Full Year 2023 HSBC Holdings PLC Earnings Call

February 21, 2024

[music].

Good morning, good afternoon, good evening, ladies and gentlemen, and welcome to the Investor and Analyst Webinar for HSBC Holdings PLC's 2023 Annual Results. For your information this webinar is being recorded. At this time, I will hand over to Noel Quinn; Group Chief Executive. Good afternoon to those in Hong Kong and great to see you all. Good morning, So I was watching in London and around the world.

Operator: Good morning, good afternoon, good evening, ladies and gentlemen, and welcome to the Investor and Analyst Webinar for HSBC Holdings PLC's 2023 Annual Results. For your information this webinar is being recorded. At this time, I will hand over to Noel Quinn; Group Chief Executive.

[music]. Good morning, Good afternoon, good evening, ladies and gentlemen, and welcome to the Investor and analyst Webinar for HSBC Holdings Plc's 2023 annual results for your information. This webinar is being recorded at this time I will.

Good afternoon to those in Hong Kong and great to see you all. Good morning, So I was watching in London and around the world. Before George takes you through the Q4 numbers I'll make some opening comments. First I'm really pleased with the performance that the team delivered in 2023.

Noel Quinn: Good afternoon to those in Hong Kong, and great to see you all. Good morning to those who are watching in London and around the world. Before Georges takes you through the Q4 numbers, I'll make some opening comments.

Good morning, Good afternoon, good evening, ladies and gentlemen, and welcome to the Investor and analyst Webinar for HSBC Holdings Plc's 2023 annual results for your information. This webinar is being recorded at this time I will.

First I'm really pleased with the performance that the team delivered in 2023. We reported $32 billion of PBT for the first time ever. And we delivered a return on tangible equity of 14, 6%. All 15, 6% excluding material notable items. Second. There were some items in the fourth quarter, which make it harder to understand the underlying performance. George will take you through them in detail. But I want to stress there was still good underlying growth in the fourth quarter. Excluding the impact of notable items on Argentina hyperinflation. Before tax was seven $3 billion. Third we just ship it to $19 billion of capital returns to our shareholders in respect of 2023.

First, I'm really pleased with the performance that the team delivered in 2023. We reported $32 billion of PBT for the first time ever. And we delivered a return on tangible equity of 14. 6%, or 15.6% excluding material notable items. Second. There were some items in the fourth quarter, which make it harder to understand the underlying performance. George will take you through them in detail. But I want to stress there was still good underlying growth in the fourth quarter. Excluding the impact of notable items on Argentina hyperinflation. Before tax was seven $3 billion.

Over to Noel Quinn group Chief Executive.

Noel Quinn: Good afternoon to those in Hong Kong and great to see you all.

Good morning, So I was watching in London and around the world.

Noel Quinn: Before George takes you through the Q4 numbers I'll make some opening comments.

Noel Quinn: First I'm really pleased with the performance that the team delivered in 2023.

George: We reported $32 billion of PBT for the first time ever.

Second, there were some items in the fourth quarter, which make it harder to understand the underlying performance. Georges will take you through them in detail. But I want to stress there was still good underlying growth in the fourth quarter. Excluding the impact of notable items on Argentina hyperinflation, our profit before tax was 7.3 billion.

George: And we delivered a return on tangible equity of 14, 6%.

George: All 15, 6% excluding material notable items.

George: Second. There were some items in the fourth quarter, which make it harder to understand the underlying performance.

George: There were some items in the fourth quarter, which make it harder to understand the underlying performance.

George: George will take you through them in detail.

George: But I want to stress there was still good underlying growth in the fourth quarter.

George: Excluding the impact of notable items on Argentina hyperinflation.

George: Before tax was seven $3 billion.

Third, we distributed $19 billion of capital returns to our shareholders in respect of 2023. This included a full year dividend of $0.61 cents per share, which is the highest since 2008; and $7 billion of share buybacks, which have reduced the share count by over 4% a completion of the current buyback.

Third we just ship it to $19 billion of capital returns to our shareholders in respect of 2023.

George: This included a full year dividend of 61 cents per share.

George: Which is the highest since 2000 our nights.

George: And $7 billion of share buybacks.

George: We have reduced the share count by over 4% a completion of the current buyback.

George: Fourth, we still expect to have substantial distribution capacity going forward. We've announced a further share buyback of up to $2 billion. We're committed to considering a special dividend of $0.21 cents per share as a priority use of the Canada proceeds, subject to the completion of the transaction. And we finished the year with a strong CET1 ratio of 14.8%, which will be further boosted by the Canada the deal. Fith, we remain committed to cost discipline.

Fourth, we still expect to have substantial distribution capacity going forward. We've announced a further share buyback of up to $2 billion. We're committed to considering a special dividend of $0.21 cents per share as a priority use of the Canada proceeds, subject to the completion of the transaction. And we finished the year with a strong CET1 ratio of 14.8%, which will be further boosted by the Canada the deal.

George: We've announced a further share buyback of up to $2 billion.

George: We're committed to considering special dividends of 21 cents per share as a priority use of the Canada proceeds.

Subject to the completion of the transaction.

George: And we finished the year with a strong CET one ratio of 14, 8%.

George: Which will be further boosted by the kind of the deal.

George: Hey.

Fith, we remain committed to cost discipline. We have flow-through impacts of 2023 inflation on all cost this year, but expect a downward trend in inflationary pressures in 2025 and beyond. We continue to invest in growth opportunities and the digitization of our business to drive incremental efficiencies. We remain very focused on funding much of that investment through cost-saving initiatives.

George: We remain committed to cost discipline.

George: We have flow through impacts of 2023 inflation on all cost this year. But expect a downward trend and inflationary pressures in 2025 and beyond. We continue to invest in growth opportunities and the digitization of our business to drive incremental efficiencies. Okay. We remain very focused on funding much of that investment through cost saving initiatives.

George: But expect a downward trend and inflationary pressures in 2025 and beyond. We continue to invest in growth opportunities and the digitization of our business to drive incremental efficiencies.

George: We continue to invest in growth opportunities and the digitization of our business to drive incremental efficiencies.

George: Okay.

George: We remain very focused on funding much of that investment through cost saving initiatives.

George: Finally, we expect to have further opportunities to grow revenue, even in a lower rate environment. Georges will take you through how we're reducing our sensitivity to rate movements. And we do acknowledge the downside risk to NII. But we're confident that we have the levers for growth that allows us to deliver mid-teen returns in 2024. I'll take you through some of these levers later.

Finally, we expect to have further opportunities to grow revenue, even in a lower rate environment. Georges will take you through how we're reducing our sensitivity to rate movements. And we do acknowledge the downside risk to NII. But we're confident that we have the levers for growth that allows us to deliver mid-teen returns in 2024.

George: George will take you through how we're reducing our sensitivity to rate movements.

George: And we do acknowledge the downside risk to NII.

George: But we're confident that we have the levers for growth that allows us to deliver mid teen returns in 2024.

I'll take you through some of these levers later. Let me now hand over to Georges.

George: I will take you through some of these leave us later. Let me now hand over to George.

I will take you through some of these leave us later.

Let me now hand over to George. Yes. Thanks. Yeah. Yeah.

George: Let me now hand over to George.

George: Yes. Thanks. Yeah. Yeah.

George: Thanks. Yeah. Yeah.

George: Yeah. Yeah.

George: Yeah.

George: Thank you, Noel. A warm welcome to everyone here in Hong Kong. For those of you watching in London, good morning, and thank you for joining our full year 2023 results call. We delivered the good underlying business performance in the fourth quarter. But let me first start by clarifying that reported profit before tax was impacted by $5 $8 billion of notable items. And the further north of $5 billion from Argentina hyperinflation. <unk> the more than 50% devaluation of the peso in December.

Georges Elhedery: Thank you, Noel. A warm welcome to everyone here in Hong Kong. For those of you watching in London, good morning, and thank you for joining our full year 2023 results call.

George: Warm welcome to everyone here in Hong Kong.

George: For those of you watching in London, Good morning, and thank you for joining our full year 2023 results call.

George: We delivered the good underlying business performance in the fourth quarter.

We delivered the good underlying business performance in the fourth quarter. But let me first start by clarifying that all reported profit before tax was impacted by $5.8 billion of notable items, and a further notable of $5 billion from Argentina hyperinflation including the more than 50% devaluation of the peso in December. Let me unpack 3 of those notable items. First we reinstated the impairment on the sale of our French retail business a signal at the third quarter. Second, we booked to north of $0.4 billion of Treasury disposal losses in the quarter, again, in line with the guidance at the third quarter to extend the duration of hedges in anticipation of rate decreases.

Speaker Change: But let me first start by clarifying that reported profit before tax was impacted by $5 $8 billion of notable items.

Speaker Change: And the further north of $5 billion from Argentina hyperinflation.

Speaker Change: <unk> the more than 50% devaluation of the peso in December.

Speaker Change: Let me unpack 3 of those notable items. First we reinstated the impairment on the sale of our French retail business a signal at the third quarter. Second, we booked to north of $0.4 billion of Treasury disposal losses in the quarter, again, in line with the guidance at the third quarter to extend the duration of hedges in anticipation of rate decreases.

Speaker Change: First we reinstated the impairment on the sale of our French retail business a signal at the third quarter.

Speaker Change: Second we booked to north of $4 billion of Treasury disposal losses in the quarter again in line with the guidance at the third quarter to extend the duration of hedges in anticipation of rate decreases.

Speaker Change: And finally, as you know each quarter, we conduct a value in use test on the carrying value of our investment in BoCom described in detail in our annual reporting accounts. Following the outcomes of that test in Q4, we took a charge of $3 billion in the quarter against our carrying value. The charge had an insignificant impact on CET1 capital and our CET1 ratio, and no impact on our dividends or share buyback. And just to be clear this has no impact on our strategy in Mainland China, has no impact on our strategic relationship with BoCom and it has no impact on HSBC's or BoCom's operation, strategy or outlook.

Speaker Change: Following the outcomes of that test in Q4, we took a charge of $3 billion in the quarter against our carrying value.

Speaker Change: The charge had an insignificant impact on CET, one capital and our CET one ratio. No impact on our dividends or share buyback. And just to be clear this has no impact on our strategy in mainland China has no impact on our strategic relationship with Bocom and it has no impact on hsbc's or bulk homes operation strategy or outlook.

Speaker Change: No impact on our dividends or share buyback.

Speaker Change: And just to be clear this has no impact on our strategy in mainland China has no impact on our strategic relationship with Bocom and it has no impact on hsbc's or bulk homes operation strategy or outlook.

Speaker Change: So on a reported basis, our profit before tax was $1 billion in the fourth quarter, down $4 billion from the fourth quarter of 2022. Excluding the $6.3 billion dollar impact of multiple items in Argentina hyperinflation, our profit before tax was $7.3 billion, up $0.7 billion versus the fourth quarter of 2022, primarily due to growth in banking NII. On the next slide so on a reported basis fourth quarter revenue was down $1 $6 billion compared to the same period last year due.

So on a reported basis, our profit before tax was $1 billion in the fourth quarter, down $4 billion from the fourth quarter of 2022. Excluding the $6.3 billion dollar impact of multiple items in Argentina hyperinflation, our profit before tax was $7.3 billion, up $0.7 billion versus the fourth quarter of 2022, primarily due to growth in banking NII.

Speaker Change: Excluding the $6 3 billion dollar impact of multiple items in Argentina hyperinflation.

Speaker Change: Profit before tax was $7 $3 billion. Up north of $7 billion versus the fourth quarter of 2022, primarily due to growth in banking NII. On the next slide so on a reported basis fourth quarter revenue was down $1 $6 billion compared to the same period last year due.

Speaker Change: Up north of $7 billion versus the fourth quarter of 2022, primarily due to growth in banking NII.

On the next slide, so on a reported basis, fourth quarter revenue was down $1.6 billion compared to the same period last year. Due to the impact of notable items in Argentina hyperinflation. Excluding these, our revenue was up 1.5 billion, primarily banking NII. The strength of our deposit franchise, our access to 2 deep pools of liquidity in the U.K. in Hong Kong. And our enviable balance sheet made it possible for us to benefit from the more favorable rate environment.

Speaker Change: On the next slide so on a reported basis fourth quarter revenue was down $1 $6 billion compared to the same period last year due.

Speaker Change: Due to the impact of notable items in Argentina hyperinflation.

Speaker Change: Excluding these our revenue was up one 5 billion.

Speaker Change: <unk> really banking NII.

Speaker Change: The strength of our deposit franchise I would add. Access to two deep pools of liquidity in the U K and Hong Kong and our enviable balance sheet made it possible for us to benefit from the more favorable rate environment.

Speaker Change: Access to two deep pools of liquidity in the U K and Hong Kong and our enviable balance sheet made it possible for us to benefit from the more favorable rate environment.

Speaker Change: On the next slide, fourth quarter NII and banking NII were again impacted by Argentina hyperinflation, and a reclassification of cash flow hedge revenue between NII and non-NII. Excluding these both NII and banking NII were broadly stable in the third quarter, and then was down 3 basis points, primarily due to higher time deposit cost and deposit migration in Hong Kong.

Speaker Change: Were again impacted by Argentina hyperinflation.

Speaker Change: And a reclassification of cash flow hedge revenue between NII and NII.

Speaker Change: Excluding these both NII and banking NII were broadly stable in the third quarter, and then was down three basis points, primarily due to higher time deposit cost and deposit migration in Hong Kong.

Speaker Change: Turning to the outlook. Taking our fourth quarter banking NII, and adjusting for Argentina hyperinflation, and the reclassification of cash flow hedge revenue, and the disposal of our France retail and Canada businesses gives you an annualized run rate of just above $43 billion. That should be your starting point for modeling our 2024 banking NII.

Speaker Change: Taking our fourth quarter banking NII.

Speaker Change: And adjusting for Argentina, hyperinflation, and the reclassification of cash flow hedge revenue.

Speaker Change: And the disposal of our fancy tail and Canada businesses gives.

Speaker Change: It gives you an annualized run rate of just above $43 billion.

Speaker Change: That should be your starting point for modeling our 2024 banking NII.

Speaker Change: We expect 4 key variables to drive our banking NII from that starting point in 2024: changes in interest rates; the reinvestment of maturing structural hedge assets at higher yield; deposit migration, particularly here in Hong Kong and balance sheet movements. There is a degree of uncertainty inherent in all of these. We're guiding towards the banking NII of at least $41 billion in 2024.

Speaker Change: We expect four key variables to drive our banking NII from that starting point in 2024.

Speaker Change: Changes in interest rates.

Speaker Change: The reinvestment of maturing structural hedge assets at higher yields.

Speaker Change: Deposit migration, particularly here in Hong Kong.

Speaker Change: And balance sheet movements.

Speaker Change: There is a degree of uncertainty inherent in all of these.

We're guiding towards the banking NII of at least $41 billion in 2024.

Speaker Change: This is our current estimate of the bottom end of the range of reasonable outcomes and is intended to help you with your modeling. We wouldn't continue updating further as the year unfolds. And before turning to non NII I'd like to direct your attention to the chart on the bottom right of the slide. Over the last 18 months, our banking NII sensitivity has reduced by around $3 5 billion.

This is our current estimate of the bottom end of the range of reasonable outcomes and is intended to help you with your modeling. We will continue updating further as the year unfolds.

We wouldn't continue updating further as the year unfolds.

Speaker Change: And before turning to non NII I'd like to direct your attention to the chart on the bottom right of the slide.

And before turning to non-NII, I'd like to direct your attention to the chart on the bottom right of the slide. Over the last 18 months, our banking NII sensitivity has reduced by around $3.5 billion. More than 1/3 of this reduction is due to increased structural interest rate hedging. Subject to market conditions, we expect to increase both the notional and the duration of our structural hedge in the coming quarters in order to reduce our banking NII sensitivity still further.

Speaker Change: Over the last 18 months, our banking NII sensitivity has reduced by around $3 5 billion.

Speaker Change: More than one third of this reduction is due to increased structural interest rate hedging.

Speaker Change: Subject to market conditions, we expect to increase both the notional and the duration of our structural hedge in the coming quarters in order to reduce our banking NII sensitivity still further.

Speaker Change: Non-NII was down $0.9 billion compared to the same quarter last year, due to notable items in Argentina hyperinflation. And again, excluding these non-NII was up $1.7 billion versus the same quarter last year. This was primarily due to the revenue offset into non-NII from the central cost of funding global banking and markets trading activity, which is included in banking NII. And from the cash flow hedge income reclassification between NII and non-NII I referred to previously.

Speaker Change: This was primarily due to the revenue offset into non NII from the central cost of funding global banking and markets trading activity.

Speaker Change: Which is included in banking NII.

Speaker Change: And from the cash flow hedge income reclassification between NII and on NII I referred to previously.

Speaker Change: Other non-NII was up modestly versus the same quarter last year, including an increase of $0.1 billion in net fee income primarily in Commercial Banking and Wealth and Personal Banking. Looking at non-NII from our 2 strategic activities of wholesale transaction banking and wealth. In wholesale and transaction banking non-NII was up 2% on the fourth quarter of 2022. There was good growth in global payments solution and trade and then foreign exchange, reflecting the strength of our international network and transaction banking capabilities, as well as increased client activity and repricing initiatives. This was partly offset by a relatively small decrease in security services.

Speaker Change: Looking at non NII from our two strategic activities of wholesale transaction banking and wealth. [laughter]. In wholesale and transaction banking non NII was up 2% on the fourth quarter of 2022.

Speaker Change: [laughter].

In wholesale and transaction banking non NII was up 2% on the fourth quarter of 2022.

Speaker Change: There was good growth in global payments solution and trade and then foreign exchange, reflecting the strength of our international network and transaction banking capabilities.

Speaker Change: As well as increased client activity and repricing initiatives.

Speaker Change: This was partly offset by a relatively small decrease in security services.

Speaker Change: In wealth, non-NII in both Asset Management and Private Banking grew by double digits versus the fourth quarter of last year, due to an increase in assets under management, partly driven by net new invested assets. However, total wealth non-NII was down $0.1 billion as a result of a $0.2 billion correction to historical valuation estimates in our insurance business. For the full year non NII in wholesale transaction banking was 10 $6 billion up 5% on 2022 and. $6 billion in wealth up 7%.

In wealth, non-NII in both Asset Management and Private Banking grew by double digits versus the fourth quarter of last year, due to an increase in assets under management, partly driven by net new invested assets. However, total wealth non-NII was down $0.1 billion as a result of a $0.2 billion correction to historical valuation estimates in our insurance business. For the full year non-NII in wholesale transaction banking was $10.6 billion up 5% on 2022 and $6 billion in wealth up 7%.

Speaker Change: Non M in both asset management and private banking grew by double digits versus the fourth quarter of last year due to an increase in assets under management, partly driven by net new invested assets.

Speaker Change: Total wealth on NII was down north of $1 billion as a result of $2 billion correction to historical valuation estimates in our insurance business.

Speaker Change: For the full year non NII in wholesale transaction banking was 10 $6 billion up 5% on 2022 and.

For the full year non-NII in wholesale transaction banking was $10.6 billion up 5% on 2022 and $6 billion in wealth up 7%.

Speaker Change: $6 billion in wealth up 7%.

Speaker Change: Turning now to credit. Our fourth quarter ECL charge was $1 billion primarily in wholesale. This brought our full year ECL charge to $3.4 billion, which was 33 basis points of average customer loans, including those held for sale or 36 basis points, excluding those, and within our full year 2023 guidance. Due to ongoing macroeconomic uncertainty, we're guiding towards ECL of around 40 basis points for 2024.

Speaker Change: Oh fourth quarter ECL charge was $1 billion primarily in wholesale.

Speaker Change: This brought our full year ECL charge to $3 $4 billion, which was 33 basis points of average customer loans, including those held for sale or.

Speaker Change: Or 36 basis points, excluding doors and within our full year 2023 guidance.

Speaker Change: Due to ongoing macroeconomic uncertainty, we're guiding towards ECL to float around 40 basis points for 2022.

Speaker Change: We took an ECL charge of $0.2 billion for Mainland China commercial real estate in the fourth quarter, as part of the $1 billion charge for the quarter referenced in the last slide. This brought the full year charge on this portfolio to $1 billion, crystallizing the plausible downside scenario that we set out last February. Our main area of focus remains the portfolio booked in Hong Kong. That exposure is now $6.3 billion down $1.2 billion in the quarter, and down $3.1 billion compared to full year '22. We continue to monitor the sector closely and we are comfortable with our current level of provisions.

We took an ECL charge of $0.2 billion for Mainland China commercial real estate in the fourth quarter, as part of the $1 billion charge for the quarter referenced in the last slide. This brought the full year charge on this portfolio to $1 billion, crystallizing the plausible downside scenario that we set out last February. Our main area of focus remains the portfolio booked in Hong Kong. That exposure is now $6.3 billion down $1.2 billion in the quarter, and down $3.1 billion compared to full year '22. We continue to monitor the sector closely and we are comfortable with our current level of provisions.

Speaker Change: This brought the full year charge on this portfolio to $1 billion.

Speaker Change: Crystallizing the plausible downside scenario that we set out last February.

Speaker Change: Our main area of focus remains the portfolio booked in Hong Kong.

Our main area of focus remains the portfolio booked in Hong Kong. That exposure is now $6.3 billion down $1.2 billion in the quarter, and down $3.1 billion compared to full year '22. We continue to monitor the sector closely and we are comfortable with our current level of provisions.

Speaker Change: That exposure is now six $3 billion down $1 $2 billion in the quarter.

Speaker Change: And down $3 1 million compared to full year 'twenty two. We continue to monitor the sector closely and we are comfortable with our current level of provisions.

Speaker Change: We continue to monitor the sector closely and we are comfortable with our current level of provisions.

Speaker Change: Turning to cost. Full year 2023 costs on a constant currency basis were down 1%. On a target basis full year 2023 costs came in 1% higher than our Q3 guidance driven by 3 items that unexpectedly landed in the fourth quarter. First the FDIC special assessment, which we expected to be incurred over '24 and '25.

Turning to cost. Full year 2023 costs on a constant currency basis were down 1%. On a target basis full year 2023 costs came in 1% higher than our Q3 guidance driven by 3 items that unexpectedly landed in the fourth quarter.

Speaker Change: Full year 2023 costs on a constant currency basis were down 1%.

Speaker Change: On a target basis full year 2023 costs came in 1% higher than our Q3 guidance driven by three items that unexpectedly landed in the fourth quarter.

Speaker Change: First the FDIC special assessment, which we expected.

First the FDIC special assessment, which we expected to be incurred over '24 and '25. Second, the U.K. bank Levy was higher than forecast, primarily due to adjustments relating to prior years. And third, there was an offsetting benefit from Argentina hyperinflation in the quarter. Looking ahead, we are aiming to limit cost growth to around 5% in 2024 on a target basis, which excludes the reduction in 2024 costs from the France retail in Canada disposals. This will be driven by the flow through impact of 2023 inflation to 2024 costs, investment and volume growth, and partly offset by cost-saving initiatives.

Speaker Change: To be incurred over 24% and 25.

Speaker Change: Second the U K bank Levy was higher than forecast, primarily due to adjustments relating to prior years. And third there was an offsetting benefit from Argentina hyperinflation in the quarter. Looking ahead. We are aiming to limit cost growth to around 5% in 2024 on a target basis, which excludes the reduction in 2020 food costs from defense retail in Canada disposals.

Speaker Change: And third there was an offsetting benefit from Argentina hyperinflation in the quarter.

Speaker Change: Looking ahead.

Speaker Change: We are aiming to limit cost growth to around 5% in 2024 on a target basis, which excludes the reduction in 2020 food costs from defense retail in Canada disposals.

Speaker Change: This will be driven by. The flow through impact of 2023 inflation through 2020 for costs. Investment and volume growth. And partly offset by cost saving initiatives. Yeah.

Speaker Change: The flow through impact of 2023 inflation through 2020 for costs. Investment and volume growth. And partly offset by cost saving initiatives.

Speaker Change: Investment and volume growth. And partly offset by cost saving initiatives.

Speaker Change: And partly offset by cost saving initiatives.

Speaker Change: Yeah.

Speaker Change: On the next slide, customer lending and deposits were broadly stable versus the third quarter, once you exclude the sale of our French retail business. Without that, there was $35 billion of deposit growth of which $27 billion was in Asia with around half of this in Hong Kong. Deposit growth in Asia benefited from seasonality. And we would expect at least some of that growth to reverse in the course of Q1.

Speaker Change: Customer lending and deposits were broadly stable versus the third quarter. Once you exclude the sale of our French retail business.

Speaker Change: Without that there was $35 million of deposit growth of which $27 billion.

Speaker Change: I was in Asia with around half of this in Hong Kong. Deposit growth in Asia benefited from seasonality. And we would expect at least some of that growth to reverse in the course of Q1. Turning now to capital. Our CET one ratio at the end of 2023 was 14, 8%. Which was down <unk>, one percentage points on the third quarter. There are three things I'd like to draw your attention to.

I was in Asia with around half of this in Hong Kong. Deposit growth in Asia benefited from seasonality. And we would expect at least some of that growth to reverse in the course of Q1.

Speaker Change: Deposit growth in Asia benefited from seasonality.

Speaker Change: And we would expect at least some of that growth to reverse in the course of Q1.

Speaker Change: Turning now to capital.

Turning now to capital. Our CET1 ratio at the end of 2023 was 14.8%, which was down 0.1 percentage points on the third quarter. There are 3 things I'd like to draw your attention to. First, as I said earlier, the BoCom charge had an insignificant impact on CET1 capital and our CET1 ratio due to the compensating reduction in regulatory capital threshold deductions, and it had no impact on dividends or share buybacks. Second we expect the share buyback announced today to have an impact of around 25 basis points and our CET one ratio in the first quarter of 2024.

Speaker Change: Our CET one ratio at the end of 2023 was 14, 8%.

Speaker Change: Which was down <unk>, one percentage points on the third quarter.

Speaker Change: There are three things I'd like to draw your attention to.

Speaker Change: First as I said earlier, the Bocom charge had an insignificant impact on <unk> capital and our CET one ratio due to the compensating reduction in regulatory capital threshold deductions. And it had no impact on dividends or share buybacks. Second we expect the share buyback announced today to have an impact of around 25 basis points and our CET one ratio in the first quarter of 2024.

Speaker Change: And it had no impact on dividends or share buybacks.

Second, we expect the share buyback announced today to have an impact of around 25 basis points and our CET1 ratio in the first quarter of 2024. And finally, we expect the Canada the sale to generate around 1.2 percentage points of CET1 in the first quarter of 2024. We remain committed to consider with $0.21 per share special dividend in the first half of 2024, as a priority use of the sale proceeds, which equates to around 0.5 percentage points of Q1.

we expect the share buyback announced today to have an impact of around 25 basis points and our CET one ratio in the first quarter of 2024. And finally, we expect the kind of the sale to generate around one two percentage points of CET one in the first quarter of 2024. We remain committed to consider with 21 cents per share special dividend in the first half of 2024. That's the priority use of the sale proceeds which equates to around <unk>.

Speaker Change: Second we expect the share buyback announced today to have an impact of around 25 basis points and our CET one ratio in the first quarter of 2024.

Speaker Change: And finally, we expect the kind of the sale to generate around one two percentage points of CET one in the first quarter of 2024. We remain committed to consider with 21 cents per share special dividend in the first half of 2024. That's the priority use of the sale proceeds which equates to around <unk>.

We remain committed to consider with 21 cents per share special dividend in the first half of 2024.

Speaker Change: That's the priority use of the sale proceeds which equates to around <unk>.

Speaker Change: Five percentage points of Q1. Before I hand back to know and I am pleased to share some enhancements that we have made with regard. International disclosures. There are two sets of data and none will also comment further on them.

Five percentage points of Q1.

Before I hand back to Noel, I am pleased to share some enhancements that we have made with regard international disclosures. There are 2 sets of data and Noel will also comment further on them.

Speaker Change: Before I hand back to know and I am pleased to share some enhancements that we have made with regard.

Speaker Change: International disclosures.

Speaker Change: There are two sets of data and none will also comment further on them.

Speaker Change: Starting with our wholesale business, let me walk you through the data on this slide. In 2023, we generated $33.5 billion of client revenue across commercial banking and global banking, and markets. Of this, $20.4 billion was generated from multi-jurisdictional clients by this, we mean clients that bank with us in more than 1 market.

None: So I think without a wholesale business, let me walk you through the data on this slide.

Speaker Change: In 2023, we generated $33 $5 billion of client revenue across commercial banking.

Speaker Change: Global banking and markets.

Speaker Change: Of this <unk>.

Speaker Change: $24 billion was generated from multi jurisdictional clients by this we mean clients that bank with us in more than one market.

Speaker Change: The charts on the right, show that 2/3 of declined revenue, we generate from those clients comes from providing them with services in markets outside their home market, where they also bank with us. It is also worth pointing out that 2/3 of multi-jurisdictional client revenue or $13.4 billion was generated from clients whose home market is in the West, with the remaining $7 billion from clients, whose home market is in the East.

Speaker Change: Two thirds of declined revenue, we generate from those clients comes from providing them with services in markets outside their home market, where they also banked with us.

Speaker Change: It is also worth pointing out that two thirds of multi jurisdiction the declining revenue or $13 4 billion.

Speaker Change: Well, it's generated from client who is home market is in the west. The remaining $7 billion from clients, who is home market is in the east. Turning now to WPB International revenue. More than $10 million or 40% of our WPB revenue comes from international customers at all. Two thirds of which is generated in Asia. So to summarize both the wholesale and WPB clients revenue data clearly demonstrates the strength of our international network.

Well, it's generated from client who is home market is in the west. The remaining $7 billion from clients, who is home market is in the east.

Speaker Change: The remaining $7 billion from clients, who is home market is in the east.

Speaker Change: Turning now to WPB International revenue.

Turning now to WPB, international revenue. More than $10 million or 40% of our WPB revenue comes from international customers, around 2/3 of which is generated in Asia. So to summarize, both the wholesale and WPB clients revenue data clearly demonstrates the strength of our international network and our unique capability to serve international clients. Our network and further investments into our international proposition position us to capture an even greater share of this vital fast-growing segment.

Speaker Change: More than $10 million or 40% of our WPB revenue comes from international customers at all.

Speaker Change: Two thirds of which is generated in Asia.

Speaker Change: So to summarize both the wholesale and WPB clients revenue data clearly demonstrates the strength of our international network.

Speaker Change: The unique capability to serve international clients. Our network and further investments into our international proposition position us to capture an even greater share of this vital fast growing segment. Let me now hand back to norm.

The unique capability to serve international clients. Our network and further investments into our international proposition position us to capture an even greater share of this vital fast growing segment.

Speaker Change: Our network and further investments into our international proposition position us to capture an even greater share of this vital fast growing segment.

Let me now hand back to Noel.

Speaker Change: Let me now hand back to norm.

Noel Quinn: Thank you, Georges. You've just heard about good underlying performance in the fourth quarter. And Georges has introduced more detail information about our international revenue. Our wholesale international business model is a mature and differentiated business model with substantial scale.

Norm: Thank you George you've just heard about good underlying performance in the fourth quarter.

Norm: George has introduced more detail information about our international revenue.

Norm: Our wholesale international business model is a mature undifferentiated business model with substantial scale.

Norm: And in recent years, we have started to develop and invest in our WPB international business model. What George's slide showed is that already 40% of WPB revenue comes from international customers. And we believe we can take it much further. So let me now turn to how we will drive revenue growth. Not just this year and next but over the next three to four years. As always I'll begin with all purpose ambition strategy and values.

And in recent years, we have started to develop and invest in our WPB international business model. What George's slide showed is that already 40% of WPB revenue comes from international customers. And we believe we can take it much further.

Norm: What Georgia Slide showed is that already 40% of W. P. P revenue comes from international customers.

Norm: We believe we can take it much further.

So let me now turn to how we will drive revenue growth. Not just this year and next but over the next 3 to 4 years. As always, I'll begin with our purpose, ambition, strategy and values. These have helped to drive the good underlying business growth, which alongside supportive interest rates have given us strong momentum. In the short term, we're conscious of the potential downside risk to NII. The structural hedging we have put in place will help to protect that income.

Speaker Change: So let me now turn to how we will drive revenue growth.

Speaker Change: Not just this year and next but over the next three to four years.

Speaker Change: As always I'll begin with all purpose ambition strategy and values.

Speaker Change: They use have helped to drive the good underlying business growth. [noise] alongside supportive interest rates I've, given us strong momentum. In the short term, we're conscious of the potential downside risk so NII. The structural hedging way of putting in place will help to protect net income.

Speaker Change: [noise] alongside supportive interest rates I've, given us strong momentum.

In the short term, we're conscious of the potential downside risk to NII. The structural hedging we have put in place will help to protect that income. But we do have some clear focus areas under our 4 strategic pillars, which I'll cover on the following slides.

Speaker Change: In the short term, we're conscious of the potential downside risk so NII.

Speaker Change: The structural hedging way of putting in place will help to protect net income.

Speaker Change: Well, we do have some clear focus areas. Under our four strategic pillars, which I'll cover on the following slides. Starting with focus. And our international wholesale business, which remains our biggest competitive advantage. Because of its scale, our biggest growth opportunity. In the past all businesses in the west, but primarily focused on domestic clients. For the last four years, we have repositioned those businesses to align them with our international strategy exiting low return. Low growth domestic ought to be wise. The result is the differentiated model you see today. In commercial banking.

Well, we do have some clear focus areas. Under our four strategic pillars, which I'll cover on the following slides.

Speaker Change: Under our four strategic pillars, which I'll cover on the following slides.

Speaker Change: Starting with focus.

Starting with focus. In our international wholesale business, which remains our biggest competitive advantage, and because of its scale, our biggest growth opportunity. In the past, our businesses in the West, but primarily focused on domestic clients. Over the last 4 years, we have repositioned those businesses to align them with our international strategy, exiting low return, and low growth domestic RWAs. The result is the differentiated model you see today. In commercial banking.

Speaker Change: And our international wholesale business, which remains our biggest competitive advantage.

Speaker Change: Because of its scale, our biggest growth opportunity.

Speaker Change: In the past all businesses in the west, but primarily focused on domestic clients.

Speaker Change: For the last four years, we have repositioned those businesses to align them with our international strategy exiting low return.

Speaker Change: Low growth domestic ought to be wise. The result is the differentiated model you see today. In commercial banking.

Speaker Change: The result is the differentiated model you see today.

In commercial banking.

In Commercial Banking, we are unique in our ability to serve clients across multiple geographies, which is what HSBC was founded to do. The result was the $13.3 billion of profit before tax the commercial banking generated last year. In Global Banking and Markets. I believe we are uniquely positioned to connect clients between West and East, which was evidenced in our market leading performances in markets like the Middle East, and businesses like global foreign exchange. We have clearly got a strong international franchise. As you can see we facilitated more than $850 billion of trade last year. With the diversification of supply chains leading, to revenue growth opportunities for HSBC.

commercial banking. They're all unique in our ability to serve clients across multiple geographies. Which is what HSBC was finally to do. The result was the $13 $3 billion. Profit before tax the commercial banking generated last year. In global banking and markets. I believe we are uniquely positioned to connect clients between west and east. Which was evidenced in our market leading performance is in markets like the middle East. Businesses like global Foreign exchange. We have clearly got a strong international franchise. You can see we facilitated more than $850 billion of trade last year. With the diversification of supply chains, leading so revenue growth opportunities for HSBC.

Speaker Change: They're all unique in our ability to serve clients across multiple geographies. Which is what HSBC was finally to do. The result was the $13 $3 billion. Profit before tax the commercial banking generated last year. In global banking and markets. I believe we are uniquely positioned to connect clients between west and east. Which was evidenced in our market leading performance is in markets like the middle East. Businesses like global Foreign exchange. We have clearly got a strong international franchise. You can see we facilitated more than $850 billion of trade last year. With the diversification of supply chains, leading so revenue growth opportunities for HSBC.

Speaker Change: Which is what HSBC was finally to do.

Speaker Change: The result was the $13 $3 billion.

Speaker Change: Profit before tax the commercial banking generated last year.

In Global Banking and Markets. I believe we are uniquely positioned to connect clients between West and East, which was evidenced in our market leading performances in markets like the Middle East, and businesses like global foreign exchange. We have clearly got a strong international franchise. As you can see we facilitated more than $850 billion of trade last year. With the diversification of supply chains leading, to revenue growth opportunities for HSBC.

Speaker Change: In global banking and markets.

Speaker Change: I believe we are uniquely positioned to connect clients between west and east.

Speaker Change: Which was evidenced in our market leading performance is in markets like the middle East.

Speaker Change: Businesses like global Foreign exchange.

Speaker Change: We have clearly got a strong international franchise. You can see we facilitated more than $850 billion of trade last year. With the diversification of supply chains, leading so revenue growth opportunities for HSBC.

Speaker Change: You can see we facilitated more than $850 billion of trade last year.

Speaker Change: With the diversification of supply chains, leading so revenue growth opportunities for HSBC.

Speaker Change: We ranked 2nd globally by revenue in our payments business and processed around $500 trillion of electronic payments. And we've been number 3 globally by revenue and FX since 2021. But I believe there is significant amounts of untapped opportunity still to go for, which can drive revenue growth in the face of declining interest rates.

Speaker Change: And we've been number three globally by revenue and FX since 2021.

But I believe there is significant amounts of untapped opportunity still to go for.

Speaker Change: Which can drive revenue growth in the face of declining interest rates.

Importantly, this potential revenue growth is not necessarily dependent on GDP, as that growth opportunity already exists within our client base. And it is often fee-based on strongly influenced by opportunities that are inherent to our international nature of our client base. To provide some evidence of this growth potential, we grew wholesale multi-jurisdictional client revenue by 29% in 2023.

Speaker Change: It's not necessarily dependent on GDP.

Speaker Change: And so that growth opportunity already exists within our client base.

Speaker Change: And it is often fee based on.

Speaker Change: Strongly influenced by opportunities that are inherent to our international nature of our client base.

Speaker Change: To provide some evidence of this growth potential.

To provide some evidence of this growth potential, we grew wholesale multi-jurisdictional client revenue by 29% in 2023. On the revenue multiplier for multi-jurisdictional corporate clients in Commercial Banking was 5x that of an average domestic only customer. I am pleased that international isn't just a wholesale story. We are doing more with our WPB customers as well, building our Wealth business to meet the rising demand for Wealth Management services, especially here in Asia has been a strategic priority in recent years.

To provide some evidence of this growth potential, we grew wholesale multi-jurisdictional client revenue by 29% in 2023. On the revenue multiplier for multi-jurisdictional corporate clients in Commercial Banking was 5x that of an average domestic-only customer. I am pleased that international isn't just a wholesale story. We are doing more with our WPB customers as well, building our Wealth business to meet the rising demand for Wealth Management services, especially here in Asia has been a strategic priority in recent years.

Speaker Change: We grew wholesale multi jurisdictional client revenue by 29% in 2023.

Speaker Change: On the revenue multiplier for multi jurisdictional corporate clients in commercial banking. It was five times that of an average domestic only customer. I am pleased that international isn't just a wholesale story. We are doing more with our W. P P customers as well. Building, our wealth business to meet the rising demand for wealth management services, especially here in Asia has been a strategic priority in recent years.

Speaker Change: It was five times that of an average domestic only customer.

I am pleased that international isn't just a wholesale story. We are doing more with our WPB customers as well, building our Wealth business to meet the rising demand for Wealth Management services, especially here in Asia has been a strategic priority in recent years. So I'm pleased that we attracted net new invested assets of $84 billion last year. Compared to a $2 billion in 2022 and. $64 billion in 2021. This is a good indicator of future revenue opportunities, which again is often fee income. And should benefit and a lower interest rate environment as investors shift from cash reserves into invested asset classes.

I am pleased that international isn't just a wholesale story.

Speaker Change: I am pleased that international isn't just a wholesale story.

We are doing more with our WPB customers as well, building our Wealth business to meet the rising demand for Wealth Management services, especially here in Asia has been a strategic priority in recent years. So I'm pleased that we attracted net new invested assets of $84 billion last year. Compared to a $2 billion in 2022 and. $64 billion in 2021. This is a good indicator of future revenue opportunities, which again is often fee income. And should benefit and a lower interest rate environment as investors shift from cash reserves into invested asset classes.

Speaker Change: We are doing more with our W. P P customers as well.

Building, our wealth business to meet the rising demand for wealth management services, especially here in Asia has been a strategic priority in recent years.

Speaker Change: So I'm pleased that we attracted net new invested assets of $84 billion last year. Compared to a $2 billion in 2022 and. $64 billion in 2021. This is a good indicator of future revenue opportunities, which again is often fee income. And should benefit and a lower interest rate environment as investors shift from cash reserves into invested asset classes.

So I'm pleased that we attracted net new invested assets of $84 billion last year compared to $80 billion in 2022, and $64 billion in 2021. This is a good indicator of future revenue opportunities, which again, is often fee income, and should benefit and a lower interest rate environment as investors shift from cash reserves into invested asset classes.

Speaker Change: Compared to a $2 billion in 2022 and.

Speaker Change: $64 billion in 2021.

This is a good indicator of future revenue opportunities, which again is often fee income.

Speaker Change: And should benefit and a lower interest rate environment as investors shift from cash reserves into invested asset classes.

Speaker Change: Another trend is the growing demand for seamless cross-border banking services. Innovation is key here, and we hadn't innovated enough in this space in the past, which meant we weren't offering our customers what they wanted. But we are now, Global Money has more than $1.3 million customers up from 550,000 a year ago.

Speaker Change: Innovation is key here.

Speaker Change: And we haven't innovated enough in this space in the past.

Speaker Change: Each meant we weren't offering our customers what they wanted.

Speaker Change: Well we are not. Global money has more than $1 3 million customers up from 550000, a year ago. We also launched a new strengthened international banking proposition. Overall, we grew revenue from WPB international customers like 41% last year from $7 $2 billion to $10 2 billion. And while you might assume this was driven solely by higher rates I am pleased to say there was a 43% jump in new to bank International WPB customers last year. Again, these are higher revenue generating customers, bringing in three times as much revenue as an average domestic only customer.

Well we are not. Global money has more than $1 3 million customers up from 550000, a year ago.

Global money has more than $1 3 million customers up from 550000, a year ago.

Speaker Change: We also launched a new strengthened international banking proposition.

We also launched a new strengthened international banking proposition. Overall, we grew revenue from WPB international customers like 41% last year from $7.2 billion to $10.2 billion. And while you might assume this was driven solely by higher rates I am pleased to say, there was a 43% jump in new to bank International WPB customers last year. Again, these are higher revenue generating customers, bringing in 3X as much revenue as an average domestic-only customer.

Speaker Change: Overall, we grew revenue from WPB international customers like 41% last year from $7 $2 billion to $10 2 billion.

And while you might assume this was driven solely by higher rates I am pleased to say there was a 43% jump in new to bank International WPB customers last year.

Speaker Change: Again, these are higher revenue generating customers, bringing in three times as much revenue as an average domestic only customer.

Speaker Change: Next is the continued growth in 2 home markets. Our leading propositions in Hong Kong, in the U.K. provide us with deep liquidity and the differentiated proposition. These 2 pools of liquidity underpin our exceptionally strong balance sheet, which gives us the safety and security that our clients trust us to provide. Hong Kong and the U.K. are both highly connected global financial centers. We have increased our market leading share of trade finance in Hong Kong by 6.6 percentage points over the last 3 years. This included a 2.4 percentage point increase last year alone.

Speaker Change: A leading propositions in Hong Kong, and the U K provide us with deep liquidity and the differentiated proposition.

Speaker Change: These two pools of liquidity underpin our exceptionally strong balance sheet.

Speaker Change: Which gives us the safety and security that our clients Trust us to provide.

Speaker Change: Hong Kong and the UK are both highly connected global financial centers. We have increased our market leading share of trade finance in Hong Kong by six six percentage points over the last three years. This included a two. <unk> four percentage point increase last year alone.

Speaker Change: We have increased our market leading share of trade finance in Hong Kong by six six percentage points over the last three years.

Speaker Change: This included a two.

Speaker Change: <unk> four percentage point increase last year alone.

Speaker Change: We are also ideally positioned to capitalize as the mass affluent population in Hong Kong and Mainland China continues to grow. Driven by rapid urbanization across Mainland China, and the increased use of the connect schemes between Mainland China and Hong Kong. We grew new-to-bank retail customers in Hong Kong by 36% over the last 3 years including by capitalizing on the significant increase of visitors from Mainland China post reopening.

Speaker Change: Driven by rapid urbanization across mainland China, and the increased use of the connect schemes between mainland China and Hong Kong.

Speaker Change: We grew new to bank retail customers in Hong Kong by 36% over the last three years.

Speaker Change: Including by capitalizing on the significant increase in visitors from mainland China post reopening. In the U K, we also have good traction in commercial banking. In 2023, we were the number one bank for U K large corporates. As well as the best bank in the UK for resumes according to Euromoney. And we're all continuing to grow in wealth and personal banking.

Including by capitalizing on the significant increase in visitors from mainland China post reopening.

In the U.K. we also have good traction in Commercial Banking. In 2023, we were the number 1 bank for U.K. large corporates, as well as the best bank in the U.K. for SMEs according to Euromoney. And we're all continuing to grow in Wealth and Personal Banking.

Speaker Change: In the U K, we also have good traction in commercial banking.

Speaker Change: In 2023, we were the number one bank for U K large corporates.

Speaker Change: As well as the best bank in the UK for resumes according to Euromoney.

Speaker Change: And we're all continuing to grow in wealth and personal banking.

Speaker Change: We attracted over 1 million new-to-bank customers in the U.K. last year. And we've had steady mortgage growth, increasing our market share of U.K. stock to 8%. As economic conditions improve and we continue to invest, we are confident in our ability to grow our business further in these critical areas. Next, I showed a slide like this last year to demonstrate how we've gone from a business that depended on our home markets for the vast majority of our profits, while the rest of the franchise underperformed to one with broad-based profitability across markets. This slide shows the increasing profitability of these diversified growth opportunities.

Speaker Change: And we've had steady mortgage growth, increasing our market share of U K stock so 8%.

Speaker Change: As economic conditions improve and we continue to invest we are confident in our ability to grow our business further in these critical areas.

Speaker Change: Next I showed a slide like this last year.

Speaker Change: Stride, how we call. From a business that depended on our home markets for the vast majority of our profits.

Speaker Change: From a business that depended on our home markets for the vast majority of our profits.

Speaker Change: While the rest of the franchise Underperforms. So one with broad based profitability across markets. This slide shows the increasing profitability. These diversified growth opportunities. The number one rankings speak for themselves. And I, especially want to call out the great work that the global banking and markets team are doing in the middle East.

While the rest of the franchise Underperforms. So one with broad based profitability across markets. This slide shows the increasing profitability. These diversified growth opportunities.

So one with broad based profitability across markets.

Speaker Change: This slide shows the increasing profitability.

The number 1 rankings speak for themselves. And I especially want to call out the great work that the Global Banking and Markets team are doing in the Middle East. They now topped rankings 3 years in a row in a region that presents significant growth opportunities going forward. India Mainland, China, excluding associates and Singapore, all contributed more than $1 billion of profits in 2023. With Singapore doing so for the first time. This underlines why HSBC was named Best Bank in Asia by Euromoney, but there was strong growth across all these markets.

Speaker Change: These diversified growth opportunities.

Speaker Change: The number one rankings speak for themselves.

Speaker Change: And I, especially want to call out the great work that the global banking and markets team are doing in the middle East.

Speaker Change: And I've talked to these rankings three years in a row. In a region that presents significant growth opportunities going forward. India mainland, China, excluding associates, and Singapore, all contributed more than $1 billion of profits in 2023. With Singapore doing so for the first time. This underlines why H S. P. C was named Best Bank in Asia by Euromoney. But there was strong growth across all these markets.

Speaker Change: In a region that presents significant growth opportunities going forward.

Speaker Change: India mainland, China, excluding associates, and Singapore, all contributed more than $1 billion of profits in 2023.

With Singapore doing so for the first time.

Speaker Change: This underlines why H S. P. C was named Best Bank in Asia by Euromoney.

Speaker Change: But there was strong growth across all these markets.

Speaker Change: The next slide underlines that we have reshaped our portfolio to reinforce strengths, while exiting areas of underperformance and all our strategic priority. Over the last 12 months, we've announced exits in a number of our smaller markets. This is one way that we expect to take out further costs, alongside our continued focus on improving internal efficiency of the bank. And by making savings we can invest in the areas on the left that help us to drive growth. Before I move on, I want to mention SVB U.K everyone knows that HSBC is an international bank. But we also have a long history of supporting innovative entrepreneurs. AnD the acquisition of SVB U.K. enabled us to build a bigger proposition that can help us to become known as the go-to bank for innovation companies. It's encouraging innovation banking had its best ever quarter for customer on boarding in the fourth quarter of 2023.

The next slide underlines that we have reshaped our portfolio to reinforce strengths, while exiting areas of underperformance and all our strategic priority. Over the last 12 months, we've announced exits in a number of our smaller markets. This is one way that we expect to take out further costs, alongside our continued focus on improving internal efficiency of the bank. And by making savings we can invest in the areas on the left that help us to drive growth. Before I move on, I want to mention SVB U.K everyone knows that HSBC is an international bank. But we also have a long history of supporting innovative entrepreneurs. AnD the acquisition of SVB U.K. enabled us to build a bigger proposition that can help us to become known as the go-to bank for innovation companies.

Speaker Change: To reinforce strengths.

Speaker Change: While exiting areas of underperformance and all our strategic priority.

Speaker Change: Over the last 12 months.

We've announced exits and a number of our smaller markets.

Speaker Change: This is one way that we expect to take out further costs.

Speaker Change: Alongside our continued focus on improving internal efficiency of the bank.

Speaker Change: And by making savings we can invest in the areas on the left. Help us to drive growth. Before I move on I want to mention SVP U K. Everyone knows that H SBC is an international bank. But we also have a long history of supporting innovative entrepreneurs.

Speaker Change: Help us to drive growth.

Speaker Change: Before I move on I want to mention SVP U K.

Speaker Change: Everyone knows that H SBC is an international bank.

Speaker Change: But we also have a long history of supporting innovative entrepreneurs.

Speaker Change: On the acquisition of SCB U K enabled us to build a bigger proposition. And you can kind of can help us to become known as the go to bank for innovation companies. It's encouraging innovation banking had its best ever quarter for customer on boarding in the fourth quarter of 2023.

Speaker Change: And you can kind of can help us to become known as the go to bank for innovation companies.

It's encouraging that Innovation Banking had its best ever quarter for customer on boarding in the fourth quarter of 2023. I'm also encouraged by how many of those innovative companies want to take their capabilities across border. The next slide set aside how we're investing in technology to make customer experiences better, so process is more efficient on a cost of execution lower. I'm pleased to say more of our personal and corporate customers on mobile and digitally active. HSBC has traditionally grown by cross selling products to our existing banking clients.

Speaker Change: It's encouraging innovation banking had its best ever quarter for customer on boarding in the fourth quarter of 2023.

Speaker Change: I'm also encouraged by how many of those innovative companies wants to take their capabilities Cross border. The next slide set aside <unk>. We're investing in technology to make customer experiences better sell processes more efficient on a cost of execution level.

Speaker Change: The next slide set aside <unk>. We're investing in technology to make customer experiences better sell processes more efficient on a cost of execution level.

Speaker Change: We're investing in technology to make customer experiences better sell processes more efficient on a cost of execution level.

Speaker Change: I'm pleased to say more of a personal and corporate customers on mobile and digitally active. HSBC has traditionally grown by cross selling products to our existing banking clients. But innovation also enables us to open up growth avenues that are beyond our traditional customer footprint.

I'm pleased to say more of a personal and corporate customers on mobile and digitally active. HSBC has traditionally grown by cross selling products to our existing banking clients.

HSBC has traditionally grown by cross selling products to our existing banking clients.

But innovation also enables us to open up growth avenues that are beyond our traditional customer footprint. Zing is one such growth avenue, because it offers cross-border payment capabilities but critically, it is targeted at non-HSBC customers. Our embedded finance joint venture announced with trade shift last year is another such growth avenue. It's still early days for both, but they will allow us to break outside of the existing business model. I will also briefly cover our final 2 pillars. There isn't a conversation I have with the client whether Net Zero transition doesn't come up. Our first Net Zero transition plan shows how we intend to finance and support the transition to Net Zero.

Speaker Change: But innovation also enables us to open up growth avenues that are beyond our traditional customer footprint.

Speaker Change: Zinc is one such growth Avenue. Because it offers cross border payment capabilities for critically. It is targeted at non H SPC customers. Our embedded finance joint venture announced with trade shift last year is another such growth Avenue.

Speaker Change: Because it offers cross border payment capabilities for critically.

Speaker Change: It is targeted at non H SPC customers.

Speaker Change: Our embedded finance joint venture announced with trade shift last year is another such growth Avenue.

Speaker Change: It's still early days for both. But they will allow us to break out side of the existing business model. I will also briefly cover our final two pillars there. There isn't a conversation I have with the client whether net zero transition doesn't come up. Our first night zero transition plan shows how we intend to finance and support the transition to net zero.

But they will allow us to break out side of the existing business model.

I will also briefly cover our final 2 pillars. There isn't a conversation I have with the client whether Net Zero transition doesn't come up. Our first Net Zero transition plan shows how we intend to finance and support the transition to Net Zero, and collaborate globally to help enable change at scale. It will be a complex journey, but we have exactly the right geographic footprint, where the need and opportunity are greatest. Finally, Energize. Over the last 4 years, we've increased the pace of execution across the organization.

Speaker Change: I will also briefly cover our final two pillars there.

Speaker Change: There isn't a conversation I have with the client whether net zero transition doesn't come up.

Speaker Change: Our first night zero transition plan shows how we intend to finance and support the transition to net zero.

Speaker Change: Collaborate globally to help enable change at scale. It will be a complex Joni <unk>. Well, we have exactly the right geographic footprint. The need and opportunity are greatest. Finally energize. Over the last four years, we've increased the pace of execution across the organization.

Speaker Change: It will be a complex Joni <unk>.

Speaker Change: Well, we have exactly the right geographic footprint.

Speaker Change: The need and opportunity are greatest.

Speaker Change: Finally energize.

Finally, Energize. Over the last 4 years, we've increased the pace of execution across the organization. The management team is confident about the business. But it's even more important that all colleagues are confident, because when they are, we stand a much greater chance of succeeding. So I'm pleased that our 2023 staff survey showed the number of colleagues seeing the positive impacts of our strategy was up 11 percentage points from 2020 to 73%.

Speaker Change: Over the last four years, we've increased the pace of execution across the organization.

Speaker Change: Our management team is confident about the business. What is even more important that all colleagues so confident. Because when they are we stand a much greater chance of succeeding. So I'm pleased that our 2023 staff survey showed the number of colleagues seeing the positive impacts of our strategy was up 11 percentage points from 2020% to 73%.

Speaker Change: What is even more important that all colleagues so confident.

Speaker Change: Because when they are we stand a much greater chance of succeeding.

So I'm pleased that our 2023 staff survey showed the number of colleagues seeing the positive impacts of our strategy was up 11 percentage points from 2020 to 73%. And I'm also very excited by the number of quality new hires we've been able to bring into the organization over the last 12 months. It's also a vote of confidence in our strategy and the momentum we have built over the last 4 years.

Speaker Change: So I'm pleased that our 2023 staff survey showed the number of colleagues seeing the positive impacts of our strategy was up 11 percentage points from 2020% to 73%.

Speaker Change: And I'm also very excited by the number of quality new hires we've been able to bring into the organization over the last 12 months. It's also a vote of confidence in our strategy and the momentum we have built over the last four years.

Speaker Change: It's also a vote of confidence in our strategy and the momentum we have built over the last four years.

Speaker Change: In summary, I will go back to what I said at the start. I'm really pleased with how we performed in 2023, and the contribution that our people made. We reported $30 billion of PBT for the first time, and a mid-teens ROTE. There was good underlying growth in the fourth quarter. Excluding the impact of notable items in Argentina hyperinflation, our profit before tax was $7.3 billion.

Speaker Change: I'm really pleased with how we performed in 2023.

Speaker Change: On the contribution that all people night.

Speaker Change: We reported $30 billion of PBT for the first time.

Speaker Change: On a mid teens ROTC.

Speaker Change: That was good underlying growth in the fourth quarter. Excluding the impact of notable items in Argentina hyperinflation, a profit before tax was $7 3 billion. We distributed $19 billion of capital returns to our shareholders in respect of 2023.

That was good underlying growth in the fourth quarter. Excluding the impact of notable items in Argentina hyperinflation, a profit before tax was $7 3 billion.

Speaker Change: Excluding the impact of notable items in Argentina hyperinflation, a profit before tax was $7 3 billion.

Speaker Change: We distributed $19 billion of capital returns to our shareholders in respect of 2023.

We distributed $19 billion of capital returns to our shareholders in respect of 2023. This included the best full year dividend since 2008 and 3 share buybacks. And we still expect to have substantial distribution capacity coming forward. We remain committed to cost discipline, and we expect to have further opportunities to grow revenue, even in a lower rate environment. We're confident that we have the levers for growth that allows us to deliver mid-teens returns in 2024. With that let me hand over to Neil for Q&A.

Speaker Change: This included the best full year dividend since 2009. Three share buybacks. And we still expect to have substantial distribution capacity coming forward. We remain committed to cost discipline. And we expect to have further opportunities to grow revenue, even in a lower rate environment.

Speaker Change: Three share buybacks.

Speaker Change: And we still expect to have substantial distribution capacity coming forward.

Speaker Change: We remain committed to cost discipline.

Speaker Change: And we expect to have further opportunities to grow revenue, even in a lower rate environment.

Speaker Change: We're confident that we have the levers for growth that allows us to deliver mid teens returns in 2024. With that let me hand over to Neil for Q&A.

With that let me hand over to Neil for Q&A.

Speaker Change: With that let me hand over to Neil for Q&A.

Neil Sankoff: [Operator Instructions] For the people in the room, please wait for the microphone and make sure to state your name and the name of your institution before asking your question. We'll start with questions in the room. Okay. Gurpreet?

Speaker Change: Yes. Excellent. Thanks.

Neil: Excellent. Thanks.

Neil: If you are dialed into the call and you wanted to ask a question. Please use the raise hand feature in zoom make sure. Your camera is and microphone are turned on and wait for the prompt.

Neil: For the people in the room, please wait for the microphone and make sure to state your name and the name of your institution before asking your question.

Neil: We'll start with questions in the room. Okay. Okay.

Neil: Okay.

Gurpreet Sahi: Thank you. Gurpreet Sahi from Goldman. 2 questions, if I may, please. The first one is on FY '25 and beyond. We note that the ROTE guidance for this year, but if there can be any commentars regarding the ROTE for '25 and beyond, in particular, if the banking NII sensitivity for the next 100 basis points of rate cuts can be kind of guided to us?

Speaker Change: With me today from Goldman.

Speaker Change: Two questions. If I may please the first one is on FY 'twenty five and beyond we note that the Idaho at the guidance for this year, but is there can be any commentary regarding the royalty for 25 and beyond in particular, if the banking NII sensitivity for the next 100 basis points of Cat.

Speaker Change: <unk> can be. Kind of guided to us the second one is around the gain. The implied improvement in the capital from the gain. <unk> operations and that remains at around 10 billion of which 4 billion can be special dividend. So the 6 billion have you decided on how much between capital distribution to shareholders and then business growth. Thank you.

<unk> can be. Kind of guided to us

Speaker Change: Kind of guided to us the second one is around the gain.

The second one is around the gain, the implied improvement in the capital from the gain in Canadian operations and that remains around $10 billion, of which $4 billion can be special dividend. So the $6 billion have you decided on how much between capital distribution to shareholders and then business growth? Thank you.

Speaker Change: The implied improvement in the capital from the gain.

Speaker Change: <unk> operations and that remains at around 10 billion of which 4 billion can be special dividend. So the 6 billion have you decided on how much between capital distribution to shareholders and then business growth. Thank you.

Speaker Change: Thank you very much for your questions. I'll ask Georges to cover both of those, please. Thank you those things are good for you so. So we have not at this stage given guy. Guidance for full year 'twenty five I point, you to the guidance, we've given for full year 'twenty four of at least $41 billion in banking NII and mid teens return on tangible equity. In terms of banking NII sensitivity, we do have a slide at the back end of the deck, which I can point, you to which shows for the further 100 basis points and for future years.

Noel Quinn: Thank you very much for your questions. I'll ask Georges to cover both of those, please.

George: Thank you those things are good for you so.

Georges Elhedery: Thank you, Noel. Thanks, Gurpreet. So we have not at this stage given guidance for full year '25. I point you to the guidance we've given for full year '24 of at least $41 billion in banking NII and mid-teens return on tangible equity. In terms of banking NII sensitivity, we do have a slide at the back-end of the deck, which I can point you to, which shows for the further 100 basis points and for future years, what's the impact, and what I can point you to is number 1 we continue to intend to increase subject to market conditions, but as of today to increase the structural hedge.

George: So we have not at this stage given guy. Guidance for full year 'twenty five I point, you to the guidance, we've given for full year 'twenty four of at least $41 billion in banking NII and mid teens return on tangible equity. In terms of banking NII sensitivity, we do have a slide at the back end of the deck, which I can point, you to which shows for the further 100 basis points and for future years.

George: Guidance for full year 'twenty five I point, you to the guidance, we've given for full year 'twenty four of at least $41 billion in banking NII and mid teens return on tangible equity.

In terms of banking NII sensitivity, we do have a slide at the back end of the deck, which I can point, you to which shows for the further 100 basis points and for future years.

George: The impact was. Can point you to is number one we continue to intend to increase subject to market conditions, but as of today to increase the structural hedge. Second the volume of the structural hedge second we continue to intend to increase the weighted average life of the structural hedge having now reached two eight years and with the intent to take it to about three years.

The impact was.

Can point you to is number one we continue to intend to increase subject to market conditions, but as of today to increase the structural hedge. Second the volume of the structural hedge second we continue to intend to increase the weighted average life of the structural hedge having now reached two eight years and with the intent to take it to about three years.

Can point you to is number one we continue to intend to increase subject to market conditions, but as of today to increase the structural hedge.

George: Can point you to is number one we continue to intend to increase subject to market conditions, but as of today to increase the structural hedge. Second the volume of the structural hedge second we continue to intend to increase the weighted average life of the structural hedge having now reached two eight years and with the intent to take it to about three years.

Second, the volume of the structural hedge. Second, we continue to intend to increase the weighted average life of the structural hedge, having now reached 2.8 years and with the intent to take it to about 3 years. Both of which should give you a sense of how we're mitigating rate impact into '24 and '25 from the structural hedging activity. With regards gain on Canada, so $10 billion proceeds, $4 billion will be considered-- what we committed to consider as a priority use for special dividend. The residual $6 billion will constitute about 0.8%, 0.9% additional CET1, which may--which very likely will be at the Q1 outcome.

George: Second the volume of the structural hedge second we continue to intend to increase the weighted average life of the structural hedge having now reached two eight years and with the intent to take it to about three years.

Both of which should give you a sense of how we're mitigating rate impact into 2014. 25 from the structural hedging activity with regards our gain on Canada, So $10 billion proceeds 4 billion. B considered what we committed to consider as a priority use for especially the dividend. The residual 6 billion will constitute a boat. Eight 9%. Additionally, CET, one which may. <unk>, which which very likely will be at the <unk>.

George: 25 from the structural hedging activity with regards our gain on Canada, So $10 billion proceeds 4 billion.

George: B considered what we committed to consider as a priority use for especially the dividend. The residual 6 billion will constitute a boat.

George: Eight 9%. Additionally, CET, one which may.

George: <unk>, which which very likely will be at the <unk>.

We will continue looking at opportunities, but it remains our intent subject to market conditions, our capital position, regulatory position, it remains our intent to continue a rolling series of share buybacks beyond this one. Thank you.

George: We will continue looking at opportunities, but it remains our intent subject to market conditions are kept in position regulatory position. It remains our intent to continue enrolling series of share buybacks beyond this one.

Speaker Change: Thank you.

Thank you. Any others in the room? So we'll take our first question from the line, will be from Andrew Coombs from Citi. Andrew Hi. Good morning from London. Yourself. Two questions. Please firstly I just want to clarify the messaging on the banking NII out. If I rewind 12 months ago, I think you gave guidance Greg.

Neil Sankoff: Thank you. Any others in the room? So we'll take our first question from the line, will be from Andrew Coombs from Citi.

Speaker Change: Yes, there isn't room. Okay. So we'll take. Our first question from the line will be from. Andrew Coombs from Citi. Andrew Hi. Good morning from London. Yourself. Two questions. Please firstly I just want to clarify the messaging on the banking NII out. If I rewind 12 months ago, I think you gave guidance Greg.

Speaker Change: Okay. So we'll take.

Speaker Change: Our first question from the line will be from.

Andrew Coombs: Andrew Coombs from Citi.

Andrew Coombs: Andrew Hi. Good morning from London. Yourself. Two questions. Please firstly I just want to clarify the messaging on the banking NII out. If I rewind 12 months ago, I think you gave guidance Greg.

Andrew Coombs: Good morning from London. 2 questions, please. Firstly I just want to clarify the messaging on the banking NII outlook. If I rewind 12 months ago, I think you gave guidance for greater than $36 billion of reported NII. But then this time a year ago, you said you weren't seeking to move consensus, which at the time it was actually higher than $37 billion. If I fast forward to today, you are guiding to greater than $41 billion. If I look at consensus NII, I adjust the trading book funding costs. It looks like consensus banking NII is around $44 billion. So are you seeking to rebase consensus banking NII? Or should we put greater emphasis on your greater than within that $41 billion target. That's my first question. I just want to clarify that messaging.

Andrew Coombs: Good morning from London.

Andrew Coombs: Yourself.

Andrew Coombs: Two questions. Please firstly I just want to clarify the messaging on the banking NII out.

Andrew Coombs: If I rewind 12 months ago, I think you gave guidance Greg.

Andrew Coombs: <unk> <unk> 6 billion in the fourth Gen II, but then this time a year ago. You said you weren't seeking to meet consensus switches the times it was actually higher Shepard. Fast forward to today, you are guiding to greater than 41, if buying new caps Tencent since NII I adjust the China funding costs. It looks like consensus banking NII is around 44. Are you seeking to rebase consensus banking NII or should we put greater emphasis on you're right that we did in that 41 target.

Andrew Coombs: Fast forward to today, you are guiding to greater than 41, if buying new caps Tencent since NII I adjust the China funding costs. It looks like consensus banking NII is around 44.

Andrew Coombs: Are you seeking to rebase consensus banking NII or should we put greater emphasis on you're right that we did in that 41 target.

Andrew Coombs: That's my last question is from a qualified our messaging. My second question is around the hedge thank you for the extra disclosure on the 478 million nominal and the $2 eight years average life. Can you give us an idea of the. Average yield on that. And Akshay what it is currently loading up. And what Youre aiming to moment back on that if you are extending the duration. <unk>.

That's my last question is from a qualified our messaging.

My second question is around the hedge. Thank you for the extra disclosure on the $478 billion nominal and the 2.8 years average life. Can you give us an idea of the average yield on that book and also where is currently rolling off that and when you're aiming to roll it back on that if you are extending the duration now?

Andrew Coombs: My second question is around the hedge thank you for the extra disclosure on the 478 million nominal and the $2 eight years average life.

Can you give us an idea of the.

Andrew Coombs: Average yield on that.

Andrew Coombs: And Akshay what it is currently loading up.

Andrew Coombs: And what Youre aiming to moment back on that if you are extending the duration. <unk>.

<unk>.

Andrew Coombs: I think Georges will answer both of those. so thank you Andrew.

Noel Quinn: I think Georges will answer both of those.

Georges Elhedery: Thank you, Andrew. So obviously today, we cannot see consensus banking NII and basically, I'll use this opportunity to ask you collectively if you can start giving us your banking NII, and so we can we can see the NII forecasts and then the funding cost of the trading book gets lumped together with the non-NII and so it's be fair, very difficult for us to unpack it although $44 billion does sound high if we try to do the math ourselves.

Andrew Coombs: So obviously today, we cannot see consensus banking NII and basically I'll use this opportunity to all skew collectively if you can start giving us your bank handling and since we can see the NII forecast and then the funding cost of the trading book gets lumped together with the non NII and. To be fair it difficult for us to. To unpack it although 44 billion does sound high.

George: So obviously today, we cannot see consensus banking NII and basically I'll use this opportunity to all skew collectively if you can start giving us your bank handling and since we can see the NII forecast and then the funding cost of the trading book gets lumped together with the non NII and.

George: To be fair it difficult for us to.

George: To unpack it although 44 billion does sound high.

Speaker Change: We tried to do the math ourselves.

Speaker Change: But let me take a step back and just walk you through how we're thinking about NII. And just bear with me for 2 minutes, but I think that explanation would probably help guide you. So we start from the Q4 $10.7 billion banking NII. We would adjust in Q4 for the parts related to Argentina hyperinflation, as well as the reclassification of the cash flow hedges for between a la NII. We'll adjust for the part that does not pertain to Q4. So that's a full year correction. And that's about an additional $0.5 billion you could use on the Q4 $10.7 billion number. So that takes you to $11.2 billion adjusted quarterly run rate. annualized take into account day counts you'll get.

But let me take a step back and just walk you through how we're thinking about NII. And just bear with me for 2 minutes, but I think that explanation would probably help guide you. So we start from the Q4 $10.7 billion banking NII. We would adjust in Q4 for the parts related to Argentina hyperinflation, as well as the reclassification of the cash flow hedges for between a la NII. We'll adjust for the part that does not pertain to Q4. So that's a full year correction. And that's about an additional $0.5 billion you could use on the Q4 $10.7 billion number. So that takes you to $11.2 billion adjusted quarterly run rate.

Speaker Change: Walk you through how we're thinking about NII and just bear with me for two minutes I think. That explanation would probably help. So we start from the Q4 $10 7 billion. Banking NII. We would adjust in Q4 for the parts related to Argentina, hyperinflation as well as the reclassification of the cash flow hedges for between a la Nia Ali. Just for the part that does not pertain to Q4, so that's a full year correction and that's about an additional $5 billion you could use on the Q4 10 set of numbers. So that takes you to 11, two adjusted quarterly run rate annualized take into account day counts you'll get.

Speaker Change: That explanation would probably help. So we start from the Q4 $10 7 billion. Banking NII. We would adjust in Q4 for the parts related to Argentina, hyperinflation as well as the reclassification of the cash flow hedges for between a la Nia Ali. Just for the part that does not pertain to Q4, so that's a full year correction and that's about an additional $5 billion you could use on the Q4 10 set of numbers. So that takes you to 11, two adjusted quarterly run rate annualized take into account day counts you'll get.

Speaker Change: So we start from the Q4 $10 7 billion. Banking NII. We would adjust in Q4 for the parts related to Argentina, hyperinflation as well as the reclassification of the cash flow hedges for between a la Nia Ali. Just for the part that does not pertain to Q4, so that's a full year correction and that's about an additional $5 billion you could use on the Q4 10 set of numbers. So that takes you to 11, two adjusted quarterly run rate annualized take into account day counts you'll get.

Speaker Change: Banking NII. We would adjust in Q4 for the parts related to Argentina, hyperinflation as well as the reclassification of the cash flow hedges for between a la Nia Ali. Just for the part that does not pertain to Q4, so that's a full year correction and that's about an additional $5 billion you could use on the Q4 10 set of numbers. So that takes you to 11, two adjusted quarterly run rate annualized take into account day counts you'll get.

Speaker Change: We would adjust in Q4 for the parts related to Argentina, hyperinflation as well as the reclassification of the cash flow hedges for between a la Nia Ali.

Speaker Change: Just for the part that does not pertain to Q4, so that's a full year correction and that's about an additional $5 billion you could use on the Q4 10 set of numbers. So that takes you to 11, two adjusted quarterly run rate annualized take into account day counts you'll get.

Annualized taking into account the accounts, you get to $44.4 billion. From that $44.4 billion, remember you have to deduct the full year French NII, France, retail NII as well as 3 quarters from the Canada NII, which together combined come to about $1.3 billion. So $44.4 billion minus $1.3 billion takes you to just above $43 billion. That would be our starting position, if you want, in terms of an annualization of a run rate, factoring in structural hedges, et cetera. no from that 43 billion there are various tailwind and headwinds. The tailwind of reinvestment of all the structural hedges from lower rates into the current rate environment, we do have some tail winds.

Speaker Change: 44 four. From that 44 forward remember you have to deduct the full year of French retail NII as well as three quarters from the kind of the NII, which together combined come to about $1 3 billion of which $4. Four minus 1.3 takes you to just them. <unk> $43 billion.

Speaker Change: From that 44 forward remember you have to deduct the full year of French retail NII as well as three quarters from the kind of the NII, which together combined come to about $1 3 billion of which $4. Four minus 1.3 takes you to just them.

Speaker Change: <unk> $43 billion.

Speaker Change: That would be our starting position in Q1 in terms of and then utilization of around the rate factoring in. Factoring in structural hedges et cetera, no from that 43 billion there are various tailwind and headwinds. The tailwind of reinvestment of all the structural hedges from lower rates into the current rate environment, we do have some tail winds.

Speaker Change: Factoring in structural hedges et cetera, no from that 43 billion there are various tailwind and headwinds.

Now from that $43 billion, there are various tailwind and headwinds. We have the tailwind of reinvestment of all the structural hedges from lower rates into the current rate environment. We do have some tailwinds, probably cautious on H1, but tailwinds beyond in H1 in terms of volume growth and loan growth. And we do have headwinds, including the rate cycle, if indeed, we start seeing the decreases in the second half of the year. And we obviously have the headwinds, which we have observed specifically Hong Kong around deposit migration to term deposits. Kind of baking all of that into account, we're getting to the guidance of at least $41 billion that we're comfortable sharing today. With regards to the structural hedge we have shared with you volume. <unk> shared with you.

Speaker Change: The tailwind of reinvestment of all the structural hedges from lower rates into the current rate environment, we do have some tail winds.

Speaker Change: Probably cautious on H, one, but payloads beyond <unk>, one in terms of volume growth and loan growth and we do have headwinds, including the debate cycle. If indeed, we start seeing the decreases in. In the second half of the year and we obviously have the headwinds, which we have observed specifically at home couldnt get on deposit migration to term deposits.

Speaker Change: In the second half of the year and we obviously have the headwinds, which we have observed specifically at home couldnt get on deposit migration to term deposits.

Speaker Change: Kind of baking all of that into account, we're getting to the guidance of at least $41 billion that we're comfortable sharing today. With regards to the structural hedge we have shared with you volume. <unk> shared with you.

Speaker Change: With regards to the structural hedge we have shared with you volume.

With regards to structural hedge, we have shared with you volume, we have shared with you the weighted average life, and we have shared with you now banking NII sensitivity. We have not yet shared and we have not yet found the level of standard we would need to be able to share the yield. But what I can tell you about the yield is that both the yield of the maturing hedges being replaced at current rates, as well as the additional hedges we're doing with inverted curves are all baked into our at least $41 billion of banking NII guidance.

Speaker Change: <unk> shared with you.

Speaker Change: The weighted average life and we have shared with you know banking NII sensitivity. We have not yet. Sure and we have not yet found the you know the level of the stuff that we would need to be able to share the yield books, what I can tell you about the yield is that both the yield of the maturing hedges being replaced at current rates as well as the additional hedges were.

Speaker Change: The weighted average life and we have shared with you know banking NII sensitivity.

Speaker Change: We have not yet.

Speaker Change: Sure and we have not yet found the you know the level of the stuff that we would need to be able to share the yield books, what I can tell you about the yield is that both the yield of the maturing hedges being replaced at current rates as well as the additional hedges were.

Speaker Change: Doing with inverted curves are all baked into our at least $141 billion of banking NII guidance. So if I could just add a couple of comments. One reason, we're not giving a statement regarding consensus is as George says, we think consensus is a mixture of updated thinking has adjusted for some of these annualized nation effects of disposals and other things and some consensus hasn't adjusted for that at the moment. So I think there's a little bit of apples and pears in today's consensus position. So.

Doing with inverted curves are all baked into our at least $141 billion of banking NII guidance.

So if I could just add a couple of comments. One reason we're not giving a statement regarding consensus is as Georges says, we think consensus is a mixture of updated thinking that has adjusted for some of these annualization effects of disposals and other things, and some consensus hasn't adjusted for that at the moment. So I think there's a little bit of apples and pears in today's consensus position. So.

Noel Quinn: So if I could just add a couple of comments. One reason we're not giving a statement regarding consensus is as Georges says, we think consensus is a mixture of updated thinking that has adjusted for some of these annualization effects of disposals and other things, and some consensus hasn't adjusted for that at the moment. So I think there's a little bit of apples and pears in today's consensus position.

Speaker Change: So if I could just add a couple of comments.

Speaker Change: One reason, we're not giving a statement regarding consensus is as George says, we think consensus is a mixture of updated thinking has adjusted for some of these annualized nation effects of disposals and other things and some consensus hasn't adjusted for that at the moment. So I think there's a little bit of apples and pears in today's consensus position. So.

So what Georges it's clearly trying to articulate for you is take the Q4 adjusted for the known items, get to a new starting position of $43 billion, and is underpinned without starting position of $43 billion with at least $41 billion. Therefore, the range of modeling is going to be somewhere between $41 billion and $43 billion, depending on the assumptions you might make on the headwinds and the tailwinds. And we think that given that lack of consistency on consensus, the uncertainty in the market, that's probably the best way to guide you on banking NII, but there's a very clear repositioning of the starting position to get us back on an apples-and-apples basis. And then the other thing--no that was it. That's what I wanted to say. Those 2 comments. Thank you.

George It's clearly try to articulate for you is take the Q4 adjusted for the known items.

Speaker Change: Get to a new starting position of 43 billion. And is underpinned without starting position of $43 billion. With I at least 40 wall therefore, the range of modeling. He is going to be somewhere between 41 and 43, depending on the assumptions you might make on the headwinds on the tailwind. And we think that given that lack of consistency on consensus. So I'm seeing in the market, that's probably the best way to guide you on banking NII, but there's a very clear repositioning of the starting position.

George: And is underpinned without starting position of $43 billion. With I at least 40 wall therefore, the range of modeling. He is going to be somewhere between 41 and 43, depending on the assumptions you might make on the headwinds on the tailwind.

George: With I at least 40 wall therefore, the range of modeling. He is going to be somewhere between 41 and 43, depending on the assumptions you might make on the headwinds on the tailwind.

George: He is going to be somewhere between 41 and 43, depending on the assumptions you might make on the headwinds on the tailwind.

And we think that given that lack of consistency on consensus, the uncertainty in the market, that's probably the best way to guide you on banking NII, but there's a very clear repositioning of the starting position to get us back on an apples-and-apples basis. And then the other thing--no that was it. That's what I wanted to say. Those 2 comments. Thank you.

George: And we think that given that lack of consistency on consensus.

George: So I'm seeing in the market, that's probably the best way to guide you on banking NII, but there's a very clear repositioning of the starting position.

George: To get us back on an apples and apples basis. And then the other thing no that was that's what I want to cite those two comments. Thank you. Thanks Pat. Next question. We will take one from the room. Welcome.

To get us back on an apples and apples basis.

George: And then the other thing no that was that's what I want to cite those two comments.

And then the other thing no that was that's what I want to cite those two comments. Thank you. Thanks Pat. Next question. We will take one from the room. Welcome.

And then the other thing no that was that's what I want to cite those two comments. Thank you.

Speaker Change: Thank you.

Speaker Change: Thanks Pat.

Speaker Change: Next question. We will take one from the room. Welcome.

Neil Sankoff: Next question. We will take one from the room. Katherine?

Speaker Change: We will take one from the room.

Speaker Change: Welcome.

Speaker Change: I'm Katherine from J.P. Morgan. So I have 2 questions here. The first question is I want to clarify, the mid-teens low teens ROTE's guidance is a normalized ROTE. That means that the ROTE excluding Canada disposal gain. So I want to clarify that because if that is the case mid-teen ROTE, then if you look at the company compiled consensus I think the ROTE is 17.4%. Then I just calculated on a very like top-down basis, excluding the disposal gain, then consensus ROTE is roughly about mid-teen as well. But the thing is that,

Katherine Lei: I'm Katherine from J.P. Morgan. So I have 2 questions here. The first question is I want to clarify, the mid-teens low teens ROTE's guidance is a normalized ROTE. That means that the ROTE excluding Canada disposal gain. So I want to clarify that because if that is the case mid-teen ROTE, then if you look at the company compiled consensus I think the ROTE is 17.4%. Then I just calculated on a very like top-down basis, excluding the disposal gain, then consensus ROTE is roughly about mid-teen as well.

Speaker Change: My first question I want to clarify the mid teens low teens guidance.

Speaker Change: I'll answer it all with you that means that the ROE excluding. Excluding Canada disposal gains. And to clarify that because if that is the case mid teen ROE would you sense. If you look at the company compiled consensus I think the royalty is 17, 4% and I calculate it on a very like pop out basis, excluding the disposal gains in consensus reality is roughly about <unk> well, but the thing is.

Speaker Change: Excluding Canada disposal gains.

Speaker Change: And to clarify that because if that is the case mid teen ROE would you sense. If you look at the company compiled consensus I think the royalty is 17, 4% and I calculate it on a very like pop out basis, excluding the disposal gains in consensus reality is roughly about <unk> well, but the thing is.

But the thing is that, I think that means that HSBC guidance and consensus is quite in line in terms of normalized ROTE. But I think on NII, on cost, NII I think in the previous questions I think that may be a bit of reset in expectation. And then I think cost, the 5% cost is a bit higher than where consensus was indicating. Then that means--does it mean that you are quite optimistic on non-NII growth, i.e., fee growth or maybe you have a different view on asset quality and hence, the ECL charges. I think this is the first part of the big question. The second part is on bolt com.

Speaker Change: That's I think that means that it just beat the guidance and consensus is quite in line in terms of normalized royalty, but I think on NII on cost and I think in the previous questions I think that may be a bit weaker.

Speaker Change: That's in expectation. And then I think caused a 5% coffee is a bit higher than where consensus. With indicating then that means I think mean that you are quite optimistic on non NII growth I E vehicles, or maybe you have a different view on asset quality and hence the ECL charges. I think this is the first part of the question. The second part is on bolt com.

Speaker Change: And then I think caused a 5% coffee is a bit higher than where consensus.

Speaker Change: With indicating then that means I think mean that you are quite optimistic on non NII growth I E vehicles, or maybe you have a different view on asset quality and hence the ECL charges. I think this is the first part of the question. The second part is on bolt com.

The second part is on BoCom. May I know I know like what trigger the $3 billion impairment charges? And as China's yield is declining like they just announced a 25 basis points on 5-year LPL cuts and all those. Should we be expecting more impairments on the BoCom investment? So basically I wanted to see if there is any one time off event that triggered this impairment. It's going to be a normal part of the business.

Speaker Change: Now I know like what trigger, let's say blending and handling charges and China as our yield is declining. I know it was about 25 basis points on five year LPL cut that nor should we be. Be expecting more in Pam and on the Bocom and bathroom. So basically I wanted to see if there is any one time off event that triggered this impairment. It's going to be a normal part of the business.

Speaker Change: I know it was about 25 basis points on five year LPL cut that nor should we be.

Speaker Change: Be expecting more in Pam and on the Bocom and bathroom. So basically I wanted to see if there is any one time off event that triggered this impairment.

So basically, I want to see if there is any one-time of event that triggered this impairment, or if it's going to be a normal part of the business. So I think in the statement you clearly stated that this will have no impact on dividend and shareholders return. I believe this is related to the $14 billion capital deduction, which you have already made on associate. I think that is primarily BoCom. But can you explain a bit of that mechanism? Because I think today's share price reaction is partly factoring in the kind of concern that if there is an ongoing impairment on BoCom, that will affect the company's ability to deliver shareholders' return.

Speaker Change: It's going to be a normal part of the business.

Speaker Change: So I think in the statement you clearly stated that this will have no impact on dividend and shareholders return I believe this is related to the 14 billion capital deduction, which you have already made an assumption I think that is primarily bolt com, but can you explain a bit off that mccann has them because I think. Todays share price reaction, it's partly factoring in the kind of concern that you have today is that ongoing in payment on bolt ons that will affect the company's ability to de lever schaffel sweet yeah.

I believe this is related to the $14 billion capital deduction, which you have already made on associate. I think that is primarily BoCom. But can you explain a bit of that mechanism? Because I think today's share price reaction is partly factoring in the kind of concern that if there is an ongoing impairment on BoCom, that will affect the company's ability to deliver shareholders' return.

Speaker Change: Todays share price reaction, it's partly factoring in the kind of concern that you have today is that ongoing in payment on bolt ons that will affect the company's ability to de lever schaffel sweet yeah.

Speaker Change: Two excellent questions and Youre going to get two excellent answers from Jewish. Thank you Catherine. So Catherine taken them in the order you say this first mid teens roti is excluding notable items and therefore it is excluding the gain on Canada. Your calculation is correct. In terms of NII and cost.

Noel Quinn: 2 excellent questions, and you're going to get 2 excellent answers from Georges.

Jewish: Thank you Catherine. So Catherine taken them in the order you say this first mid teens roti is excluding notable items and therefore it is excluding the gain on Canada. Your calculation is correct. In terms of NII and cost.

Georges Elhedery: Thank you, Katherine. So Katherine, taking them in the order you say the first mid-teens ROTE is excluding notable items. Therefore, it is excluding the gain on Canada. So your calculation is correct. In terms of NII and cost, there is a couple of things to share. And we recognize the cost assessment. In terms of banking NII, we have given the guidance here. Just point to-- I mentioned it in my earlier speech, but I just point you that banking NII sensitivity has reduced more than-- by more than half from the full year 2022 due to, among other parameters our structural hedging activity. So therefore the rate impacts on our banking NII is reduced commensurately.

Jewish: So Catherine taken them in the order you say this first mid teens roti is excluding notable items and therefore it is excluding the gain on Canada. Your calculation is correct.

Speaker Change: In terms of NII and cost.

Speaker Change: So a couple of things to share and we recognize the cost are assessed. Assessment in terms of banking NII. We have given the guidance here just point you mentioned it in my earlier speech, but just point to that. Banking NII sensitivity has reduced more than by more than half from the full year 2022 due to among other parameters are restructured and hedging activity. So therefore the rate impacts on our banking NII is reduced commensurately.

Catherine: Assessment in terms of banking NII. We have given the guidance here just point you mentioned it in my earlier speech, but just point to that. Banking NII sensitivity has reduced more than by more than half from the full year 2022 due to among other parameters are restructured and hedging activity. So therefore the rate impacts on our banking NII is reduced commensurately.

Catherine: We have given the guidance here just point you mentioned it in my earlier speech, but just point to that.

Catherine: Banking NII sensitivity has reduced more than by more than half from the full year 2022 due to among other parameters are restructured and hedging activity. So therefore the rate impacts on our banking NII is reduced commensurately.

Catherine: Equally, we do have some anticipation of volume growth if and when rates start increasing, which is now planned for H2, and this is why we have some positive outlook for H2. If rates decrease volume could pick up, subject to economic conditions, et cetera. But that's the assessment, we have made today. And then thirdly on the non-rate sensitive earnings. I've called out transaction banking and went earlier between them they constitute about 80% of our of our-non rate sensitive earnings. One has grown 5%, 23 to 22 and the other one has grown 7%. And therefore, we do feel there is momentum in both these areas for continued growth. And I didn't talk about the residual 20%, but in the residual 20% capital market activities, for instance, is included. And again in a different rate environment, we have grounds to believe this can also pick up. So yes, we are comfortable with the momentum we have in the revenue.

Equally, we do have some anticipation of volume growth if and when rates start increasing, which is now planned for H2, and this is why we have some positive outlook for H2. If rates decrease volume could pick up, subject to economic conditions, et cetera. But that's the assessment, we have made today. And then thirdly on the non-rate sensitive earnings. I've called out transaction banking and went earlier between them they constitute about 80% of our of our-non rate sensitive earnings. One has grown 5%, 23 to 22 and the other one has grown 7%. And therefore, we do feel there is momentum in both these areas for continued growth. And I didn't talk about the residual 20%, but in the residual 20% capital market activities, for instance, is included. And again in a different rate environment, we have grounds to believe this can also pick up. So yes, we are comfortable with the momentum we have in the revenue.

Catherine: On a positive outlook for <unk>, if rates decreased volume could pick up subject to economic conditions et cetera, but that's the.

Catherine: That's the assessment, we have made today.

Catherine: And then thirdly on the non rate sensitive earnings. Called out transaction banking and wealth earlier between them they constitute about 80% of our of our non rate sensitive earnings one has grown 5%, 23% to 22 and the other one is growing 7% and therefore, we do feel there is momentum in both. These areas for continued growth and I didn't talk about that as of June 20%, but then the residual 20% capital market activities. For instance is included and again in a different rate environment.

Catherine: Called out transaction banking and wealth earlier between them they constitute about 80% of our of our non rate sensitive earnings one has grown 5%, 23% to 22 and the other one is growing 7% and therefore, we do feel there is momentum in both.

Catherine: These areas for continued growth and I didn't talk about that as of June 20%, but then the residual 20% capital market activities. For instance is included and again in a different rate environment.

And I didn't talk about the residual 20%, but in the residual 20% capital market activities, for instance, is included. And again in a different rate environment, we have grounds to believe this can also pick up. So yes, we are comfortable with the momentum we have in the revenue.

Catherine: Have grounds to believe this can also pick up so yes, we are comfortable with the momentum we have in the in the revenue can I put you on one thing about cost we called it out 5% for the 2024 has a flow through impact from inflation in 2023 2023 experienced high inflation there is some. Through some adjustments, including wage inflation, which we anticipate to do in 2024 based on current outlook of inflation that but auditor is easing as we look forward beyond 24, without giving you any guidance for 'twenty five the inflationary component flow through into 'twenty five.

Have grounds to believe this can also pick up so yes, we are comfortable with the momentum we have in the in the revenue

Can I point you on one thing about cost? We called it out 5% for the 2024, has a flow through impact from inflation in 2023. 2023 experienced high inflation there is some flow-through, some adjustments, including wage inflation, which we anticipate to do in 2024. Based on current outlook of inflation that parameter is easing as we look forward beyond '24, without giving you any guidance for '25. The inflationary component flow-through into '25 does look like easing from where we stand today looking at '24 outlook for inflation.

Catherine: Through some adjustments, including wage inflation, which we anticipate to do in 2024 based on current outlook of inflation that but auditor is easing as we look forward beyond 24, without giving you any guidance for 'twenty five the inflationary component flow through into 'twenty five.

Catherine: It does look like easing from where we stand today looking at 2004 the outlook for inflation. If I move on to your second question about Bocom. So this is. We do talk about the value in use model. It's following the Hong Kong accounting standards International accounting standards without boring you with the accounting details. The RNA has many pages, which we can point you to that explained it it feeds into parameters all essentially.

It does look like easing from where we stand today looking at 2004 the outlook for inflation.

Catherine: If I move on to your second question about Bocom.

If I move on to your second question about Bocom. So this is--we do talk about the value-in-use model. It's following the Hong Kong accounting standards, international accounting standards without boring you with the accounting details, the AR&A has many pages, which we can point you to that explain it it. It feeds into parameters all in the-- essentially, in the public domain, including macro data, other factors, including analyst's comments feeds into the model. But the model is not highly intuitive, but the outcome is the outcome, and we've been consistently applying it for umpteenth quarters now and therefore, we will apply it for Q4. It is very difficult to predict what the model Give us in Q1, we will take into account the information we receive over the course of Q1, and we would run the model as we do every quarter and consistently applied the outcome.

Catherine: So this is.

Catherine: We do talk about the value in use model. It's following the Hong Kong accounting standards International accounting standards without boring you with the accounting details. The RNA has many pages, which we can point you to that explained it it feeds into parameters all essentially.

Catherine: Essentially in the public domain, including macro data other factors, including analyst's comments feeds into the model, but the model is not highly intuitive, but the outcome is the outcome and we've been consistently applying it for 10 quarters now and therefore, we will apply it for Q4, it is very difficult to predict what the model.

It is very difficult to predict what the model will give us in Q1, and we will take into account the information we receive over the course of Q1, and we would run the model as we do every quarter and consistently apply the outcome. Finally, captive reduction. I think this is a very important point. Your math Katherine is correct. There is about $14 billion sitting today in our regulatory capital deductions, because they sit above our threshold. And therefore, you could legitimately assume that there is that much of buffer against any impairments we face in our financial holdings, BoCom being one of them. The other one is insurance. That's the 2 essentially. And therefore, you can legitimately assume that the compensation we would get from any hypothetical future impairment will be commensurate, given the size of our threshold deductions at this stage.

Catherine: Give us in Q1, we will take into account the information we receive over the course of Q1, and we would run the model as we do every quarter and consistently applied the outcome.

Catherine: Finally kept the deduction I think this is a very important point your math Catherine is correct. There is about $14 billion sitting today in our regulatory capital deductions, because they sit above our threshold.

Catherine: Therefore, you could legitimately assume that there is that much of buffer. Against. Any impairments, we face and all with financial holdings bulk on being one of them. Other one is insurance that's the two essentially. And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture. So I did give you two excellent answers.

Therefore, you could legitimately assume that there is that much of buffer. Against. Any impairments, we face and all with financial holdings bulk on being one of them. Other one is insurance that's the two essentially. And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture.

Catherine: Against. Any impairments, we face and all with financial holdings bulk on being one of them. Other one is insurance that's the two essentially. And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture.

Catherine: Any impairments, we face and all with financial holdings bulk on being one of them. Other one is insurance that's the two essentially. And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture.

Catherine: Other one is insurance that's the two essentially. And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture.

Catherine: And therefore, you can legitimately assume. That the compensation, we would get from any hypothetical future impairment would be commensurate. Given the size of our special deductions at this picture.

Catherine: That the compensation, we would get from any hypothetical future impairment would be commensurate.

Catherine: Given the size of our special deductions at this picture.

Noel Quinn: So he did give you 2 excellent answers. Thank you. Thanks, Georges. Next question, please.

Speaker Change: So I did give you two excellent answers.

Speaker Change: Thank you thanks, George Thanks, so much.

Speaker Change: Next question. Please our next question comes from Joseph Dickerson at Jefferies. [noise] Joseph. We cannot hear you mean, Ireland, yes, yes. Hear me now yeah, hi, sorry about that.

Next question. Please our next question comes from Joseph Dickerson at Jefferies. [noise]

Next question. Please our next question

Next question. Please

Our next question comes from Joseph Dickerson at Jefferies. Joseph, we cannot hear you. Ireland, yes, yes. Hear me now yeah, hi, sorry about that.

Neil Sankoff: Our next question comes from Joseph Dickerson at Jefferies. Joseph, we cannot hear you.

comes from Joseph Dickerson at Jefferies. [noise]

Joseph Dickerson: [noise] Joseph.

Joseph. We cannot hear you mean, Ireland, yes, yes. Hear me now yeah, hi, sorry about that.

Can you hear me now? yeah, hi, sorry about that.

Joseph Dickerson: Can you hear me now?

Joseph Dickerson: We cannot hear you mean, Ireland, yes, yes.

yeah, hi, sorry about that.

Neil Sankoff: Yes.

Joseph Dickerson: Sorry about that. So just cutting to the chase on some of the questions that have come through on the NII guide. I think you can probably get a sense that there is some reasonable confusion about what the message is for the 2024 baseline. If we worked back from your kind of clean mid-teens ROE, you've given us some guidance on costs, you've given some guidance on credit. It's kind of getting into a baseline revenue number of about $64 billion, in consensus of $63.5 billion or thereabouts. Are you comfortable with that consensus number? Are you seeking to change that with this guide? So that is question number 1.

Joseph Dickerson: Hear me now yeah, hi, sorry about that.

Joseph Dickerson: Cutting to the chase on E. Can you hear me yes. Yeah, So just cutting to the chase on some of the questions that have come through on the NII Guide I think you can probably get a sense that there is some reasonable confusion about what the what the message is for the.

Joseph Dickerson: Can you hear me yes. Yeah, So just cutting to the chase on some of the questions that have come through on the NII Guide I think you can probably get a sense that there is some reasonable confusion about what the what the message is for the.

Joseph Dickerson: Yeah, So just cutting to the chase on some of the questions that have come through on the NII Guide I think you can probably get a sense that there is some reasonable confusion about what the what the message is for the.

Joseph Dickerson: The 2024 baseline we worked back from your kind of clean mid teens ROE you've given us some guidance on costs, you've given some guidance on credit. It's kind of getting into a baseline revenue number of about 64 billion and consensus of <unk> 63, and a half or thereabouts or are you comfortable with that consensus number or are you seeking to change that with this guide so that is.

It's kind of getting into a baseline revenue number of about 64 billion and consensus of <unk> 63, and a half or thereabouts or are you comfortable with that consensus number or are you seeking to change that with this guide so that is.

Joseph Dickerson: Question number one and question number two is. Why the focus on banking. I I. Versus total NII, because theres going to be as rates come down a lot of moving parts on the trading book funding cost dynamic because indeed, if I look at your annual report you've. <unk> actually got a benefit coming through in the U S D bucket from rates. Falling in terms of the aggregate NII. So I guess why are you trying to distinguish between those two. For us because again thats, creating a fair amount of confusion with investors. George.

And question number 2 is why the focus on banking NII versus total NII, because there's going to be as rates come down a lot of moving parts on the trading book funding cost dynamic because indeed, if I look at your annual report, you've actually got a benefit coming through in the USD bucket from rates falling in terms of the aggregate NII. So I guess why are you trying to distinguish between those 2 conceptually for us? Because again, it's creating a fair amount of confusion with investors.

Joseph Dickerson: Why the focus on banking. I I.

Joseph Dickerson: I I.

Joseph Dickerson: Versus total NII, because theres going to be as rates come down a lot of moving parts on the trading book funding cost dynamic because indeed, if I look at your annual report you've.

Joseph Dickerson: <unk> actually got a benefit coming through in the U S D bucket from rates.

Joseph Dickerson: Falling in terms of the aggregate NII. So I guess why are you trying to distinguish between those two. For us because again thats, creating a fair amount of confusion with investors.

For us because again thats, creating a fair amount of confusion with investors.

George.

Noel Quinn: Georges?

Georges Elhedery: Thank you, Noel. So Joseph, I recognize your arithmetics. Yes, I agree with your arithmetics. This being said, I cannot give you guidance on total revenue. Otherwise I'll be giving you guidance on our full profitability. But we recognize your arithmetics. A couple of things just to highlight if you want to for your consideration. The first one is our guidance for banking NII is not $41 billion. It's at least $41 billion, factoring in elements of uncertainty that I called out earlier, that's for full year 2024. You do have the building blocks for cost and for ECL. And then the residual part if you want to forward earnings story is the non NII component, excluding the gains from Canada

George: Yes, so I recognize your arithmetic. Yes, hi. I agree with your ethics. This being said I cannot give you I cannot give you guidance on total revenue otherwise I'll be giving you guidance on our full profitability, but the boiler. I agree with your ethics. This being said I cannot give you I cannot give you guidance on total revenue otherwise I'll be giving you guidance on our full profitability, but the boiler.

Speaker Change: Yes, hi. I agree with your ethics. This being said I cannot give you I cannot give you guidance on total revenue otherwise I'll be giving you guidance on our full profitability, but the boiler. I agree with your ethics. This being said I cannot give you I cannot give you guidance on total revenue otherwise I'll be giving you guidance on our full profitability, but the boiler.

George: I agree with your ethics. This being said I cannot give you I cannot give you guidance on total revenue otherwise I'll be giving you guidance on our full profitability, but the boiler.

George: Recognize your arithmetic. A couple of things just to highlight if you want to. For your consideration. The first one is our guidance for banking is not $41 billion. It's at least $41 billion factoring in elements of uncertainty that I called out earlier, that's for full year 2024.

George: A couple of things just to highlight if you want to.

George: For your consideration. The first one is our guidance for banking is not $41 billion. It's at least $41 billion factoring in elements of uncertainty that I called out earlier, that's for full year 2024.

George: You do have the building blocks for cost and for <unk>. And then the residual part if you want to forward earnings story is the non NII component, excluding the gains from Canada and as I said earlier about. 80% of it is. Generated from transaction banking and wealth, both of which do have momentum both of which are areas, where we continue investing both in terms of digital capabilities and client servicing and in terms of net new invested assets.

You do have the building blocks for cost and for <unk>. And then the residual part if you want to forward earnings story is the non NII component, excluding the gains from Canada

And then the residual part, if you want, of our earnings story is the non-NII component, excluding the gains from Canada. And as I said earlier about 80% of it is generated from transaction banking and wealth, both of which do have momentum, both of which are areas, where we continue investing both in terms of digital capabilities and client servicing and in terms of net new invested assets.

George: And then the residual part if you want to forward earnings story is the non NII component, excluding the gains from Canada and as I said earlier about.

and as I said earlier about. 80% of it is. Generated from transaction banking and wealth, both of which do have momentum both of which are areas, where we continue investing both in terms of digital capabilities and client servicing and in terms of net new invested assets.

George: 80% of it is.

George: Generated from transaction banking and wealth, both of which do have momentum both of which are areas, where we continue investing both in terms of digital capabilities and client servicing and in terms of net new invested assets.

George: And we are excited about the potential of these 2 businesses, and we believe our mid-teens ROTE is not based on unreasonable growth in these areas. It's based on momentum growth in these areas. Maybe I can point you to our net new invested assets, $84 billion for the year, up from $80 billion last year, up from $64 billion the year before. So clearly, we're acquiring new assets. But equally as you've seen, Management and Private Banking grew double digit percentage points. That's also partly due to the valuation because AUM is also increasing because the underlying valuation is improving which is therefore, a generator of fees commensurately, subject to market conditions as we go forward.

George: We are excited about the potential of these two businesses and we believe. Our mid teens royalty is not based on unreasonable growth in these areas it's based on. Momentum growth in these areas. Maybe I can point you to our new invested assets $84 billion for the year up from 80 billion last year up from $64 billion. The year before so clearly, we're acquiring new assets, but equally as you've seen them.

George: Our mid teens royalty is not based on unreasonable growth in these areas it's based on.

George: Momentum growth in these areas.

George: Maybe I can point you to our new invested assets $84 billion for the year up from 80 billion last year up from $64 billion. The year before so clearly, we're acquiring new assets, but equally as you've seen them.

George: Management private banking grew double digit percentage points. That's also partly due to the valuation because AUM is also increasing because the underlying valuation is improving which is therefore, a generator of fees commensurately.

George: Subject to market conditions as we go forward. I think if if if there's any more questions may be where you get the IR team to just work with you off to after the call. Thank you. So on your second point, so when we're guiding we would like to move to banking NII guidance. We recognized last year, we have moved from <unk> into its do with guidance of NII and funding cost of the trading book, We think it is much simpler to look at our overall rate sensitive earnings. Through banking NII Islands.

Subject to market conditions as we go forward.

I think if there's any more questions, maybe we get the IR team to just work with you after the call. Thank you. So on your second point, so when we're guiding we would like to move to banking NII guidance. We recognized last year, we have moved from <unk> into its do with guidance of NII and funding cost of the trading book, We think it is much simpler to look at our overall rate sensitive earnings. Through banking NII Islands.

Noel Quinn: I think if there's any more questions, maybe we get the IR team to just work with you after the call.

Speaker Change: I think if if if there's any more questions may be where you get the IR team to just work with you off to after the call.

Speaker Change: Thank you.

Georges Elhedery: So on your second point, so we're guiding--we would like to move to banking NII guidance. We recognized last year, we have moved from NII into a dual guidance of NII and funding cost of the trading book. We think it is much simpler to look at our overall rate sensitive earnings through banking NII lens.

Speaker Change: So on your second point, so when we're guiding we would like to move to banking NII guidance.

Speaker Change: We recognized last year, we have moved from <unk> into its do with guidance of NII and funding cost of the trading book, We think it is much simpler to look at our overall rate sensitive earnings.

Speaker Change: Through banking NII Islands.

Speaker Change: They kind of shift from one to the other which is zero-sum game. So it moves from one to the other, is reflective of business decisions as regards how much of our funding we would want to give to the trading book based on various parameters, including opportunities in the trading book as well as opportunities for loan growth. And we would think that it would be too noisy if we have to really manage both on a separate basis. Thank you.

They kind of shift from one to the other which is zero-sum game. So it moves from one to the other, is reflective of business decisions as regards how much of our funding we would want to give to the trading book based on various parameters, including opportunities in the trading book as well as opportunities for loan growth. And we would think that it would be too noisy if we have to really manage both on a separate basis.

Speaker Change: Zero sum game, so it moves from one to the other is reflective of.

Business decisions as regards how much your forward funding, we would want to give to the trading book based on various parameters, including opportunities in the trading book as well as opportunities for loan growth and we would think that it would be too noisy if we have to really manage both.

Speaker Change: A separate basis. Thank you.

Speaker Change: Thank you.

Thank you. Next question, please. Our next question comes from Benjamin Toms at RBC.

Noel Quinn: Thank you. Next question, please.

Speaker Change: Next question. Please our next question comes from Benjamin Toms RBC.

Neil Sankoff: Our next question comes from Benjamin Toms at RBC.

Good Morning. Thank you for taking my questions. Firstly on cost of risk, in relation to your guidance of 40 basis points, is there still a plausible to this guidance? Or does the 40 basis points encapsulate that plausible downside? And secondly, on loan growth I know you're cautious on loan growth in the first half of 2024. Do you expect growth to pick up in half 2, but 2024 as a whole, can you just confirm that you expect net growth in the balance sheet? It sounds like you do because you earlier described volumes and a potential tailwind to NII. Could you narrow down how much lending we should expect for growth for this year? Thank you.

Benjamin Toms: Good Morning. Thank you for taking my questions. Firstly on cost of risk, in relation to your guidance of 40 basis points, is there still a plausible to this guidance? Or does the 40 basis points encapsulate that plausible downside?

Benjamin Toms: Morning. Thank you for taking my questions. Firstly on cost of risk relationship guidance of 40 basis points is that still a plausible downsides risk items or just the 40 basis points encapsulate towards the downside.

And secondly, on loan growth I know you're cautious on loan growth in the first half of 2024. Do you expect growth to pick up in half 2, but 2024 as a whole, can you just confirm that you expect net growth in the balance sheet? It sounds like you do because you earlier described volumes and a potential tailwind to NII. Could you narrow down how much lending we should expect for growth for this year? Thank you.

Benjamin Toms: Secondly on loan growth I know youre cautious on loan growth in the first half of 2024.

Benjamin Toms: Great pickup in half two.

Benjamin Toms: Trying to 24 as a whole can you just confirm that you expect net right.

Benjamin Toms: The balance sheet it sounds like David because you earlier described. Potential tailwind NII could you narrow it down how much lending we should expect a great and this year I think. Thank you.

Benjamin Toms: Potential tailwind NII could you narrow it down how much lending we should expect a great and this year I think.

Speaker Change: Thank you.

Noel Quinn: Georges, do you want to take both of those?

Georges Elhedery: Sure. Thank you, Benjamin. So the cost of risk a 40 basis point encapsulates everything we currently foresee as our balance sheet. We have not communicated a further plausible downside on the China commercial real estate portfolio booked in Hong Kong, because we believe at this stage that, number 1, we're well provisioned for this portfolio afterwards--after the provisioning that's taken place last year. And number 2, we also have less concerns going forwards on our residual exposure in that portfolio.

George: So the cost of risk a 40 basis point encapsulates everything we currently foresee as our balance sheet. We have not communicated. Further plausible downside on the China commercial real estate portfolio booked in Hong Kong, because we believe at this stage that number one with when provision for this portfolio. After what's after the provisioning that's taken place last year and number two we also have less concerns going forwards on our.

Speaker Change: We have not communicated. Further plausible downside on the China commercial real estate portfolio booked in Hong Kong, because we believe at this stage that number one with when provision for this portfolio. After what's after the provisioning that's taken place last year and number two we also have less concerns going forwards on our.

George: Further plausible downside on the China commercial real estate portfolio booked in Hong Kong, because we believe at this stage that number one with when provision for this portfolio. After what's after the provisioning that's taken place last year and number two we also have less concerns going forwards on our.

George: Residual exposure in that portfolio I can point you to our exposure is now at $6 2 billion, that's down $3 1 billion from full year 'twenty two so. So therefore. We do not have a reduced level of concern I can walk you through if needed. The how well our ECL positioning isn't this portfolio, but we are comfortable no for no. Additional concerns then we called out last year.

Residual exposure in that

I can point you to our exposure is now at $6.2 billion, that's down $3.1 billion from full year '22. So therefore we do not-- we have reduced level of concern I can walk you through, if needed, the-- how well ECL positioning is in this portfolio, but we are comfortable. No additional concerns than we caught out last year.

George: So therefore.

George: We do not have a reduced level of concern I can walk you through if needed.

George: The how well our ECL positioning isn't this portfolio, but we are comfortable no for no. Additional concerns then we called out last year.

George: On the loan growth, yes, our expectations is that as economic conditions continue improving and the interest rate environment becomes more supportive, we would expect to see loan growth. We continue to guide on a medium-term basis to mid-single-digit percentage points loan growth and balance sheet growth. It's very difficult to forecast what H2 will look like, but that is part of our projections. so I think. <unk>. Given the shift in the interest rate cycle and the shift in inflation.

On the loan growth, yes, our expectations is that as economic conditions continue improving and the interest rate environment becomes more supportive, we would expect to see loan growth. We continue to guide on a medium-term basis to mid-single-digit percentage points loan growth and balance sheet growth. It's very difficult to forecast what H2 will look like, but that is part of our projections.

George: Yes, I would expectations is that Oh as.

George: Economic conditions continue improving and the interest rate environment becomes more supportive.

George: Would expect to see loan growth.

George: Continue to guide on a medium term basis to mid single digit percentage points loan growth and balance sheet growth.

George: So very difficult to forecast, what <unk> will look like but that is part of.

Speaker Change: Not at this point.

Speaker Change: Our our projections so I think.

Noel Quinn: So I think our view is given the shift in the interest rate cycle and the shift in inflation, we'll start to see more economic confidence, or business confidence, consumer confidence in the second half. We're not expecting significant growth in the balance sheet in first half. You start to see that kick in the second half. You're unlikely to see full year mid-single-digit growth in '24. You're going to see a proportion of that start to kick in, in the second half of the year. And then you'll see it kick in even more strongly in '25 and beyond. So I think in your modeling and you're probably looking at limited growth in the first half, growth starting to come back in the second half.

Speaker Change: <unk>.

Speaker Change: Given the shift in the interest rate cycle and the shift in inflation.

Speaker Change: We'll start to see more economic confidence business confidence consumer confidence in the second half, we're not expecting significant growth in the balance sheet in first half. You start to see that kick in the second half. No we're unlikely to see full year mid single digit growth in 'twenty, four youre going to see a proportion of that start to kick in. In the second half of the year and then you'll see it kick in even more strongly in 'twenty five and beyond so I think in your model and you're probably looking at limited growth in the first half. I was starting to come back in the second half.

Speaker Change: You start to see that kick in the second half.

No we're unlikely to see full year mid single digit growth in 'twenty, four youre going to see a proportion of that start to kick in. In the second half of the year and then you'll see it kick in even more strongly in 'twenty five and beyond so I think in your model and you're probably looking at limited growth in the first half.

Speaker Change: In the second half of the year and then you'll see it kick in even more strongly in 'twenty five and beyond so I think in your model and you're probably looking at limited growth in the first half.

Speaker Change: I was starting to come back in the second half.

Neil Sankoff: Our next question comes from Robert Noble at Deutsche.

Robert Noble: Hello can you hear me? Thanks for taking my questions. What was the size of the hedge last year? So how much is it that ramped up this year? Can you give us some idea of what the currency mix of the hedges and whether there's any duration differences between those currencies as well? Secondly, what exactly is in the quarter, the cash flow hedge reclassification, the impact you had from transferring from NII to non-NII. What exactly was that?

Robert Noble: Hello can you hear me, yes, yes.

Robert Noble: Hi, Thanks, Thanks for taking my questions what was the size of the hedge last year. So how much is it that ramped up this year can you give us some idea of.

Robert Noble: Well the currency mix that Jason and whether there's any duration differences between those currencies as well.

Secondly, what exactly is in the quarter, the cash flow hedge reclassification, the impact you had from transferring from NII to non-NII. What exactly was that?

Robert Noble: Secondly, what exactly is in the quarter, the cash flow hedge reclassification and the impact you had from transpiring from NII and all that.

Robert Noble: And then lastly, the timing of the special dividend of the Canada sale, will it come with Q1 results, if the deal is announced prior to release? Or is it not linked to the results down? That's all.

Robert Noble: And then lastly, the timing of the special dividend the candidates out what will it come with Q1 result, if being now if the deal isn't out price of relief or they're not linked to the results conference call.

Noel Quinn: Okay. George?

George: So Robert, we've added about north of $80 billion to our hedge this year in terms of bond notional a little bit more in terms of other derivative notional. And that's on top of an $80 billion we've added over Q4 and starting in Q3 in 2022. So that should give you an idea of also what is the quantum we could reasonably do in 2024 if the market conditions remain supportive for the hedge. So that should give you an idea of also w conditions remain supportive for.

Georges Elhedery: So Robert, we've added about north of $80 billion to our hedge this year in terms of bond notional a little bit more in terms of other derivative notional. And that's on top of an $80 billion we've added over Q4 and starting in Q3 in 2022. So that should give you an idea of also what is the quantum we could reasonably do in 2024 if the market conditions remain supportive for the hedge.

Speaker Change: So but.

We've added the boat.

Speaker Change: We've added about 80 more north of $80 billion Starwood hedged this year in terms of.

Speaker Change: In terms of bond notion a little bit more in terms of other derivative notional.

Speaker Change: And that's on top of an 80 billion with added over Q4 and starting in Q3 in 2022.

Speaker Change: So so that should give you an idea of also what the what is the quantum we could reasonably do in 2024, if the market conditions remain supportive for.

In terms of duration, I mean the kind of-- the obvious one to call out is we can certainly hedge on a weighted average life with slightly longer currencies, such as the pound, the U.S. dollar and some extend, the euro. We have an inability to hedge in any reasonable size or shape and this is due structural market, our Hong Kong dollar exposure. So I would Hong Kong dollar exposure hedged would remain much lower. And therefore, our exposure in Hong Kong dollar would remain more sensitive to the rate outlook compared to the other currencies. In terms of Canada sale you could expect in Q1 subject to completion, which is now planned to be on track to be by the end of Q1. We would expect to see a jump of 1.2%, and 1.3% in our CET1 ratio. The special dividend, which we're committed to consider what happened afterwards. Our best estimates is H1, but frankly, afterwards as soon as we can subject to all necessary approvals

The hedge. In terms of. In terms of duration. The kind of the obvious one to call out is we can certainly hedge. On a weighted average life with slightly longer. Currencies, such as the pound U S dollar and some extend the euro. Currencies, such as the pound U S dollar and some extend the euro. We have an inability to hedge in any reasonable size or shape. This is due to structural market I would Hong Kong dollar exposure, So I would Hong Kong dollar exposure hedged would remain.

Speaker Change: In terms of.

Speaker Change: In terms of duration.

Speaker Change: The kind of the obvious one to call out is we can certainly hedge.

Speaker Change: On a weighted average life with slightly longer.

Speaker Change: Currencies, such as the pound U S dollar and some extend the euro.

Speaker Change: We have an inability to hedge in any reasonable size or shape.

Speaker Change: This is due to structural market I would Hong Kong dollar exposure, So I would Hong Kong dollar exposure hedged would remain.

Speaker Change: Much lower and therefore, our exposure in Hong Kong dollar would remain more sensitive. To the right outlook compared to the other currencies. In terms of kind of the same you could expect in Q1 subject to completion, which is now I believe. In terms of kind of the same you could expect in Q1 subject to completion, which is now I believe. She is now planned to be on track to be by the end of Q1, you would expect to see a jump of one two and 3%.

Speaker Change: To the right outlook compared to the other currencies.

In terms of Canada sale you could expect in Q1 subject to completion, which is now planned to be on track to be by the end of Q1. We would expect to see a jump of 1.2%, and 1.3% in our CET1 ratio. The special dividend, which we're committed to consider what happened afterwards. Our best estimates is H1, but frankly, afterwards as soon as we can subject to all necessary approvals And that will drop the CET1 by about 0.5, with a result of net of around 0.8 in CET1 after the dividend. We will update you at the Q1 results about the special dividend considerations.

Speaker Change: In terms of kind of the same you could expect in Q1 subject to completion, which is now I believe.

Speaker Change: She is now planned to be on track to be by the end of Q1, you would expect to see a jump of one two and 3%.

Speaker Change: In our CET one ratio. The special dividend, which we're committed. Committed to consider what happened afterwards, our best estimates as H, one, but frankly afterwards as soon as we can subject to necessary approvals and that will drop the CET one by about <unk> five with a result of net to fight on H CET. CET one after the dividends we will update you at the Q1 results about the special dividend considerations.

In our CET one ratio. The special dividend, which we're committed. Committed to consider what happened afterwards, our best estimates as H, one, but frankly afterwards as soon as we can subject to necessary approvals

Speaker Change: The special dividend, which we're committed. Committed to consider what happened afterwards, our best estimates as H, one, but frankly afterwards as soon as we can subject to necessary approvals and that will drop the CET one by about <unk> five with a result of net to fight on H CET.

Speaker Change: Committed to consider what happened afterwards, our best estimates as H, one, but frankly afterwards as soon as we can subject to necessary approvals and that will drop the CET one by about <unk> five with a result of net to fight on H CET.

And that will drop the CET1 by about 0.5, with a result of net of around 0.8 in CET1 after the dividend. We will update you at the Q1 results about the special dividend considerations.

Speaker Change: CET one after the dividends we will update you at the Q1 results about the special dividend considerations.

Speaker Change: Yes. It's probably not possible to close at the end of March and declare in the same quarter just for accounting reasons. So it's likely to be close at the end of Q1 and probably declare Q2, and then pay following that. That's likely to be the accounting requirement just to get the books closed for Q1, and then declaring Q2 is the most likely outcome. So I declare declared in Q2 with Q2 results. Probably with Q2 results right. Alright.

Noel Quinn: Yes. It's probably not possible to close at the end of March and declare in the same quarter just for accounting reasons. So it's likely to be close at the end of Q1 and probably declare Q2, and then pay following that. That's likely to be the accounting requirement just to get the books closed for Q1, and then declaring Q2 is the most likely outcome.

Speaker Change: It's likely to be close at the end of Q1 and probably declare.

Speaker Change: Q2, and then pay following that's likely to be the the accounting requirement just to get the books closed Q1.

Speaker Change: And then declaring Q2 is the most likely outcome. So I declare declared in Q2 with Q2 results. Probably with Q2 results right. Alright.

Speaker Change: So I declare declared in Q2 with Q2 results.

Sorry, declare declared in Q2, not with Q2 results? Probably with Q2 results right. Alright.

Robert Noble: Sorry, declare declared in Q2, not with Q2 results?

Probably with Q2 results right.

Noel Quinn: Probably with Q2 results.

Speaker Change: Alright.

Speaker Change: Right. So pay in Q3. It's how we intend to do it as soon as we can. I can take you through the process, but there is a process we have to go through and the timelines. We'll need to just flow through. But we'll confirm the timing at the <unk> results. Alright, Thank Keith I was just just at one little question of what the what the cash flow hedge reconstituted Nicole Oh, sorry, Yeah. That's reclassification is. Is isn't. Isn't it isn't ever in the reporting it's related to one geography, where some of our cash flow hedges were booked.

Robert Noble: Right. So pay in Q3.

It's our intend to do it as soon as we can. I can take you through the process, but there is a process we have to go through and the timelines will need to just flow through. But we'll confirm the timing at the 1Q results. Alright, Thank Keith I was just just at one little question of what the what the cash flow hedge reconstituted Nicole Oh, sorry, Yeah. That's reclassification is. Is isn't. Isn't it isn't ever in the reporting it's related to one geography, where some of our cash flow hedges were booked.

Georges Elhedery: It's our intend to do it as soon as we can. I can take you through the process, but there is a process we have to go through and the timelines will need to just flow through. But we'll confirm the timing at the 1Q results.

Speaker Change: It's how we intend to do it as soon as we can. I can take you through the process, but there is a process we have to go through and the timelines. We'll need to just flow through. But we'll confirm the timing at the <unk> results. Alright, Thank Keith I was just just at one little question of what the what the cash flow hedge reconstituted Nicole Oh, sorry, Yeah. That's reclassification is.

Speaker Change: I can take you through the process, but there is a process we have to go through and the timelines.

Speaker Change: We'll need to just flow through.

Speaker Change: But we'll confirm the timing at the <unk> results.

Speaker Change: Alright, Thank Keith I was just just at one little question of what the what the cash flow hedge reconstituted Nicole Oh, sorry, Yeah. That's reclassification is.

Alright, Thank Keith I was just just at one little question of what the what the cash flow hedge reconstituted Nicole Oh, sorry, Yeah. That's reclassification is. Is isn't. Isn't it isn't ever in the reporting it's related to one geography, where some of our cash flow hedges were booked.

Robert Noble: All right. Thank you. There was just that 1 little question, what the cash flow hedge reclassification in the quarter.

Speaker Change: Is isn't. Isn't it isn't ever in the reporting it's related to one geography, where some of our cash flow hedges were booked.

Georges Elhedery: Sorry, yes. That reclassification is an area in reporting. It's related to 1 geography, where some of our cash flow hedges were booked wrongly between NII and non-NII and we've done this correction. It is-- it has affected 1 jurisdiction. The amount is a full year amount. So I wouldn't--the $0.3 billion charge we've taken reflects a full year correction of which around 1/4 relate to actually the fourth quarter, the rest is a catch up for the first 3 quarters of the year.

Speaker Change: Isn't it isn't ever in the reporting it's related to one geography, where some of our cash flow hedges were booked.

Speaker Change: Wrongly between NII and NII and we've done this correction it isn't. You know it has affected one jurisdiction. The amount is a full year alone so I wouldn't. $3 billion charge, we've taken the floor. <unk> full year correction of which around fourth relate to actually the fourth quarter. The rest is a catch up for the first three quarters of the year.

Speaker Change: You know it has affected one jurisdiction. The amount is a full year alone so I wouldn't. $3 billion charge, we've taken the floor. <unk> full year correction of which around fourth relate to actually the fourth quarter. The rest is a catch up for the first three quarters of the year.

Speaker Change: The amount is a full year alone so I wouldn't. $3 billion charge, we've taken the floor. <unk> full year correction of which around fourth relate to actually the fourth quarter. The rest is a catch up for the first three quarters of the year.

Speaker Change: $3 billion charge, we've taken the floor. <unk> full year correction of which around fourth relate to actually the fourth quarter. The rest is a catch up for the first three quarters of the year.

Speaker Change: <unk> full year correction of which around fourth relate to actually the fourth quarter. The rest is a catch up for the first three quarters of the year.

Speaker Change: Alright, thanks very much. And just sorry, just to be clear. Robert the total and become has not affected this is just a reclassification of income from one line item to another like a line item.

Robert Noble: All right, thank you very much.

Georges Elhedery: And sorry, just to be clear, Robert, the total income is not affected. This is just a reclassification of income from 1 line item to another line item.

Speaker Change: And just sorry, just to be clear. Robert the total and become has not affected this is just a reclassification of income from one line item to another like a line item.

Speaker Change: Robert the total and become has not affected this is just a reclassification of income from one line item to another like a line item.

Robert Noble: Got it. Thank you.

Noel Quinn: Next question, please.

Alastair. I used the word from autonomous. Just a quick question on the ECL charges and things have subsided a bit on the China property side, obviously nice for you guys to see but some. A few cracks puffing up in Mexico or is that something you'd. Characterize this cycle stuff that might be going some way from here, we need to keep an eye on or something a little more one off.

Neil Sankoff: Alastair?

Alastair Warr: Alastair Warr from Autonomous. Just a quick question on the ECL charges and things are subsided a bit on the China property side. Obviously, nice for you guys to see, but some a few crept is popping up in Mexico, is that something you'd characterize the cycle stuff that might be going some way from here, we need to keep an eye on or something a little more one-off?

Speaker Change: Alistair. I used the word from autonomous. Just a quick question on the ECL charges and things have subsided a bit on the China property side, obviously nice for you guys to see but some.

Speaker Change: I used the word from autonomous.

Alistair: Just a quick question on the ECL charges and things have subsided a bit on the China property side, obviously nice for you guys to see but some.

Alistair: A few cracks puffing up in Mexico or is that something you'd.

Alistair: Characterize this cycle stuff that might be going some way from here, we need to keep an eye on or something a little more one off.

Alistair: Thank you, Alastair. So the one off-- sorry, the Mexico ECL related to an increase in our activity is specifically in unsecured lending. It's a feature of that jurisdiction, where margins are very healthy, but the ECL coverage or the ECL charge tend to be a bit higher. It will depend on our activity, but we expect to run at a slightly higher activity in unsecured lending among other in Mexico than we were before. So I wouldn't look at it as a one-off, but obviously it will depend on the cycle. It's a function of doing business and growing the business as opposed to a function of a historic problem materializes.

Georges Elhedery: Thank you, Alastair. So the one off-- sorry, the Mexico ECL related to an increase in our activity is specifically in unsecured lending. It's a feature of that jurisdiction, where margins are very healthy, but the ECL coverage or the ECL charge tend to be a bit higher. It will depend on our activity, but we expect to run at a slightly higher activity in unsecured lending among other in Mexico than we were before. So I wouldn't look at it as a one-off, but obviously it will depend on the cycle.

Speaker Change: Thank you Alastair. So the one of the sorry, the Mexico issue related to an increase in our activity is. Specifically in unsecured lending. A feature of that jurisdiction, where.

Speaker Change: So the one of the sorry, the Mexico issue related to an increase in our activity is.

Speaker Change: Specifically in unsecured lending.

Speaker Change: A feature of that jurisdiction, where.

Speaker Change: Margins are very healthy.

Speaker Change: But the. ECL coverage or the ECL charge tend to be a bit higher. It will depend on our activity, but we expect to run at a slightly higher activity in unsecured lending. Among other in Mexico than we were before so I wouldn't look at it as a one off but obviously it will depend on the cycle. It's a function of doing business and growing the business as opposed to a function of a historic problem materializes.

Speaker Change: ECL coverage or the ECL charge tend to be a bit higher.

Speaker Change: It will depend on our activity, but we expect to run at a slightly higher activity in unsecured lending.

Among other in Mexico than we were before so I wouldn't look at it as a one off but obviously it will depend on the cycle.

Noel Quinn: It's a function of doing business and growing the business as opposed to a function of a historic problem materializes. Next question. Please

Speaker Change: It's a function of doing business and growing the business as opposed to a function of a historic problem materializes.

Speaker Change: Next question. Please our next question comes from early mall at K B W.

Next question. Please

Neil Sankoff: Our next question comes from Perlie Mong at KBW.

Early Mall: Thank you for taking my questions. Just a couple, and I guess the first one is cost. And just what can you do with cost in the falling rate environment because you've talked about management actions. I guess the reason I'm asking is because this year, I believe all in is about 7% year-on-year. And of course, it includes a lot of one-offs like levers in this quarter and SVB earlier in the year. But on the basis that it crept up from about 2% year-on-year, which is I think, the first when you talked about the 23' guidance to the end result being something like 6%, 7%. And just wondering what levers do you have in your sort of cost management action pocket to combat costs if revenue were to disappoint? So that's number one. And the second question is, I think, we all talked a lot about what might happen to revenues rate environments. But--and also just thank you for the disclosure on the structural hedge. But I guess stepping back a little bit from that

Perlie Mong: Thank you for taking my questions. Just a couple, and I guess the first one is cost. And just what can you do with cost in the falling rate environment because you've talked about management actions. I guess the reason I'm asking is because this year, I believe all in is about 7% year-on-year. And of course, it includes a lot of one-offs like levers in this quarter and SVB earlier in the year. But on the basis that it crept up from about 2% year-on-year, which is I think, the first when you talked about the 23' guidance to the end result being something like 6%, 7%. And just wondering what levers do you have in your sort of cost management action pocket to combat costs if revenue were to disappoint? So that's number 1.

Early Mall: Just a couple and I guess this last one is awesome. What can you do with confidence wondering maiden long because you've talked about in the management actions and I guess the reason I'm asking is because this year I believe all in it's about 7% year on year and of course. It includes a lot of one offs like levees and this quarter, an SPD only and again that channel on the basis that it crept up from about 2% year on year, which is I think.

Early Mall: What can you do with confidence wondering maiden long because you've talked about in the management actions and I guess the reason I'm asking is because this year I believe all in it's about 7% year on year and of course. It includes a lot of one offs like levees and this quarter, an SPD only and again that channel on the basis that it crept up from about 2% year on year, which is I think.

Early Mall: I'll put out for 'twenty, and some of your guidance to and and without being something like six 7%. Just wondering what levers do you have in your sort of cost management action, okay to to come back call. It revenue actually disappoint. So that kind of one and the second question is I don't know what helps a lot about <unk> and. What might happen to your revenues and various rate environments. And also just.

Early Mall: Just wondering what levers do you have in your sort of cost management action, okay to to come back call. It revenue actually disappoint. So that kind of one and the second question is I don't know what helps a lot about <unk> and.

Early Mall: So that kind of one and the second question is I don't know what helps a lot about <unk> and.

And the second question is, I think, we all talked a lot about what might happen to revenues rate environments. But--and also just thank you for the disclosure on the structural hedge. But I guess stepping back a little bit from that Just a couple of clarifications. So in a falling rate environment, how would you expect things like customer behavior to respond? And so things like deposit mixture like in Hong Kong. So I guess the mixture towards term happened quite a lot faster in Hong Kong versus the U.K. on the way up and it's still ongoing from the disclosures today.

Early Mall: What might happen to your revenues and various rate environments.

Early Mall: And also just.

Early Mall: Thank you for the disclosure on the structural hedge, but I guess stepping back a little bit from that.

Early Mall: Just a couple of clarification, so and I'm wondering based environment, how would you expect and things like customer behavior agile to respond and so things like deposit mix shift like in Hong Kong, So I guess. The mix shift towards time happened quite a lot softer in Hong Kong versus the UK on the way out and it's still it's still ongoing from the disclosure today. So.

Early Mall: The mix shift towards time happened quite a lot softer in Hong Kong versus the UK on the way out and it's still it's still ongoing from the disclosure today. So.

Speaker Change: So if rates were to turn, would you expect that flip back to be pretty quick? Or based on a pretty high rate environment or do you still expect to make sure to continue? So I think you talked about things like capital markets might outperform in a falling rate environment. So I guess on an underlying basis, how do you see that because capital markets and loan growth, et cetera. I guess a lot of it has also to do with the underlying GDP as well. And then there's still a lot of uncertainty on the horizon. So even if rates were to come down just how quickly do you think these benefits can come through?

Speaker Change: To be pretty quick. So when I put a high rate environment or do you still expect him to make sure to continue so. I think you talked about two things.

Speaker Change: So when I put a high rate environment or do you still expect him to make sure to continue so.

Speaker Change: I think you talked about two things.

Speaker Change: Capital markets might outperform in a falling rate environment. So I guess on an underlying basis, how do you see it advocates and and. And capital markets and blown belt et cetera I. I guess a lot of it has also to do with it but the underlying GDP as well. And then yes, there's still a lot of uncertainty on the horizon. So even if rates were to come down to how quickly do you think these benefits can come through. Okay.

Speaker Change: And capital markets and blown belt et cetera I.

Speaker Change: I guess a lot of it has also to do with it but the underlying GDP as well.

Speaker Change: And then yes, there's still a lot of uncertainty on the horizon. So even if rates were to come down to how quickly do you think these benefits can come through.

Speaker Change: Okay.

Speaker Change: Okay. We'll tackle the cost first and then maybe if we come to the revenue second then I'll do a few introductory comments on how I see revenues. On costs, Georges do you want to just do a quick analysis of reported costs '23 versus '22 target basis, and then reported '23 to 24' target basis? I might just add a few comments at the end of that at on cost levers, the way I look at it. But Georges? a good deal. Thanks, so so so on them on a reported basis, 23% to 22, we were down 1%. So the growth against our target of 6% also is reflective of the fact that a lot of the restructuring costs. We've taken in 2022 did not repeat.

Noel Quinn: Okay. We'll tackle the cost first and then maybe if we come to the revenue second then I'll do a few introductory comments on how I see revenues. On costs, Georges do you want to just do a quick analysis of reported costs '23 versus '22 target basis, and then reported '23 to 24' target basis? I might just add a few comments at the end of that at on cost levers, the way I look at it. But Georges?

Speaker Change: Hum.

Speaker Change: On costs George do you want to just do a quick analysis all reported costs 23 versus 22 target basis, and then reported 23 to four target basis.

Speaker Change: I might just add a few comments at the end of that at all cost leavers, Hawaii I looked at it.

Georges Elhedery: Good. Yes. Thanks. So on a reported basis, '23 to '22, we were down 1%. So the growth against our target of 6% also is reflective of the fact that a lot of the restructuring costs we've taken in 2022 did not repeat. We've guided how the costs have increased from our initial 3%, where we included severance into the 6%. Obviously the last percent this quarter was unexpected. The rules for the FDIC special assessment came in November. The earlier draft rules, we've seen in September indicated we would be incurring debt cost in '24 and '25, but the rules that came in November had us to have a different accounting treatment and accelerate as did all other banks who were subject to the FDIC special assessment.

Speaker Change: George a good deal. Thanks, so so so on them on a reported basis, 23% to 22, we were down 1%.

George: So the growth against our target of 6% also is reflective of the fact that a lot of the restructuring costs. We've taken in 2022 did not repeat.

Speaker Change: Yeah. We've guided how the costs have increased from our initial two or <unk>, 3%, where we included severance into the 6% obviously the loss a percent this quarter was. Was unexpected. The rules for the FDIC Special assessment came in November. Earlier draft rules, we've seen in September indicated we would be incurring debt cost in 2000 and 425, but the rules that came in November had those two have two different accounting treatment than accelerate.

Speaker Change: We've guided how the costs have increased from our initial two or <unk>, 3%, where we included severance into the 6% obviously the loss a percent this quarter was.

Speaker Change: Was unexpected.

Speaker Change: The rules for the FDIC Special assessment came in November.

Speaker Change: Earlier draft rules, we've seen in September indicated we would be incurring debt cost in 2000 and 425, but the rules that came in November had those two have two different accounting treatment than accelerate.

Speaker Change: That's. All other banks, who were subject to the FDIC special assessment. So just want to call. It out that this one was a particular event we called out. We as we look at going forward for 'twenty four we're looking at two 5% on a target basis growth. This is excluding the cost reduction we would get from exiting the French retail business to kind of in the kind of the business between the two of them, we will be exiting on an annual basis and equivalent to a $1 billion just shy of that.

That's. All other banks, who were subject to the FDIC special assessment.

All other banks, who were subject to the FDIC special assessment. So just want to call. It out that this one was a particular event we called out.

So just want to call it out that this one was a particular event we called out. We-- as we look at going forward for '24 we're looking at a 5% on the target basis growth. This is excluding the cost reduction we would get from exiting the French retail business and the Canada business. Between the 2 of them, we will be exiting on an annual basis and equivalent to $1 billion just shy of that, which is around 3%, that would be a reduction in cost of 3%, but that is excluded from the way we are managing our target basis. Just explaining how we're coming up with this cost and then Don can talk you through the levers to manage our cost. So first there is the flow through inflation from 'twenty. Three there is some wage adjustments we need to take into account for 24 based on the flow through inflation from 2003 that component we feel is easing.

Speaker Change: We as we look at going forward for 'twenty four we're looking at two 5% on a target basis growth.

Speaker Change: This is excluding the cost reduction we would get from exiting the French retail business to kind of in the kind of the business between the two of them, we will be exiting on an annual basis and equivalent to a $1 billion just shy of that.

Speaker Change: She is around 3%. That would be a reduction in cost of 3%, but that is excluded from the way we are managing our target basis. Just explaining how we're coming up with this cost and then Don can talk you through the levers to manage our cost. So first there is the flow through inflation from 'twenty. Three there is some wage adjustments we need to take into account for 24 based on the flow through inflation from 2003 that component we feel is easing.

Speaker Change: That would be a reduction in cost of 3%, but that is excluded from the way we are managing our target basis. Just explaining how we're coming up with this cost and then Don can talk you through the levers to manage our cost. So first there is the flow through inflation from 'twenty. Three there is some wage adjustments we need to take into account for 24 based on the flow through inflation from 2003 that component we feel is easing.

Just explaining how we're coming up with this cost, and then Noel can talk you through the levers to manage our cost. So first, there is the flow-through inflation from '23. There is some wage adjustments we need to take into account for '24 based on the flow-through inflation from '23 that component we feel is easing and hopefully, in the output completion will ease as we go out of '24 into the future. There is continued spend in technology, and continued investment in some of the growth areas, organic growth areas. And that's particularly true in the in Wealth. And those spending are partly offset by a number of cost management actions some of which we have taken already such as the Severance program, which will have a flow-through benefit into '24 and other actions we're planning to take.

Speaker Change: Just explaining how we're coming up with this cost and then Don can talk you through the levers to manage our cost. So first there is the flow through inflation from 'twenty. Three there is some wage adjustments we need to take into account for 24 based on the flow through inflation from 2003 that component we feel is easing.

Don: So first there is the flow through inflation from 'twenty. Three there is some wage adjustments we need to take into account for 24 based on the flow through inflation from 2003 that component we feel is easing.

Don: Hopefully in the ultra completion will ease as we go out of 24 into the future. There is continued spend in technology. And continued investment in some of the growth areas organic growth areas, and that's particularly true in the in wealth. And those spending are partly offset by a number of cost management actions some of which we have taken already such as the severance program, which will have a flow through benefit into 'twenty four and other actions we're planning to take.

Don: There is continued spend in technology.

There is continued spend in technology, and continued investment in some of the growth areas, organic growth areas. And that's particularly true in the in Wealth. And those spending are partly offset by a number of cost management actions some of which we have taken already such as the Severance program, which will have a flow-through benefit into '24 and other actions we're planning to take.

And continued investment in some of the growth areas organic growth areas, and that's particularly true in the in wealth.

Don: And those spending are partly offset by a number of cost management actions some of which we have taken already such as the severance program, which will have a flow through benefit into 'twenty four and other actions we're planning to take.

Don: Just before Noel talks to levers, we're looking at cost as in growth on a target basis in dollars numbers. We're not looking at our cost efficiency ratio basis, there may be fluctuation towards revenue, but frankly, in a year like '23, our CER has dropped from 65% and in '22 to 48%. So we will tolerate some volatility on the CER as long as we're managing our costs and the spend dollar basis. But, Noel... Thank you for making sure you know I know.

Just before Noel talks to levers, we're looking at cost as in growth on a target basis in dollars numbers. We're not looking at our cost efficiency ratio basis, there may be fluctuation towards revenue, but frankly, in a year like '23, our CER has dropped from 65% and in '22 to 48%. So we will tolerate some volatility on the CER as long as we're managing our costs and the spend dollar basis. But, Noel... Thank

Don: In a year like 23. <unk> has dropped from 65% and 22% to 48%. So we will tolerate some volatility on the CR as long as we're managing our costs and the spend dollar basis, but.

Don: <unk> has dropped from 65% and 22% to 48%. So we will tolerate some volatility on the CR as long as we're managing our costs and the spend dollar basis, but.

Noel Quinn: I know this is an important topic and let me reiterate upfront. We remain committed to cost discipline. The question is how are we achieving cost discipline. We obviously look for efficiencies in the existing organization. We invest in tech to drive efficiencies in our processing costs, and we're continuing to do that. We invest in simplification of the portfolio closing time businesses organically exiting cost organically. But we're also exiting costs through M&A. And our target basis, we adjust for that. But I don't want you to lose sight, we have exited--we'll be exiting $1 billion of costs in 2024 as a function of M&A decisions. Portfolio of choices made for good strategic reasons $300 million of that was the exit of our French retail business.

you for making sure you know I know.

Speaker Change: Thank you for making sure you know I know.

Speaker Change: This is an important topic and let me reiterate upfront we remain committed to cost discipline. The question is how are we achieving cost discipline. We obviously look for efficiencies in the existing organization, we invest in tech to drive efficiencies in our processing costs. And we're continuing to do that. We invest in simplification of the portfolio. Closing time businesses organically exiting <unk>. Cost organically. But we're also exiting costs through M&A. And our target basis, we adjust for that but I don't I don't want you to lose sight, we've exited woobie exits and $1 billion of costs in 2020 full as a function of M&A decisions portfolio of choices made for good strategic reasons $300 million of that was the exit of our French retail business.

Speaker Change: The question is how are we achieving cost discipline. We obviously look for efficiencies in the existing organization, we invest in tech to drive efficiencies in our processing costs. And we're continuing to do that. We invest in simplification of the portfolio. Closing time businesses organically exiting <unk>. Cost organically. But we're also exiting costs through M&A.

Speaker Change: We obviously look for efficiencies in the existing organization, we invest in tech to drive efficiencies in our processing costs.

Speaker Change: And we're continuing to do that.

Speaker Change: We invest in simplification of the portfolio.

Speaker Change: Closing time businesses organically exiting <unk>.

Speaker Change: Cost organically.

Speaker Change: But we're also exiting costs through M&A.

And our target basis, we adjust for that but I don't I don't want you to lose sight, we've exited woobie exits and $1 billion of costs in 2020 full as a function of M&A decisions portfolio of choices made for good strategic reasons $300 million of that was the exit of our French retail business.

Speaker Change: It's a business that was losing money. So we've exited $300 million of costs by selling. And it's going to be profit accretive, because that business was a loss-making business. We've exited $800 million of costs in Canada through selling. We hope to by the end of Q1, not tempting fate. Why are we doing it? Because that business in our hands was properly valued at around 1x book, and we were able to generate 2.5x book as over 2.5x book. We sold it because it was worth more to somebody else than to us. And we're redistributing the proceeds of that to our shareholders because we thought it was the right answer for our shareholders. So we do internally generated cost efficiency, and externally generated cost efficiency for good strategic reasons, and we'll continue to pull those levers.

Speaker Change: So we've exited 300 million of costs by sell in.

Speaker Change: And it's going to be profit accretive.

Speaker Change: Was that business was a loss making business.

Speaker Change: We've exited 800 million of costs in Canada to sell it.

Speaker Change: Two on the end of Q1.

Speaker Change: 17 sites.

Speaker Change: Why are we doing it because.

Speaker Change: Because of that business in our hands was properly valued at around one times book.

Speaker Change: We were able to generate two and a half times book.

Speaker Change: US over two and a half times book, we sold it because it was worth more to somebody else than to us.

Speaker Change: And we're redistributing the proceeds of that so our shareholders because we thought it was the right answer for our shareholders.

So we do internally generated cost efficiency, and externally generated cost efficiency for good strategic reasons, and we'll continue to pull those levers. Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and changed the nature of the cost to pay a much more strategic cost component in driving future

So we do internally generated cost efficiency, and externally generated cost efficiency for good strategic reasons, and we'll continue to pull those levers.

Speaker Change: And externally generated cost efficiency for good strategic reasons, and we'll continue to pull those levers. Now the other thing is we are we do believe an organization like us with the growth opportunities we have we should invest. And we made a decision last year on our original cost target of 3%. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and changed the nature of the cost to pay a much more strategic cost component in driving future cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have. You have our absolute commitment both myself and Georges and the management teams, we will keep cost discipline. We'll invest and save at the same time. We have to acknowledge the flow-through of inflation. But the other component we decided made a decision on in '23 given the very, very strong performance the business had. We thought it was right to go from

Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and changed the nature of the cost to pay a much more strategic cost component in driving future Cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have. Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and changed the nature of the cost to pay a much more strategic cost component in driving future cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have

Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and change the nature of the cost to pay a much more strategic cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have, you have our absolute commitment both myself and Georges on the management teams, we will keep cost discipline. We'll invest and save at the same time. We have to acknowledge the flow-through of inflation. But the other component we decided--made a decision on in '23 given the very, very strong performance the business had, we thought it was right to go from 4% to 5% by topping up the variable pay pool by an extra percent. We thought that was the right decision for our people. So we think it's the right cost decision. But at housing flights at all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that and then the final 1% taking us to.

Now the other thing is we are-- we do believe an organization like us with the growth opportunities we have, we should invest. And we made a decision last year on our original cost target of 3% to actually move it up to 4% because we are continuing to invest in tech. And in tech today as part of our overall cost base is now around 22%. When I took over 4 years ago, tech as a percentage our cost base with 16%. So we're trying to remain disciplined on costs and change the nature of the cost to pay a much more strategic cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have, you have our absolute commitment both myself and Georges on the management teams, we will keep cost discipline. We'll invest and save at the same time. We have to acknowledge the flow-through of inflation. But the other component we decided--made a decision on in '23 given the very, very strong performance the business had, we thought it was right to go from 4% to 5% by topping up the variable pay pool by an extra percent.

Speaker Change: Now the other thing is we are we do believe an organization like us with the growth opportunities we have we should invest. And we made a decision last year on our original cost target of 3%. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: And we made a decision last year on our original cost target of 3%. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic. So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: So actually move it up to 4% because we are continuing to invest in tech. Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: Check today as part of our overall cost base is now around 22%. When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: When I took over four years ago check is a sense of our cost base with 16%. So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: So with trying to remain disciplined on costs unchanged the nature of the cost to pay a much more strategic.

Speaker Change: Cost component in driving future enhancements with customer propositions and efficiencies. So that's sort of the thinking we have you have our absolute commitment both myself and George on the management teams, we will keep cost discipline. We'll invest in. Safe at the same time we. We have to acknowledge the flow through of inflation. But the other component we decided made a decision on in 'twenty three. Given the very very strong performance of the business that we thought it was right to go from.

Speaker Change: So that's sort of the thinking we have you have our absolute commitment both myself and George on the management teams, we will keep cost discipline. We'll invest in.

you have our absolute commitment both myself and George on the management teams, we will keep cost discipline. We'll invest in. Safe at the same time we. We have to acknowledge the flow through of inflation. But the other component we decided made a decision on in 'twenty three. Given the very very strong performance of the business that we thought it was right to go from. you have our absolute commitment both myself and George on the management teams, we will keep cost discipline. We'll invest in. Safe at the same time we. We have to acknowledge the flow through of inflation. But the other component we decided made a decision on in 'twenty three. Given the very very strong performance of the business that we thought it was right to go from.

Speaker Change: We'll invest in.

Safe at the same time we.

Speaker Change: We have to acknowledge the flow through of inflation.

Speaker Change: But the other component we decided made a decision on in 'twenty three.

Speaker Change: Given the very very strong performance of the business that we thought it was right to go from.

Speaker Change: 4% to 5% by topping up the variable pay pool by an extra percent. We thought that was the right decision for our people. So we think it's the right cost decision. But at housing flights at all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that and then the final 1% taking us to.

We thought that was the right decision for our people. So we think it's the right cost decision, but it has inflated all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that. And then the final 1% taking us to the 6% number you talked about was unexpected when we talked to you in Q3, we didn't expect that final 1% to come through for FDIC and bank levies. After I see it's probably a timing issue it was going to come through in '24 '25 but it actually surprisingly came through in the final quarter of the year. So you've got our commitment of remain tight with cost. Let's now turn to revenues. And let me maybe

We thought that was the right decision for our people. So we think it's the right cost decision, but it has inflated all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that. And then the final 1% taking us to the 6% number you talked about was unexpected when we talked to you in Q3, we didn't expect that final 1% to come through for FDIC and bank levies. The FDIC it's probably a timing issue it was going to come through in '24 '25 but it actually surprisingly came through in the final quarter of the year. So you've got our commitment of remain tight with cost.

Speaker Change: We thought that was the right decision for our people. So we think it's the right cost decision. But at housing flights at all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that and then the final 1% taking us to.

Speaker Change: But at housing flights at all cost compared to our original target of 3%. But I think we have to do the right thing by our people on that and then the final 1% taking us to.

But I think we have to do the right thing by our people on that and then the final 1% taking us to.

Speaker Change: The 6% number you talked about was unexpected when we talked to you in Q3. We didn't expect that final 1% to come through for FDIC and bank levies. After I see it's probably a timing issue it was going to come through in 'twenty four 'twenty five but it actually surprisingly came through in the final quarter of the year. So you've got our commitment or Miami, possibly theres lots of revenues and let me maybe.

Speaker Change: The 6% number you talked about was unexpected when we talked to you in Q3.

Speaker Change: We didn't expect that final 1% to come through for FDIC and bank levies.

Speaker Change: After I see it's probably a timing issue it was going to come through in 'twenty four 'twenty five but it actually surprisingly came through in the final quarter of the year. So you've got our commitment or Miami, possibly theres lots of revenues and let me maybe.

Let's now turn to revenues. And let me maybe, gain, decompose how we think about revenue growth outside of NII or interest income. Clearly the great work that Georges and the team has done on hedging and further structural hedges, we put in place and the extra duration is a mitigan to the downside. I look at the opportunity on the upside in 2 components. One is our core USP of international banking. We have within our franchise, clients who operate in more countries than we currently bank them, be their personal clients or corporate clients.

Speaker Change: Again decompose, how we think about revenue growth outside of NII or interest income. Clearly the great work that George and the team has done on hedging. So the structural hedges, we put in place and the extra duration, it's a michigan so the downside. I look at the opportunity on the upside. In two components one. It's all core U S pay of international banking. We have within our franchise clients, who operate in more countries than we currently bank them.

Speaker Change: Clearly the great work that George and the team has done on hedging. So the structural hedges, we put in place and the extra duration, it's a michigan so the downside.

So the structural hedges, we put in place and the extra duration, it's a michigan so the downside.

Speaker Change: I look at the opportunity on the upside.

Speaker Change: In two components one.

Speaker Change: It's all core U S pay of international banking.

Speaker Change: We have within our franchise clients, who operate in more countries than we currently bank them.

Speaker Change: My personal clients corporate clients. Still have huge amounts of untapped opportunity to further penetrate our client base. And every time you saw in the revenue multipliers, we take the client. So multiple jurisdictions. A revenue multiplier of five times domestic revenue in wholesale banking three times domestic revenue. In retail banking. That's an internally generated revenue opportunity not dependent on GDP.

My personal clients corporate clients.

We still have huge amounts of untapped opportunity to further penetrate our client base. And every time you saw in the revenue multipliers, we take a client to multiple jurisdictions, a revenue multiplier of 5x domestic revenue in wholesale banking, 3x domestic revenue in retail banking. That's an internal generated revenue opportunity not dependent on GDP. That's in our hands. The second revenue opportunity you talked about in your analysis is countercyclical. And I do believe -- I've been around 37 years, so I've seen some cycles. And I do believe lower inflation leads to a lower interest rates, lower interest rates lead to a pickup in economic activity normally for the lag effect. And I do believe that picks up will have a positive impact on capital market activity in our Global Banking and Markets business. I think it will have a big and positive impact on demand for corporate lending and personal lending in our wholesale and retail business lag effects as I've talked about.

Speaker Change: Still have huge amounts of untapped opportunity to further penetrate our client base.

Speaker Change: And every time you saw in the revenue multipliers, we take the client.

Speaker Change: So multiple jurisdictions.

Speaker Change: A revenue multiplier of five times domestic revenue in wholesale banking three times domestic revenue.

Speaker Change: In retail banking.

Speaker Change: That's an internally generated revenue opportunity not dependent on GDP.

Speaker Change: That's in our hands. The second revenue opportunity you talked about in your analysis is kind of a cyclical. And I do believe up I've been around 37 years, so I've seen some cycles and I do believe lower inflation linked to lower interest rates lower interest rates lead to a pickup in economic activity normally if the lag effects. And I do believe that picks up we will have a positive impact on capital market activity in our global banking and markets business.

Speaker Change: The second revenue opportunity you talked about in your analysis is kind of a cyclical. And I do believe up I've been around 37 years, so I've seen some cycles and I do believe lower inflation linked to lower interest rates lower interest rates lead to a pickup in economic activity normally if the lag effects.

Speaker Change: And I do believe up I've been around 37 years, so I've seen some cycles and I do believe lower inflation linked to lower interest rates lower interest rates lead to a pickup in economic activity normally if the lag effects.

And I do believe lower inflation leads to a lower interest rates, lower interest rates lead to a pickup in economic activity normally for the lag effect. And I do believe that picks up will have a positive impact on capital market activity in our Global Banking and Markets business. I think it will have a big and positive impact on demand for corporate lending and personal lending in our wholesale and retail business lag effects as I've talked about.

Speaker Change: And I do believe that picks up we will have a positive impact on capital market activity in our global banking and markets business.

Speaker Change: [[[I think it will have a big positive impact on demand for corporate lending and personal lending in our wholesale and retail business log effects as I've talked to that and thirdly, I think consumers will start to shift out of cash into invested assets. That's a huge opportunity for our wealth business and you've seen our track record. All our ability to attract net new invested assets over the last three years. 84 billion $80 billion 64 billion.

[[[I think it will have a big positive impact on demand for corporate lending and personal lending in our wholesale and retail business log effects as I've talked to that

And thirdly, I think consumers will start to shift out of cash into invested assets, and that's a huge opportunity for our wealth business and you've seen our track record on our ability to attract net new invested assets over the last 3 years, $84 billion, $64 billion. That's where we're very focused and a lot of our investment is going.

Speaker Change: That's a huge opportunity for our wealth business and you've seen our track record.

Speaker Change: All our ability to attract net new invested assets over the last three years.

Speaker Change: 84 billion $80 billion 64 billion.

Speaker Change: That's where we're very focused on a lot of our investment is going. As far as the management team to deliver on that. So we know we got to deliver on its high cost on <unk>. Cost discipline, and we've got to deliver on revenue diversification. My final comment on this is gray. Grateful that we've had four years of transformation. Because we now are through the majority of that transformation focus. Alrighty. When I focus on. On that growth opportunity. And we're in a fortunate position. Not all of the hard work of the last four years has given us a platform for growth.

That's where we're very focused on a lot of our investment is going.

Speaker Change: As far as the management team to deliver on that. So we know we got to deliver on its high cost on <unk>. Cost discipline, and we've got to deliver on revenue diversification. My final comment on this is gray.

Now it's for us, the management team to deliver on that. So we know we got to deliver on tight cost on and cost discipline, and we've got to deliver on revenue diversification. My final comment on this is I'm grateful that we've had 4 years of transformation because we now are through the majority of that transformation focus, majority, and we're now focus on that growth opportunity. And we're in a fortunate position that all of the hard work of the last 4 years has given us that platform for growth. Thank you.

Speaker Change: So we know we got to deliver on its high cost on <unk>. Cost discipline, and we've got to deliver on revenue diversification.

Speaker Change: Cost discipline, and we've got to deliver on revenue diversification.

Speaker Change: My final comment on this is gray.

Speaker Change: Grateful that we've had four years of transformation.

Speaker Change: Because we now are through the majority of that transformation focus. Alrighty. When I focus on. On that growth opportunity. And we're in a fortunate position. Not all of the hard work of the last four years has given us a platform for growth.

Speaker Change: Alrighty.

Speaker Change: When I focus on.

On that growth opportunity.

Speaker Change: And we're in a fortunate position.

Speaker Change: Not all of the hard work of the last four years has given us a platform for growth.

Neil Sankoff: So we have time for one last question, then I'll hand it back to you, Noel, if you want to make any concluding remarks. Our final question comes from Aman Rakkar at Barclays.

Speaker Change: So we have time for one last question then I'll hand, it back to you know if you want to make any concluding remarks. Thank you. So our final question comes from <unk> at Barclays.

Aman Rakkar: Thank you very much. I have 2 broad questions. First one is kind of split into 2. And then I've got a second question around GB&M. Sorry, sorry capital return. First broad question it's around fee income. The first part of it is, I'm a bit confused by your banking NII sensitivity. You can see on slide 34, $3.4 billion on a 100 basis points rate cap. But the majority of that comes from non-banking, sorry, non-NII, so can you help me that because I just don't understand that. I thought banking NII We kind of stripped out the trading funding costs. So whatever color you can give us there?

Barclays: Thank you very much I know.

Barclays: And right now.

Barclays: I have two broad questions first one is kind of.

Speaker Change: Thanks, Tony.

And then I've got a second question around GBM. Sorry, sorry Catherine. First question I'm, sorry, it's around fee income. First part of it is I'm a bit confused by your banking NII sensitivity.

Speaker Change: Sorry, sorry Catherine.

Speaker Change: First question I'm, sorry, it's around fee income. First part of it is I'm a bit confused by your banking NII sensitivity.

Speaker Change: First part of it is I'm a bit confused by your banking NII sensitivity.

Speaker Change: You can see on slide 34. $3 $4 billion on a 100 basis points right. The majority of that comes from non banking sorry, non NII. So can you help me that because I, just don't understand that Apple banking NII.

Speaker Change: $3 $4 billion on a 100 basis points right.

Speaker Change: The majority of that comes from non banking sorry, non NII.

Speaker Change: So can you help me that because I, just don't understand that Apple banking NII.

Speaker Change: We kind of stripped out and trading funding costs or whatever color you can give us there. And the related question is the. Your outlook for fee income more broadly. I get your messaging around wealth transaction banking is content. Demonstrating positive momentum, but can I ask you about the other big chunk of fee income which is GPM. And there's various moving parts that I suspect. You think cyclically small earnings. Its full amount I also do note that. Global FX has kind of been decent for awhile. Can you give us your view to what extent that that business is all pricing. Hello, everyone or had this kind of capacity. That was a kind of broad two pronged question on fee income. Oh no.

We kind of stripped out and trading funding costs or whatever color you can give us there.

Speaker Change: And the related question is the.

And the related question is that your outlook for fee income, more broadly, I get your messaging around wealth. Transaction banking is kind of demonstrating positive momentum. But can I ask you about the other big chunk of fee income, which is GB&M. And there's various moving parts there. I suspect that you think cyclically small earnings its full amount. I also do note that Global FX has kind of been decent for awhile. So can you give us your view to what extent that business is operating at, bellow or ahead of kind of capacity? That was a kind of broad 2 pronged question on fee income, believe it or not.

Speaker Change: Your outlook for fee income more broadly. I get your messaging around wealth transaction banking is content.

Speaker Change: I get your messaging around wealth transaction banking is content.

Speaker Change: Demonstrating positive momentum, but can I ask you about the other big chunk of fee income which is GPM.

Speaker Change: And there's various moving parts that I suspect. You think cyclically small earnings.

Speaker Change: You think cyclically small earnings.

Speaker Change: Its full amount I also do note that. Global FX has kind of been decent for awhile. Can you give us your view to what extent that that business is all pricing.

Speaker Change: Global FX has kind of been decent for awhile. Can you give us your view to what extent that that business is all pricing.

Speaker Change: Can you give us your view to what extent that that business is all pricing.

Speaker Change: Hello, everyone or had this kind of capacity. That was a kind of broad two pronged question on fee income. Oh no.

Speaker Change: That was a kind of broad two pronged question on fee income.

Speaker Change: Oh no.

Speaker Change: The second question was around distribution, your approach to distribution that you're potentially facing down the barrel of a slower volume growth in '24. And I'm interested in your arguably then going to be more capital generative this year on still decent profits, and not a lot of balance sheet growth. How do you approach that? Do you kind of give us additional buybacks through the course of this year? Or do you kind of hold that powder dry for a bigger rebound in '25, to say? Thank you very much.

Speaker Change: Distribution. Price distributions. Potentially facing down the barrel is a slower volume growth in. In 'twenty four and I'm interested in your arguably then going to be more capital generative this year still decent profits. Not a lot of balance sheet growth how did you. Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Price distributions. Potentially facing down the barrel is a slower volume growth in. In 'twenty four and I'm interested in your arguably then going to be more capital generative this year still decent profits. Not a lot of balance sheet growth how did you. Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Speaker Change: Potentially facing down the barrel is a slower volume growth in. In 'twenty four and I'm interested in your arguably then going to be more capital generative this year still decent profits. Not a lot of balance sheet growth how did you. Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Speaker Change: In 'twenty four and I'm interested in your arguably then going to be more capital generative this year still decent profits. Not a lot of balance sheet growth how did you. Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Speaker Change: Not a lot of balance sheet growth how did you. Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Speaker Change: Approach that do you kind of give us additional buybacks through the course of this year or do you kind of hope that powder dry.

Speaker Change: We're a bigger rebound in 25 site. Thank you.

Noel Quinn: Okay. I think George do you want to pick up those 3 points.

Georges Elhedery: Sure. Aman, so what historically we've been giving you is NII sensitivity. But as you know there is a big component that is rate sensitive in our earnings, which doesn't sit in NII. It sits in non-NII under funding cost of the trading book. And what we've been doing, and hopefully, that slide was meant to clarify, but I'm assuming now we have to take probably more offline with you to go through it. What we've been doing is showing the sensitivity of both the NII to date, as well as the sensitivity of the funding cost of the trading book to date. And then giving you the full sensitivity of banking NII to date, because that would be a better representation of how sensitive our earnings are to date, and that will take away the noise that is created by the ongoing commercial decisions on how much-- how much funds we provide the trading activity or take away from the trading activity in year.

George: So what. Typically we've been giving you is NII sensitivity, but as you know there is a big component that is rate sensitive earnings which doesn't sit in NII. It sits in non NII under funding cost of the trading book and what we've been doing and hopefully that slide was meant to clarify but. Assuming that we have to take probably more offline with you to to go through it what we've been doing is showing the sensitivity of both the NII to date as well as the sensitivity of the funding cost of the trading book to date, and then giving you the Fulton sensitivity of banking NII to date, because that would be a better representation.

George: Typically we've been giving you is NII sensitivity, but as you know there is a big component that is rate sensitive earnings which doesn't sit in NII. It sits in non NII under funding cost of the trading book and what we've been doing and hopefully that slide was meant to clarify but. Assuming that we have to take probably more offline with you to to go through it what we've been doing is showing the sensitivity of both the NII to date as well as the sensitivity of the funding cost of the trading book to date, and then giving you the Fulton sensitivity of banking NII to date, because that would be a better representation.

George: Assuming that we have to take probably more offline with you to to go through it what we've been doing is showing the sensitivity of both the NII to date as well as the sensitivity of the funding cost of the trading book to date, and then giving you the Fulton sensitivity of banking NII to date, because that would be a better representation.

George: Of how sensitive or earnings are to date and that will take away. The noise that is created by you know.

George: The ongoing commercial decisions on how much. You know how much funds, we provide the trading activity or take away from the trading activity in year. It kind of lenses that information out because it's just giving you. The total of that is it I live and put our overall earnings that sensitivity has reduced by more than half. Over the year. In part at least for the 30 or 40% of it due to a structural hedging activity.

The ongoing commercial decisions on how much. You know how much funds, we provide the trading activity or take away from the trading activity in year.

George: You know how much funds, we provide the trading activity or take away from the trading activity in year. It kind of lenses that information out because it's just giving you. The total of that is it I live and put our overall earnings that sensitivity has reduced by more than half.

It kind of cleanses that information out because it's just giving you the total that is relevant for our overall earnings. That sensitivity has reduced by more than half over the year, in part at least for the 30% or 40% of it due to our structural hedging activity. With regards the fee income you mentioned FX, having a good and decent income a couple of things about Japan him to call out first the PBT of GBP and EM was more than 20%, 25% higher year on year,

George: Over the year.

George: In part at least for the 30 or 40% of it due to a structural hedging activity.

With regards the fee income, you mentioned FX having a good and decent income. A couple of things about GB&M to call out. First, the PBT of GB&M was more than 20% or 25% higher year-on-year. So clearly, a business that increases PBT. Its return on tangible equity has exceeded our cost of capital. It's something that has been not achieved for many years, it's above 12%. And to be also fair to GB&M, its return on tangible equity only increased by about 10% because there are some corporate center related adjustments, which has affected them. Otherwise, they return on tangible equity could have followed the trend of PBT growth because their RWAs were down, and they could have seen close to 20%. And therefore, well above their cost of equity. So we are comfortable with how the business is continue to transform itself, focusing on their strength and adjusting their footprint, and hat momentum continues.

George: With regards the fee income you mentioned FX, having a good and decent income a couple of things about Japan him to call out first the PBT of GBP and EM was more than 20%, 25% higher year on year, So clearly a business that increases PBT. Return on tangible equity has exceeded our cost of capital it's something that has been. Not achieved for many years, it's above 12% and to be also fair to GBM. It's return on tangible equity only increased by about 10% because there are some corporate center related adjustments, which has affected them otherwise they return on tangible equity could have followed the trend of PBT growth because there are <unk>.

With regards the fee income you mentioned FX, having a good and decent income a couple of things about Japan him to call out first the PBT of GBP and EM was more than 20%, 25% higher year on year,

So clearly a business that increases PBT. Return on tangible equity has exceeded our cost of capital it's something that has been. Not achieved for many years, it's above 12% and to be also fair to GBM. It's return on tangible equity only increased by about 10% because there are some corporate center related adjustments, which has affected them otherwise they return on tangible equity could have followed the trend of PBT growth because there are <unk>.

George: Return on tangible equity has exceeded our cost of capital it's something that has been.

George: Not achieved for many years, it's above 12% and to be also fair to GBM. It's return on tangible equity only increased by about 10% because there are some corporate center related adjustments, which has affected them otherwise they return on tangible equity could have followed the trend of PBT growth because there are <unk>.

George: Don and they could have seen them. Close to 20% and therefore. Well above their cost of equity. So we are comfortable with how the business is up. As the trends continue to transform itself focusing on their strength and. Adjusting their footprint. That momentum continues. In terms of. Distribution well firstly it remains our ambition to have a rolling series of share buybacks. As long as all the captains supports it and the outlook for capital both supported but this remains subject to ongoing macroeconomic developments and regulatory approvals et cetera, and one thing to call out with regards or.

Don and they could have seen them. Close to 20% and therefore. Well above their cost of equity. So we are comfortable with how the business is up. As the trends continue to transform itself focusing on their strength and. Adjusting their footprint. That momentum continues.

George: Close to 20% and therefore. Well above their cost of equity. So we are comfortable with how the business is up.

Well above their cost of equity. So we are comfortable with how the business is up.

George: As the trends continue to transform itself focusing on their strength and.

George: Adjusting their footprint.

George: That momentum continues.

In terms of distribution, well, first, it remains our ambition to have a rolling series of share buybacks, as long as our capital supports it, and the outlook for capital does supported but this remains subject to ongoing macroeconomic developments and regulatory approvals et cetera. And one thing to call out with regards our bolt-on acquisitions is when we look at an acquisition obviously the first parameter is making sure it's a strategic and accelerating the growth area that we strategically want to grow. But the second parameter that we also use equally is that it is accretive compared to a share buyback. So we're making sure that when we go for a bolt-on acquisition the investments is more accretive than the investment in buying our own shares. And this would be a disciplined measure to make sure we're doing M&A that is both strategic and accretive.

George: In terms of.

George: Distribution well firstly it remains our ambition to have a rolling series of share buybacks.

George: As long as all the captains supports it and the outlook for capital both supported but this remains subject to ongoing macroeconomic developments and regulatory approvals et cetera, and one thing to call out with regards or.

George: Bolt on acquisitions is when we look at an acquisition obviously the first parameter is making sure it's a strategic and accelerating the growth area that we strategically want to grow but the second parameter that we also use equally is that it is accretive compared to a share. Buyback, so we're making sure that when we go for a bolt on acquisition the investments is more accretive than the investment in buying our own shares and this is this would be a disciplined measure to make sure we're doing. You know M&A that is both strategic and accretive.

George: Buyback, so we're making sure that when we go for a bolt on acquisition the investments is more accretive than the investment in buying our own shares and this is this would be a disciplined measure to make sure we're doing. You know M&A that is both strategic and accretive.

George: You know M&A that is both strategic and accretive.

George: And. Finally in terms of other parts of the distribution, a 50% dividend payout ratio for 2020 forward, which we reaffirmed. Hum. And then if. If you wanted to give or if you want to have a benchmark on where do we would. Operates on a target basis, our CET one ratio it will be in the 14 to $14 five range, which we raised to date, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generate. <unk>. On the pace of which we can get back to that target is going to be dictated. By two things the capacity of the market to take buybacks and second. Other alternative uses of that capital to support growth, but I think it's fair to say. There's going to be. Excess of all CET, one over our target range.

And finally, in terms of other parts of the distribution, 50% dividend payout ratio for 2024, which we reaffirmed. And then if you want to give or if you want to have a benchmark on where we would operate on a target basis, our CET1 ratio it will be in the 14 to 14.5 range, which we reiterate, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generation.

George: Finally in terms of other parts of the distribution, a 50% dividend payout ratio for 2020 forward, which we reaffirmed.

George: Hum. And then if. If you wanted to give or if you want to have a benchmark on where do we would. Operates on a target basis, our CET one ratio it will be in the 14 to $14 five range, which we raised to date, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generate.

George: And then if. If you wanted to give or if you want to have a benchmark on where do we would. Operates on a target basis, our CET one ratio it will be in the 14 to $14 five range, which we raised to date, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generate.

George: If you wanted to give or if you want to have a benchmark on where do we would.

George: Operates on a target basis, our CET one ratio it will be in the 14 to $14 five range, which we raised to date, but we recognize we may not meet that target because we may be well above it for a few quarters in particular, thanks to Canada, but also to our own capital generate.

George: <unk>. On the pace of which we can get back to that target is going to be dictated. By two things the capacity of the market to take buybacks and second. Other alternative uses of that capital to support growth, but I think it's fair to say. There's going to be. Excess of all CET, one over our target range.

George: On the pace of which we can get back to that target is going to be dictated. By two things the capacity of the market to take buybacks and second. Other alternative uses of that capital to support growth, but I think it's fair to say. There's going to be. Excess of all CET, one over our target range.

Noel Quinn: And the pace at which we can get back down to that target is going to be dictated by 2 things: the capacity of the market to take buybacks; and second, other alternative uses of that capital to support growth. But I think it's fair to say there's going to be excess of our CET1 over our target range more in the near term because probably the capacity of the market to take the volume of buybacks that could be done.

George: By two things the capacity of the market to take buybacks and second. Other alternative uses of that capital to support growth, but I think it's fair to say. There's going to be. Excess of all CET, one over our target range.

George: Other alternative uses of that capital to support growth, but I think it's fair to say. There's going to be. Excess of all CET, one over our target range.

George: There's going to be. Excess of all CET, one over our target range.

Excess of all CET, one over our target range.

George: In the near term because probably the capacity of the market to take the volume of buybacks that could be done. Thank you so much can I just to clarify so is it reasonable then to expect. Is it reasonable to target year on year growth in GP in the fee income businesses and TV is it yes. And all these various moving parts should we think about price. Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

In the near term because probably the capacity of the market to take the volume of buybacks that could be done.

Thank you so much. Can I just to clarify? So is it reasonable then to expect that-- is it reasonable to target year-on-year growth in GB&M, the fee income businesses in GB&M? Is it--given those various moving parts, should we think about growht? Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

Aman Rakkar: Thank you so much. Can I just to clarify? So is it reasonable then to expect that-- is it reasonable to target year-on-year growth in GB&M, the fee income businesses in GB&M? Is it--given those various moving parts, should we think about growth?

Speaker Change: Thank you so much can I just to clarify so is it reasonable then to expect. Is it reasonable to target year on year growth in GP in the fee income businesses and TV is it yes. And all these various moving parts should we think about price. Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

Is it reasonable to target year on year growth in GP in the fee income businesses and TV is it yes. And all these various moving parts should we think about price. Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

Speaker Change: And all these various moving parts should we think about price. Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

Georges Elhedery: Yes, in the strategic area, certainly. I mean, the areas we called out such as the foreign exchange, such as payments, such as supporting trade, we do expect also growth. And as Noel mentioned earlier, in capital market activity, if and when rates come down we see progress in this area of the fee income space. Clearly, GB&M has focused itself and the kind of the message is that in the areas, where they are focusing strategically, yes. In the areas where they have exited or are downsizing, then this would be a non-strategic areas that they would continue doing downsizing.

Speaker Change: Yes, it's in the strategic areas certainly I mean, the areas, we called out such as.

Speaker Change: The foreign exchange such as payments such as supporting trade. We do expect also growth in as Bowen mentioned earlier and kept in market activity, if if and when rates come come down we see progress in this area of the fee income space. Clearly, Japan Emmis focused itself. The kind of the message is that India areas, where theyre focusing strategically yes in the areas, where they have exited or. Or are downsizing then this would be a non strategic areas that they would continue doing. Downsizing.

Speaker Change: We do expect also growth in as Bowen mentioned earlier and kept in market activity, if if and when rates come come down we see progress in this area of the fee income space. Clearly, Japan Emmis focused itself. The kind of the message is that India areas, where theyre focusing strategically yes in the areas, where they have exited or. Or are downsizing then this would be a non strategic areas that they would continue doing.

Speaker Change: Clearly, Japan Emmis focused itself. The kind of the message is that India areas, where theyre focusing strategically yes in the areas, where they have exited or. Or are downsizing then this would be a non strategic areas that they would continue doing.

Speaker Change: The kind of the message is that India areas, where theyre focusing strategically yes in the areas, where they have exited or. Or are downsizing then this would be a non strategic areas that they would continue doing.

Speaker Change: Or are downsizing then this would be a non strategic areas that they would continue doing.

Speaker Change: Downsizing.

Aman Rakkar: Okay. Thank you so much.

Speaker Change: Listen, I just wanted to say thank you all for joining. I also want to just say, look, I'm clearly-- I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2020-- 2008 and 3 share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Noel Quinn: Listen, I just wanted to say thank you all for joining. I also want to just say, look, I'm clearly-- I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2020-- 2008 and 3 share buybacks.

Speaker Change: Yeah sure. Listen. I just wanted to say thank you all for joining I also want to just say look I'm. Clearly I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: Listen. I just wanted to say thank you all for joining I also want to just say look I'm. Clearly I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: I just wanted to say thank you all for joining I also want to just say look I'm. Clearly I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: Clearly I'm really pleased that we've had a record profit year in 2023. And the best returns that we've had for a decade. Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: And the best returns that we've had for a decade.

Speaker Change: Really pleased we were able to reward our loyal shareholders with $19 billion of capital returns to our shareholders in respect to 2023. This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: This included the best full year dividend since 2000 22000 of nights. Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: Free share buybacks. We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline. I want you in no doubt on that. We expect to have further opportunities to grow revenue and we are very focused on it because we've come out of the 4-year transformation phase with a very strong focus on growth. We continue to target a mid-teens ROTE in 2024. And I just want to say thank you for joining us. And Neil and the team are available should you need them. I hope to see many of you here in Hong Kong in April when we hold our inaugural Global Investment Summit looking forward to being back here at the end of March and for the Investment Summit in early April. Thank you all very much.

Speaker Change: We still expect to have substantial distribution capacity going forward. And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: And we are committed to cost discipline I want you in no doubt on that.

Speaker Change: We expect to have further opportunities to grow revenue and we are very focused on it because we've come out of the full year of transformation phase with a very strong focus on growth. We continue to target a mid teens ROE team in 2024. And I just want to say, thank you for joining us and Neil and the team are available should you need them. Hope to see many of you here in Hong Kong in April when we hold our inaugural global investment summit looking forward to being back here at the end of March and for the investment summit in early April. Thank you all very much.

Speaker Change: We continue to target a mid teens ROE team in 2024. And I just want to say, thank you for joining us and Neil and the team are available should you need them. Hope to see many of you here in Hong Kong in April when we hold our inaugural global investment summit looking forward to being back here at the end of March and for the investment summit in early April. Thank you all very much.

And I just want to say thank you for joining us. And Neil and the team are available should you need them. I hope to see many of you here in Hong Kong in April when we hold our inaugural Global Investment Summit looking forward to being back here at the end of March and for the Investment Summit in early April. Thank you all very much.

Speaker Change: And I just want to say, thank you for joining us and Neil and the team are available should you need them. Hope to see many of you here in Hong Kong in April when we hold our inaugural global investment summit looking forward to being back here at the end of March and for the investment summit in early April. Thank you all very much.

Speaker Change: Hope to see many of you here in Hong Kong in April when we hold our inaugural global investment summit looking forward to being back here at the end of March and for the investment summit in early April. Thank you all very much.

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

Speaker Change: Thank you for coming. Thank you ladies and gentlemen, you may now disconnect the call.

Speaker Change: Thank you ladies and gentlemen, you may now disconnect the call.

[music]. Yeah.

Speaker Change: Yeah.

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