it would be adverse for certain customer outcomes, if we needed to take a more restrictive action on it and this is putting it in the context that our nine months year to date reported cost is down 2% year on year, it's down 2% year on year so, this is why we were willing to tolerate the continued investment in tech and ops, I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending our the money now and in the future.

Yes.

Georges Elhedery: With regard to your first question about tech and ops, look, it's a mix of necessary and discretionary. We made the decision on the basis that well, first, when we put our cost base at the start of the year, we had a materially higher inflation than in some areas, in some geographies, and some pockets than we anticipated for the year. We felt that it would be adverse for certain customer outcomes if we needed to take a more restrictive action on it. This is putting it in the context that our nine-month year-to-date reported cost is down 2% year on year.

With regards to your first question about tech and ops.

It's a mix of necessary and discretionary.

We we made the decision on the basis that one first when we put our cost base at the start of the year. We we had the a materially higher inflation than in some areas in some geographies and some pockets than than we anticipated for the year.

And we felt that it would be.

Adverse for certain customer outcomes, if if we needed to take a more restrictive action in it and this is putting it in the context that over nine months year to date reported cost is down 2% a year.

Georges Elhedery: And this is putting it in the context that our nine months year to date reported cost is down 2% year on year, it's down 2% year on year so, this is why we were willing to tolerate the continued investment in tech and ops, I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending our the money now and in the future. Thank you Joseph next question please.

Yeah, It was down 2% year on year so.

Georges Elhedery: This is why we were willing to tolerate the continued investment in tech and ops. I just wanna reaffirm what Noel said. We're absolutely committed to our cost discipline and we will be you know giving you you know visibility about how we're spending our money now and the future. Thank you, Joseph. Next question, please.

So this is why we were willing to tolerate to the continued investment in tech and ops I just want to reaffirm what Noel said, we're absolutely committed to our cost discipline and we will be giving you the visibility about how are we spending all the money now in the future.

Thank you Joseph next question please.

Operator 1: Our next question today comes from Jason Napier from UBS.

Operator: Our next question today comes from Jason Napier from UBS.

Operator: Our next question today comes from Jason Napier from UBS. Please accept the prompt to unmute your line and ask your question.

Georges Elhedery: Hello, Jason.

Jason Napier: Good morning. Can you hear me okay now?

Georges Elhedery: Hello, Jason.

Good morning can you hear me Okay. Now we can hear you Jason Thank you.

Jason Napier: Good morning can you hear me Okay. Now

Georges Elhedery: We can hear you, Jason.

Noel Quinn: Thank you. The first one please, on the $600 million of losses on the hedge reset and risk management quarter, and the extra sort of $400 million that's penciled in for Q4. I wonder whether you wouldn't mind adding a bit of color in terms of exactly what it is you're doing there. The payback period, you said sort of longer than 5 years. It feels like a downside risk hedge that's being put in place. If you could just talk about, you know, how much you might get the sensitivity down once all is said and done, and just confirm that it really pays you for H2 rather than, you know, supports your revenues in the near term. Secondly, we've had a busy week of mainland Chinese bank reporting.

Jason Napier: Thank you. The first one please, on the $600 million of losses on the hedge reset and risk management quarter, and the extra sort of $400 million that's penciled in for Q4. I wonder whether you wouldn't mind adding a bit of color in terms of exactly what it is you're doing there. The payback period, you said sort of longer than 5 years. It feels like a downside risk hedge that's being put in place. If you could just talk about, you know, how much you might get the sensitivity down once all is said and done, and just confirm that it really pays you for H2 rather than, you know, supports your revenues in the near term. Secondly, we've had a busy week of mainland Chinese bank reporting.

we can hear you Jason Thank you.

Georges Elhedery: we can hear you Jason

Jason Napier: Thank you the first one please on the $600 million of losses on the hedge reset and risk management this quarter and the extra sort of 400 that's pencilled in for Q4, I Wonder, whether you wouldn't mind, adding a bit of color in terms of exactly what it is you're doing with the payback periods. You said. Longer than five years, it feels like a downside risk edge being put in place, you could just talk about. How much you might get the sensitivity down once I want to check on that. The bright spot rather than. Our support revenue something like that. And then secondly, we had a busy week of mainland Chinese bank reporting all of the majors with Mr. Ron forecast and one of your peers right down there. Despite what. Third quarter results I Wonder could you update us on. We have value in Houston. On the call. All of that question is what's your name.

The first one case on the.

600 million.

<unk> on the hatred Spanish quota.

And the extra sort of 400.

Pennsylvania for Q4, I Wonder, whether you wouldn't mind, adding a bit of color in terms of exactly what it is youre doing the payback periods.

You said.

Jason Napier: You said. Longer than five years, it feels like a downside risk edge being put in place, you could just talk about. How much you might get the sensitivity down once I want to check on that. The bright spot rather than. Our support revenue something like that. And then secondly, we had a busy week of mainland Chinese bank reporting all of the majors with Mr. Ron forecast and one of your peers right down there. Despite what. Third quarter results I Wonder could you update us on. We have value in Houston. On the call. All of that question is what's your name.

Jason Napier: You said. Longer than five years,

Longer than five years, it feels like a downside risk edge.

Jason Napier: It feels like a downside risk hedge that's being put in place, if you could just talk about how much you might get the sensitivity down once all is set The bright spot rather than. Our support revenue something like that. And then secondly, we had a busy week of mainland Chinese bank reporting all of the majors with Mr. Ron forecast and one of your peers right down there. Despite what. Third quarter results I Wonder could you update us on. We have value in Houston. On the call. All of that question is what's your name.

Jason Napier: It feels like a downside risk hedge that's being put in place,

Being put in place you could just talk about.

Jason Napier: If you could just talk about how much you might get the sensitivity down once all is said and done and just confirm if it pays you if rates fall rather than support revenues in the near term and then secondly, we had a busy week of mainland Chinese bank reporting, all of the majors have missed our own forecast and one of your peers wrote down their mainland China stake with their Third quarter results, I Wonder could you update us please on where value in use is versus book value on BoCom and how that process runs towards year end?

How much you might get the sensitivity down once I want to check on that.

The bright spot rather than.

Our support revenue something like that.

And then secondly, we had a busy week of mainland Chinese bank reporting all of the majors with Mr. Ron forecast and one of your peers right down there.

Noel Quinn: All of the majors have missed our own forecasts, and one of your peers wrote down their mainland Chinese stake with their Q3 results. I wonder, could you update us please on where value in use versus book value on BoCom and how that process runs towards year-end? Thanks.

Jason Napier: All of the majors have missed our own forecasts, and one of your peers wrote down their mainland Chinese stake with their Q3 results. I wonder, could you update us please on where value in use versus book value on BoCom and how that process runs towards year-end? Thanks.

Despite what.

Third quarter results I Wonder could you update us on.

We have value in Houston.

On the call.

All of that question is what's your name.

Georges Elhedery: Sure. Thank you, Jason. First on the treasury losses. A few things to share here. First, we see this as one of the multiple tools we have to manage our structural hedge and obviously to manage the risk in our balance sheet. Second, importantly, the losses themselves have been taken already into CET1, mostly last year. These are already affected in our CET1 and this is why effectively they have a mild CET1 ratio benefit where we sit today. Third, as you indicated, Jason, we are looking to retrieve these losses in the NII line essentially over the next 5 years.

Georges Elhedery: Sure, Thank you Jason. So first on the tragedy losses, so a few things to share here first is we see this as one of the multiple tools you have to manage our structural hedge and obviously to manage the risk in our balance sheet. And importantly, it's the losses themselves have been taken already into CET, one mostly last year. So these are. These are already affected in or see Q1, and this is why. Effectively they have a mild CET one ratio benefit where. Where we sit today. And then third as you indicate that Jason we are looking at. To retrieve these losses in the NII line essentially over the next five years. So this is a reinvestment into either longer dated or higher yielding instruments by disposing. Foster disposing of lower yielding instruments to Lois. To. It kind of move faster than a structural hedging off the balance sheet. Yeah. If you wanted some sense of kind of math you could argue if we've taken 600 million law says, it's about 100 million loss. Additionally, the NII every year for the next six years or so. Which kind of gives you a sense of how we look at it. And it's indeed as part of our sexual hedging, which means part of how we're mitigate we're protecting the balance sheet mitigating risks offer rate downfall in the future. On your second question, Jason about the mainland China. So first I can comment on bulk homes Q2 performance because as you know in our numbers, we have one quarter delay. So the exercise it relates to Q2. Good value in use in a as if. As of Q3 has. <unk> has a has the room has room of about <unk> $4 billion. Compared to our carrying value. So the impairment is not a management discretion the decision right. There's a rigorous accounting process I will just follow the process and. Based on their Q3 results, we will evaluate those as we go into Q4 and that would be part of our interfere. Assessment I think the important thing I want to share about our local news because it sits insignificant investments and because we hold. Capital deductions and they're going to have to be kept as deductions against it and as you can see from from decided when capital $16 billion kept the deduction it effectively means that any. Any impediment on old holding of Bocom should it happen. We'll have virtually nil, a CET one ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount. So therefore, no implication on <unk> will also have an implication that reported profit accounting reported profits but. We'll treat it doesn't materially notable item and it'll have no implications either on the way, we calculate our dividend or dividend payout ratio. So this is why at this stage this is not too concerned with just follow the. Follow the accounting rules as we do the assessment. And just for clarity based on the impairment tests, we did in Q3. We have headroom against our carrying value there is no impairments Joe of Q3. And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead. Line level first aside. <unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

Georges Elhedery: Sure, Thank you Jason.

Georges Elhedery: So first on the treasury losses, so a few things to share here, first is, we see this as one of the multiple tools you have to manage our structural hedge and obviously to manage the risk in our balance sheet, second, importantly, it's the losses themselves have been taken already into CET1, mostly last year, so these are, these are already effective in our CET1, and this is why effectively they have a mild CET1 ratio benefit where we sit today, and then third as you indicated Jason, we are looking to retrieve these losses in the NII line, essentially over the next five years, so this is a reinvestment into either longer dated or higher yielding instruments by disposing, faster disposing of lower yielding instruments to allow us to kind of move faster than a structural hedging off the balance sheet. If you wanted some sense of kind of math you could argue if we've taken 600 million losses, it's about 100 million loss additional NII every year for the next six years or so, which kind of gives you a sense of how we look at it and it's indeed as part of our structural hedging, which means part of how we're mitigate, we're protecting the balance sheet mitigating risks offer rate downfall in the future. On your second question, Jason about the mainland China. So first I can comment on bulk homes Q2 performance because as you know in our numbers, we have one quarter delay. So the exercise it relates to Q2. Good value in use in a as if. As of Q3 has. <unk> has a has the room has room of about <unk> $4 billion. Compared to our carrying value. So the impairment is not a management discretion the decision right. There's a rigorous accounting process I will just follow the process and. Based on their Q3 results, we will evaluate those as we go into Q4 and that would be part of our interfere. Assessment I think the important thing I want to share about our local news because it sits insignificant investments and because we hold. Capital deductions and they're going to have to be kept as deductions against it and as you can see from from decided when capital $16 billion kept the deduction it effectively means that any. Any impediment on old holding of Bocom should it happen. We'll have virtually nil, a CET one ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount. So therefore, no implication on <unk> will also have an implication that reported profit accounting reported profits but. We'll treat it doesn't materially notable item and it'll have no implications either on the way, we calculate our dividend or dividend payout ratio. So this is why at this stage this is not too concerned with just follow the. Follow the accounting rules as we do the assessment. And just for clarity based on the impairment tests, we did in Q3. We have headroom against our carrying value there is no impairments Joe of Q3. And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead. Line level first aside. <unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

So first on the tragedy losses, so a few things to share here first is we see this as one of the multiple tools you have to manage our structural hedge and obviously to manage the risk in our balance sheet.

And importantly, it's the losses themselves have been taken already into CET, one mostly last year. So these are.

These are already affected in or see Q1, and this is why.

Effectively they have a mild CET one ratio benefit where.

Georges Elhedery: And then third as you indicated Jason, we are looking to retrieve these losses in the NII line, essentially over the next five years, so this is a reinvestment into either longer dated or higher yielding instruments by disposing, faster disposing of lower yielding instruments to allow us to kind of move faster than a structural hedging off the balance sheet. If you wanted some sense of kind of math you could argue if we've taken 600 million losses, it's about 100 million loss additional NII every year for the next six years or so, which kind of gives you a sense of how we look at it and it's indeed as part of our structural hedging, which means part of how we're mitigate, we're protecting the balance sheet mitigating risks of a rate downfall in the future.

Where we sit today.

And then third as you indicate that Jason we are looking at.

To retrieve these losses in the NII line essentially over the next five years.

Georges Elhedery: This is a reinvestment into either longer dated or higher yielding instruments, by disposing, you know, faster of lower yielding instruments to allow us to kind of move faster on our structural hedging of the balance sheet. You could if you wanted some sense of kind of math, you could argue if we've taken $600 million losses, it's about a $100 million loss additional NII every year for the next 6 years or so, which kind of gives you a sense of how we're looking at it. It's indeed as part of our structural hedging, which means part of how we're or protecting the balance sheet, mitigating risks of a rate downfall in the future. On your second question, Jason, about the mainland China.

So this is a reinvestment into either longer dated or higher yielding instruments by disposing.

Georges Elhedery: If you wanted some sense of kind of math you could argue if we've taken 600 million losses, it's about $100 million loss additional NII every year for the next six years or so, which kind of gives you a sense of how we look at it and it's indeed as part of our structural hedging, which means part of how we're mitigate, we're protecting the balance sheet mitigating risks of a rate downfall in the future.

Foster disposing of lower yielding instruments to Lois.

To.

It kind of move faster than a structural hedging off the balance sheet.

Yeah.

If you wanted some sense of kind of math you could argue if we've taken 600 million law says, it's about 100 million loss. Additionally, the NII every year for the next six years or so.

Which kind of gives you a sense of how we look at it.

And it's indeed as part of our sexual hedging, which means part of how we're mitigate we're protecting the balance sheet mitigating risks offer rate downfall in the future.

Georges Elhedery: On your second question, Jason about the mainland China. So first I can comment on bulk homes Q2 performance because as you know in our numbers, we have one quarter delay. So the exercise it relates to Q2. Good value in use in a as if. As of Q3 has. <unk> has a has the room has room of about <unk> $4 billion. Compared to our carrying value. So the impairment is not a management discretion the decision right. There's a rigorous accounting process I will just follow the process and. Based on their Q3 results, we will evaluate those as we go into Q4 and that would be part of our interfere. Assessment I think the important thing I want to share about our local news because it sits insignificant investments and because we hold. Capital deductions and they're going to have to be kept as deductions against it and as you can see from from decided when capital $16 billion kept the deduction it effectively means that any. Any impediment on old holding of Bocom should it happen. We'll have virtually nil, a CET one ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount. So therefore, no implication on <unk> will also have an implication that reported profit accounting reported profits but. We'll treat it doesn't materially notable item and it'll have no implications either on the way, we calculate our dividend or dividend payout ratio. So this is why at this stage this is not too concerned with just follow the. Follow the accounting rules as we do the assessment. And just for clarity based on the impairment tests, we did in Q3. We have headroom against our carrying value there is no impairments Joe of Q3. And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead. Line level first aside. <unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

Georges Elhedery: On your second question, Jason about the mainland China.

Georges Elhedery: So first I can comment on BoCom's Q2 performance because as you know, in our numbers we have one quarter delay, so the exercise relates to Q2, our value in use in a as of Q3 has room of about $0.4 billion dollars compared to our carrying value so, impairment is not a management discretionary decision right, there's a rigorous accounting process and we just follow the process and based on their Q3 results, we will evaluate those as we go into Q4 and that would be part of our end of the year assessment, I think the important thing I want to share about BoCom is, because it sits in significant investments and because we hold capital deductions, regulatory capital deductions against it, as you can see from the slide on capital, a $16 billion dollars capital deduction, it effectively means that any impairment on our holding of BoCom should it happen, we'll have virtually nil CET1 ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount. So therefore, no implication on <unk> will also have an implication that reported profit accounting reported profits but. We'll treat it doesn't materially notable item and it'll have no implications either on the way, we calculate our dividend or dividend payout ratio. So this is why at this stage this is not too concerned with just follow the. Follow the accounting rules as we do the assessment. And just for clarity based on the impairment tests, we did in Q3. We have headroom against our carrying value there is no impairments Joe of Q3. And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead. Line level first aside. <unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

On your second question, Jason about the mainland China. So first I can comment on bulk homes Q2 performance because as you know in our numbers, we have one quarter delay.

Georges Elhedery: First, I can comment on BoCom's Q2 performance because as you know, in our numbers, we have one quarter delay. The exercise relates to Q2. Our value in use as of Q3 has headroom of about $9.4 billion, compared to our carrying value. Look, impairment is not a management discretionary decision, right? There's a rigorous accounting process, and we just follow the process. Based on their Q3 results, we will evaluate those as we go into Q4, and that will be part of our end of year assessment.

So the exercise it relates to Q2.

Good value in use in a as if.

As of Q3 has.

<unk> has a has the room has room of about <unk> $4 billion.

Compared to our carrying value.

So the impairment is not a management discretion the decision right. There's a rigorous accounting process I will just follow the process and.

Georges Elhedery: I think the important thing I want to share about BoCom is, because it sits in significant investments and because we hold capital deductions, regulatory capital deductions against it, as you can see from the slide on capital, a $16 billion dollars capital deduction, it effectively means that any impairment on our holding of BoCom should it happen, we'll have virtually nil CET1 ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount.

Based on their Q3 results, we will evaluate those as we go into Q4 and that would be part of our interfere.

Georges Elhedery: I think the important thing I wanna share about BoCom is because it sits in significant investments and because we hold capital deductions, regulatory capital deductions against it, and as you can see from the slide on capital, $16 billion capital deduction, it effectively means that any impairment on our holding of BoCom, should it happen, will have virtually nil CET1 ratio impact. That's because any impairment will be compensated like for like by a release of the deductions of a similar amount. Therefore, no implication on CET1. It'll have an implication on reported profits, accounting reported profits, but we'll treat it as a material notable item, and it'll have no implications either on the way we calculate our dividend or our dividend payout ratio.

Assessment I think the important thing I want to share about our local news because it sits insignificant investments and because we hold.

Capital deductions and they're going to have to be kept as deductions against it and as you can see from from decided when capital $16 billion kept the deduction it effectively means that any.

Any impediment on old holding of Bocom should it happen.

We'll have virtually nil, a CET one ratio impact and that's because any impairment will be compensated like for like by a release of the deductions of a similar amount.

Georges Elhedery: So therefore, no implication on CET1, we'll also, it will have an implication at reported profit, accounting reported profits but we'll treat it as a materially notable item and it'll have no implications either on the way we calculate our dividend or dividend payout ratio, so this is why at this stage this is not a concern we just follow the, follow the accounting rules as we do the VIU assessment. And just for clarity based on the impairment tests, we did in Q3, we have headroom against our carrying value, there is no impairments Joe of Q3. And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead. Line level first aside. <unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

So therefore, no implication on <unk> will also have an implication that reported profit accounting reported profits but.

We'll treat it doesn't materially notable item and it'll have no implications either on the way, we calculate our dividend or dividend payout ratio.

Georges Elhedery: This is why at this stage, this is not a concern. We'll just follow the, you know, accounting rules as we do the VIU assessment.

So this is why at this stage this is not too concerned with just follow the.

Noel Quinn: And just for clarity, based on the impairment tests we did in Q3, we have headroom against our carrying value, there is no impairments due at Q3 and we'll reassess it at Q4, but based on the Q3 results that BoCom issued a couple of days ago, those results, at a headline level first aside did not cause us any concern on our impairment test in Q3, but we'll reassess that at Q4. Yeah. Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it. Thank you Jason can we move to the next question.

Follow the accounting rules as we do the assessment.

Noel Quinn: Jason, just for clarity, based on the impairment test we did at Q3, we have headroom against our carrying value. There is no impairment due at Q3, and we'll reassess it at Q4. Based on the Q3 results that BoCom issued a couple of days ago, those results are at a headline level. First slide did not cause us any concern on our impairment test at Q3. We'll reassess that at Q4.

And just for clarity based on the impairment tests, we did in Q3.

We have headroom against our carrying value there is no impairments Joe of Q3.

And we'll reassess it at Q4, but based on the Q3 results above come issued a couple of days ago. So she was old so I I'd ahead.

Line level first aside.

<unk> causes any concern on our impairment test in Q3, but we'll reassess that of Q4.

Georges Elhedery: Thanks Noel, you'll have the details in the AR&A In how we do the impairment testing for the value in use with BoCom Jason in case, you need it. Thank you Jason can we move to the next question.

Yeah.

Georges Elhedery: Thanks, Noel. You'll have the details in the ARA in how we do the impairment testing for the value in use of BoCom, Jason, in case you need it. Thank you, Jason. Can we move to the next question?

Thanks, Don you you'll have the details in the O N E. In how we do the impairment testing for the value in use with Broadcom or Jason in case, you need it.

Thank you Jason can we move to the next question.

Operator 1: Our next question today comes from Gurpreet Singh Sahi from Goldman Sachs. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Gurpreet Singh Sahi from Goldman Sachs. Please accept the prompt to unmute your line and ask your question.

Gurpreet Singh Sahi: Thank you very much for letting me ask the question. Good morning, Noel. Good morning, Georges.

Gurpreet Singh Sahi: Thank you very much for letting me ask a question, Good morning George, So first one on loan growth, how do we see the areas of loan growth going into next year, you have done a good growth around mortgages, but they have been offset by shrinking in the commercial book, so that's the first one. In terms of medium term of course, we are highlighting mid single digits, but specifically as interest rates remain high I always be borrowing at the guidance into next year and then the second one with respect to the special dividend that make sense. By doing a really be announced. Great. Thank you. Thank you Gurpreet

I think they ask the question. Good morning, Good morning, George So first one on loan growth.

Georges Elhedery: Good morning.

Gurpreet Singh Sahi: First one on loan growth. How do we see the areas of loan growth going into next year? We've done a good growth around mortgages, but they have been offset by shrinkage in the commercial book. That's the first one. In terms of medium term, of course, we are highlighting mid-teens digits, but specifically as interest rates remain high, how is the borrowing appetite into next year? And then the second one with respect to the special dividend timing, the $0.21, will it be paid by June, or will it be announced towards Q2 and paid later on? Thank you.

Do we see the areas of loan growth going into next year, we have been a good growth that our mortgages, but they have been offset by shrinking the commercial book.

That's the fresh Brian in terms of medium term of course, we are highlighting mid single digits, but specifically as interest rates remain high I always be borrowing at the guidance into next year and then the second one with respect to the special dividend that make sense.

Gurpreet Singh Sahi: In terms of medium term of course you are highlighting mid, single digits, but specifically as interest rates remain high, how is the borrowing appetite into next year? and then the second one with respect to the special dividend timing, the 21 cents, will it be paid by June or will it be announced towards the second quarter and paid later on? Thank you. Thank you Gurpreet

By doing a really be announced.

Great.

Thank you.

Georges Elhedery: Thank you, Gurpreet. In terms of loan growth, what we've observed so far is continued growth in mortgages. We said $11 billion year to date, essentially in Hong Kong and the UK. That continued even this quarter, despite the softness in the housing market. We remain competitive, and we continue to support this business for our customers. That is definitely there. We're also seeing some loan growth in the unsecured space in our retail business. It will be smaller proportions. In terms of commercial, the reality is the main softness in loan growth in commercial is in Hong Kong, and this is what's driving the commercial overall number. The softness in Hong Kong has two parameters.

Thank you goodbye.

Georges Elhedery: Thank you Gurpreet So in terms of loan growth what we've what we've observed so far is a some growth and continued growth in mortgages, we said 11 billion year to date. Essentially in essentially in Hong Kong and the U K that continued even this quarter. Despite the softness in the housing market, but we remain competitive and we continue to support this business. For our customers so that is definitely there. We're also seeing. Some loan growth in the unsecured space in our retail business it will be smaller proportions. In terms of commercial. The reality is the main softness in loan growth in commercial is in Hong Kong. This is what's driving the commercial overall number the softness is Hong Kong has two. Two parameters one the rate differential with mainland China, and you know as long as well. We have saturated differential it is XP. Expect it to have mainland Chinese bought always continue borrowing onshore mainland China, rather than borrowing offshore because because of the rate differential and that probably will not reverse in the next couple of years. But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see a reversing and we've been encouraged by the policy measures that have been taken. By way of supporting the economy. And if those materialize, we will start seeing. Some pick up in the segment no outside this softness areas, we do still have shrunk. Loan growth potential in <unk>. Growing areas. In other geographies such as such. Such as southeast Asia, such as India, such as the Middle East. And we even had growth in some of the western economies. So so that's. That is happening and quite importantly, also I wanted to call out growth in trade I called it out in the earlier kind of a speech if you want but truth is bucking the trend for the first quarter, where we've seen 3% growth node loan book after several quarters of decline and that's encouraging we'll obviously need to see how it evolves, but that's definitely a team.

Georges Elhedery: Thank you Gurpreet, so in terms of loan growth what we've, what we've observed so far is a, some growth and continued growth in mortgages, we said 11 billion year to date, essentially in Hong Kong and the U.K. that continued even this quarter, despite the softness in the housing market, but we remain competitive and we continue to support this business for our customers so that is definitely there. We're also seeing. Some loan growth in the unsecured space in our retail business it will be smaller proportions. In terms of commercial. The reality is the main softness in loan growth in commercial is in Hong Kong. This is what's driving the commercial overall number the softness is Hong Kong has two. Two parameters one the rate differential with mainland China, and you know as long as well. We have saturated differential it is XP. Expect it to have mainland Chinese bought always continue borrowing onshore mainland China, rather than borrowing offshore because because of the rate differential and that probably will not reverse in the next couple of years. But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see a reversing and we've been encouraged by the policy measures that have been taken. By way of supporting the economy. And if those materialize, we will start seeing. Some pick up in the segment no outside this softness areas, we do still have shrunk. Loan growth potential in <unk>. Growing areas. In other geographies such as such. Such as southeast Asia, such as India, such as the Middle East. And we even had growth in some of the western economies.

So in terms of loan growth what we've what we've observed so far is a some growth and continued growth in mortgages, we said 11 billion year to date.

Essentially in essentially in Hong Kong and the U K that continued even this quarter. Despite the softness in the housing market, but we remain competitive and we continue to support this business.

For our customers so that is definitely there.

Georges Elhedery: We're also seeing some loan growth in the unsecured space in our retail business, it will be smaller proportions, In terms of commercial. The reality is the main softness in loan growth in commercial is in Hong Kong. This is what's driving the commercial overall number the softness is Hong Kong has two. Two parameters one the rate differential with mainland China, and you know as long as well. We have saturated differential it is XP. Expect it to have mainland Chinese bought always continue borrowing onshore mainland China, rather than borrowing offshore because because of the rate differential and that probably will not reverse in the next couple of years. But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see a reversing and we've been encouraged by the policy measures that have been taken. By way of supporting the economy. And if those materialize, we will start seeing. Some pick up in the segment no outside this softness areas, we do still have shrunk. Loan growth potential in <unk>. Growing areas. In other geographies such as such. Such as southeast Asia, such as India, such as the Middle East. And we even had growth in some of the western economies.

Georges Elhedery: We're also seeing some loan growth in the unsecured space in our retail business, it will be smaller proportions,

We're also seeing.

Some loan growth in the unsecured space in our retail business it will be smaller proportions.

Georges Elhedery: In terms of commercial, the reality is the main softness in loan growth in commercial is in Hong Kong, this is what's driving the commercial overall number, the softness in Hong Kong has two parameters, one the rate differential with mainland China, and you know as long as we have saturated differential it is expected to have mainland Chinese borrowers continue borrowing onshore mainland China, rather than borrowing offshore because of the rate differential and that probably will not reverse in the next couple of years. But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see a reversing and we've been encouraged by the policy measures that have been taken. By way of supporting the economy. And if those materialize, we will start seeing. Some pick up in the segment no outside this softness areas, we do still have shrunk. Loan growth potential in <unk>. Growing areas. In other geographies such as such. Such as southeast Asia, such as India, such as the Middle East. And we even had growth in some of the western economies.

In terms of commercial.

The reality is the main softness in loan growth in commercial is in Hong Kong. This is what's driving the commercial overall number the softness is Hong Kong has two.

Georges Elhedery: One, the rate differential with mainland China. You know, as long as we have such a rate differential, it is expected to have mainland Chinese borrowers continue borrowing onshore mainland China rather than borrowing offshore because of the rate differential, and that probably will not reverse in the next couple of years. Two, some of the softness we've seen in the economic conditions in Hong Kong, which we start to see reversing, and we've been encouraged by the policy measures that have been taken by way of supporting the economy. If those materialize, we will start seeing some pickup in this segment.

Two parameters one the rate differential with mainland China, and you know as long as well.

We have saturated differential it is XP.

Expect it to have mainland Chinese bought always continue borrowing onshore mainland China, rather than borrowing offshore because because of the rate differential and that probably will not reverse in the next couple of years.

Georges Elhedery: But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see reversing and we've been encouraged by the policy measures that have been taken by way of supporting the economy and if those materialize, we will start seeing some pick up in this segment. no outside this softness areas, we do still have shrunk. Loan growth potential in <unk>. Growing areas. In other geographies such as such. Such as southeast Asia, such as India, such as the Middle East. And we even had growth in some of the western economies.

But also too is some of the softness we've seen in the economic conditions in Hong Kong, which we start to see a reversing and we've been encouraged by the policy measures that have been taken.

By way of supporting the economy.

And if those materialize, we will start seeing.

Some pick up in the segment no outside this softness areas, we do still have shrunk.

Georges Elhedery: Now, outside the softness areas, we do still have strong loan growth potential in growing areas in our geography such as Southeast Asia, such as India, such as the Middle East. We even had growth in some of the Western economies. That is, you know, that is happening. Quite importantly also, I wanna call out growth and trade. I called it out in the earlier kind of speech if you want. Trade is bucking the trend for Q1, where we've seen 3% growth in our loan book after several quarters of decline, and that's encouraging. We'll obviously need to see how it evolves, but that's definitely encouraging.

Georges Elhedery: Now outside this softness areas, we do still have strong loan growth potential in growing areas in our geographies such as such, such as southeast Asia, such as India, such as the Middle East and we even had growth in some of the western economies, so that is happening.

Loan growth potential in <unk>.

Growing areas.

In other geographies such as such.

Such as southeast Asia, such as India, such as the Middle East.

And we even had growth in some of the western economies.

Georges Elhedery: So so that's. That is happening and quite importantly, also I wanted to call out growth in trade I called it out in the earlier kind of a speech if you want but truth is bucking the trend for the first quarter, where we've seen 3% growth node loan book after several quarters of decline and that's encouraging we'll obviously need to see how it evolves, but that's definitely a team. Encouraging and if you look at it most of that growth is in Asia, which means is bucking the trend in Asia, that's probably on the back book, but certainly on the backdrop of. Now the trade between China, and ASEAN has exceeded trade between China, and Europe, or China, and U S and that obviously would benefit given our footprint in China and ASEAN. On the special dividend good put it at this stage. We're aiming for completion of Canada sometime in Q1, we will then have to go through dual governance and you approvals before we do it. Thank each 124, it is reasonable to expect but it is obviously you know. Obviously at this stage just a. Method of process, we need to go through. That's what I can say at this stage. I assume that well, we'll pay it as soon as we can go pretty that's what it is at this stage. Oh. Thank you. The next question please.

Georges Elhedery: So so that's. That is happening and

Georges Elhedery: Quite importantly, also I wanted to call out growth in trade, I called it out in the earlier kind of speech if you want but, trade is bucking the trend for the first quarter where we've seen 3% growth node, loan book after several quarters of decline and that's encouraging we'll obviously need to see how it evolves, but that's definitely encouraging and if you look at it most of that growth is in Asia, which means is bucking the trend in Asia, that's probably on the back book, but certainly on the backdrop of. Now the trade between China, and ASEAN has exceeded trade between China, and Europe, or China, and U S and that obviously would benefit given our footprint in China and ASEAN. On the special dividend good put it at this stage. We're aiming for completion of Canada sometime in Q1, we will then have to go through dual governance and you approvals before we do it. Thank each 124, it is reasonable to expect but it is obviously you know. Obviously at this stage just a. Method of process, we need to go through. That's what I can say at this stage. I assume that well, we'll pay it as soon as we can go pretty that's what it is at this stage. Oh. Thank you. The next question please.

So so that's.

That is happening and quite importantly, also I wanted to call out growth in trade I called it out in the earlier kind of a speech if you want but truth is bucking the trend for the first quarter, where we've seen 3% growth node loan book after several quarters of decline and that's encouraging we'll obviously need to see how it evolves, but that's definitely a team.

Georges Elhedery: If you look at it, most of that growth is in Asia, which means it's bucking the trend in Asia, and that's probably on the backdrop of, now the trade between China and ASEAN has exceeded trade between China and Europe or China and the US, and that obviously will benefit, given our footprint in China and ASEAN. On the special dividend, Gurpreet, at this stage we're aiming for completion of Canada sometime in Q1. We will then have to go through due governance and due approvals before we do it. I think H1 2024 is reasonable to expect, but it is obviously, you know, it's obviously at this stage just a matter of a process we need to go through. I think that's what I can say at this stage. As soon as

Encouraging and if you look at it most of that growth is in Asia, which means is bucking the trend in Asia, that's probably on the back book, but certainly on the backdrop of.

Now the trade between China, and ASEAN has exceeded trade between China, and Europe, or China, and U S and that obviously would benefit given our footprint in China and ASEAN.

Georges Elhedery: Now the trade between China and ASEAN has exceeded trade between China and Europe, or China and U.S. and that obviously would benefit given our footprint in China and ASEAN. On the special dividend good put it at this stage. We're aiming for completion of Canada sometime in Q1, we will then have to go through dual governance and you approvals before we do it. Thank each 124, it is reasonable to expect but it is obviously you know. Obviously at this stage just a. Method of process, we need to go through. That's what I can say at this stage. I assume that well, we'll pay it as soon as we can go pretty that's what it is at this stage. Oh. Thank you. The next question please.

Georges Elhedery: Now the trade between China and ASEAN has exceeded trade between China and Europe, or China and U.S. and that obviously would benefit given our footprint in China and ASEAN.

On the special dividend good put it at this stage.

Georges Elhedery: On the special dividend Gurpreet, it at this stage, we're aiming for completion of Canada sometime in Q1, we will then have to go through due governance and due approvals before we do it, I think H124 is reasonable to expect but it is obviously you know, is obviously at this stage just a matter of process we need to go through, I think that's what I can say at this stage, we'll pay it as soon as we can Gurpreet, that's what it is at this stage. Oh. Thank you Gurpreet, next question please.

We're aiming for completion of Canada sometime in Q1, we will then have to go through dual governance and you approvals before we do it.

Thank each 124, it is reasonable to expect but it is obviously you know.

Obviously at this stage just a.

Method of process, we need to go through.

That's what I can say at this stage.

Georges Elhedery: Well, we'll pay it as soon as we can, Gurpreet. That's what you say at this stage. Thank you, Gurpreet. Next question please.

I assume that well, we'll pay it as soon as we can go pretty that's what it is at this stage.

Oh. Thank you. The next question please.

Operator 1: Our next question today comes from Manus Costello from Autonomous. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Manus Costello from Autonomous. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Manus Costello from Autonomous please accept the prompt to on mute your line and ask your question.

Yeah.

Manus Costello: Good morning. Thanks for taking the question. Can I probe you a bit more on the hedging that you've got in place? You've talked about increased hedging for the last couple of quarters, and you have this quarter, as you discussed previously, taken some losses through the held-for-sale portfolio to improve NII next year. But we lack a kind of an overall understanding of what you've got in terms of the hedge. My question specifically is how big is your hedge and what's the duration of your hedge so that we can do some modeling to understand how much protection you've got into 2024 and beyond? Thank you.

Manus Costello: Good morning, thanks for taking the question can I, probe you a bit more on the hedging that you've got in place, you've talked about the increased hedging for the last couple of quarters and you have this quarter, as you've discussed previously, taken some losses through the held for sale portfolio to improve that now and next year, but we lack a kind of an overall understanding of what you've got in terms of the hedge. And so my question specifically is how big is your hedge on what situation is your hedge, so that we can do some modeling to understand how much protection you've got into '24 and beyond thank you.

And do you have this quarter as you discussed previously taken some losses true the held for sale portfolio to improve NII next year. So we like to kind of an overall understanding of what you've got in terms of the hedge.

Manus Costello: But we lack a kind of an overall understanding of what you've got in terms of the hedge, and so my question specifically is how big is your hedge and what's the duration of your hedge, so that we can do some modeling to understand how much protection you've got into '24 and beyond, thank you.

And so my question specifically is how big is your hedge I want situations go ahead. She said that we can do some modeling to understand how much protection you go into 'twenty four and beyond thank you.

Georges Elhedery: Thank you, Manus. A very insightful question. We are intending to have much more disclosure around our structural hedge at the full year. We're planning to give you additional disclosures from the one we already give today, which is the usual NII table with multiple rate shifts and over the five years. That, you know, includes duration, that includes yields on the structural hedge, et cetera, which hopefully can allow you to model all of this. We're not ready to do it at Q3. It'll be more appropriate to do it at the full year.

Georges Elhedery: Thank you Manus, very insightful question, we are intending to have much more disclosure around our structural hedge at the full year, we're planning to give you additional disclosures from the one we already gave today, which is the usual NII table with the multiple rate shifts in over the five years, that includes a duration, that include yields on the structural hedge et cetera, which hopefully can allow you to model all of this we're not ready to do it at Q3, it would be more appropriate to do it at the full year. I think what you should take into account some of the information we shared at the half year, which is the hedge itself has allowed us to reduce our NII sensitivity. At the backend of last year from $6 billion for a 100 basis points down. To to now a. $2 $6 billion. For which you should add the funding. Funding of the trading book sensitivity of four three so that's giving you an idea of how much the. Overall hedge among other consider contributors have supported the reduction of our entire volatility. Sensitivity to the downward pressure on rates and I think you should definitely assume that it remains our intention at this phase of the cycle and rates to continue. Doing hedges. As appropriate across all those balance sheets, where we can find them. So more on that are at the full year of madness. Thank you for the questions and I look forward to it. Thank you.

Very insightful question, we are intending to have much more disclosure I don't know structural hedge at the full year.

We're planning to give you additional disclosures from the one we all would you give today, which is the usual NII table with the multiple rate shifts in over the five years.

Includes a duration that include yields on the structural hedge et cetera, which hopefully can allow you to model all of this we're not ready to do it at Q3, it would be more appropriate to do it at the full year.

Georges Elhedery: I think what you should take into account is some of the information we shared at the H1, which is the hedge itself has allowed us to reduce our NII sensitivity at the back end of last year from $6 billion for 100 basis points down to now $2.6 billion, over which you should add the funding for trading book sensitivity of $1.3 billion. That's giving you an idea of how much the overall hedge among other contributors have supported the reduction of our NII volatility and our NII sensitivity to the downward pressure on rates.

I think what you should take into account some of the information we shared at the half year, which is the hedge itself has allowed us to reduce our NII sensitivity.

Georges Elhedery: I think what you should take into account is some of the information we shared at the half year, which is the hedge itself has allowed us to reduce our NII sensitivity at the backend of last year from $6 billion dollars for a 100 basis points down to now a $2.6 billion dollars, over which you should add the funding of the trading book sensitivity of 1.3 so that's giving you an idea of how much the overall hedge, among other contributors have supported the reduction of our NII volatility and our NII sensitivity to the downward pressure on rates and I think you should definitely assume that it remains our intention at this phase of the cycle and rates to continue. Doing hedges. As appropriate across all those balance sheets, where we can find them. So more on that are at the full year of madness. Thank you for the questions and I look forward to it. Thank you.

At the backend of last year from $6 billion for a 100 basis points down.

To to now a.

$2 $6 billion.

For which you should add the funding.

Funding of the trading book sensitivity of four three so that's giving you an idea of how much the.

Georges Elhedery: So that's giving you an idea of how much the overall hedge, among other contributors, have supported the reduction of our NII volatility and our NII sensitivity to the downward pressure on rates and I think you should definitely assume that it remains our intention, at this phase of the cycle in rates, to continue doing hedges as appropriate across all our balance sheets, where we can find them, so more on that are at the full year Manus, Thank you for the questions and I look forward to it. Thank you.

Overall hedge among other consider contributors have supported the reduction of our entire volatility.

Sensitivity to the downward pressure on rates and I think you should definitely assume that it remains our intention at this phase of the cycle and rates to continue.

Georges Elhedery: I think you should definitely assume that it remains our intention at this phase of the cycle in rates to continue doing hedges as appropriate across all our balance sheets where we can find them. So more on that at the full year, Manus. Thank you for the question.

Doing hedges.

As appropriate across all those balance sheets, where we can find them. So more on that are at the full year of madness. Thank you for the questions and I look forward to it. Thank you.

Manus Costello: I look forward to it. Thank you.

Okay.

Yeah.

Operator 1: Our next question today.

Operator: Our next question today.

Operator: Our next question today comes from Raul Sinha from J.P. Morgan, please accept the prompt to unmute your line and then ask your question.

Georges Elhedery: Yes, please.

Operator 1: Our next question today comes from Rahul Sinha from JP Morgan. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Rahul Sinha from JP Morgan. Please accept the prompt to unmute your line and ask your question.

Our next question today comes from Raul Sinha from JP, Morgan, except a prompt to Amit your line and ask your question.

Rahul Sinha: Hi. Good morning, Noel. Couple of follow-ups from me, please, if I can. I guess the first one is just around slide 17, looking at the split of NIM across your main subsidiaries. I'm just trying to understand the underlying NIM trajectory for the bank, you know, in the absence of any rate changes from here on. If we look at the UK bank, the Ring-fenced bank, obviously that's that margin has been under pressure this quarter, and a number of peers are obviously flagging the lag effect on deposit costs as well as the migration is going to have an impact in Q4.

Raul Sinha: Hi, good morning, a couple of follow ups from me please, if I can, I guess the first one is just around slide 17 looking at the split of NIM across your main subsidiaries, I'm just trying to understand the underlying NIM trajectory for the bank, in the absence of any great changes from here on, if you look at the U.K. bank or a ring fenced bank, obviously that's, that margin has been under pressure this quarter and a number of peers, are obviously flagging the lag effect on deposit costs as well as the migration, it's going to have an impact in Q4 I was just wondering if you could. Give us a little bit color on what you think geography Europe is this in terms of March maybe the U K. And then I guess just linking it back to the group margin. Which has actually stayed pretty stable. But starting to come under pressure.

Hi, good morning.

Couple of follow ups from me. Please just if I can I guess the first one is just around.

Slide 17 looking at the split.

I mean across your main subsidiaries.

I'm, just trying to understand the underlying NIM trajectory.

For the bank in the absence of any great changes from here on.

Raul Sinha: If you look at the U.K. bank or ring fenced bank, obviously that's, that margin has been under pressure this quarter and a number of peers are obviously flagging the lag effect on deposit costs as well as the migration, it's going to have an impact in Q4 I was just wondering if you could. Give us a little bit color on what you think geography Europe is this in terms of March maybe the U K. And then I guess just linking it back to the group margin. Which has actually stayed pretty stable. But starting to come under pressure.

If you look at the U K bank or a ring fenced bank obviously that's.

That market has been under pressure this quarter and a number of our peers, obviously staggering the lag effect on deposit costs as well as the migration. It's great to have an impact in Q4 I was just wondering if you could.

Raul Sinha: I was just wondering if you could give us a little bit color on what you think the outlook for your business in terms of margin in the U.K. and then, I guess just linking it back to the group margin, which is as you say broadly stable, but starting to come under a little bit pressure, the HIBOR-LIBOR gap is obviously very narrow season. So even though the rguest buy brokers or up in Q4. Let me take a step back and think about the overall margin trajectory would. Would you say that. In the absence of rate changes the margin is stable or do you think there is a little bit more pressure sort of creeping in hum because of what was going on in the UK.

Rahul Sinha: I was just wondering if you could give us a little bit color on what you think is the outlook for your business in terms of margin in the UK. Then I guess just linking it back to the group margin, which is as you said, broadly stable, but starting to come under a little bit pressure. The HIBOR-LIBOR gap is obviously very narrow, you know, seasonally I guess HIBOR tends to go up in Q4. When we take a step back and think about the overall margin trajectory, would you say that, you know, in the absence of rate changes, the margin is stable or do you think there's a little bit more pressure sort of creeping in because of what is going on in the UK? Thank you.

Give us a little bit color on what you think geography Europe is this in terms of March maybe the U K.

And then I guess just linking it back to the group margin.

Which has actually stayed pretty stable.

But starting to come under pressure.

Raul Sinha: The HIBOR-LIBOR gap is obviously very narrow, seasonally I guess HIBOR tends to go up in Q4, so let me take a step back and think about the overall margin trajectory, would you say that, in the absence of rate changes the margin is stable or do you think there is a little bit more pressure sort of creeping in because of what was going on in the U.K. Thank You.

For sure.

Hydro LIBOR gap is obviously very narrow season.

So even though the rguest buy brokers or up in Q4.

Let me take a step back and think about the overall margin trajectory would.

Would you say that.

In the absence of rate changes the margin is stable or do you think there is a little bit more pressure sort of creeping in hum because of what was going on in the UK.

Georges Elhedery: Sure. Okay. Thank you, Rahul. Okay, let me unpack. There are quite a number of considerations here. The first one is, I would kind of, as always, will encourage you to look at banking NII, because first, it's a better reflection of our rate sensitive earnings, and second, it will immunize you from some of the kind of business choices we make by putting more money into the trading to support more funding to support the trading activities or not, and that can create noise in NII versus funding of the trading book, which is annihilated when you look at it from a banking NII perspective. Now, talking a little bit on Q3 before I talk about the outlook.

Georges Elhedery: Sure okay thank you Raul, okay, so let me unpack there are quite a number of considerations here, so the first one is I would, kind of as always will encourage you to look at banking NII, because that will, first it's a better reflection of our rate sensitive earnings and second it will immunize you from some of the kind of business choices, we make by putting more money into the trading to support, more funding to support the trading activities are not and that can create noise in NII versus funding of the trading book, which is any related when you look at it from a banking perspective. <unk>. No. Talking a little bit on Q3 before I talk about the outlook on the Q3 numbers. You look at banking NII in Hong Kong, It was up 10%. Now this is not reflected in NIM NIM is up two basis points. But essentially because a lot of that upside went into the funding of the trading book. But the from. Are they sensitive earnings in Asia. Asian entity has grown 10% by about $3 billion. So that's the first thing to observe if you look at high baud rate. You know Q2 to Q3, obviously they were up 75 basis points you know when we look at Q4 to date Theres another something like 50 basis points baked in the average. So there is additional tailwind into Q4 from Highboy, which will obviously need to see how the next two months before we before we evaluate. If you look at the U K. So the UK NIM was up 16 basis points Q1 to Q2 down eight basis points Q2 to Q3. The first thing I want to say is this is definitely not the trend here to be read I think NIM is broadly stable from here for the next few quarters. Some of these moves are kind of idiosyncrasies and over market Treasury management, but not necessary drivers of trends. So we're looking at it in the indoor is broadly.

Georges Elhedery: Sure okay thank you Raul, okay, so let me unpack there are quite a number of considerations here, so the first one is I would, kind of as always, will encourage you to look at banking NII, because that will, first it's a better reflection of our rate sensitive earnings and second it will immunize you from some of the, kind of business choices we make by putting more money into the trading to support, more funding to support the trading activities or not and that can create noise in NII versus funding of the trading book, which is unrelated when you look at it from a banking NII perspective.

Okay. So let me unpack that quite a number of considerations here.

So the first one is.

I would kind of as always will encourage you to look at banking NII.

Because that will first it's a better reflection of how rate sensitive earnings.

And second it will immunize you from some of the kind of business choices, we make by putting more money into the trading to support more funding to support the trading activities are not and that can create noise in NII versus funding of the trading book, which is any related when you look at it from a banking perspective.

<unk>.

No.

Talking a little bit on Q3 before I talk about the outlook on the Q3 numbers.

Georges Elhedery: Now talking a little bit on Q3 before I talk about the outlook, on the Q3 numbers if you look at banking NII in Hong Kong, it was up 10%, now this is not reflected in NIM, NIM is up two basis points, but essentially, because a lot of that upside went into the funding of the trading book, but the full rate-sensitive earnings in Asia, in our Asian entity has grown 10% by about $0.3 billion dollars. So that's the first thing to observe if you look at high baud rate. You know Q2 to Q3, obviously they were up 75 basis points you know when we look at Q4 to date Theres another something like 50 basis points baked in the average. So there is additional tailwind into Q4 from Highboy, which will obviously need to see how the next two months before we before we evaluate. If you look at the U K. So the UK NIM was up 16 basis points Q1 to Q2 down eight basis points Q2 to Q3. The first thing I want to say is this is definitely not the trend here to be read I think NIM is broadly stable from here for the next few quarters. Some of these moves are kind of idiosyncrasies and over market Treasury management, but not necessary drivers of trends. So we're looking at it in the indoor is broadly.

Georges Elhedery: On the Q3 numbers, if you look at banking NII in Hong Kong, it was up 10%. Now, this is not reflected in NIM. NIM is up 2 basis points, but essentially because a lot of that upside went into the funding of the trading books. From rate sensitive earnings in Asia and/or, you know, Asian entity has grown 10% by about $0.3 billion. That's the first thing to observe. If you look at HIBOR, you know, Q2 to Q3, obviously they were up 75 basis points. You know, when we look at Q4 to date, there's another something like 50 basis points baked in the average.

You look at banking NII in Hong Kong, It was up 10%.

Now this is not reflected in NIM NIM is up two basis points.

But essentially because a lot of that upside went into the funding of the trading book.

But the from.

Are they sensitive earnings in Asia.

Asian entity has grown 10% by about $3 billion.

So that's the first thing to observe if you look at high baud rate.

Georges Elhedery: So that's the first thing to observe, if you look at HIBOR rates, you know Q2 to Q3 obviously they were up 75 basis points, you know when we look at Q4 to date, theres another something like 50 basis points baked in the average, so there is additional tailwind into Q4 from HIBOR, which we'll obviously need to see how the next two months fare before we evaluate. If you look at the U K. So the UK NIM was up 16 basis points Q1 to Q2 down eight basis points Q2 to Q3. The first thing I want to say is this is definitely not the trend here to be read I think NIM is broadly stable from here for the next few quarters. Some of these moves are kind of idiosyncrasies and over market Treasury management, but not necessary drivers of trends. So we're looking at it in the indoor is broadly.

You know Q2 to Q3, obviously they were up 75 basis points you know when we look at Q4 to date Theres another something like 50 basis points baked in the average. So there is additional tailwind into Q4 from Highboy, which will obviously need to see how the next two months before we before we evaluate.

Georges Elhedery: There is additional tailwind into Q4 from HIBOR, which we'll obviously need to see how the next two months fare before we evaluate. If you look at the UK, the UK NIM was up 16 basis points Q1 to Q2, down 8 basis points Q2 to Q3. The first thing I wanna say is this is definitely not the trend here to be read. I think NIM is broadly stable from here for the next few quarters. Some of these moves are kind of idiosyncrasies in our market treasury management, not necessary drivers of trends. We're looking at it in the whole as broadly stable.

If you look at the U K.

Georges Elhedery: If you look at the U.K. so the U.K. NIM was up 16 basis points Q1 to Q2, down eight basis points Q2 to Q3, the first thing I want to say is, this is definitely not the trend here to be read, I think NIM is broadly stable from here for the next few quarters, some of these moves are kind of idiosyncrasies in our market Treasury management, not necessarily drivers of trends, so we're looking at it, in the whole as broadly stable.

So the UK NIM was up 16 basis points Q1 to Q2 down eight basis points Q2 to Q3.

The first thing I want to say is this is definitely not the trend here to be read I think NIM is broadly stable from here for the next few quarters. Some of these moves are kind of idiosyncrasies and over market Treasury management, but not necessary drivers of trends. So we're looking at it in the indoor is broadly.

Georges Elhedery: Obviously it continued facing pressure on deposit costs, but as you know, as I just said earlier, at these rates, any additional rate hikes are expected to be passed through to customers, and this is what's been happening. We've benefited from 75 basis point rate hike in pounds between Q2 and Q3, most of which has gone either to customers in the form of pass-throughs, some term deposits, migration in the UK, minimal, but some, and then obviously asset margin compression in the UK. As you look forward, how can I kind of invite you to evaluate forward? First, I'm not giving guidance for 2024, where the only guidance for 2024 is the mid-teens ROTCE. We will be giving more details at the year end.

Stable.

Georges Elhedery: Obviously it continued facing pressure on deposit costs, but as, you know as I just said earlier at these rates any additional rate hikes are expected to be passed through to customers and this is what's been happening so, we benefited from 75 basis point rate hike in pounds between Q2 and Q3, most of which has gone either to customers in the form of pass throughs, some term deposits migration in the U.K. minimal but some, and then obviously asset margin compression in the U K. So as you look forward. How how can I kind of invite you to evaluate for it because I'm not giving guidance. For 2024, we're the only guy just within 24 is now is the mid teens royalty, we will be giving more details at the yearend, but if you want some indicators of how to think about it first think about it. We will continue facing the usual headwinds of. Margin compression. But that probably is easy now having seen most of that compression in Q2 and Q3, we will continue to see pressure on deposits. You know migration may continue you know we've seen the pace of 1% per month in Hong Kong. Kind of steady for the last nine months that is likely to continue. And then. So these would be the main headwinds are the. The tail winds. So they paid winds would be one the additional rate upside in Hong Kong from high boy, probably more further rate upside in the major other currencies. The tail winds will be reinvestments of maturing structural hedges that have been put at lower rates and as they mature to really invest them in higher rates and that will give us additional tailwind and then the main tailwind, which we anticipate at some stage in 'twenty four but not yet. If not for the next couple of quarters, but at some stage in 'twenty four it is volume growth. When we start seeing volume go through we'll see the support for the NII in the medium term. <unk> always indicated mid single digit percentage point growth for our balance sheet is always a mid midterm aspiration and as and when this starts after the next couple of quarters of transition. This will give us the additional paid wings. I suppose that's probably as much as we can say at this stage Oh yeah. Thank you for your question I think Joe and the next one.

So we benefited from 75 basis point rate hike in pounds between Q2, and Q3, most of which has gone either to customers in the form of pass throughs. Some time deposits migration UK minimal, but some and then obviously I said margin.

The compression in the U K.

So as you look forward.

Georges Elhedery: So as you look forward, how how can I kind of invite you to evaluate forward? first I'm not giving guidance for 2024, we're the only guidance we're doing in 24 is now is the mid-teens RoTE, we will be giving more details at the year end, but if you want some indicators of how to think about it, first think about it as we will continue facing the usual headwinds of margin compression, but that probably is easy now having seen most of that compression in Q2 and Q3, we will continue to see pressure on deposits. You know migration may continue you know we've seen the pace of 1% per month in Hong Kong. Kind of steady for the last nine months that is likely to continue. And then. So these would be the main headwinds are the. The tail winds. So they paid winds would be one the additional rate upside in Hong Kong from high boy, probably more further rate upside in the major other currencies. The tail winds will be reinvestments of maturing structural hedges that have been put at lower rates and as they mature to really invest them in higher rates and that will give us additional tailwind and then the main tailwind, which we anticipate at some stage in 'twenty four but not yet. If not for the next couple of quarters, but at some stage in 'twenty four it is volume growth. When we start seeing volume go through we'll see the support for the NII in the medium term. <unk> always indicated mid single digit percentage point growth for our balance sheet is always a mid midterm aspiration and as and when this starts after the next couple of quarters of transition. This will give us the additional paid wings. I suppose that's probably as much as we can say at this stage Oh yeah. Thank you for your question I think Joe and the next one.

How how can I kind of invite you to evaluate for it because I'm not giving guidance.

For 2024, we're the only guy just within 24 is now is the mid teens royalty, we will be giving more details at the yearend, but if you want some indicators of how to think about it first think about it.

Georges Elhedery: If you want some indicators of how to think about it, first think about it as we will continue facing the usual headwinds of, you know, margin compression, but that probably is easing now, having seen most of that compression in Q2 and Q3. We'll continue to see pressure on deposits. You know, migration may continue. We've seen a pace of 1% per month in Hong Kong, kind of steady for the last 9 months. That is likely to continue. These would be the main headwinds. The tailwinds would be one, the additional rate upside in Hong Kong from HIBOR, probably no further rate upside in the major other currencies.

We will continue facing the usual headwinds of.

Margin compression.

But that probably is easy now having seen most of that compression in Q2 and Q3, we will continue to see pressure on deposits. You know migration may continue you know we've seen the pace of 1% per month in Hong Kong.

Georges Elhedery: We will continue to see pressure on deposits, You know migration may continue, you know, we've seen the pace of 1% per month in Hong Kong, kind of steady for the last nine months, that is likely to continue and then, so these would be the main headwinds, the tail winds, so the tailwinds would be, one the additional rate upside in Hong Kong from HIBOR, probably more further rate upside in the major other currencies, the tail winds will be reinvestments of maturing structural hedges that have been put at lower rates and as they mature re-invest them in higher rates and that will give us additional tailwinds. and then the main tailwind, which we anticipate at some stage in 'twenty four but not yet. If not for the next couple of quarters, but at some stage in 'twenty four it is volume growth. When we start seeing volume go through we'll see the support for the NII in the medium term. <unk> always indicated mid single digit percentage point growth for our balance sheet is always a mid midterm aspiration and as and when this starts after the next couple of quarters of transition. This will give us the additional paid wings. I suppose that's probably as much as we can say at this stage Oh yeah. Thank you for your question I think Joe and the next one.

Kind of steady for the last nine months that is likely to continue.

And then.

So these would be the main headwinds are the.

The tail winds.

So they paid winds would be one the additional rate upside in Hong Kong from high boy, probably more further rate upside in the major other currencies.

Georges Elhedery: The tailwinds will be reinvestments of maturing structural hedges that have been put at lower rates, and as they mature, we reinvest them at higher rates, and that will give us additional tailwinds. Look, the main tailwind, which we anticipate at some stage in 2024, but not yet, at least not for the next couple of quarters, but at some stage in 2024, is volume growth. When we start seeing volume growth, we will see the support for the NII in the medium term. As we've always indicated, mid-single digit percentage point growth for our balance sheet is our midterm aspiration. As and when this starts after the next couple of quarters of, you know, transition, this will give us the additional tailwinds.

The tail winds will be reinvestments of maturing structural hedges that have been put at lower rates and as they mature to really invest them in higher rates and that will give us additional tailwind and then the main tailwind, which we anticipate at some stage in 'twenty four but not yet.

Georges Elhedery: And then the main tailwind, which we anticipate at some stage in '24 but not yet, at least not for the next couple of quarters, but at some stage in '24 is volume growth, when we start seeing volume growth we will see the support for the NII in the medium term, as we've always indicated mid-single-digit percentage point growth for our balance sheet is our mid-term aspiration and as and when this starts after the next couple of quarters of transition, this will give us the additional tailwinds, I suppose that's probably as much as we can say at this stage Raul, Thank you for your question.

If not for the next couple of quarters, but at some stage in 'twenty four it is volume growth.

When we start seeing volume go through we'll see the support for the NII in the medium term.

<unk> always indicated mid single digit percentage point growth for our balance sheet is always a mid midterm aspiration and as and when this starts after the next couple of quarters of transition.

This will give us the additional paid wings.

Georges Elhedery: I suppose that's probably as much as we can say at this stage, Rahul. Thank you for your question.

I suppose that's probably as much as we can say at this stage Oh yeah.

Georges Elhedery: I suppose that's probably as much as we can say at this stage, Rahul. Thank you for your question.

Thank you for your question I think Joe and the next one.

Rahul Sinha: Thanks, Joe.

Georges Elhedery: Happy to take the next one.

Operator 1: Our next question today comes from Perlie Mong from KBW. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Perlie Mong from KBW. Please accept the prompt to unmute your line and ask your question.

Uh huh.

Operator: Our next question today comes from Perlie Mong from KBW. Please accept the prompt to unmute your line and ask your question.

Perlie Mong: Hello, thank you for taking my questions. I guess just a couple of follow-ups. The first one is on your hedge strategy because, I guess you've basically in disposal losses, you've essentially, I guess, brought forward some of the rolling of the hedge, which I guess we haven't really seen so much in, especially in UK banks. They tend to sort of use it as a sort of pure smoothing mechanism, as it were, to just let the lower rates run off and then reinvesting. You seem to have brought forward that. I guess the question is, you know, does that suggest that you're not just using the hedge as a smoothing mechanism, but to sort of more actively traded, as it were.

Perlie Mong: Hello and thank you for taking my questions I have just a couple of follow ups, the first one is on your hedge strategy, because I guess, you've basically in disposal losses, you've, essentially I guess, brought forward some of the rolling of the hedge and, which I guess we haven't really seen so much especially in the U.K. banks, they tend to sort of use it as a pure smoothing mechanism as it were and to just let the lower rates run off and then reinvesting but you seem to have brought forwards that, so I guess the question is you. Does that suggest that youre not just using the hedge assets moving mechanism that is true. And it sort of more activity. Sort of I'm. Trade it I said well, it's not fat I guess, that's the first question and the second question. I guess, it's based on now and I just saw on them by Scott Chan. The comment that we feel like that trying to CRE that you mention it has bottomed out. And I mean, acknowledging that Chinese government has taken steps to support the fact that that Japanese now still seem to be pretty negative and guests do they extend it there have been actions taken there probably not as large as maybe some of them the market would have expected or hoped for a few months ago. And so it's probably be around catering. You talked a requirement and some of the tier one cities up I guess, just what gives you the confidence that you may have bottomed out.

This one is on your hedge strategy because I.

I guess, you basically disposal losses.

Essentially I guess brought forward some of the rolling of the hedge and which I guess, we haven't really seen so much especially in the U K banks, they tend to sort of offense.

Perlie Mong: They tend to sort of use it as a pure smoothing mechanism asset were and to just let the lower rates run off and then reinvesting but you seem to have brought forwards that, So I guess the question is, does that suggest that you're not just using the hedge as a smoothing mechanism but is to sort of more actively trade it? is that fair? I guess, that's the first question.

So don't feel it's smoothing mechanism as well and actually just Latam.

The rates, but also then be investing but you seem to have thoughtful it. So I guess the question is you.

Perlie Mong: So I guess the question is, does that suggest that you're not just using the hedge as a smoothing mechanism but is to sort of more actively trade it? is that fair? I guess, that's the first question and the second question. I guess, it's based on now and I just saw on them by Scott Chan. The comment that we feel like that trying to CRE that you mention it has bottomed out. And I mean, acknowledging that Chinese government has taken steps to support the fact that that Japanese now still seem to be pretty negative and guests do they extend it there have been actions taken there probably not as large as maybe some of them the market would have expected or hoped for a few months ago. And so it's probably be around catering. You talked a requirement and some of the tier one cities up I guess, just what gives you the confidence that you may have bottomed out.

Does that suggest that youre not just using the hedge assets moving mechanism that is true.

And it sort of more activity.

Sort of I'm.

Perlie Mong: Is that fair? I guess it's the first question. The second question, I guess it's really for Noel. I just saw on Bloomberg that you made a comment that you feel like the China CRE situation has bottomed out. I mean, acknowledging that the Chinese government has taken steps to support the sector, but the news flow still seems to be pretty negative. To the extent that there have been actions taken, they're probably not as large as maybe some of them the market would have expected or hoped for, you know, a few months ago. It's probably around tailoring the total requirements in some of the tier one cities. I guess just what gives you the confidence that we have bottomed out?

Trade it I said well, it's not fat I guess, that's the first question and the second question.

Perlie Mong: And the second question, I guess it's based on Noel, I just saw on Bloomberg that you made a comment that you feel like the China CRE situation has bottomed out and, I mean, acknowledging that Chinese government has taken steps to support the sector but the news flow still seem to be pretty negative and do they extend it there have been actions taken there probably not as large as maybe some of them the market would have expected or hoped for a few months ago. And so it's probably be around catering. You talked a requirement and some of the tier one cities up I guess, just what gives you the confidence that you may have bottomed out.

I guess, it's based on now and I just saw on them by Scott Chan.

The comment that we feel like that trying to CRE that you mention it has bottomed out.

And I mean, acknowledging that Chinese government has taken steps to support the fact that that Japanese now still seem to be pretty negative and guests do they extend it there have been actions taken there probably not as large as maybe some of them the market would have expected or hoped for a few months ago.

Perlie Mong: To the extent that there have been actions taken there, probably not as large as, maybe some of them the market would have expected or hoped for a few months ago and so it's probably around tailoring the total requirements in some of the tier one cities so, I guess, just what gives you the confidence that we have bottomed out?

And so it's probably be around catering.

You talked a requirement and some of the tier one cities up I guess, just what gives you the confidence that you may have bottomed out.

Georges Elhedery: Perfect. Thank you, Perlie. I'll take the first question and I'll invite Noel, obviously, to comment on your second one. Look, the hedge strategy. First, we have a number of tools at our disposal. We will use them as effectively and as opportunistically as we can to achieve what we want to achieve, which is, number one, reducing the downside sensitivity of our balance sheet to a reduction in rates, and number two, extending that reduction of downside as far out in time as possible. This strategy that we've used, which is disposing of existing low-earning positions, is one of these measures. Number one, to remind you, it does not have a CET1 impact.

Georges Elhedery: Perfect, Thank you Perlie, I'll take the first question and I'll invite Noel obviously to comment on your second one and sort of the hedge strategy, first, we have a number of tools at our disposal, we will use them as effectively and as opportunistically as we can to achieve what we want to achieve which is, number one, reducing the downside sensitivity of our balance sheet to a reduction in rates. Number two extending that reduction of downside us fight out in time as possible. This strategy that we've used which is disposing of them. Existing law, earning. Positions is one of these measures so number one to remind you. It does not have the seat you on the impact that these the loss does not have a seat you want impact because of the loss has been taken capital mostly in 2022 or so. So that gives us. This flexibility in our capital. The second one is yes part of the hedge considerations is indeed, allowing us to extend higher yields for longer rather than be. Other than kind of retain some of the lower yielding assets for longer than we wish for and give us additional protection. And the third is it's also risk management considerations. We will also look at how we use our other obligations as your portfolio and how we can optimize the utilization that off and how we use combination of bonds and swap hedges and fair value accounting relationships et cetera. So there are all sorts of number of other considerations, which we look at but the outcome. Which you know for the purposes of our bottom line is indeed, giving us. This this runway. I need to point out. Done an exercise in Q3, we indicate that we intend to do another exercise to the tune of about $1 $4 billion in Q4, but we do not look at this as a recurring activities like this is. Kind of by exception occasion, when risk management and performance justify it we will do it. This is not meant to be a recurrent quote unquote activity I just want to be clear about that we've done. This last quarter will do it next quarter anything beyond that we will give you will give you indication but.

I invite all obviously to comment on your second one.

And sort of the hedge strategy first.

We have a number of tools at our disposal, we will use them as effectively and as a push to.

Domestically as we can to achieve what we want to achieve which is number one reducing the downside sensitivity of our balance sheet to a reduction in rates.

Number two extending that reduction of downside us fight out in time as possible.

Georges Elhedery: Number two, extending that reduction of downside as far out in time as possible, this strategy that we've used which is disposing of the existing low earning positions is one of these measures, so number one to remind you, it does not have the CET1 impact, at least the loss does not have a CET1 impact because the loss has been taken capital mostly in 2022 already so that gives us flexibility in our capital. The second one is yes part of the hedge considerations is indeed, allowing us to extend higher yields for longer rather than be. Other than kind of retain some of the lower yielding assets for longer than we wish for and give us additional protection. And the third is it's also risk management considerations. We will also look at how we use our other obligations as your portfolio and how we can optimize the utilization that off and how we use combination of bonds and swap hedges and fair value accounting relationships et cetera. So there are all sorts of number of other considerations, which we look at but the outcome. Which you know for the purposes of our bottom line is indeed, giving us. This this runway. I need to point out. Done an exercise in Q3, we indicate that we intend to do another exercise to the tune of about $1 $4 billion in Q4, but we do not look at this as a recurring activities like this is. Kind of by exception occasion, when risk management and performance justify it we will do it. This is not meant to be a recurrent quote unquote activity I just want to be clear about that we've done. This last quarter will do it next quarter anything beyond that we will give you will give you indication but.

This strategy that we've used which is disposing of them.

Existing law, earning.

Positions is one of these measures so number one to remind you. It does not have the seat you on the impact that these the loss does not have a seat you want impact because of the loss has been taken capital mostly in 2022 or so.

Georges Elhedery: At least the loss does not have a CET1 impact because the loss has been taken capital mostly in 2022 already. That gives us, you know, this flexibility on our capital. The second one is, yes, part of the hedge considerations is indeed allowing us to extend higher yields for longer rather than kind of retain some of the lower yielding assets for longer than we wish for and give us additional protection. The third is it's also risk management considerations. We will also look at how we use our RWAs and treasury portfolio and how we can optimize the utilization thereof and how we use combination of bonds, swap hedges, and fair value accounting relationships, et cetera.

Georges Elhedery: The second one is yes, a part of the hedge considerations is indeed, allowing us to extend higher yields for longer rather than kind of retain some of the lower yielding assets for longer than we wish for and give us additional protection and the third is, it's also risk management considerations we will also look at how we use our RWA's and treasure portfolio and how we can optimize the utilization thereof and how we use combination of bonds and swap hedges in fair value accounting relationships etcetera. So there are all sorts of number of other considerations, which we look at but the outcome. Which you know for the purposes of our bottom line is indeed, giving us. This this runway. I need to point out. Done an exercise in Q3, we indicate that we intend to do another exercise to the tune of about $1.4 billion in Q4, but we do not look at this as a recurring activities like this is. Kind of by exception occasion, when risk management and performance justify it we will do it. This is not meant to be a recurrent quote unquote activity I just want to be clear about that we've done. This last quarter will do it next quarter anything beyond that we will give you will give you indication but.

So that gives us.

This flexibility in our capital.

The second one is yes part of the hedge considerations is indeed, allowing us to extend higher yields for longer rather than be.

Other than kind of retain some of the lower yielding assets for longer than we wish for and give us additional protection.

And the third is it's also risk management considerations. We will also look at how we use our other obligations as your portfolio and how we can optimize the utilization that off and how we use combination of bonds and swap hedges and fair value accounting relationships et cetera. So there are all sorts of number of other considerations, which we look at but the outcome.

Georges Elhedery: So there are all sorts of number of other considerations, which we look at, but the outcome of which you know for the purposes of our bottom line is indeed giving us this runway, now I need to point out we've done an exercise in Q3, we indicate that we intend to do another exercise to the tune of about $0.4 billion dollars in Q4, but we do not look at this as a recurring activity, like this is kind of by exception occasion, when risk management and performance justify it we will do it, this is not meant to be a recurrent quarter on quarter activity I just want to be clear about that, we've done it last quarter we'll do it next quarter anything beyond that we will give you will give you indication but it'll be on a case by case, and occasional basis. Now Noel for the second question.

Georges Elhedery: There are all sorts of number of other considerations which we look at, but the outcome of which, you know, for the purposes of our bottom line is indeed giving us this runway. Now, I need to point out, we've, you know, done an exercise in Q3. We indicate that we intend to do another exercise to the tune of about $9.4 billion in Q4. We do not look at this as a recurring activity, right? This is kind of by exception, occasional, when risk management and performance justify it, we will do it. This is not meant to be a recurring quote-unquote activity. I just wanna be clear about that. We've done it last quarter, we'll do it next quarter.

Which you know for the purposes of our bottom line is indeed, giving us. This this runway.

I need to point out.

Done an exercise in Q3, we indicate that we intend to do another exercise to the tune of about $1 $4 billion in Q4, but we do not look at this as a recurring activities like this is.

Kind of by exception occasion, when risk management and performance justify it we will do it. This is not meant to be a recurrent quote unquote activity I just want to be clear about that we've done. This last quarter will do it next quarter anything beyond that we will give you will give you indication but.

Georges Elhedery: Anything beyond that, we will give you indication, but it'll be on a case by case and occasional basis. Noel, for the second question.

It'll be on a case by case, an occasion that basis.

Noel P. Quinn: On China CRE my comments this morning were already about the massive policy correction that has taken place over the last 18 months in commercial real estate in China, it has really impacted very heavily in the real estate market, do I think the big negative correction in the market has been delivered or do I expect further negative correction? no I think what we know into is the workout phase of that policy correction. Equally I think I've said this morning, I don't see. I think swing back into positive policy territory for commercial real estate I see does. Fine tuning from this low base. What I'm talking about is the market as a whole the commercial real estate market in China. I see a correction dime. We're at the bottom of that correction phase and we know in a gradual replying buckeye with possible policy tweaks, taking place, but as you quite rightly say pardon me that they're not going to be big swings back up in policy correction, they're gonna be smaller policy correction. Can place as we've seen in recent weeks. Yeah. What does that mean for ECL. For banks, both domestically and internationally. Well those ecl's have. And could still emerge over time, but I think the market itself has bottomed and now we're in a period of. Sort of readjustment for the new norm. Don't see a big readjustment backup. From our point of view on Ecl's I think we feel as George has said we've got good coverage ratios on the.

Noel Quinn: Yeah. On China CRE, my comments this morning were really about the massive policy correction that has taken place over the last 18 months in commercial real estate in China. You know, it has really impacted very heavily the real estate market. Do I think that big negative correction in the market has been delivered and do I expect further negative correction? No. I think what we're now into is the workout phase of that policy correction. Equally, I think I said this morning, I don't see a big swing back into positive policy territory for commercial real estate. I see it as fine-tuning from this low base. What I'm talking about is the market as a whole, the commercial real estate market in China, a massive correction down.

The massive policy correction there has taken place over the last.

18 months in commercial real estate in China.

It has really impacted very heavily the real estate market.

Do I think the big negative correction in the market.

Has been delivered on do I expect further negative correction no I think what we know into is the workout phase of that policy correction.

Noel P. Quinn: Equally I think I said this morning, I don't see a big swing back into positive policy territory for commercial real estate, I see it as fine tuning from this low base, what I'm talking about is the market as a whole the commercial real estate market in China, a massive correction down, I think we're at the bottom of that correction phase and we are now in a gradual re-climb back out with possible policy tweaks taking place, but as you quite rightly say Perli they're not going to be big swings back up in policy correction, they're gonna be smaller policy corrections taking place as we've seen in recent weeks. Yeah. What does that mean for ECL. For banks, both domestically and internationally. Well those ecl's have. And could still emerge over time, but I think the market itself has bottomed and now we're in a period of. Sort of readjustment for the new norm. Don't see a big readjustment backup. From our point of view on Ecl's I think we feel as George has said we've got good coverage ratios on the.

Equally I think I've said this morning, I don't see.

I think swing back into positive policy territory for commercial real estate I see does.

Fine tuning from this low base.

What I'm talking about is the market as a whole the commercial real estate market in China.

I see a correction dime.

Noel Quinn: I think we're at the bottom of that correction phase, and we're now in a gradual recline back out with possible policy tweaks taking place. As you quite rightly say, Perlie, they're not gonna be big swings back up in policy correction. They're gonna be smaller policy correction taking place, as we've seen in recent weeks. Now, what does that mean for ECLs for banks, both domestically and internationally? Well, those ECLs have and could still emerge over time, but I think the market itself has bottomed, and now we're in a period of sort of readjustment for the new norm. I don't see a big readjustment back up. From our point of view on ECLs, I think we feel, as Georges has said, we've got good coverage ratios on the unsecured book.

We're at the bottom of that correction phase and we know in a gradual replying buckeye with possible policy tweaks, taking place, but as you quite rightly say pardon me that they're not going to be big swings back up in policy correction, they're gonna be smaller policy correction.

Can place as we've seen in recent weeks.

Yeah.

What does that mean for ECL.

Noel P. Quinn: Now, what does that mean for ECLs, for banks, both domestically and internationally, well those ECL's have and could still emerge over time, but I think the market itself has bottomed and now we're in a period of, sort of readjustment for the new norm and I don't see a big readjustment back up, from our point of view on ECL's, I think we feel as George has said we've got good coverage ratios on the. The unsecured book. 50% of our offshore Bulks Ids. So we are related or <unk> related. We do not see that same policy correction affecting the SOA is the way it's affected the east So we don't see that. Certainly a downside on that at this stage. And those P O easy not 50% I talked about. Those pay always are largely either secured or that are in the residential sector, they're in CRE and other forms of the sector. So I think from our point of view. We feel well provisioned at this stage, it's not to say the wrong potential problems on the horizon from an ECL point of view for the industry. We see Rosa, we're well positioned. I suppose my bottoming comment was on the market as a whole. And. There's been such a massive correction I think we're now in a gradual rebuild but not gradual rebuild will take time. There will be the potential for the industry Tabasco further losses. We are keeping a close eye on that and what it means for us, but we think we're well well provisioned. The Q3 level, we're probably going to take some more of our tyneside possible downside scenario in Q4, but as George said earlier, we think that we've got the capacity within our overall guidance on ECL of 40 basis points. To absorb any further charges, we may or may not take in Q4. Yeah.

For banks, both domestically and internationally.

Well those ecl's have.

And could still emerge over time, but I think the market itself has bottomed and now we're in a period of.

Sort of readjustment for the new norm.

Don't see a big readjustment backup.

Noel P. Quinn: from our point of view on ECL's, I think we feel as George has said, we've got good coverage ratios on the unsecured book, the 50% of our offshore book that is SOE related or POE related, we do not see that same policy correction affecting the SOEs the way it's affected the POEs, so we don't see necessarily a downside on that at this stage and on those POEs in the 50% I talked about, those POEs are largely either secured or that are in the residential sector, they're in CRE and other forms of the sector. So I think from our point of view. We feel well provisioned at this stage, it's not to say the wrong potential problems on the horizon from an ECL point of view for the industry. We see Rosa, we're well positioned. I suppose my bottoming comment was on the market as a whole. And. There's been such a massive correction I think we're now in a gradual rebuild but not gradual rebuild will take time. There will be the potential for the industry Tabasco further losses. We are keeping a close eye on that and what it means for us, but we think we're well well provisioned. The Q3 level, we're probably going to take some more of our tyneside possible downside scenario in Q4, but as George said earlier, we think that we've got the capacity within our overall guidance on ECL of 40 basis points. To absorb any further charges, we may or may not take in Q4. Yeah.

From our point of view on Ecl's I think we feel as George has said we've got good coverage ratios on the.

The unsecured book.

Noel Quinn: The 50% of our offshore book that is SOE related or POE related, we do not see that same policy correction affecting the SOEs the way it's affected the POEs. We don't see necessarily a downside on that at this stage. Then those POEs in that 50% I talked about, those POEs are largely either secured or they're not in the residential sector. They're in CRE and other forms of the sector. I think from our point of view, we feel well-provisioned at this stage. It's not to say that there aren't potential problems on the horizon from an ECL point of view for the industry, but we feel as though we're well positioned. I suppose my bottom line comment was on the market as a whole, in that there's been such a massive correction.

50% of our offshore Bulks Ids.

So we are related or <unk> related.

We do not see that same policy correction affecting the SOA is the way it's affected the east So we don't see that.

Certainly a downside on that at this stage.

And those P O easy not 50% I talked about.

Those pay always are largely either secured or that are in the residential sector, they're in CRE and other forms of the sector.

Noel P. Quinn: So I think from our point of view, we feel well provisioned at this stage, it's not to say there aren't potential problems on the horizon from an ECL point of view for the industry, but we feel as we're well positioned, I suppose my bottoming comment was on the market as a whole and in that there's been such a massive correction, I think we're now in a gradual rebuild but that gradual rebuild will take time and there will be the potential for the industry to bear some further losses and we are keeping a close eye on that and what it means for us, but we think we're well well provisioned. The Q3 level, we're probably going to take some more of our tyneside possible downside scenario in Q4, but as George said earlier, we think that we've got the capacity within our overall guidance on ECL of 40 basis points. To absorb any further charges, we may or may not take in Q4. Yeah.

So I think from our point of view.

We feel well provisioned at this stage, it's not to say the wrong potential problems on the horizon from an ECL point of view for the industry.

We see Rosa, we're well positioned.

I suppose my bottoming comment was on the market as a whole.

And.

There's been such a massive correction I think we're now in a gradual rebuild but not gradual rebuild will take time.

Noel Quinn: I think we're now in a gradual rebuild, but that gradual rebuild will take time, and there will be the potential for the industry to bear some further losses, and we are keeping a close eye on that and what it means for us, but we think we're well-provisioned at Q3 level. We're probably gonna take some more of our plausible downside scenario in Q4, but as George said earlier, we think that's we've got the capacity within our overall guidance on ECL of 40 basis points to absorb any further charges we may or may not take in Q4.

There will be the potential for the industry Tabasco further losses.

Noel P. Quinn: And we are keeping a close eye on that and what it means for us, but we think we're well provisioned at the Q3 level, we're probably going to take some more of our downside, possible downside scenario in Q4, but as George said earlier, we think that we've got the capacity within our overall guidance on ECL of 40 basis points to absorb any further charges, we may or may not take in Q4.

We are keeping a close eye on that and what it means for us, but we think we're well well provisioned. The Q3 level, we're probably going to take some more of our tyneside possible downside scenario in Q4, but as George said earlier, we think that we've got the capacity within our overall guidance on ECL of 40 basis points.

To absorb any further charges, we may or may not take in Q4.

Yeah.

Georges Elhedery: Thank you, Noel. Thank you, Perlie Mong. Let's move to the next question, please.

Georges Elhedery: Thank you Noel, Thank you Perli, Let's move to next question, please.

Let's move to next question. Please.

Operator 1: Our next question today comes from Robert Noble from Deutsche Bank. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Robert Noble from Deutsche Bank. Please accept the prompt to unmute your line and ask your question.

Operator: Our next question today comes from Robert Noble from Deutsche Please accept a prompt to on mute your line ask your question.

Robert Noble: Morning. Thank you for taking my questions. Just on the treasury sales, you've announced another potential $400 million in Q4. Why not do them all in Q3? What's the advantage of waiting if you're just gonna realize a loss and do it now? Why not just do them all now? Secondly, just a little bit more on China. What's the sensitivity of the balance sheet to rates in China, and how concerned are you about the rate differential between China and Hong Kong? What are the moving parts of that differential on all of the businesses, not just the commercial side? Thanks.

Robert Noble: Good morning, Thanks for taking my questions, and just on the Treasury sales, you've announced another potential $400 million in Q4, why not do them all in Q3? what's the advantage of waiting? if you're just going to realize the losses and doing that why don't you do the more now. Secondly, just a little bit more on China, what's the sensitivity of the balance sheet to rates in China. Concern you about rate differential between China, and Hong Kong, what are the moving parts of that differential. All of the businesses not just the commercial side. Thank you.

Just on the Treasury sales you've announced another 4% from 400 million in Q4, why not at the moment.

Q3 will see advantage of Whiting, if you're just going to realize them Austin and doing that why don't you do the more now.

Secondly, just a little bit more on China, what's the sensitivity of the balance sheet to rates in China.

Robert Noble: Secondly, just a little bit more on China, what's the sensitivity of the balance sheet to rates in China and how concerned are you about rate differential between China, and Hong Kong, what are the moving parts of that differential on all of the businesses not just on the commercial side. Thank you.

Concern you about rate differential between China, and Hong Kong, what are the moving parts of that differential.

All of the businesses not just the commercial side.

Georges Elhedery: Thank you, Rob. On your first point, I mean, look, this is a matter of phasing it in time so that we're doing it thoughtfully, carefully. We're evaluating the impact every time we do an activity. I don't think there's a... We didn't put a cut-off per se for Q3 and Q4. As you can see, the numbers aren't mathematically... They don't follow a given symmetry. It's just a matter of where we are on the journey when we kind of cut off the books on 30 September, but we carry this activity throughout, and we look for the right market opportunities to do it. I think this is the way we look at it.

Thank you.

Georges Elhedery: Thank you Robert, so on your first point, I mean look this is a matter of phasing it in time, so that we're doing it thoughtfully, carefully, we're evaluating the impact every time we do an activity so, I don't think there is a, we didn't put a cut off per se for Q3 and Q4 as you can see the numbers aren't mathematically or aren't kind of, they don't follow given symmetry, is just a matter of where we are on the journey when we, when we kind of cut off the books on the 30th September, but we can't do this activity throughout and we look forward the right market opportunities to do it. I think this is this is the way we look at it. In with regards to your second point, a couple of things I can share it here. The first one is the rate sensitivity of China. So just to give you an indication of the impact of the China NIM on our <unk>. <unk> or Asia NIM is about three basis points. So the fact that we have some. The rate compression in China simply because of the policy rates compression. This has affected our overall in Asia. NIM by a couple of basis points. So that's the quantum or the magnitude given obviously the size and scale, we have in Hong Kong versus B side of the scale, we have in mainland China and other geographies. The second one to call out is that the rate differential we expect it to remain. For the method of many quarters, probably a couple of years. Which doesn't mean that the offshore. Well that mainland Chinese customers Butterworth offshore. Offshore in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB.

On your first point I mean look this is a matter of phasing. It in time, so that we're doing it thoughtfully carefully we're evaluating the impact every time, we do an activity so.

I don't think there is a we didn't put the cutoff.

Say for Q3 and Q4 as you can see the numbers on.

Mathematically or on kind of they don't follow a given symmetry is just a matter of where we are on the journey when we when we kind of.

Cut off the books on the 30th September, but we can't do this activity throughout and we look forward the right market opportunities to do it.

I think this is this is the way we look at it.

Georges Elhedery: With regards to your second point, couple of things I can share here, Rob. The first one is, the rate sensitivity of China. Just to give you an indication, the impact of the China NIM on our HBAP or our Asia NIM is about three basis points. The fact that we have some, you know, rate compression in China simply because of the policy rates, you know, compression, this has affected our overall Asia NIM by a couple basis points. That's the quantum or the magnitude given obviously the size and scale we have in Hong Kong versus the size and scale we have in mainland China and other geographies.

In with regards to your second point, a couple of things I can share it here.

Georges Elhedery: I think this is this is the way we look at it. In with regards to your second point, a couple of things I can share it here. The first one is the rate sensitivity of China. So just to give you an indication of the impact of the China NIM on our <unk>. <unk> or Asia NIM is about three basis points. So the fact that we have some. The rate compression in China simply because of the policy rates compression. This has affected our overall in Asia. NIM by a couple of basis points. So that's the quantum or the magnitude given obviously the size and scale, we have in Hong Kong versus B side of the scale, we have in mainland China and other geographies. The second one to call out is that the rate differential we expect it to remain. For the method of many quarters, probably a couple of years. Which doesn't mean that the offshore. Well that mainland Chinese customers Butterworth offshore. Offshore in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB.

Georges Elhedery: I think this is this is the way we look at it.

Georges Elhedery: In with regards to your second point, a couple of things I can share here Rob, the first one is the rate sensitivity of China, so just to give you an indication, the impact of the China NIM on our HBAP or our Asia NIM is about three basis points, so the fact that we have some rate compression in China simply because of the policy rates compression, this has affected our overall Asia NIM by a couple of basis points. So that's the quantum or the magnitude given obviously the size and scale, we have in Hong Kong versus the side of the scale, we have in mainland China and other geographies. The second one to call out is that the rate differential we expect it to remain. For the method of many quarters, probably a couple of years. Which doesn't mean that the offshore. Well that mainland Chinese customers Butterworth offshore. Offshore in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB.

The first one is the rate sensitivity of China. So just to give you an indication of the impact of the China NIM on our <unk>.

<unk> or Asia NIM is about three basis points. So the fact that we have some.

The rate compression in China simply because of the policy rates compression. This has affected our overall in Asia.

NIM by a couple of basis points. So that's the quantum or the magnitude given obviously the size and scale, we have in Hong Kong versus B side of the scale, we have in mainland China and other geographies.

Georges Elhedery: The second one to call out is that the rate differential, we expect it to remain for a matter of many quarters, probably a couple of years, which does mean that mainland Chinese customers borrowing offshore in Hong Kong will probably remain subdued for the next couple of years because it's much cheaper for them to borrow at lower rates in RMB. This headwind is likely to continue for the next couple of years. Now on the flip side, again, because of the rate differential, the growth and wealth that we observe in Hong Kong is obviously a positive and a beneficiary of the rate differential.

The second one to call out is that the rate differential we expect it to remain.

Georges Elhedery: The second one to call out is that the rate differential, we expect it to remain for a matter of many quarters, probably a couple of years, ,which doesn't mean that the offshore, well that mainland Chinese customers borrowing offshore, in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB. And this headwind is likely to continue for the next couple of years now.

Georges Elhedery: The second one to call out is that the rate differential, we expect it to remain for a matter of many quarters, probably a couple of years, ,which doesn't mean that the offshore, well that mainland Chinese customers borrowing offshore, in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB, and this headwind is likely to continue for the next couple of years.

For the method of many quarters, probably a couple of years.

Which doesn't mean that the offshore.

Well that mainland Chinese customers Butterworth offshore.

Offshore in Hong Kong will probably remain subdued for the next couple of years, because it's much cheaper for them to borrow at lower rates in RMB.

Georges Elhedery: And this headwind is likely to continue for the next couple of years, now on the flip side, again because of the rate differential, the growth in wealth that we observe in Hong Kong is obviously a positive and a beneficiary of the rate differential, so the fact that we're seeing more wealth buildup in Hong Kong, the fact that we're seeing more demand for insurance products and capabilities in Hong Kong, also reflects the fact that for mainland Chinese, for some you know, for some of them and subject to the quotas they are allowed to do et cetera. It is interesting, it's an attractive proposition to invest offshore because they are getting the rate pick up. So we were seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business CSM and why we're seeing that the challenge on the other side. Luke. All this at the end to say is we remain. We remain very optimistic in the medium to long term on both Hong Kong and mainland China. And we just need to see some of the short term difficulties play out specifically in mainland China, specifically in the retail sector until we recover and are able to see some of the momentum back on a positive growth there.

Georges Elhedery: And this headwind is likely to continue for the next couple of years,

And this headwind is likely to continue for the next couple of years now.

Georges Elhedery: Now on the flip side, again because of the rate differential, the growth in wealth that we observe in Hong Kong is obviously a positive and a beneficiary of the rate differential, so the fact that we're seeing more wealth buildup in Hong Kong, the fact that we're seeing more demand for insurance products and capabilities in Hong Kong, also reflects the fact that for mainland Chinese, for some you know, for some of them and subject to the quotas they are allowed to do et cetera. It is interesting, it's an attractive proposition to invest offshore because they are getting the rate pick up, so we were seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business CSM, while we're seeing the challenge on the other side.

Now on the flip side.

Again because of the rate differential.

The growth in <unk> that we observe in Hong Kong is obviously, a positive and a beneficiary of that differential. So the fact that we're seeing more wins buildup in Hong Kong. The fact that we're seeing.

Georges Elhedery: The fact that we're seeing more wealth build up in Hong Kong, the fact that we're seeing more demand for our insurance products and capabilities in Hong Kong, also reflects the fact that, you know, for mainland Chinese, for some of them and subject to the quotas they're allowed to do, et cetera, it is interesting. It's an attractive proposition to invest offshore because they're getting the rate pickup. We're seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business CSM, while, you know, while we're seeing the, you know, the challenge on the other side.

More demand for insurance products and capabilities in Hong Kong also reflects the fact that for mainland Chinese.

Georges Elhedery: For some you know, for some of them and subject to the quotas they are allowed to do et cetera. It is interesting, it's an attractive proposition to invest offshore because they are getting the rate pick up, so we were seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business CSM, while we're seeing the challenge on the other side.

For some you know for some of them and subject to the quarters. They are allowed to do et cetera. It is interesting, it's an attractive proposition to invest offshore because they are getting the rate pick up. So we were seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business, Yes, and what why do you know why why we're seeing that the tenants on the other.

Georges Elhedery: Look, all this at the end to say is we remain very optimistic in the medium to long term, on both Hong Kong and mainland China and we just need to see some of the short term difficulties play out specifically in mainland China, specifically in the real estate sector until we recover and are able to see some of the momentum back on a positive growth there.

Georges Elhedery: Look, all this at the end to say is we remain very optimistic in the medium to long term on both Hong Kong and mainland China, and we just need to see some of the short-term difficulties play out, specifically in mainland China, specifically in the real estate sector, until we recover and are able to see, you know, some of the momentum back on, positive growth there. Thank you, Rob. Suggest we move to the next question.

Sorry, Luke.

All this at the end to say is we remain.

We remain very optimistic in the medium to long term on both Hong Kong and mainland China.

And we just need to see some of the short term difficulties play out specifically in mainland China, specifically in the retail sector until we recover and are able to see some of the momentum back on a positive growth there.

Georges Elhedery: Thank you Rob, I suggest we move to the next question.

Suggest we move to the next question.

Operator 1: We have time for one last question today from Andrew Coombs from Citigroup. Please accept the prompt to unmute your line and ask your question.

Operator: We have time for one last question today from Andrew Coombs from Citigroup. Please accept the prompt to unmute your line and ask your question.

Operator: We have time for one last question today from Andrew Coombs from Citigroup, please accept the prompt to unmute your line and ask your question.

Except the prompt to Amit your line and ask your question.

Andrew Coombs: Good morning. I'll ask a couple if that's okay. Just a quick one firstly. You've reiterated the greater than $35 billion NII guidance. In the past you've talked about being comfortable with consensus, which is obviously above that, $36.5 billion. So if I could just push you as to whether you are still comfortable with consensus. Second question, buybacks and how you're thinking about those. Obviously a step change today going from 2 to 3 for the next quarter. Pro forma for the buybacks and for balance retail, you're looking at a 14.2 core tier one ratio, still within your target range. You've said 2024 ROTE similar to 2023, payout ratio for the dividend similar to 2023.

Andrew Coombs: Good morning, a couple of (inaudible), just a quick one firstly, you've reiterated the greater than $35 billion NII guidance, in the past you've talked about being comfortable with consensus which is obviously above that at $36.5, so if I could just push here, whether you are still comfortable with consensus and then second question buybacks and how you're thinking about that. Obviously, a step change today. Great. Koto. Pro forma for the buyback. Bonds retired youre looking at a $14 two core tier one ratio staying within your target range, you said 2020 form 8-K. Trey payout ratio for the dividend similar to 2023 said any doubt to see benign Greg are you still talking of course short term. Oh, you mean, the midstream what did your median time Jay. Thinking about the bombing back going forward is it a trade off with that language. Occasionally the language goes to mid single digits year, that's 2 billion, whereas if it's a low single digit is that 3 billion conceptually, how you're thinking about the buyback.

Okay. Just a quick one lastly, you British right, Greg that's 5 billion guided in the past you've talked about being comfortable.

Sentences about that.

<unk> six and a half.

If I could just push here, whether you are still comfortable with consensus.

Andrew Coombs: And then second question on buybacks and how you're thinking about those, obviously, a step change today going from 2 to 3 for the next quarter, Pro forma for the buyback and the France retail, you're looking at a $14.2 CET1 ratio staying within your target range, you said 2024 RoTE similar to 2023, payout ratio for the dividend similar to 2023, so the only delta seems to be loan growth, where you're still talking of course short term but aiming for mid-single digits in medium term. median time Jay. Thinking about the bombing back going forward is it a trade off with that language. Occasionally the language goes to mid single digits year, that's 2 billion, whereas if it's a low single digit is that 3 billion conceptually, how you're thinking about the buyback.

And then second question buybacks and how you're thinking about that.

Obviously, a step change today.

Great.

Koto.

Pro forma for the buyback.

Bonds retired youre looking at a $14 two core tier one ratio staying within your target range, you said 2020 form 8-K.

Trey payout ratio for the dividend similar to 2023 said any doubt to see benign Greg are you still talking of course short term.

Andrew Coombs: The only delta seems to be loan growth, where you're still talking cautious short term, but aiming for mid-single digits in medium term. When we're thinking about the buyback going forward, is it a trade-off with that loan growth? Is it a case of if the loan growth goes to mid-single digits, you're back to $2 billion? Whereas if it stays low single digit, you stay at $3 billion? Conceptually, how are you thinking about the buyback? Thank you.

Andrew Coombs: So when we're thinking about the buying back going forward, is it a trade off with that loan growth? so is it a case of if the loan growth goes to mid single digits year back to $2 billion, whereas if it stays low single digit you stay at $3 billion conceptually, how you're thinking about the buyback? thank you.

Oh, you mean, the midstream what did your median time Jay.

Thinking about the bombing back going forward is it a trade off with that language.

Occasionally the language goes to mid single digits year, that's 2 billion, whereas if it's a low single digit is that 3 billion conceptually, how you're thinking about the buyback.

Georges Elhedery: Thank you, Andrew. Okay. On your first question, NII guidance, I can reaffirm. We're still comfortable with the 2023 consensus. As you look into 2024, we haven't given guidance yet, apart from the mid-teens ROTCE. I'd like to kind of just point out two things just to keep in mind. The first one is, again, banking NII would be a better guide of how our earnings will behave with rates. So look at NII in combination with the funding cost of the trading book and immunize, therefore, your analysis from how much we end up channeling or not in terms of funding to the trading book activities.

Georges Elhedery: Thank you Andrew, okay on your first question NII guidance I can, yeah I can reaffirm we're still comfortable with the 2023 consensus, as you look into '2024, we haven't given guidance yet apart from the mid-teens RoTE, but I'd like to kind of just point out two things just to keep in mind. The first one is again banking NII would be a better guide of how our earnings will behave with rates. So look at NII in combination with the funding cost of the trading book and Immunize. Therefore, your analysis from how much we end up churning or not in terms of funding to the trading book activities. Then the second one just to keep in mind is the disposal of Canada, and France, which will both contribute to an annualized $1 5 billion builders with Emily Riley. Which obviously not be there as and when they go away. As and when the sale is complete. And then finally balance sheet growth at some stage in 'twenty four. Where do we kind of start resuming the expectation of our balance sheet to grow that's I think the broad sense, how we should look at. For 2024 again, we're not guiding but we're giving you some tools that you can do your. And then this is. In terms of buyback. So a couple of things first. First the reason, we announced a 3 billion buyback. Certainly because we have the capital to support it but equally. Because we have an extended periods. To do it we mentioned that this is an intent to do it. Up to February results, so that gives us four months. So definitely encourage you not to look at 3 billion as the new 2 billion. It is not it is a reflection of the fact that we were aiming for. We have a longer period ahead of us for months instead of three and we are aiming to see if we can get up to 3 billion during that period. You know, it's it's therefore kind of a specific consequence of the length of the period that is ahead of us. For the buyback. We look at continue saying it remains our intention to perform a rolling series of share buybacks as long as. As long as the. Capital supported. We are we look at our forecast and our capital. Those capital buildup does seem to be. Reasonably realistic forecast and therefore, it remains our intention to do the series of buybacks. About the question of trade off between buybacks and loan growth. A couple of things first as you know the proceeds of the sale of Canada will give us a buyback runway.

Okay on your first question NII guidance I can yes, I can reaffirm we're still comfortable with the 2023 consensus.

As you look into 'twenty 'twenty, four we haven't given guidance yet apart from the mid teens royalty.

But I'd like to kind of just point out two things just to keep in mind. The first one is again banking NII would be a better guide of how our earnings will behave with rates.

Georges Elhedery: The first one is, again banking NII would be a better guide of how our earnings will behave with rates, so look at NII in combination with the funding cost of the trading book and Immunize therefore, your analysis from how much we end up channelling or not in terms of funding to the trading book activities. Then the second one just to keep in mind is the disposal of Canada, and France, which will both contribute to an annualized $1 5 billion builders with Emily Riley. Which obviously not be there as and when they go away. As and when the sale is complete. And then finally balance sheet growth at some stage in 'twenty four. Where do we kind of start resuming the expectation of our balance sheet to grow that's I think the broad sense, how we should look at. For 2024 again, we're not guiding but we're giving you some tools that you can do your. And then this is. In terms of buyback. So a couple of things first. First the reason, we announced a 3 billion buyback. Certainly because we have the capital to support it but equally. Because we have an extended periods. To do it we mentioned that this is an intent to do it. Up to February results, so that gives us four months. So definitely encourage you not to look at 3 billion as the new 2 billion. It is not it is a reflection of the fact that we were aiming for. We have a longer period ahead of us for months instead of three and we are aiming to see if we can get up to 3 billion during that period. You know, it's it's therefore kind of a specific consequence of the length of the period that is ahead of us. For the buyback. We look at continue saying it remains our intention to perform a rolling series of share buybacks as long as. As long as the. Capital supported. We are we look at our forecast and our capital. Those capital buildup does seem to be. Reasonably realistic forecast and therefore, it remains our intention to do the series of buybacks. About the question of trade off between buybacks and loan growth. A couple of things first as you know the proceeds of the sale of Canada will give us a buyback runway.

So look at NII in combination with the funding cost of the trading book and Immunize. Therefore, your analysis from how much we end up churning or not in terms of funding to the trading book activities.

Georges Elhedery: Then the second one, just to keep in mind, is the disposal of Canada and France, which will both contribute to an annualized $1.5 billion of NII, which will obviously not be there, as and when they go away, as and when the sale is complete. Then finally, balance sheet growth at some stage in 2024, where we kind of start resuming the expectation of our balance sheet to grow. That's, I think, you know, in the broad sense, how we should look at for 2024. Again, we're not guiding, but we're giving you some tools that you can do your analysis. In terms of buyback, so a couple of things.

Then the second one just to keep in mind is the disposal of Canada, and France, which will both contribute to an annualized $1 5 billion builders with Emily Riley.

Georges Elhedery: Then the second one just to keep in mind is the disposal of Canada, and France, which will both contribute to an annualized $1.5 billion dollars of NII, which will obviously not be there as and when they go away and as and when the sale is complete, and then finally, balance sheet growth at some stage in '24 where we kind of start resuming the expectation of our balance sheet to grow that's I think in on the broad sense, how we should look at for 2024, again, we're not guiding but we're giving you some tools that you can do your analysis. In terms of buyback. So a couple of things first. First the reason, we announced a 3 billion buyback. Certainly because we have the capital to support it but equally. Because we have an extended periods. To do it we mentioned that this is an intent to do it. Up to February results, so that gives us four months. So definitely encourage you not to look at 3 billion as the new 2 billion. It is not it is a reflection of the fact that we were aiming for. We have a longer period ahead of us for months instead of three and we are aiming to see if we can get up to 3 billion during that period. You know, it's it's therefore kind of a specific consequence of the length of the period that is ahead of us. For the buyback. We look at continue saying it remains our intention to perform a rolling series of share buybacks as long as. As long as the. Capital supported. We are we look at our forecast and our capital. Those capital buildup does seem to be. Reasonably realistic forecast and therefore, it remains our intention to do the series of buybacks. About the question of trade off between buybacks and loan growth. A couple of things first as you know the proceeds of the sale of Canada will give us a buyback runway.

Which obviously not be there as and when they go away.

As and when the sale is complete.

And then finally balance sheet growth at some stage in 'twenty four.

Where do we kind of start resuming the expectation of our balance sheet to grow that's I think the broad sense, how we should look at.

For 2024 again, we're not guiding but we're giving you some tools that you can do your.

And then this is.

In terms of buyback.

Georges Elhedery: First, the reason we announced a $3 billion buyback, certainly because we have the capital to support it, but equally because we have an extended period to do it. We mentioned that this is an intent to do it, up to February results. That gives us four months. I'll definitely encourage you not to look at $3 billion as the new $2 billion. It is not. It is a reflection of the fact that we have a longer period ahead of us, four months instead of three, and we're aiming to see if we can get up to $3 billion during that period. You know, it's therefore kind of a specific consequence of this length of the period that is ahead of us, for that buyback. We, you know.

So a couple of things first.

Georges Elhedery: In terms of buyback, so a couple of things, first, the reason, we announced a $3 billion buyback, certainly because we have the capital to support it but equally because we have an extended periods to do it, we mentioned that this is an intent to do it, up to February results, so that gives us four months, so I'll definitely encourage you not to look at $3 billion as the new $2 billion, it is not, it is a reflection of the fact that we are aiming for the, we have a longer period ahead of us, four months instead of three and we are aiming to see if we can get up to 3 billion during that period, you know, it's it's therefore kind of a specific consequence of the length of the period that is ahead of us for that buyback. We look at continue saying it remains our intention to perform a rolling series of share buybacks as long as. As long as the. Capital supported. We are we look at our forecast and our capital. Those capital buildup does seem to be. Reasonably realistic forecast and therefore, it remains our intention to do the series of buybacks. About the question of trade off between buybacks and loan growth. A couple of things first as you know the proceeds of the sale of Canada will give us a buyback runway.

First the reason, we announced a 3 billion buyback.

Certainly because we have the capital to support it but equally.

Because we have an extended periods.

To do it we mentioned that this is an intent to do it.

Up to February results, so that gives us four months.

So definitely encourage you not to look at 3 billion as the new 2 billion. It is not it is a reflection of the fact that we were aiming for.

Georges Elhedery: So I'll definitely encourage you not to look at $3 billion as the new $2 billion, it is not, it is a reflection of the fact that we are aiming for the, we have a longer period ahead of us, four months instead of three and we are aiming to see if we can get up to $3 billion during that period, you know, it's it's therefore kind of a specific consequence of this length of the period that is ahead of us for that buyback.

We have a longer period ahead of us for months instead of three and we are aiming to see if we can get up to 3 billion during that period.

You know, it's it's therefore kind of a specific consequence of the length of the period that is ahead of us.

For the buyback.

We look at continue saying it remains our intention to perform a rolling series of share buybacks as long as.

Georges Elhedery: Look, I continue saying it remains our intention to perform a rolling series of share buybacks as long as the capital support it. We look at our forecast and our capital buildup does seem to be, you know, reasonably realistic in our forecast, and therefore, it remains our intention to do the series of buybacks. About the question of trade-off between buybacks and loan growth, a couple of things. First, as you know, the proceeds of the sale of Canada will give us a buyback runway, regardless of loan growth, because the gain, you know, the proceeds less the priority use for special dividend will still allow for, you know, $a few billion of additional buyback and irrespective of our loans.

Georges Elhedery: We look at, continue saying it remains our intention to perform a rolling series of share buybacks as long, as long as the capital supports it, We are, we look at our forecast and our capital buildup does seem to be reasonably realistic in our forecast and therefore, it remains our intention to do the series of buybacks, about the question of trade-off between buybacks and loan growth, a couple of things, first as you know the proceeds of the sale of Canada will give us a buyback runway.

As long as the.

Capital supported.

We are we look at our forecast and our capital.

Those capital buildup does seem to be.

Reasonably realistic forecast and therefore, it remains our intention to do the series of buybacks.

Georges Elhedery: About the question of trade-off between buybacks and loan growth, a couple of things, first as you know the proceeds of the sale of Canada will give us a buyback runway, regardless of loan growth because the game, the proceeds less the priority use for special dividend, will still allow for a few billion dollars of additional buyback and irrespective of our loans, so that will give us runway for loan growth. Second I just need to also highlight when we talk about mid single digit loan growth, we're not saying mid single digit order growth some of our loans specifically in the mortgage space, which is the components for loan growth have lower oil and. And therefore. Benefits from lower <unk>, and therefore ought to be a growth as. I expect it to to trade loan growth. Kind of absent. Credit reviews. And and therefore, we don't see that there is a competition between loan growth and buybacks I think this is a fine balance between the two. Appropriate trade off between the two. This is Andrew probably how much I can say it at this stage to your question. Thank you very much.

About the question of trade off between buybacks and loan growth.

A couple of things first as you know the proceeds of the sale of Canada will give us a buyback runway.

Regardless of loan growth because that's the game.

The proceeds less the.

Priority use for special dividend, which has been low for them you know if you.

<unk> billion dollars of additional buyback and irrespective of our loans, so that will give us runway for loan growth.

Georges Elhedery: That'll give us runway for loan growth. Second, I just need to also highlight when we talk about mid-single digit loan growth, we're not saying mid-single digit RWA growth. Some of our loans, specifically in the mortgage space, which is a big component for our loan growth, have lower RWA density and therefore benefit from lower RWAs, and therefore our RWA growth is, you know, expected to trail loan growth, you know, kind of absent credit reviews. And therefore we don't see that there is a competition between loan growth and buybacks. I think this is a fine balance between the two and an appropriate trade-off between the two. This is, Andrew, probably how much I can say at this stage to your question. Thank you very much.

Georges Elhedery: Second I just need to also highlight, when we talk about mid-single-digit loan growth, we're not saying mid-single-digit RWA growth, some of our loans, specifically in the mortgage space, which is the components for loan growth, have lower RWA density and therefore benefits from lower RWAs, and therefore our RWA growth is expected to trade loan growth, kind of absent the credit reviews. And and therefore, we don't see that there is a competition between loan growth and buybacks I think this is a fine balance between the two. Appropriate trade off between the two. This is Andrew probably how much I can say it at this stage to your question. Thank you very much.

Second I just need to also highlight when we talk about mid single digit loan growth, we're not saying mid single digit order growth some of our loans specifically in the mortgage space, which is the components for loan growth have lower oil and.

And therefore.

Benefits from lower <unk>, and therefore ought to be a growth as.

I expect it to to trade loan growth.

Kind of absent.

Credit reviews.

Georges Elhedery: And and therefore, we don't see that there is a competition between loan growth and buybacks, I think this is a fine balance between the two and appropriate trade-off between the two. This is Andrew probably how much I can say it at this stage to your question. Thank you very much.

And and therefore, we don't see that there is a competition between loan growth and buybacks I think this is a fine balance between the two.

Appropriate trade off between the two.

This is Andrew probably how much I can say it at this stage to your question.

Thank you very much.

Georges Elhedery: I'll move straight to the closing remarks. Thank you everyone, for joining us today and for your questions. I wanna end by reiterating that we've had a good nine months. All of our businesses have been performing well. We have delivered an annualized return on tangible equity of 17.1% when you exclude strategic transactions, and we remain committed to tight cost discipline. We're investing in growth, while we're also supporting dividends and buybacks, and I will be looking forward to speaking with you all again soon. Have a good morning or afternoon, everyone. Thank you very much.

Georges Elhedery: I'll move straight to the closing remarks, thank you everyone for joining us today and for your questions, I want to end by reiterating that we've had a good nine months, all of our businesses have been performing well we have delivered an annualized return on tangible equity of 17.1% when you exclude strategic transactions. And we remain committed to tight cost discipline. We're investing in growth. While we're also supporting dividends and buybacks. I'll be looking forward to speaking with you all again soon have a good morning or afternoon, everyone. Thank you very much. Thank you.

I want to end by reiterating that we've had a good nine months all of our businesses have been performing well we.

We have delivered an annualized return on tangible equity of 17, 1% when you exclude strategic transactions.

And we remain committed to tight cost discipline.

Georges Elhedery: And we remain committed to tight cost discipline, we're investing in growth while we're also supporting dividends and buybacks and I will be looking forward to speaking with you all again soon, so have a good morning or afternoon, everyone. Thank you very much. Thank you.

We're investing in growth.

While we're also supporting dividends and buybacks.

I'll be looking forward to speaking with you all again soon have a good morning or afternoon, everyone. Thank you very much.

Operator 2: Thank you.

Noel Quinn: Thank you.

Thank you.

Operator 1: Thank you, ladies and gentlemen. You may now disconnect.

Operator: Thank you, ladies and gentlemen. You may now disconnect.

Noel Quinn: Thank you.

Operator: Thank you ladies and gentlemen, you may now disconnect.

Yeah.

[noise] [noise].

Q3 2023 HSBC Holdings PLC Earnings Call

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