Q1 2024 HSBC Holdings PLC Earnings Call

April 30, 2024

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Operator: The Analyst and Investor Webinar on the 2024 Q1 results for HSBC Holdings plc will begin in two minutes. Following the presentation, there will be the opportunity to ask questions to HSBC's executive directors. For analysts and investors joining via the Zoom link provided, please use the raise hand function in Zoom to register your interest in asking a question. You may raise your hand now or at any other time during the call. Please ensure your camera is also turned on. If you're invited to ask a question, please accept the prompt to unmute your line. Please note that it will not be possible to ask a question if you are joining via the webinar link on HSBC's website. Welcome, ladies and gentlemen, to the Analyst and Investor Webinar on the 2024 Q1 results for HSBC Holdings plc.

Operator: The Analyst and Investor Webinar on the 2024 First Quarter Results for HSBC Holdings PLC will begin in two minutes. Following the presentation, there will be the opportunity to ask questions to HSBC's Executive Directors. For analysts and investors joining via the Zoom link provided, please use the raise hand function in Zoom to register your interest in asking a question. You may raise your hand now or at any other time during the call.

Oh analyst and Investor Webinar on the 'twenty 'twenty four that's closer to about 400, <unk> Holdings plc will begin in two minutes.

Following the presentation that will be the opportunity to ask question I hate to MPC executive director.

But unless that investors joining bothers seem like provided turnkey device hand function and stadiums to watch a field trial and asking a question you.

You may raise your hand, now or any other time during the call.

Operator: Please ensure your camera is also turned on. If you're invited to ask a question, please accept the prompt to unmute your line. Please note that it will not be possible to ask a question if you are joining via the webinar link on HSBC's website.

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Operator: If you're invited to ask a question, please accept the prompt to unmute your line. Please note that it will not be possible to ask a question if you are joining via the webinar link on HSBC's website. Welcome, ladies and gentlemen, to the Analyst and Investor Webinar on the 2024 Q1 results for HSBC Holdings plc. For your information, this webinar is being recorded. We are now ready to start the webinar, so I will hand over to Mark Tucker, Group Chairman.

Speaker Change: If you were looking to ask a question. Please.

Speaker Change: So on mute your line.

Speaker Change: Please note that it will not be possible to ask a question. If you are joining by the webinar link on <unk> website.

Speaker Change: Yeah.

Operator: ?? ?? ?? Welcome.

Speaker Change: [music].

Operator: Ladies and gentlemen, this is the Analyst and Investor webinar on the 2024 first quarter results for HSBC Holdings PLC. For your information, this webinar is being recorded. We are now ready to start the webinar, so I will hand over to Mark Tucker, Group Chairman.

Speaker Change: Yeah.

Speaker Change: [music].

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Speaker Change: Okay.

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Mark Tucker: Good morning to those of you in London and good afternoon to those of you in Hong Kong. I'm joining you today from London and have with me Noel and Georges. I'll be making some short opening remarks before handing it over to Noel. As you may have already seen, we have announced today that Noel has informed the board of his intention to retire from the bank after nearly five years in the role.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [noise].

Speaker Change: [noise] welcome, ladies and gentlemen to the analysts and investors on the 'twenty 'twenty four first quarter results for HSBC Holdings plc the orange.

Operator: For your information, this webinar is being recorded. We are now ready to start the webinar, so I will hand over to Mark Tucker, Group Chairman.

Speaker Change: Imagine this webinar is being recorded we are now ready to start the webinar. So I will hand over to Mark Tucker Group Chairman.

Mark Tucker: The board and I would like to pay tribute to Noel's exceptional leadership during that time. As Group Chief Executive, he drove both our transformation strategy... as well as creating a simpler, more focused business through the disposal of assets in the US, France, and Canada. This has enabled us to deliver an improved performance, achieving record profits last year, and create a platform for future growth and development. Noel, who you'll hear from in a second, has decided it's the right time to step back and find a better balance between his personal and business commitments.

Mark Tucker: Good morning to those of you in London, and good afternoon to those of you in Hong Kong. I'm joining you today from London and have alongside me Noel and Georges. I'll be making some short opening remarks before handing over to Noel. As you may have already seen, we've announced today that Noel has informed the board of his intention to retire from the bank after nearly five years in the role. The board and I would like to pay tribute to Noel's exceptional leadership during that time. As Group Chief Executive, he drove both our transformation strategy as well as creating a simpler and more focused business through the disposal of assets in the US, France, and Canada. This has enabled us to deliver an improved performance, achieving record profits last year, and create a platform for future growth and development.

Good morning to those of you in London and good afternoon to those of you in Hong Kong.

Mark Tucker: I'm joining you today from London and have alongside me know enjoys.

Mark Tucker: I'll be making some short opening remarks before handing over to note.

Speaker Change: As you may have already seen we've announced today to know has informed the board.

Speaker Change: All of his intention to retire from the bank after nearly five years in a row.

Speaker Change: The board and I would like to pay tribute to and that was exceptional leadership during that time.

Speaker Change: As group Chief Executive he just that's our transformation strategy.

Speaker Change: It's about creating a simpler more focused business through.

Speaker Change: Through the disposal of assets in the U S.

Mark Tucker: As you would expect, the board keeps succession planning under constant review. We have already started a robust and rigorous process to find our next Group Chief Executive. This process will look at both internal and external candidates.

Speaker Change: Comps in Canada.

Speaker Change: This has enabled us to deliver an improved performance achieving record profits last year and create a platform for future growth and development.

Mark Tucker: Noel, who you'll hear from in a second, has decided it's the right time to step back and find a better balance between his personal and business commitments. As you would expect, the board keeps succession planning under constant review. We already have started a robust and rigorous process to find our next group chief executive. This process will look at both internal and external candidates. I'm very pleased that Noel has agreed to remain in his role while this process takes place, ensuring a smooth and orderly transition. On a personal note, I'd like to thank Noel for his unwavering commitment and dedication to HSBC, which he joined 37 years ago. Noel, it's been a pleasure and privilege to work with and alongside you.

Speaker Change: Now to who do you who you'll hear from in a second has decided it's lifetime to.

Mark Tucker: I'm very pleased that Noel has agreed to remain in his role while this process takes place, ensuring a smooth and orderly transition. And on a personal note, I'd like to thank Noel for his unwavering commitment and dedication to HSBC, which he joined 37 years ago. Noel, it's been a pleasure and privilege to work with and alongside you. Thank you, Mark.

Speaker Change: To step back and find a better balance between his personal.

Speaker Change: These commitments.

Speaker Change: I would expect the board keeps succession planning under constant review.

Speaker Change: We already have started a robust and rigorous process to find our next group Chief executive.

Speaker Change: This process will look at both internal and external candidates.

Speaker Change: Yeah.

Speaker Change: I think pleasing, though it has agreed to a made in his role while this process takes place.

Noel Quinn: I'm very grateful for your support, guidance, friendship, and partnership.

Speaker Change: Ensuring a smooth and orderly transition.

Speaker Change: And on a personal note I'd like to thank now for his unwavering commitment and dedication to HSBC was enjoying 37 years ago.

Noel Quinn: I'm proud of what my HSBC colleagues and I have achieved together over the past five years. During that period, we have hit some significant milestones, such as record profits last year, the strongest returns in a decade, and the highest dividend since 2008. As Mark mentioned, we have created a more focused business, and I believe we have built a strong platform for the bank's next phase of development and growth. That's why I feel this is the right time to step back, to find a better balance between my personal and business commitment, with the intention going forward after a break to pursue a portfolio career when I reflect back on the last 37 years.

Speaker Change: Noticed that pleasure and privilege to work alongside you. Thank you Mark Thank you.

Noel Quinn: Thank you, Mark. Thank you. I'm very grateful for your support, guidance, friendship, and partnership. I'm proud of what my HSBC colleagues and I have achieved together over the past five years. Over that period, we have hit some significant milestones. Record profits last year, the strongest returns in a decade, and the highest dividends since 2008. As Mark mentioned, we have created a more focused business, and I believe we have built a strong platform for the bank's next phase of development and growth. That's why I feel this is the right time to step back, to find a better balance between my personal and business commitments with the intention going forward after a break of pursuing a portfolio career.

Speaker Change: Okay.

Speaker Change: I'm very grateful for your support guidance friendship and partnership.

Speaker Change: I'm proud of what my hedge SBC colleagues and I have achieved together over the past five years.

Speaker Change: Over that period, we've hit some significant milestones record profits last year.

Speaker Change: <unk> returns in a decade.

Speaker Change: And the highest dividend since 2000 and nights.

Speaker Change: As Mark mentioned.

Speaker Change: We have created a more focused business and I believe we have built a strong platform for the banks next phase of development and growth.

Noel Quinn: I have held intensive leadership roles, particularly since I took over the UK Commercial Bank in October of 2008. After 16 years of intense leadership, I'm ready for a change, but it's also a natural inflection point for the bank.

Speaker Change: That's why I feel this is the right time to step back.

Speaker Change: To find a better balance.

Between my personal and business commitments.

Speaker Change: With the intention going forward after a break of pursuing a portfolio career.

Noel Quinn: When I reflect back on the last 37 years, I have held intensive leadership roles, particularly since I took over the UK Commercial Banking in October 2008. After 16 years of intensive leadership, I'm ready for a change. It's also a natural inflection point for the bank as it comes to the end of the current transformation phase. It's an ideal time to bring in new leadership. The board has now started a process to find my successor, and I'm very happy to continue in my role as that process takes place. Rest assured, I will be working hard to ensure a smooth and orderly transition for my successor and to keep the momentum going in this business, as you have seen in Q1. Until then, it's business as usual. Let's now turn to our Q1 results, which have showed continued progress.

Noel Quinn: As we come to the end of the current transformation phase, it's an ideal time to bring in new leadership. The board has now started a process to find my successor. And I'm very happy to continue in my role as that process takes place. Rest assured, I will be working hard to ensure a smooth and orderly transition for my successor and to keep the momentum going in this business, as you have seen in Q1. Until then, it's business as usual. So let's now turn to our Q1 results, which show continued progress. We had a good first quarter.

Speaker Change: When I reflect reflect back over the last 37 years.

Speaker Change: I have held intensive leadership roles.

Speaker Change: Particularly since I took over the U K commercial bank.

Speaker Change: In October of 2000 and night.

Speaker Change: After 16 years of intensive leadership army for a change.

Speaker Change: But it's also a natural inflection point for the bank.

Speaker Change: As it comes to the end of the current transformation phase.

Speaker Change: It's an ideal time to bring in new leadership.

Speaker Change: The board and I started a process probably my successor.

Noel Quinn: Reported profit before tax was $12.7 billion, excluding notable items. Profit before tax was $9 billion. Our return on tangible equity was 16.4%, excluding notable items. I'm also pleased with the further capital distributions of $8.8 billion, which brings the total amount of distributed capital by way of dividends and buyback over the last 15 months to almost $28 billion. And we are on track to meet all of our previously communicated guidance for 2024. I will now hand it over to George to take you through the numbers.

Speaker Change: And I'm very happy to continue in my role.

Speaker Change: As that process takes place.

Speaker Change: Rest assured I will be working hard to ensure a smooth and orderly transition for my successor.

Speaker Change: To keep the momentum going in this business as you have seen in Q1.

Speaker Change: Until it.

Speaker Change: It's business as usual.

Speaker Change: So, let's now turn to our Q1 results, which showed continued progress.

Noel Quinn: We had a good Q1. Reported profit before tax was $12.7 billion. Excluding notable items, profit before tax was $9 billion. Our return on tangible equity was 16.4%, excluding notable items. I'm also pleased with the further capital distributions of $8.8 billion, which brings the total amount of distributed capital by way of dividends and buybacks over the last 15 months to almost $28 billion. We are on track to meet all of our previously communicated guidance for 2024. I will now hand over to George to take you through the numbers.

Speaker Change: We had a good first quarter.

Speaker Change: Reported profit before tax was $12 7 billion.

Georges Elhedery: I'd like to open by paying tribute to the enormous contribution Noel has made to the bank. I've greatly enjoyed working alongside him, and I know everyone at the Bank has appreciated his strong and effective leadership. I'm also grateful for the support you have shown me personally since my appointment as CFO 15 months ago. The board has announced the process to find a successor, and I know Noel and I will continue to remain very focused on the job at hand until that process has been completed.

Speaker Change: Excluding notable items profit before tax was $9 billion.

Our return on tangible that could see was 16, 4% excluding notable items.

Speaker Change: I'm also pleased with the further capital distributions of eight by $8.8 billion.

Speaker Change: Which brings the total amounts of distributed capital by way of dividends and buybacks over the last 15 months, so almost $28 billion.

Georges Elhedery: Turning now to the numbers, reported profit before tax of $12.7 billion was down $0.3 billion on the first quarter of 2023 on a constant currency basis. Excluding notable items, profit before tax was $9 billion, down $0.4 billion on last year's first quarter. On an annualized basis, we deliver a return on tangible equity of 26.1%, or 16.4% excluding notable items. We completed the $2 billion share buyback announced in February in two months. This means that...

Speaker Change: And we are on track to meet all of our previously communicated guidance for 2024.

Speaker Change: I will now hand over to George to take you through the numbers.

Georges Elhedery: Thank you, Noel. I'd like to open by paying tribute to the enormous contribution Noel has made to the bank. I've greatly enjoyed working alongside him, and I know everyone at the bank has appreciated his strong and effective leadership. I'm also grateful for the support he has shown me personally since my appointment as CFO 15 months ago. The board has announced a process to find a successor, and I know Noel and I will continue to remain very focused on the job at hand until that process has been completed. Turning now to the numbers. Reported profit before tax of $12.7 billion was down $0.3 billion on Q1 2023 on a constant currency basis. Excluding notable items, profit before tax was $9 billion, down $0.4 billion on last year's first quarter.

George: Thank you Malone.

George: I'd like to open by paying tribute to the enormous contribution to Noel has made to the bank.

George: Great enjoyed working alongside him.

George: And I know everyone that the bank has appreciated this strong and effective leadership.

George: I'm also grateful for the support he has shown me personally since my appointment as CFO 15 months ago.

Georges Elhedery: Since the end of 2022, we have bought back 6% of our outstanding shares, and the trend of strong shareholder distributions continues this quarter. We have announced, as Noel said, a further $8.8 billion of distributions consisting of a First Interim Dividend for the 24th of 10 cents per share. The special dividend of $0.21 per share from the Canada sale proceeds and a new share buyback of up to $3 billion, which we plan to begin right after the AGM and complete within three months.

George: The board has announced a process to find the successor and I know loan and I will continue to remain very focused on the job at hand.

George: Until that process has been completed.

George: Turning now to the numbers.

George: Reported profit before tax of $12 7 billion was down <unk> 3 billion Bruce on the first quarter of 2023 on a constant currency basis.

George: Excluding notable items profit before tax was $9 million down <unk> $4 billion on last year's first quarter.

Georges Elhedery: On an annualized basis, we delivered a return on tangible equity of 26.1% or 16.4% excluding notable items. We completed the $2 billion share buyback announced in February in two months. This means that since the end of 2022, we have bought back 6% of our outstanding shares. The trend of strong shareholder distributions continues this quarter. We have announced, as Noel Quinn said, a further $8.8 billion of distributions consisting of first interim dividend for 2024 of $0.10 per share, the special dividend of $0.21 per share from the Canada sale proceeds, and a new share buyback of up to $3 billion, which we plan to begin right after the AGM and complete within three months.

George: On an annualized basis, we delivered a return on tangible equity of 26, 1%.

Georges Elhedery: Finally, we are reconfirming all of our 2024 guidance, including a mid-teens return on tangible equity, excluding notable items, and our commitment to limit cost growth to around 5% on a target basis. So on the next slide, we have reported profit before tax of $12.7 billion. $4.8 billion gain on the sale of Canada, partly offset by the $1.1 billion impairment on the classification of Argentina as held for sale. Excluding the notable items, profit before tax was nine billion dollars, with revenue growth offset primarily by higher costs in ECB.

George: Or 16, 4% excluding notable items.

George: We completed the $2 billion share buyback announced in February into months.

George: This means that.

George: Since the end of 2022, we have bought back 6% of our outstanding shares.

George: And the trend of strong shareholder distributions continues this quarter.

George: We have announced has always had a further $8 $8 billion of distributions consistent off.

George: First interim dividends for the 24 of 10 cents per share.

George: The special dividend of <unk> 21, 21 cents per share from the Canada sale proceeds.

George: And the new share buyback of up to $3 billion.

Georges Elhedery: Revenue of $20.8 billion, which was up $0.5 billion on the first quarter of last year. Excluding notable items, revenue was $17 billion, which was up $0.5 billion on the first quarter of last year, with growth in banking and AI, partly offset by lower fees and other increases. Within that, we saw high single-digit growth in multi-jurisdictional revenue in the first quarter, which underlines the value of our global network. Banking NII of $11.3 billion was up $0.6 billion on the fourth quarter on a reported FX basis, mainly driven by Argentina Banking NII, as well as the non-recurrence of the cash flow hedge reclassification in the last quarter. Looking ahead to the rest of the year, here are a few things to keep in mind. First,

George: Which we plan to begin right after the AGM and complete within three months.

Georges Elhedery: Finally, we are reconfirming all of our 2024 guidance, including a mid-teens return on tangible equity, excluding notable items, and our commitment to limit cost growth to around 5% on a target basis. On the next slide, reported profit before tax of $12.7 billion included $4.8 billion gain on the sale of Canada, partly offset by the $1.1 billion impairment on the classification of Argentina as held for sale. Excluding the notable items, profit before tax was $9 billion, with revenue growth offset primarily by higher costs and ECLs.

George: Finally, we are reconfirming all of our 2020 for guidance.

George: Including a mid teens return on tangible equity excluding notable items and.

George: And our commitment to limit cost growth.

George: 5% target basis.

So on the next slide reported profit before tax of $12 $7 billion included.

George: <unk> billion dollar gain on the sale of Canada.

George: Partly offset by the $1 1 billion impairment on classification of Argentina as held for sale.

George: Excluding notable items profit before tax was $9 billion with revenue growth.

Georges Elhedery: Our Q1 banking NII included $0.3 billion from Canada, which will not repeat in future quarters due to the completion of the sale in March this year. Second, our first quarter banking NII also included $0.5 billion from Argentina. This contribution will continue to be highly volatile until the sale is completed, which we expect to be within the next 12 months. Please, therefore, do not extrapolate the $1.5 billion run rate for the remainder of the year.

George: It primarily by costs to ECS.

Georges Elhedery: Revenue of $20.8 billion was up $0.5 billion on Q1 last year. Excluding notable items, revenue was $17 billion, which was up $0.5 billion on Q1 last year, with growth in banking NII partly offset by lower fee and other income. Within that, we saw high single-digit growth in multi-jurisdictional revenue in Q1, which underlines the value of our global network. Banking NII of $11.3 billion was up $0.6 billion on Q4 on a reported FX basis, mainly driven by Argentina banking NII as well as the non-recurrence of the cash flow hedge reclassification in the last quarter. Looking ahead to the rest of the year, a few things to keep in mind.

George: Revenue of $28 million.

North of $5 billion on the first quarter of last year.

George: Excluding notable items revenue was $17 billion.

George: It was up north of $5 billion on the first quarter of last year with growth in banking NII, partially offset by lower fee and other income.

Georges Elhedery: Our banking NII guidance assumes a contribution of around $1 billion in full year 2024 for Argentina, which is in line with full year 2023. The Banking NII Outlook has improved in several respects since we announced our full-year results in February. The Hong Kong time deposit mix remains stable as a percentage of customer deposits in the quarter, and markets are now pricing in more modest cuts to interest rates. However, it is still early in the year, and these things can change.

George: Within that we saw high single digit growth in multi jurisdictional revenue in the first quarter, which underlines the value of our global network.

George: Banking NII of 11 $3 billion was up north of $6 billion on the fourth quarter on a reported FX basis, mainly driven by Argentina banking NII as well as the non recurrence of the cash flow hedge reclassification in the last quarter.

Georges Elhedery: So we are maintaining our 2024 banking NII guidance of at least 41 billion. Turning to fee and other income, wholesale transaction banking was down by 9% primarily due to the normalization of FX revenues compared to a very strong foreign exchange performance in the first quarter of last year, which benefited from higher market volatility.

George: Looking ahead to the rest of the year.

Georges Elhedery: First, our Q1 banking NII included $0.3 billion from Canada, which will not repeat in future quarters due to the completion of the sale in March this year. Second, first quarter banking NII also included $0.5 billion from Argentina. This contribution will continue to be highly volatile until the sale is completed, which we expect to be within the next 12 months. Please, therefore, do not extrapolate the $0.5 billion run rate for the remainder of the year. Our banking NII guidance assumes a contribution of around $1 billion in full year 2024 for Argentina, which is in line with full year 2023. Third, the banking NII outlook has improved in several respects since we announced our full-year results in February.

Speaker Change: A few things to keep in mind.

Speaker Change: First.

Speaker Change: Q1 banking NII included <unk> 3 billion from Canada, which will not repeat in future quarters due to the completion of the sale in March this year.

Speaker Change: Second first quarter <unk> also included $1 5 billion from Argentina.

Speaker Change: This contribution will continue to be highly volatile until the sale is completed which we expect to be within the next 12 months.

Georges Elhedery: Fees from Global Pavement Solutions had another good quarter, up by 6%. Wealth is another growth area that had a very good quarter, up by 14% on the same period last year, as our investment continued to drive improved results. Private banking was a standout performer, mainly driven by increased customer activity in brokerage and trading in Asia. But growth and wealth have been broad-based.

Speaker Change: Please therefore do not extrapolate the north of $5 billion run rate for the remainder of the year.

Speaker Change: Our banking NII guidance assumes the contribution of around $1 billion in full year 'twenty four for Argentina, which is in line with full year 2023.

Third.

Speaker Change: The banking NII outlook has improved inhibitor resets since we announced our full year results in February.

Georges Elhedery: To illustrate, we acquired around 135,000 new-to-bank retail wealth customers in Hong Kong in the course; approximately 60% of these were non-residents attracted by our service and product capabilities in Hong Kong. Building on previous quarters, we attracted $27 billion of net new invested assets, of which $19 billion were in Asia. And our insurance new business, CSM, was $0.8 billion, up from $0.4 billion in the first quarter of last year. Expected credit losses were $0.7 billion in the quarter, equivalent to 30 basis points of average loss. These were primarily stage three charges across retail and holds. Additionally, there was a $54 million dollar charge related to our mainland China. Commercial Real Estate Portfolio

Georges Elhedery: The Hong Kong time deposit mix remains stable as a percentage of customer deposits in the quarter, and markets are now pricing in more modest cuts to interest rates. However, it is still early in the year and these things can change. We are maintaining our 2024 banking NII guidance of at least $41 billion. Turning to fee and other income, wholesale transaction banking was down by 9%, primarily due to the normalization of FX revenues compared to a very strong foreign exchange performance in the Q1 of last year, which benefited from higher market volatility. Fees from Global Payment Solutions had another good quarter, up by 6%. Wealth is another growth area that had a very good quarter, up by 14% on the same period last year as our investment continued to drive improved results.

Speaker Change: The Hong Kong time deposit mix remained stable as a percentage of customer deposits in the quarter.

Speaker Change: Markets are now pricing in more modest cuts to interest rates.

Speaker Change: Never.

Speaker Change: It is still early in the year and.

Speaker Change: And these things can change so.

Speaker Change: So we are maintaining our 2024 banking NII guidance.

Speaker Change: Can you just $41 billion.

Speaker Change: Turning to fee and other income.

Speaker Change: Wholesale transaction banking was down by 9% primarily due to the normalization of FX revenues compared to a very strong point change performance in the first quarter of last year, which benefited from higher market volatility.

Speaker Change: He is from global payments solutions had another good quarter.

Speaker Change: By 6%.

Speaker Change: <unk> is another both area that had a very good quarter up by 14% on the same period last year.

Speaker Change: As our investments continued to drive improved results.

Georges Elhedery: Private banking was a standout performer, mainly driven by increased customer activity in brokerage and trading in Asia. Growth in wealth has been broad-based. To illustrate this, we acquired around 135,000 new-to-bank retail wealth customers in Hong Kong in the quarter. Approximately 60% of these were non-residents attracted by our service and product capabilities in Hong Kong. Building on previous quarters, we attracted $27 billion of net new invested assets, of which $19 billion were in Asia. Our insurance new business CSM was $0.8 billion, up from $0.4 billion in Q1 of last year. On credit, expected credit losses were $0.7 billion in the quarter, equivalent to 30 basis points of average loans. These were primarily stage three charges across retail and wholesale.

Georges Elhedery: While challenges remain within the sector, we expect a more benign ECL contribution from it than last year. We remain comfortable with our current level of provisions and continue monitoring developments closely. And we are reconfirming our 2024 ECL guidance of around 40 basis points of average loans, recognizing the overall uncertainty from the flow-through effect of high rates on the economy. Next, we're on track to meet our target of limiting 2024 cost growth to around 5%.

Speaker Change: Private banking was a standout performer, mainly driven by increased customer activity in brokerage and trading in Asia, but growth in wealth has been broad based illustrate this.

Speaker Change: We acquired around 135000, new to bank retail wealth customers in Hong Kong in the quarter.

Speaker Change: Proximity 60% of these were non residence attracted by always service and product capabilities in Hong Kong.

Speaker Change: Building on previous quarters, we attracted $27 billion of net invested assets.

Speaker Change: Of which $19 billion were in Asia.

Georges Elhedery: This quarter's year-on-year cost growth was impacted by three items. First, we chose to pay for our performance-related pay more evenly this year than we did last. This accounted for two percentage points of cost growth this quarter. We do not currently expect the total amount of performance-related pay for 2024 to be significantly different from 2023. Therefore, accrual will be lower over the next three quarters than it was in the same period.

Speaker Change: And our insurance new business CSN was north of $8 billion up from one four.

Speaker Change: $4 billion in first quarter of last year.

Speaker Change: Yeah.

Speaker Change: On credit.

Speaker Change: Expected credit losses were north of $7 billion in the quarter equivalent to 30 basis points of average loans.

Speaker Change: These were primarily stage III charges across retail wholesale.

Georges Elhedery: There was a $54 million charge related to our Mainland China commercial real estate portfolio. While challenges remain within the sector, we expect a more benign ECL contribution from it than last year. We remain comfortable with our current level of provisions and continue monitoring developments closely. We are reconfirming our 2024 ECL guidance of around 40 basis points of average loans, recognizing the overall uncertainty from the flow-through effect of higher rates on the economy. Next, we're on track to meet our target of limiting 2024 cost growth to around 5% on a target basis. This quarter's year-on-year cost growth was impacted by three items. First, we chose to phase the accrual of our performance-related pay more evenly this year than we did last year. This accounted for 2 percentage points of cost growth this quarter.

Speaker Change: There was a $54 million charge related to our mainland China.

Commercial real estate portfolio.

Georges Elhedery: Second, HSBC Innovation Banking contributed to one percentage point of cost growth this quarter as we only acquired SVB UK in the middle of March last year. We intend to provide you with a fuller update on that business at the half year, but I'm pleased that it has good momentum in the UK. We onboarded 183 new-to-bank innovation banking client groups in the quarter, the best quarter since acquisition.

Speaker Change: While challenges remain within the sector, we expect a more benign ECL contribution from it than last year.

Speaker Change: We remain comfortable with our current level of provisions.

Speaker Change: And continue monitoring developments closely.

And we are Reconfirming, our 2024 issued guidance of around 40 basis points of average loans.

Speaker Change: Rising the overall uncertainty from the flow through effect of higher rates on the economy.

Speaker Change: Next we are on track to meet our targets of limiting 2020 forecast growth to around 5%.

Georges Elhedery: Finally, another percentage point of the cost growth in the quarter was due to the Bank of England levy and the incremental FDIC special estimates. We remain committed to cost discipline, and we are reconfirming our guidance of limiting 2024 cost growth to circa 5% on the target basis, inclusive of all the above, on lending and deposits. There was good loan growth in the UK, the Middle East, Mexico, and Asia, excluding Hong Kong. Loan demand in Hong Kong remains subdued, largely due to the high interest rate differential with the mainland.

Speaker Change: The target basis.

Speaker Change: This quarter's year on year cost growth was impacted by three items.

Speaker Change: First.

Speaker Change: We chose to Fay.

Speaker Change: <unk> of our performance related pay.

Speaker Change: Evenly this year than you did last year.

Speaker Change: This accounted for two percentage points of cost growth this quarter.

Georges Elhedery: We do not currently expect the total amount of performance-related pay for 2024 to be significantly different to 2023, so the accrual will be lower over the next 3 quarters than it was in the same period last year. Second, HSBC Innovation Banking contributed to 1 percentage point of cost growth this quarter, as we only acquired SVB UK in the middle of March last year. We intend to provide you with a fuller update on that business at H1, but I'm pleased that it has good momentum. In the UK, we onboarded 183 new-to-bank innovation banking client groups in the quarter, the best quarter since acquisition. Finally, another percentage point of the cost growth in the quarter was due to the Bank of England Levy and the incremental FDIC special assessment.

We do not currently expect the total amount of performance related pay for 224.

Speaker Change: To be significantly different to 2023.

Speaker Change: So the accrual will be lower over the next three quarters than it was in the same period last year.

Speaker Change: Second HSBC innovation banking contributed one percentage point of growth this quarter.

Georges Elhedery: Overall, we continue to expect mid-single-digit loan growth over the medium to long term, but we expect demand to remain subdued in the near term. Deposits were down 2%. This was due to a range of factors, including seasonality, the switch from time deposits to wealth products in Hong Kong, and our deliberate choice to forsake some highly price sensitive deposits.

Speaker Change: As we only acquired Seb U K in the middle of March last year.

Speaker Change: We intend to provide you with a full update on that business at the half year, but I'm pleased that it has good momentum in the U K.

Speaker Change: We on boarded 183, new to bank innovation banking client groups and.

Speaker Change: In the quarter, the best quarter since acquisition.

Speaker Change: Finally, another percentage point of the cost growth in the quarter was due to the bank of England Levy.

Georges Elhedery: Next, our CT1 ratio was 15.2%, up 40 basis points on the fourth. Organic capital generation and the gain from the sale of the Canadian business enabled us to announce $8.8 billion of capital distribution this quarter. This includes a share buyback of up to $3 billion, which is expected to have an impact of around 40 basis points on our CT1 ratio in this. For modeling purposes, please note that the $5.8 billion of dividends announced today, as well as the $5.9 billion in respect of the ordinary dividend announced at the full year results in February, will both be reflected in TNAV in the second quarter at the closing of the sale of HSBC Argentina, which is expected within 12 months.

Speaker Change: And the incremental FDIC special assessment.

Georges Elhedery: We remain committed to cost discipline, and we are reconfirming our guidance of limiting 2024 cost growth to circa 5% on the target basis, inclusive of all the above items. On lending and deposits there was good loan growth in the UK, the Middle East, Mexico, and Asia, excluding Hong Kong. Loan demand in Hong Kong remained subdued, largely due to the high interest rate differential with mainland China. Overall, we continue to expect mid-single-digit loan growth over the medium- to long-term, but we expect demand to remain subdued in the near-term. Deposits were down 2%. This was due to a range of factors, including seasonality, the switch from time deposits to wealth products in Hong Kong, and our deliberate choice to forsake some highly price-sensitive deposits.

Speaker Change: We remain committed to cost discipline, and we are reconfirming, our guidance limiting 2020 for cost growth to circa 5% on the target basis inclusive of all the above items.

Speaker Change: On lending and deposits there was good loan growth in the U K Middle East, Mexico and Asia.

Speaker Change: Excluding Hong Kong London.

Speaker Change: Loan demand in Hong Kong remains subdued.

Lastly, due to the high interest rate differential with mainland China.

Speaker Change: Overall, we continue to expect mid single digit loan growth over the medium to long term.

Speaker Change: But we expect demand to remain subdued in the near term.

Speaker Change: Bose, it's we're down 2%.

Speaker Change: This was due to a range of factors, including seasonality.

Speaker Change: Switch from time deposits to wealth products in Hong Kong.

Speaker Change: And our deliberate choice to forsake some highly price sensitive deposits.

Georges Elhedery: Next, our CET1 ratio was 15.2%, up 40 basis points on the Q4. Organic capital generation and the gain from the sale of the Canadian business enabled us to announce $8.8 billion of capital distributions this quarter. This includes a share buyback of up to $3 billion, which is expected to have an impact of around 40 basis points on our CET1 ratio in the Q2. For modeling purposes, please note that the $5.8 billion of dividends announced today, as well as the $5.9 billion in respect of the ordinary dividend announced at the full year results in February, will both be reflected in TNAV in the Q2.

Georges Elhedery: We will also recognize $4.9 billion of Foreign Exchange Reserve recycling losses subject to any movement in this reserve up until completion. These losses have already been accumulated in capital over the previous years. Therefore, recognition in the P&L will have no impact on C81 nor on T9.

Speaker Change: Net.

Speaker Change: Our CET one ratio was 15, 2% up 40 basis points on the fourth quarter.

Speaker Change: Organic capital generation and the gain from the sale of the Kansas.

Catering business.

Speaker Change: Enabled us to announce eight $8 billion of capital distributions this quarter.

Speaker Change: This includes a share buyback of up to $3 billion.

Georges Elhedery: Finally, looking forward to the rest of the year. Our good first quarter puts us on track, and we are reconfirming all of our 2024 goals. Admitted Returns on Tangible Equity, excluding notable items, banking NII of at least 41 billion dollars, e-sales of around 40 basis points, cost growth limited to around 5% on a target basis, and the 50% dividend payout rate.

Speaker Change: Which is expected to have an impact of around 40 basis points on our CET one ratio in the second quarter.

Speaker Change: For modeling purposes. Please note that the $5 $8 million of dividends announced today as well as the $5 $9 billion in respect of ordinary dividend announced at the full year results in February.

Speaker Change: We'll both be reflected in <unk> in the second quarter.

Georges Elhedery: At closing of the sale of HSBC Argentina, which is expected within 12 months, we will also recognize $4.9 billion of foreign exchange reserve recycling losses subject to any movement in this reserve up until completion. These losses have already been accumulated in capital over the previous years. Therefore, recognition in the P&L will have no impact on CET1 nor on TNAV. Finally, looking forward to the rest of the year, our good Q1 puts us on track, and we are reconfirming all of our 2024 guidance. A mid-teens return on tangible equity, excluding notable items, a banking NII of at least $41 billion, ECLs of around 40 basis points, cost growth limited to around 5% on a target basis, and a 50% dividend payout ratio. With that, Louise, can we please go to Q&A?

Speaker Change: At closing of the sale of HSBC, Argentina, which is expected within 12 months we.

Speaker Change: We will also recognize $4 $9 billion of foreign exchange reserve recycling losses subject to any movement in the reserve up until completion.

Georges Elhedery: And with that, Louise, can we please go to the Q&A? Thank you, Georges.

Operator: Thank you, Georges. If you would like to ask a question today, please use the raised hand function in Zoom. Please also ensure that your camera is turned on.

Speaker Change: These losses have already been accumulated in capital over the previous years.

Speaker Change: Therefore, the recognition in the P&L will have no impact on CET, one node on Tina.

Operator: If you are invited to ask a question, please accept the prompt to unmute your line. If you find your question has been answered, you may remove yourself from the queue by lowering your hand in Zoom. Our first question today comes from Joseph Dickerson at Jeffreys. Please accept the prompt to unmute your line.

Speaker Change: Finally.

Speaker Change: Looking forward to the rest of the year.

Speaker Change: Good first quarter puts us on track and we are Reconfirming all of our 2020 for guidance.

Speaker Change: Teens return on tangible equity excluding notable items.

Joseph Dickerson: Hi, good morning. Thank you for taking the time to answer my questions. And congratulations, Noel, on a great tenure at the bank. And well done on the ROE and the capital return. I guess just in terms of my question, the TD migration in Hong Kong, if you go back to the way you were computing it previously, actually looks like it improved quarter on quarter and certainly under the new definition has stabilized. I think it's slide 17, if I'm not mistaken, in the report and the presentation.

Speaker Change: Banking NII of <unk> $41 billion.

Speaker Change: Sales of around 40 basis points.

Speaker Change: Cost growth limited to.

Speaker Change: 5% on a target basis.

Speaker Change: 50% dividend payout ratio.

Speaker Change: And with that we can we please go to Q&A.

Operator: Thank you, Georges. If you would like to ask a question today, please use the raise hand function in Zoom. Please also ensure your camera is turned on. If you're invited to ask a question, please accept the prompt to unmute your line. If you find your question has been answered, you may remove yourself from the queue by lowering your hand in Zoom. Our first question today comes from Joseph Dickerson at Jefferies. Please accept the prompt to unmute your line.

Speaker Change: Thank you Joyce if you'd like to ask a question today. Please use the rate assumption.

Please also ensure camera as Todd if.

Joyce: If you are invited to ask questions. Please accept prompt tell me your line. If you find your question has been answered.

Georges Elhedery: Is that a little bit better than your expectations were a few months ago? I know when I was in Hong Kong recently, it sounded like things were starting to stabilize. But is that better than where you were thinking a few months ago? And then secondly, on the buybacks, is the $3 billion number due more to the calendar effect, or is that kind of a, are you looking to kind of boost the run rate there from the $2 billion a quarter?

Joyce: As yourself from the queue by lowering your hand in June.

Joyce: Our first question today comes from.

Jefferies: At Jefferies. Please accept the pump 20, you'll die.

Joseph Dickerson: Hi. Good morning. Thank you for taking my questions. Congrats Noel on a great tenure at the bank. Well done for the ROE and the capital return. I guess just in terms of my question, the TD migration in Hong Kong, if you go back to the way you were computing it previously, actually looks like it improved quarter on quarter and certainly under the new definition has stabilized. I think it's slide 17, if I'm not mistaken, in the presentation. Is that a little bit better than where your expectations were a few months ago? I know when I was in Hong Kong recently, it sounded like things were starting to stabilize.

Jefferies: Hi, Good morning, Thank you for taking my questions and congrats on a great tenure.

Jefferies: At the bank.

Jefferies: And Dan for the ROE and capital return I guess just in terms of my question.

Georges Elhedery: So first on the time-deposit reclassification. We have actually reclassified some private bank term deposits into time deposits. This is due to the observation of their behavior and the recognition that they're better classified as time deposits.

Speaker Change: GB migration in Hong Kong, if you go back to.

Speaker Change: The way you are.

Speaker Change: Computing it previously actually looks like Korlym.

Georges Elhedery: This rebases the number, but as you can see from the two charts we have, it does not affect the trend. So, the trend that we've seen under both classifications is the same, and we've seen the first quarter stable quarter-on-quarter. It's too early to call it a peak, but we've always expected migration this year to be slower than what we saw last year.

Speaker Change: Quarter on quarter, and certainly under the new definition.

Speaker Change: It has stabilized.

Speaker Change: Slide 17, if I'm not mistaken.

Speaker Change: And the presentation is that a little bit better than what are your expectations for a few months ago. When I was in Hong Kong recently, it sounded like things were starting to stabilize but does that.

Joseph Dickerson: I know when I was in Hong Kong recently, it sounded like things were starting to stabilize. Is that better than where you were thinking a few months ago? Secondly, on the buybacks, is the $3 billion number due more to the calendar effect, or are you looking to kind of boost the run rate there from the $2 billion a quarter? Thank you.

Georges Elhedery: And this just confirms the trend change from what we've seen in full year 2020. As regards your buyback question, so the short answer is yes, this is indeed due to calendar effects. We just completed a two billion buyback in two months. That's about two billion a month; that is the fastest run rate we've done in terms of share buybacks ever. We are now announcing a three billion buyback which we intend to do over the next three months, starting after the AGM.

Joseph Dickerson: Is that better than where you were thinking a few months ago? Secondly, on the buybacks, is the $3 billion number due more to the calendar effect, or are you looking to kind of boost the run rate there from the $2 billion a quarter? Thank you.

Speaker Change: Ben.

Speaker Change: Where you were thinking a few months ago, and then secondly on the buybacks is.

Speaker Change: Is the 3 billion number due more to the calendar effect or is that kind of are you looking to kind of boost the run rate there from the $2 billion a quarter. Thank you.

Georges Elhedery: Thank you, Joseph Dickerson. So first on the time deposit reclassification, we have actually reclassified some private bank term deposits to time deposits. This is due to the observation of their behavior and the recognition that they're better classified as time deposits. This rebases the number, but as you could see from the two charts we have, it does not affect the trend. The trend that we've seen under both classifications is the same, and we've seen Q1 stable quarter on quarter. It's too early to call it a peak, but we've always expected migration this year to be slower than what we've seen last year. This just confirms the trend change from what we've seen in full year 2023. As regards your buyback question, the short answer is yes.

Georges Elhedery: Thank you, Joseph. So first on the time deposit reclassification, we have actually reclassified some private bank term deposits to time deposits. This is due to the observation of their behavior and the recognition that they're better classified as time deposits. This rebases the number, but as you could see from the two charts we have, it does not affect the trend. The trend that we've seen under both classifications is the same, and we've seen Q1 stable quarter on quarter. It's too early to call it a peak, but we've always expected migration this year to be slower than what we've seen last year. This just confirms the trend change from what we've seen in full year 2023. As regards your buyback question, the short answer is yes.

Speaker Change: Thank you Joseph So first on the time deposit weakness specification.

Georges Elhedery: We will see how the run rate goes. Hopefully, it will remain at the one billion dollar run rate. We will see how it goes. As regards any future amount of buyback or whether we're doing the buyback, one thing, it remains our intention, to return excess capital to our shareholders through a rolling series of share buybacks. And second, we will decide on a quarter by quarter basis based on our capital outlook, the loan growth outlook, and other parameters as and when every quarter.

Joseph: We have actually reclassified some private bank term deposits to time deposits. This is due to the observation of their behavior and the recognition that there.

Joseph: They're better classified as time deposits.

Joseph: Re <unk> the number but as you could see from the two charts we have.

Joseph: It does not affect the trend.

Joseph: So therefore, the trend that we've seen under both classifications is the same and we've seen in the first quarter stable quarter on quarter.

Joseph: It's too early to call it a peak, but we've always like I did.

Operator: Thank you, Joseph. Next question. As a reminder...

Joseph: Migration this year to be slower than what we've seen last year.

Operator: As a reminder, if you would like to ask a question, please use the raise hand function in Zoom. Our next question today comes from Raul Sinha at J.P. Morgan. Please accept the prompt to unmute your line.

Joseph: And this just confirms that the the trend.

Joseph: Trend change from what we've seen in full year 2023.

Speaker Change: As regards your buyback question.

Georges Elhedery: This is indeed due to calendar effects. We just completed a $2 billion buyback in two months. That's about $1 billion a month. That is the fastest run rate we've done in terms of share buybacks ever. We are now announcing a $3 billion buyback, which we intend to do over the next three months, starting after AGM. We will see how the run rate goes. You know, it will remain at the $1 billion run rate. We will see how it will go. As regards any future amount of buyback or whether we're doing buyback, one, it remains our intention to return excess capital to our shareholders through a rolling series of share buyback.

Speaker Change: So the short answer is yes. This is indeed due to calendar effects, we just completed two months buyback.

Raul Sinha: Hi morning, everybody. Thanks very much for taking my questions, maybe two from me as well. Just staying, George, on this point about distributions and looking at the sort of moving parts for capital, one of the interesting things in this quarter was the move up in RWAs. I was wondering if you could give us a little bit more color on the growth in RWAs. There's $7 billion of increase driven by asset quality trends, I think you're calling out that it's predominantly in Asia, you know, what should we think about the sort of... outlook for RWA growth from here, even if loan growth is muted, just to get a sense of, you know, the amount of capital that you will have in quantum terms for distributions.

Speaker Change: Sorry, 2 billion buyback in two months, that's about 2 billion a month that is the fastest one way we've done in terms of share buybacks ever. We are now announcing a 3 billion buyback, which we intend to.

Speaker Change:

Speaker Change: To do over the next three months starting after the AGM.

Speaker Change: We will see how the run rate goes.

Speaker Change: It will remain at the $1 billion run rate, we will see.

Speaker Change: Which will go.

Speaker Change: As regards any future amount of buyback or whether we're doing the buyback.

Speaker Change: It remains our intention.

Speaker Change: To return excess capital to our shareholders through a rolling series of share buyback and second we will decide on a quarter by quarter basis based on our capital outlook the loan growth outlook and other.

Georges Elhedery: Second, we will decide on a quarter-by-quarter basis based on our capital outlook, the loan growth outlook, and other, you know, parameters, as in when every quarter.

Joseph Dickerson: Thank you.

Speaker Change: Other parameters.

Noel Quinn: Absolutely.

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

Speaker Change: As and when every quarter.

Operator: As a reminder, if you would like to ask a question, please use the raise hand function in Zoom. Our next question today comes from Raul Sinha at JP Morgan. Please accept the prompt to unmute your line.

Raul Sinha: And I guess the second question to Noel, just maybe a question for your broader thoughts, Noel, in the five years, this seeding has been pretty extraordinary, not just for HSBC but I guess for a lot of people, you know, given in your markets given the pandemic. But when we look at where HSBC is now, you know, you exited Canada, you renounced Argentina, and you're in the process of exiting quite a few smaller markets, return on equity is already in the mid-teens.

Speaker Change: Yeah.

Speaker Change: Thank you Phil next question please.

Speaker Change: Linda if you'd like to ask a question. Please use the raise from functional gene.

Speaker Change: Our next question today comes from Raul Sinha at Jpmorgan.

Raul Sinha: Hi. Morning, everybody. Thanks very much for taking my questions. Maybe two from me as well. Just staying, Georges, on this point on distributions and looking at the sort of moving parts for capital. One of the interesting things in this quarter was the move up in RWAs. I was wondering if you could give us a little bit more color on the growth in RWAs. There's $7 billion of increase, driven by asset quality trends. I think you're calling out it's predominantly in Asia. You know, what should we think about the sort of outlook for RWA growth from here, even if loan growth is muted, just to get a sense of, you know, the amount of capital that you will have in quantum terms for distributions.

Rahul Sinha: Hi. Morning, everybody. Thanks very much for taking my questions. Maybe two from me as well. Just staying, Georges, on this point on distributions and looking at the sort of moving parts for capital. One of the interesting things in this quarter was the move up in RWAs. I was wondering if you could give us a little bit more color on the growth in RWAs. There's $7 billion of increase, driven by asset quality trends. I think you're calling out it's predominantly in Asia. You know, what should we think about the sort of outlook for RWA growth from here, even if loan growth is muted, just to get a sense of, you know, the amount of capital that you will have in quantum terms for distributions.

Raul Sinha: The province to Amit your line.

Hi, good morning, everybody. Thanks, very much for taking my questions, maybe two from me as well.

Raul Sinha: Just anything goes wrong on this point on distributions and looking at the moving parts for capital one of the interesting things in this world.

Raul Sinha: You're buying back stock at $3 billion a quarter. You've got a special dividend as well. I guess what I'm really interested in is, from here onwards, what do you think is left to do for the group to kind of progress?

Raul Sinha: He brought in order to be raised.

Amit: I was wondering if you could give us a little bit more color on.

Amit: The growth in all of Europe.

Amit: There's 7 billion increase driven by our quality trends I think you're calling out is predominantly in Asia.

Amit: But you think about sort.

Amit: Sort of.

Georges Elhedery: start with your first question. So on RWA outlook, the RWA growth we called on a quote-on-quote basis $24 billion First, about 40% of it relates to lending and other asset growth. And as you can see from our lending book, we've grown our lending book by $5 billion. There's a number of areas of growth that contributed to around 40% of it, $9 billion.

Amit: Outlook for <unk> growth from here, even if you don't grow the stupid.

Amit: Just to get a sense to get up to the amount of capital that you will have in concrete terms for distributions.

Raul Sinha: I guess the second question to Noel, just maybe a question for your broader thoughts, Noel. You know, the five years preceding have been pretty extraordinary, not just for HSBC, but I guess for a lot of people, you know, given in your markets, given the pandemic. But when we look at where HSBC is now, you know, you've exited Canada, you've announced Argentina. You're in the process of exiting quite a few smaller markets. Return on tangible equity is already in the mid-teens. You're buying back stock at $3 billion a quarter. You've got a special dividend as well. I guess what I'm really interested in is from here onwards, what do you think is left to do for the group to kind of progress? Thank you.

Rahul Sinha: I guess the second question to Noel, just maybe a question for your broader thoughts, Noel. You know, the five years preceding have been pretty extraordinary, not just for HSBC, but I guess for a lot of people, you know, given in your markets, given the pandemic. But when we look at where HSBC is now, you know, you've exited Canada, you've announced Argentina. You're in the process of exiting quite a few smaller markets. Return on tangible equity is already in the mid-teens. You're buying back stock at $3 billion a quarter. You've got a special dividend as well. I guess what I'm really interested in is from here onwards, what do you think is left to do for the group to kind of progress? Thank you.

Speaker Change: And I guess the second question to know just maybe a question for your broader thoughts snow.

Speaker Change: Five years.

Speaker Change: Proceeding have been pretty extraordinary not just for HSBC, but I guess.

Speaker Change: A lot of people you know given in your markets given the pandemic, but when we look at HSBC now you've exited Canada, you announced or Argentina during the process of exiting quite a few smaller markets.

Georges Elhedery: Then we've had a $5 billion market twist, RWA growth. This is due to a pickup in MSS activity against a subdued 4Q. And it's more in line with their activity levels in the first 3 quarters of the year, if you want.

10 on tangible equity is already in the mid teens you're.

Speaker Change: You're buying back stock at $3 billion, a quarter got a special dividend as well.

Georges Elhedery: And this is the normalization of the market's activity. And then there is $7 billion, which we classified broadly as asset quality. First, asset quality is an ongoing exercise.

Speaker Change: I guess, what I'm really interested in is from here onwards, what do you think.

Speaker Change: It's left to do for the group to kind of progress. Thank you.

Georges Elhedery: Thank you, Raul. I'll start with your first question, Raul. First, on RWA outlook. Of the RWA growth we called on a quote-unquote basis, $24 billion. First of all, 40% of it relate to lending and other asset growth. As you can see from our lending book, we've grown our lending book by $5 billion. There's a number of areas of growth that contributed to around 40% of it, $9 billion. We've had a $5 billion market risk RWA growth. This is due to a pickup in MSS activity, against a subdued Q4, and it's more in line with their activity levels in Q1, in the first three quarters of the year, if you want. This is the normalization of the market's activity.

Georges Elhedery: Thank you, Rahul. I'll start with your first question, Raul. First, on RWA outlook. Of the RWA growth we called on a quote-unquote basis, $24 billion. First of all, 40% of it relate to lending and other asset growth. As you can see from our lending book, we've grown our lending book by $5 billion. There's a number of areas of growth that contributed to around 40% of it, $9 billion. We've had a $5 billion market risk RWA growth. This is due to a pickup in MSS activity, against a subdued Q4, and it's more in line with their activity levels in Q1, in the first three quarters of the year, if you want. This is the normalization of the market's activity.

Speaker Change: Thank you Robert.

Speaker Change: First with your first question first on the <unk>.

Speaker Change: So on the <unk> outlook is healthy <unk> growth to be called on a quote unquote the basis $24 billion.

Georges Elhedery: We do this portfolio monitoring review on a regular basis. We have recognized, across a number of geographies and a number of sectors, certain names which we have decided to downgrade on the basis that the interest rate pressure on their cash flows has been more severe. You will not see an equivalent of that downgrade in ECL, and that's mainly because for many of these customers, their balance sheets remain strong. So we're comfortable with their balance sheets, and therefore, there's no ECL impact from this downgrade.

Speaker Change: First about 40% of it related to lending and other asset growth and as you can see from our lending book, we've grown our lending book by 5 billion. There is a number of areas of growth that contributed to around 40% of that $9 billion.

Speaker Change: Then we had the $5 billion market twist <unk> growth. This is due to a pickup in M&A activity.

I guess to subdued for Q and it's more in line with activity levels in the first three quarters of the year. If you want and this is the normalization of.

Georges Elhedery: There is $7 billion, which we classified broadly as asset quality. Now asset quality, first, it is a continuous exercise. We do this portfolio monitoring review on a regular basis. We have recognized across a number of geographies and a number of sectors, certain names which we've decided to downgrade on the basis that the interest rate pressure on their cash flows has been more severe. You will not see an equivalent of that downgrade in ECL, and that's mainly because for many of these customers, their balance sheet remains strong. We're comfortable with their balance sheet, and therefore, there's no ECL implication from this downgrade.

Speaker Change: The market's activity.

Speaker Change: And then there is $7 billion, which reclassified broadly as asset quality.

Georges Elhedery: But just closing the loop, this RWA downgrade, you will see some of it materialize in our Stage 3 loans, where we increased our Stage 3 loans by about $2 billion, and that's exactly the mapping of some of this asset quality.

Speaker Change: No asset quality first it is a continuous exercise we do this portfolio monitoring review on a regular basis.

Speaker Change: We have recognized across a number of geographies and a number of factors certain names, which we've decided to downgrade on the basis that the interest rate pressure on their cash flows has been more severe.

Georges Elhedery: With regard to how we look forward, we're very comfortable where we are today. Our credit metrics remain solid. As I say, the balance sheet of our customers remains strong for a number of them, at least the exposure that is collateralized. We're very comfortable with the level of collateralization and the LTV, and therefore, we do not foresee at this stage today any additional action we should be taking. We will obviously monitor the book on a regular basis, as we always do.

Speaker Change: You will not see an equivalent of that dominate in ECM and that's mainly because for many of these customers their balance sheet remains strong. So we're comfortable with their balance sheet and therefore, there is no ECL implication from this downgrade.

Georges Elhedery: Just closing the loop, this RWA downgrade, you will see some of it materialize in our stage three loans, where we increased our stage three loans by about $2 billion, and that's exactly the mapping of some of this asset quality. With regards to how we look forward, we're very comfortable where we are today. Our credit metrics remain solid. As I say, the balance sheet of our customers remains strong for a number of them, for at least the exposure that is collateralized. We're very comfortable with the level of collateralization and the LTV, and therefore, we do not foresee at this stage today, you know, any additional action we should be taking. We will obviously monitor the book on a regular basis as we always do. Noel?

Speaker Change: Closing the loop. This this all the way down.

Speaker Change: Downgrade you will see some of it materialized in the stage three loans, where we increased our stage three loans by about 2 billion boosted that's exactly the mapping of.

Speaker Change: Some of its asset quality.

Speaker Change: Quality.

Speaker Change: We with regards how we look forward, we're very comfortable where we are today, our credit metrics remained solid.

Noel Quinn: It has certainly been an extraordinary five years, as you say, not just for HSBC but for the world, and I'm really pleased and grateful, and I want to pay tribute to the team for the way they've collectively navigated that and, in the whole process of the external environment, executed a complex but absolutely critical transformation plan over the past five years. And the outcome of that hard work is evident in the financial performance last year and the financial performance in Q1. I also want to say thanks to Mark. You know, with such volatility in the external environment, any CEO needs the support of their chairperson, their advice, and their guidance. And I've had that feeling all the way through.

Speaker Change: As I say the balance sheets of our customers remain strong for a number of them.

Speaker Change: For at least the exposure that is collateralized, we're very comfortable with the level of Collateralization and the LTV and therefore, we do not foresee at this stage today.

Speaker Change: Any additional action, we should be taking we will obviously monitor on a regular basis as we always do.

Noel Quinn: Well, thank you. It has certainly been an extraordinary five years, I should say, not just for HSBC, but for the world. I'm really pleased and grateful, and I want to pay tribute to the team for the way they've collectively navigated that. During that whole process of the external environment, executed on a complex but absolutely critical transformation plan over the past five years. The outcome of that hard work is evident in the financial performance last year and the financial performance in Q1. I also want to say thanks to Mark.

Speaker Change: No.

Speaker Change: Thank you.

Speaker Change: Suddenly bina and extraordinary five years I should say not just HSBC, but for the world and I'm really pleased and grateful I want to pay tribute to the team for the way they've collectively navigated that.

Speaker Change: And during that whole process.

Speaker Change: The external environment.

Speaker Change: Executed on a complex, but absolutely critical transformation plan over the past five years.

Noel Quinn: And I've had the support of the board all the way through in navigating what has been a very complex external environment. But the team, the board, Mark, and I, collectively, have done a good job of navigating it. Now, as I look forward, I'm not going to give a to-do list to my successor, because that is not the fair thing to do to anyone.

Speaker Change: I've come out hard work is evident in.

Speaker Change: The financial performance last year, and the financial performance in Q1.

Noel Quinn: You know, with such volatility in an external environment, any CEO needs the support of their chair, their advice, their guidance, and I've had that all the way through, and I've had the support from the board all the way through in navigating what has been a very complex external environment. The team, the board, Mark, collectively, we've done a good job of navigating it. Now, if I look forward, I'm not going to give a to-do list to my successor because that is not the fair thing to do to anyone. I will give you some thoughts about what we as a team are very much focused on and I'm focused on for as long as I'm still CEO, and that is continuing the momentum.

Speaker Change: I also want to say thanks to him up.

Speaker Change: With such volatility in the external environment.

Speaker Change: Any CEO needs the support of the chair.

Noel Quinn: But I will give you some thoughts about what we as a team are very much focused on, and I'm focused on, for as long as I'm still CEO, and that is continuing the momentum. You don't work as hard as we have for the past five years and then take the eye off the ball at this moment in time.

Speaker Change: Our advice that guidance on iPad or all the way through on our part to support for load all the way through in navigating what has been a very complex external environment.

Speaker Change: But the team the board Mark just collectively we've done a good job navigating it.

Speaker Change: I look forward I'm not going to give.

Speaker Change: I had to do was to do this to my successor, because that is not the first thing to do to anyone but I will give you some thoughts about what we as a team are very much focused on and I'm focused on.

Noel Quinn: So I'm very focused on a smooth, orderly transition. I'm very focused on continued execution of the strategy.

Noel Quinn: I think in on one element of the strategy; we have exited a lot of businesses, a lot of retail banking associations over the past five years. The one thing we've protected whilst doing that is the international core of HSBC. The countries we remain in, and the businesses we remain in are fundamentally now focused on the international nature and essence of HSBC, and we will continue to do that. Our key requirement is to continue to deliver good returns that are sustainable and repeatable whilst also taking advantage of the growth opportunities as they emerge in a world that becomes more stable and that are inherent in our customer franchise.

Noel Quinn: You don't work as hard as we've worked for the past five years and then take the eye off the ball at this moment in time. I'm very focused on a smooth, orderly transition. I'm very focused on continued execution of the strategy. I wanna clarify our thinking on one element of the strategy. We have exited a lot of businesses, a lot of RWAs over the past five years. The one thing we've protected whilst doing that is the international core of HSBC. The countries we remain in, the businesses we remain in, are fundamentally now focused on the international nature and essence of HSBC, and we will continue to do that.

Speaker Change: For as long as I'm sure you'll see a lot is continuing the momentum.

Speaker Change: You don't work as hard as we work for the past five years.

Speaker Change: And then take the eye off the ball at the moment in time, so I'm very focused on a smooth orderly transition.

Speaker Change: I'm very focused on continued execution of the strategy.

Speaker Change: I want to clarify.

Speaker Change: Our thinking on what elements of the strategy, we have exited a lot of businesses a lot of RW ways over the past five years. The one thing we've protected whilst doing that is the international court of HSBC.

Speaker Change: Our countries will remain in the businesses, we remain in a fundamentally not focused on the international nature in essence of HSBC.

Noel Quinn: Our key requirement is to continue to deliver good returns that are sustainable and repeatable, while also taking advantage of the growth opportunities as they emerge in a world that becomes more stable and that are inherent in our customer franchise. Therefore, we're very focused on continuing the development of wealth, our transaction banking capabilities, our global wholesale banking capabilities, and then being ready for when corporate loan demand picks up, we can take advantage of that to couple good returns with sustainable growth. I think you've seen evidence of that in these results. Hong Kong is subdued at the moment, but we understand why with the rate differential in China. But if you look at the rest of the world, as Georges said, there's balance sheet growth in wholesale banking in the rest of Asia, in the Middle East, in UK, in Europe.

Noel Quinn: Therefore, we're very focused on continuing the development of wealth, our transaction banking capabilities, our global wholesale banking capabilities, and then being ready for when corporate loan demand picks up so that we can take advantage of that to couple good returns with sustainable growth. And I think you've seen evidence of that in these results. Hong Kong is subdued at the moment, but we understand why with the rate differential in China and. But if you look at the rest of the world, as George said, there's balance sheet growth in wholesale banking in the rest of Asia, the Middle East, the UK, and Europe. We've seen good growth, I swear. So it's about focus.

Speaker Change: We will continue to do that.

Speaker Change: A key requirement.

Speaker Change: Is to continue to deliver.

Good returns that are sustainable.

Speaker Change: Repeatable, whilst also taken advantage of growth opportunities.

Speaker Change: As they emerge in a well that becomes more stable.

Speaker Change: And there are inherent in our customer franchise.

Speaker Change: Therefore, we're very focused on continuing the development of wealth transfer.

Speaker Change: Transaction banking capabilities, our global wholesale banking capabilities.

Speaker Change: And being ready when corporate loan demand picks up we can take advantage of that so a couple of good returns with sustainable growth.

Noel Quinn: I think you've seen evidence of that in these results. Hong Kong is subdued at the moment, but we understand why with the rate differential in China. But if you look at the rest of the world, as Georges said, there's balance sheet growth in wholesale banking in the rest of Asia, in the Middle East, in UK, in Europe. We're seeing good growth elsewhere. It's about focus, momentum, continuing to couple good returns with good growth.

Speaker Change: I think you've seen evidence of that in these results.

Speaker Change: Hong Kong is subdued at the moment, but we understand why with the rate differential between China.

Noel Quinn: continuing to couple good returns with good growth.

Speaker Change: And.

Speaker Change: But if you look at the rest of World as George said.

Operator: Thank you, Raul. Next question, please. As a reminder, if you wish to

Speaker Change: Balance sheet growth in wholesale banking.

And the rest of Asia.

Operator: As a reminder, if you wish to ask a question, please use the raise hand function in Zoom. Our next question today comes from Jeremy Hu at CICC. Please accept the prompt to unmute your line.

Noel Quinn: We're seeing good growth elsewhere. It's about focus, momentum, continuing to couple good returns with good growth.

Speaker Change: In the middle East and U K and Europe.

Speaker Change: We're seeing good growth so that's where.

Speaker Change: So it's about focus.

Speaker Change: And then some.

Speaker Change: Continuing to cole good returns with good drugs.

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

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

Operator: As a reminder, if you wish to ask a question, please use the Raise Hand function in Zoom. Our next question today comes from Jeremy Hou at CICC. Please accept the prompt to unmute your line.

Jeremy Hu: Jeremy, you're on mute. Yes, please go ahead. I can hear you. Can you hear me?

Speaker Change: Thank you.

Speaker Change: Next question please.

Jeremy Hu: Okay, so the first question is on deposits. We're glad to see that the CASA migration in Hong Kong is slowing down, but it's not stabilized at this level. But on the other hand, I think the bank has seen some deposit outflow in Q1, while your Hong Kong local peers still see some deposit growth. So I'm wondering if there's a strategic trade-off between deposit growth and CASA for you at this stage, and how do you see that trend in the rest of the year?

Speaker Change: As a reminder, if you wish to ask a question. Please use the right hand function and James Our next question today comes from Jeremy Chu CIBC. Please accept the problem child mute your line.

Georges Elhedery: Jeremy, you're on mute.

Speaker Change: Yeah.

Jeremy Hou: Uh.

Speaker Change: Yeah.

Georges Elhedery: Yes, please go ahead. We can hear you now.

Okay.

Jeremy Chu: Jeremy your Newt.

Jeremy Hou: Can you hear me?

Georges Elhedery: Yes.

Jeremy Chu: Yes. Please go ahead.

Jeremy Hou: Okay. The first question is on deposits. We're glad to see that the CASA migration in Hong Kong is slowing down, but it's not stabilized at this level. On the other hand, I think the bank has seen some deposit outflow in Q1 while your Hong Kong local peers still see some deposit growth. I'm wondering if there's a strategic trade-off between the deposit growth and the CASA for you at this stage, and how do you see that trend in the rest of the year? The second question is on the structural hedge. I'm wondering if this quarter you could share with us some breakdown of our structural hedge and how much did we benefit from the reinvestment of the structural hedge, and if there is any run rate that we can refer to. Thank you.

Jeremy Chu: Yes.

Jeremy Chu: Okay. So the first question is on deposits.

Jeremy Chu: Glad to see that cost on migration in Hong Kong.

Jeremy Chu: Is slowing down but it's.

It's now stable if not stabilized at this level, but on the other half I think the bank has seen some deposit outflow in Q1, while your Hong Kong local peers still see some deposit growth. So I'm wondering if the fed stops, but hey, Jake on the trade off between that other gross on the costs off for you at this stage and how do you see that.

Jeremy Hu: The second question is on the structural hedge. I'm wondering if this quarter you could share with us some breakdown of our structural hedge and how much we benefit from the reinvestment of the structural hedge, and if there is any run rate that we can refer to. Thank you.

Georges Elhedery: Thank you, Jeremy. So on your first question about deposits in Hong Kong. So if you remember, in Q4, our deposits in Hong Kong increased by about $14 billion. What we've seen in Q1 this year is a decrease of about $16 billion.

Jeremy Chu: <unk>.

Jeremy Chu: And the rest of the year.

The second question is on the structural hedge I'm wondering if this quarter, if you could share with us some break down the power struggle hatched and how much did we benefit from a reimbursement up the structural hashed and if there is any run rate that we can restart too. Thank you.

Georges Elhedery: Therefore, you can see seasonality playing across the two quarters and is therefore broadly stable across the two quarters. What happened though was some of these deposit inflows in Q4 related to some deposit campaigns we were running to drive some of our deposits into wealth. And when you look at Q1, while you see the deposit outflows, you also can see that $19 billion of our new invested assets were in Asia. Therefore, a chunk of these outflows have manifested or translated into wealth inflows for us, which was the purpose of the campaign in Q4 and explains, if you want, the seasonality of this deposit. Second, look, we have a powerful deposit franchise. We have a very cherished and enviable franchise. We continue to be a very attractive deposit proposition for both our retail and wholesale customers. We cherish this.

Georges Elhedery: Thank you, Jeremy. On your first question about deposits in Hong Kong, if you remember at Q4, our deposits in Hong Kong have increased by about $14 billion. What we've seen in Q1 this year is a decrease of about $16 billion. Therefore, you can see seasonality playing across the two quarters, and therefore it is broadly stable across the two quarters. What happened, though, is some of these deposit inflows in Q4 related to some deposit campaigns we were driving to drive some of our deposits into wealth. When you look at Q1, while you see the deposit outflows, you also can see that $19 billion of our new invested assets were in Asia.

Speaker Change: Thank you Jeremy So on your first question about deposits in Hong Kong.

Speaker Change: So if you if you if you remember at Q4, our deposits in Hong Kong increased by about $14 billion Blues would.

Speaker Change: What we've seen in the Q1. This year is a decrease of about $16 billion. Therefore, you can see seasonality playing across the two quarters and therefore is broadly stable across the two quarters.

Speaker Change: What happened, though is some of these deposit inflows in Q4 related to some deposit campaigns, we were driving.

Speaker Change: To drive some of our deposits into wealth.

Speaker Change: And when you look at Q1, what do you see the deposit outflows you also can see that $19 billion of new investments at assets within Asia. Therefore.

Georges Elhedery: Therefore, a chunk of these outflows has manifested or translated into wealth inflows for us, which was the purpose of the campaign in Q4 and explains, if you want, the seasonality of this deposit. Second look, we have a powerful deposit franchise. We have a very cherished and invaluable franchise. We continue globally being a you know very attractive deposit proposition for both our retail and wholesale customers. We cherish this. We continue investing in our deposit capabilities. Throughout the last six quarters, you know, you've seen how our deposit base has been very stable with you know our deposit costs being relatively benign compared to some of our peers. Therefore, I won't comment on you know month-to-month movements between ourselves and our peers.

Georges Elhedery: We continue investing in our deposit capabilities, and throughout the last six quarters, you've seen how our deposit base has been very stable, with our deposit costs being relatively benign compared to some of our peers. Therefore, I won't comment on month-to-month movements between ourselves and our peers.

A chunk of the floors has manifested or translated into.

Speaker Change: Inflows for US, which was the purpose of the campaign in Q4 and explains a few on the seasonality of this deposit.

Speaker Change: Second look we have a we have a powerful deposit franchise, we have a very cherished and valuable franchise, we continue globally being very.

Georges Elhedery: And I will move on to your second question about the structural head. First, you would have noticed that we increased the structural hedge this quarter by about $10 billion, taking it to $487 billion, with the weighted average life broadly unchanged at just shy of three. Second, we commit at this stage to continue our structural hedging activity. Obviously, this will remain subject to market conditions, but, you know, we will continue the trend that we put in Q1 based on the current market outlook.

Speaker Change: Very attractive deposit proposition for both our retail and wholesale customers. We cherish. This we continue investing in our deposit capabilities and throughout the last six quarters, you've seen how our deposit base has been very stable with.

Speaker Change: Deposit costs being relatively benign compared to some of our peers, therefore won't comment on.

Month to month.

Georges Elhedery: If I move on to your second question about the structural hedge. First, you would have noticed that we increased this quarter the structural hedge by about $10 billion, taking it to $487 billion, with the average weighted average life broadly unchanged at just shy of 3 years. Second, we commit at this stage to continue our structural hedging activity. Obviously, this will remain subject to market conditions, but you know we will continue the trend that we put in Q1 based on current market outlook.

Movement between ourselves and others.

Georges Elhedery: This activity of additional structural hedging will contribute to a mild headwind toward banking NII, and this is due to the fact that the rate curves are inverted, as you know, and you can do the math. But equally, we also are reinvesting maturing structural hedges at higher rates. And this reinvestment of maturing structural hedges at higher rates is a tailwind for banking MIT. Between the two of those effects, the structural hedge activity for the full year 2024 would remain a net tailwind to our banking NII.

Speaker Change: If I move on to your second question about the spring Shouldnt hedge.

Speaker Change: So.

Speaker Change: So what you would have noticed that we increased this quarter the structural hedge by about $10 billion.

Speaker Change: I can get to $487 billion with the average.

Speaker Change: Weighted average life broadly unchanged, it's just shy of three years.

Speaker Change: Second we commit at this stage to continue or structural hedging activity. Obviously, this really remains subject to market conditions.

Speaker Change: But you know we will continue the trend that we put in Q1 based on current market outlook.

Georges Elhedery: This activity of additional structural hedging will contribute to a mild headwind to our banking NII, and this is due to the fact that the rate curves are inverted, as you know, and you can do the math. But equally, we also are reinvesting maturing structural hedges at higher rates. This reinvestment of maturing structural hedges at higher rates is a tailwind into banking NII. Between the two of those effects, the structural hedge activity for the full year 2024 would remain a net tailwind to our banking NII. We have not yet quantified to the market that tailwind. We're looking at enhancing our disclosure in this space, but that tailwind has been factored into our guidance of at least $41 billion banking NII, and obviously factored into our return on tangible equity mid-teens guidance. Thank you, Jeremy.

Georges Elhedery: We have not yet quantified that tailwind to the market. We're looking at enhancing our disclosure in this space. But that tailwind has been factored into our guidance with at least $41 billion of banking NII and, obviously, factored into our return on tangible equity mid-teens guide.

Speaker Change: This activity of additional structural hedging will contribute to a mild headwind so linking NII and this is due to the fact that the curves.

Speaker Change: Inverted as you as you know and you can do math.

Speaker Change: But equally we also.

Speaker Change: Or reinvesting maturing swaps and hedges at higher rates and this reinvestment of maturing of structural hedges at higher rates is it tailwind into into banking NII beats.

Georges Elhedery: Thank you, Jeremy. We can move to the next question, please. Thank you, Georges.

Speaker Change: Between the two of those effects the structural hedge activity for the full year 2024 would remain in net tailwind towards banking NII.

Operator: Thank you, Georges. The next question today comes from Jason Napier at UBS. Please accept the prompt to unmute your line.

Speaker Change: We have not yet quantified to the market that tailwind, we're looking at enhancing our disclosures in this space.

Jason Napier: Good morning, can you hear me? Fantastic.

Jason Napier: Fantastic, thank you. First of all, just to echo the best wishes, Noel, for the next chapter of your career and private life. I think it is a well-earned rebalancing. Georges, I just wondered whether you'd talk a little bit within the context of hire for longer. You've referenced subdued loan demand in Hong Kong due to the differentials in interest rates. And I just wonder whether one of your peers has spoken at some length about looking forward to a change in asset mix as loan demand comes back as a way to defend margins and revenue.

Speaker Change: But that tailwind has been factored into our guidance of at least $41 billion Bank NII, obviously factored into our return on tangible equity mid teens guidance.

Georges Elhedery: Can move to the next question, please.

Operator: Thank you, Georges. The next question today comes from Jason Napier at UBS.

Speaker Change: Thank you Jeremy.

Speaker Change: Can move to the next question. Please. Thank you Josh next question today comes from J E.

Georges Elhedery: Hello, Jason.

Speaker Change: Yeah.

J E: Yes, please accept from Charley your line logic.

Jason Napier: Good morning. Can you hear me?

Georges Elhedery: We can hear you, Jason. Good morning.

J E: Hello, Jason.

Jason Napier: Fantastic. Thank you. First of all, just to echo the best wishes, Noel, for the next chapter of your career and private life. I think a well-earned rebalancing.

Hey, good morning, we can hear you Jason good morning.

Speaker Change: Thank you.

Speaker Change: Just to Echo best wishes for the next chapter of your career and private life.

Georges Elhedery: Thank you.

Noel Quinn: Thank you.

Jason Napier: Georges, I just wondered whether you talk a little bit within the context of higher for longer. You've referenced subdued loan demand in Hong Kong due to the differentials in interest rates. I just wonder whether one of your peers has spoken at some length about looking forward to a change in asset mix as loan demand comes back as a way to defend margins and revenue. I wonder whether you might talk a little bit about whether that's a material part of the plan, and sort of what you think that means for revenue sort of evolution in the next few quarters. I think I certainly was somewhat surprised that we didn't see an upgrade to banking NII guidance this quarter.

Speaker Change: Oh, well and rebalancing.

Speaker Change: Thank you George I was just wondering whether you talk a little bit within the context is higher for longer you referenced.

Jason Napier: So I wonder whether you might talk a little bit about whether that's a material part of the plan and sort of what you think that means for revenue sort of evolution in the next few quarters. I think I certainly was somewhat surprised that we didn't see an upgrade to banking NII guidance this quarter. I know you don't rebalance, you know, every quarter.

Speaker Change: Subdued loan demand in Hong Kong due to the differentials.

Speaker Change: And interest rates.

Speaker Change: And I just wanted to with one of your peers.

Speaker Change: At some length about.

Speaker Change: Looking forward to a change in asset mix as loan demand comes back.

Speaker Change: To defend margins and revenue so I wonder, whether you might talk a little bit about.

Georges Elhedery: But I just wonder whether you might talk about the role that HIAFA longer has on asset mix and then on credit demand. Secondly, wealth was phenomenal in Q1. I know there's a part of the business that's quite closely linked to what goes on with the Hang Seng Index, which is now up 20% in a short space of time. But I just wonder whether you could talk to the sustainability of those run rates, that the strategy is delivering the sort of net new money flows, or is there an element of sort of market volatility in there that we should be a little bit careful about? Thank you.

Speaker Change: That's the material part of the plan.

Speaker Change: And so what you what you think that means for revenue.

Speaker Change: Installation in the next few quarters.

Speaker Change: Sydney was somewhat surprised that we didn't see an upgrade to banking.

Jason Napier: I know you don't rebalance, you know, every quarter, but I just wonder whether you might talk to the role that higher for longer has on asset mix and then on credit demand. Secondly, wealth was phenomenal in Q1. I know there's a part of the business that's quite closely linked to what goes on with the Hang Seng Index, which is now up 20% in a short space of time. I just wonder whether you could talk to the sustainability of those run rates. Is that the strategy delivering the sort of net new money flows or is there an element of sort of market vol in there that we should be a little bit careful about? Thank you.

Speaker Change: Guidance this quarter I know you don't rebalanced.

Speaker Change: Every quarter.

Speaker Change: I, just wonder whether you might talk to the role that higher for longer has on asset mix and then on credit demand.

Speaker Change: And then secondly.

Speaker Change: Wealth was phenomenal in Q1.

Speaker Change: I know, there's a lot of the business that's quite closely linked to what goes on with the hang Seng index, which is now 20%.

Georges Elhedery: So first on banking NII, you know, we recognize there are kind of a couple of encouraging developments. The first one is higher rates for longer on the rate side, which will look more favorable than when we discussed it last in February.

Speaker Change: A short space of time, but I, just wonder whether you could talk to the sustainability of those run rates.

Speaker Change: Just the strategy delivering that sort of net new money flows or is there an element.

Georges Elhedery: Thank you, Jason. First on banking NII, you know, we recognize there are kind of a couple of encouraging developments. The first one is the higher for longer on the rate side that will look like more favorable than when we discussed last in February. The second one we just touched on, which is the balance sheet mix, specifically in Hong Kong, where we've seen term deposit remain stable for this quarter. We recognize these tailwinds to our banking NII, but we also recognize quite early in the year, and this, you know, these factors can still change. This is why we didn't change our guidance. As you said, Jason, I don't think you should expect us to update our guidance every quarter.

Speaker Change: Market volume, there that we should be able to bid.

Speaker Change: Excellent.

Speaker Change: Thank you.

Speaker Change: Thank you Jason.

So first on <unk>.

Speaker Change: Is there kind of a couple of encouraging developments. The first one is the HIFU longer on their side that will look like a more favorable than what we discussed last in.

Georges Elhedery: And the second one we just touched on, which is the balance sheet mix, specifically in Hong Kong, where we've seen term deposits remain stable for this quarter. So we recognize these as tailwinds to our banking NII. But we also recognize that it is quite early in the year, and, you know, these factors can still change. So this is why we didn't change our guidance. And as you said, Jason, I don't think you should expect us to update our guidance every quarter. We will, you know, we will reconsider this every quarter.

Speaker Change: February and the second one we just touched on with the balance sheet mix, specifically in Hong Kong, we've seen term deposit.

Speaker Change: We remain stable this quarter.

So we recognize these are these tailwind to our banking NII.

Speaker Change: But we've also recognized quite early in the year ends.

These factors can still change.

Speaker Change: So this is why we didn't change our guidance and as you said, Jason I don't think you should expect us to update our guidance every quarter, we will reconsider this every quarter, but for this quarter, we just sticking with or at least what you wanted to in dollars.

Georges Elhedery: We will, you know, reconsider this every quarter, but for this quarter, we're just sticking with our at least $41 billion. In terms of the wealth performance, recognize, you know, mid-teens % growth in wealth, 34% for our private bank. I would say a couple of things. The first one is, yes, this is an area that we've already said is a focused strategic area. We are investing in this area. Big part of our investments goes towards this area, and we're very pleased to see the results of our investments, you know, generate revenue fairly quickly. You can see that through net new invested assets growth.

Georges Elhedery: But for this quarter, we're just sticking with our at least $41 billion. Um, in terms of, in terms of your, uh, the wealth, uh, performance, so, recognize, you know, mid-teens percentage growth and wealth, 34% for our private bank. I would say a couple of things.

Speaker Change: In terms of.

Speaker Change: In terms of your the wealth.

Speaker Change: Performance, so recognizing a mid teen percentage growth in <unk> 34 per cent for our private bank.

Georges Elhedery: The first one is, yes, this is an area that we've already said where, you know, it's a focused strategic area. We are investing in this area. A big part of our, um, investments goes towards this area, and we're very pleased to see the results of our investments, you know, generate revenue fairly quickly. You can, you can see that through making your invested assets grow, you can see that through our CSM, new business CSM growth and insurance, uh, you know, as well as in the actual, uh, you know, uh, revenue performance.

Speaker Change: I would say a couple of things. The first one is yes. This is an area that we've already said, we're a focused strategic area. We are investing in this area big part of our.

Speaker Change: Investments goes towards that and we're very pleased to see the <unk>.

Speaker Change: Also our investments generate revenue pretty quickly you can you can see that through net new invested asset growth.

Georges Elhedery: You can see that through our CSM, the new business CSM growth and insurance, you know, as well as in the actual, revenue performance. This being said, I would just caution you not to annualize the numbers you're seeing because Q1 2023 had somewhat a subdued January in it when China and Hong Kong were still closed. Therefore, you've seen more pickup in activity in the Q1 2023 at the back end of it, whereas we had a full proper Q1 2024. There is an element of not annualizing the performance, but expecting that performance to continue growing. I just realized I didn't touch on your asset mix question of the first quarter, you know, of the first question. Look, we do not foresee a material change in our asset mix.

Speaker Change: Through our CSM, new business GSM growth in insurance.

Georges Elhedery: This being said, I would, um, I would just caution you not to annualize the numbers you're seeing because Q1 2023 had somewhat a subdued January in it when China and Hong Kong were still closed. So therefore, you've seen more pickup in activity in the Q123 at the back end of it, whereas we had the full proper Q124. So there is an element of not annualizing the performance but expecting that performance to continue growing. I just realized I didn't touch on your asset mix question in the first quarter of the, you know, first question. Look, we do not foresee a material change in our asset mix.

Speaker Change: As well as in the actual you know.

Speaker Change: Revenue performance that being said I would I.

Speaker Change: I would just caution you not to annualize the numbers, you're seeing because Q1 2023 had somewhat subdued January when China, and Hong Kong Western closed. So therefore, you've seen more pickup in activity in the Q1 three at the backend of it whereas we had a full proper Q1 'twenty.

Speaker Change: Before so there is an element of not annualizing the performance, but expecting that performance to continue growing.

Speaker Change: I just realized I didn't touch on your asset mix question of the first.

Speaker Change: Water.

Speaker Change: The first question.

Georges Elhedery: We had seen for the last few quarters of last year, the main growth take place in mortgages. Recognizing mortgages have seen very competitive levels both in the UK and Hong Kong, and the margins have been quite tight. As we start seeing pickup in wholesale demand, as we start seeing pickup in unsecured lending, you know, we are more, you know, hopeful that those will drive higher margins than what we've seen in mortgages. Our numbers in Q1 did show that this pickup definitely is there in areas of Asia, Southeast Asia, India, the Middle East, the UK, etc. You know, the next in line for that pickup will be Hong Kong, which we expect at some stage later in the year as we, you know, as we see wealth ease. Thanks, Jason.

Georges Elhedery: We had seen, for the last few quarters of last year, the main growth take place in mortgages. And, recognizing that mortgages have seen very competitive levels, both in the UK and Hong Kong, and the margins have been quite tight. As we start seeing a pickup in wholesale demand, as we start seeing a pickup in unsecured lending, we are more hopeful that those will drive higher margins than if you want what you've seen in mortgages

Speaker Change: Look we do not foresee.

Speaker Change: <unk> changed.

Speaker Change:

Speaker Change: We had seen for the last few quarters of last year, the main growth take place in mortgages and.

Speaker Change: And recognizing mortgages have seen a very competitive levels, both in the U K and Hong Kong and the margins have been quite tight.

Speaker Change: As we start seeing pickup in wholesale demand as we start seeing pick up in unsecured lending.

We are more hopeful that those will drive higher margins than if you want what you see in mortgages and all the numbers in Q1 did showed that this pickup definitely is there in areas of Asia Southeast Asia, India, The middle East the UK etcetera, and you know the the next in line for that pickup will be Hong Kong, which we.

Georges Elhedery: And our numbers in Q1 did show that this pickup definitely is there in areas of Asia, Southeast Asia, India, the Middle East, the UK, et cetera. And the next in line for that pickup will be Hong Kong, which we expect at some stage later in the year as we see dollar rates. Thanks, Jason.

Speaker Change: At some stage later in the year as we SBC dollars H E S.

Operator: As a reminder, if you wish to ask a question, please use the raise your hand function in Zoom. Our next question comes from Perlie Mong at KBW. Please accept the prompt to unmute your line.

Operator: As a reminder, if you wish to ask a question, please use the raise hand function in Zoom. Our next question comes from Perlie Mong at KBW. Please accept the prompt to unmute your line.

Speaker Change: Thanks, Jason.

Speaker Change: As a reminder, if you wish to ask a question. Please use the right functional gene.

Speaker Change: Our next question comes from Tommy Moll at K P for you Patrick.

Perlie Mong: Thank you for taking my question. Can I just dig a little bit further into Jason's question just now on higher for longer. I know you probably don't like to comment on longer-term NII, but I guess in a higher for longer rate environment, just how are you thinking about about the trajectory going from here? Because it sounds to me that deposit migration is probably well stabilized a lot and I would have thought any loan repricing that hasn't already come through will come through, you know, in the next few months. I guess as you know, in a higher for longer rate environment, you know, you can probably build more hedges at better rates as well, et cetera.

Tommy Moll: The pump to a mute your line.

Perlie Mong: Thank you for taking my question. Can I just dig a little bit further into Jason's question about whether it is just now on hire for longer? So I know you probably don't like to comment on longer-term NII, but I guess in a hire for longer rate environment, just how are you thinking about the trajectory going from here? Because it sounds to me that deposit migration has probably stabilised a lot. And I would have thought any loan repricing that hasn't already come through would come through in the next few months.

Tommy Moll: Thank you for taking my question can I, just dig a little bit further into Jason's question, just now on higher for longer.

Tommy Moll: I know you probably don't like to comment on.

Tommy Moll: Longer time on NII, but I.

Tommy Moll: I guess and higher for longer rate environment.

Tommy Moll: And just how are you thinking about <unk> about the trajectory going from here because it sounds to me that could pose a migration as per basis, and well stabilize it a lot.

Tommy Moll: And I would have thought any loan repricing that happened already come through and.

Perlie Mong: And I guess it As in a higher for longer rate environment, you know, you can probably put more hedges at better rates as well, etc. And there's obviously a tailwind, as you mentioned, this year already.

Tommy Moll: It will come through in the next few months.

Tommy Moll: I guess it.

Tommy Moll: And.

Tommy Moll: For longer rate environment, you can probably put more hedges.

Perlie Mong: There's obviously a tailwind, as you mentioned, in this year already. You know, how does that inform your thinking on your medium-term RoTE? I guess that's the first question. The second question, again, on broader activity level, maybe not just on credit. Again, I guess just noting your point that, you know, Hong Kong might be the next in line to pick up, but I guess overall, the emerging market is probably not benefiting in terms of activity level and in terms of capital inflows from higher US rates. How does that impact, I guess, you know, trading activities, capital flows, etc.? Just how are you thinking about the flip side of higher for longer? Thank you.

Tommy Moll: Right as well and et cetera, and that's obviously a tailwind as you mentioned this already so.

Perlie Mong: So, you know, how does that inform your thinking on your medium-term ROTI? So I guess that's the first question. And the second question, again, on broader activity levels, maybe not just on credit. So again, I guess just noting your point that Hong Kong might be the next in line to pick up, but I guess overall, the emerging market is probably not benefiting in terms of activity levels and in terms of capital inflows from higher US rates. So how does that impact, I guess, training activities, capital flows, etc.? Just how are you thinking about the flip side of higher prices for longer? Thank you.

How does that inform your thinking on your medium term ROE change. So I guess, that's the first question and the second question.

Tommy Moll: Again on project activity level, maybe not just on credit.

Tommy Moll: So.

Speaker Change: Again, I guess, just now turn it on.

Good point Michael.

Speaker Change: Next in line to pick out.

Michael: Yes overall, the emerging markets, it's probably not beneficiary.

Michael: Comes back to the luxury level and in terms of capital capital inflows from higher U S rate. So how does that impact and I guess no trading activities.

Michael: Capital flight with et cetera, how are you thinking about then the flip side are higher for longer.

Georges Elhedery: Thank you, Perlie. First, look, yes, we recognize higher for longer is definitely a tailwind or a reduction of a headwind we've forecast in our banking NII. And as I said, there has been a number of you know, manifestation of tailwinds now compared to when we last spoke in February. Equally, it is early in the year, and as you've seen, these things do change, and we therefore wanna bake in some sense of uncertainty due to the changing parameters. We are, you know, we will update you know, some longer than what we're updating, but not at this quarter, Perlie. You know, do expect us coming in the future quarters and give you further outlook for the future.

Georges Elhedery: Perlie. So first, look, yes, we recognize that higher for longer is definitely a tailwind or a reduction of the headwind we've forecast in our banking NII. And as I said, there have been a number of manifestations of tailwinds now compared to when we last spoke in February. But, equally, it is early in the year. And as you've seen, these things do change, and we therefore want to bake in some sense of uncertainty due to the changing parameters.

Speaker Change: Thank you Brendan.

Speaker Change: So first yes, we recognized higher for longer is definitely a tailwind order or the reduction of the headwind we've forecasted that we're banking NII.

Speaker Change: And as I said, there has been a number of manifestation of tailwind now compared to when we last spoke in February but equally it is early in the year and as you've seen these things do change and therefore, when the bake in some sense of uncertainty due to the changing parameters.

Georges Elhedery: We are, you know, we will update you on some, you know, longer, longer than what we're updating, but not this quarter, Perlie. So, you know, do expect us in future quarters and give you further outlook for the future. I would say the one parameter just to keep in mind as you start planning for 25 is to take Argentina out, because obviously, subject to the sale completing, which we expect to complete in the next 12 months, that potential $1 billion contribution from Argentina will go away from our banking NII.

Speaker Change: We are we will update you know.

In the longer longer than what we are updating the thought that this quarter poorly so do expect us coming in the future quarters and give you further outlook for the future I would say the one pan with it just to keep in mind as you start planning for 'twenty five is take Argentina out because obviously subject to the safe completing which we expect to compete in that.

Georges Elhedery: I would say the one parameter, just to keep in mind as you start planning for 25, is take Argentina out, because obviously subject to the sale completing, which we expect to complete in the next 12 months, that potential $1 billion contribution from Argentina will go away from our banking NII. That's the most, you know, most kind of predictable parameter where we stand today as you look into 2025. In terms of the broader activity level, I mean, first, if you look at the wealth performance, just demonstrates how wealth remains very resilient, and that's particularly true in Hong Kong, but very much so across Asia.

Speaker Change: Next 12 months that potential $1 billion contribution from Argentina will will go away from our banking NII that is the most.

Georges Elhedery: That's the most, you know, you know, most kind of predictable parameter where we stand today as you look into 2024. In terms of the broader activity level, I mean, if you first, if you look at the wealth performance, just demonstrate how wealth remains very resilient. And that's particularly true in Hong Kong but very much so across Asia. Second, when you look at our transaction banking activities, you know, apart from foreign exchange, which has an idiosyncrasy related to Q123 with very high volatility, has performed across the various areas of its fee-earning activity.

Speaker Change: Most kind of predictable parameter, where we stand today as you look into 2025.

Speaker Change: In terms of the broader activity level I mean.

Speaker Change: If you first if you could the wealth performance just demonstrates how wealth remains very resilient and that's particularly true in Hong Kong, but very much so across Asia second.

Georges Elhedery: Second, when you look at our transaction banking activities, you know, apart from foreign exchange, which has an idiosyncrasy related to Q1 2023 with a very high volatility, has performed across the, you know, various areas of its fee earning activities. Our activity is very much benefiting from cross-border trends. If you look at some of the investments or foreign direct investments or trade flows taking place intra-region in Asia between China and ASEAN, between, you know, India and ASEAN, between, you know, India and the West, et cetera, all of those trends are growing. I mean, the numbers are staggering in some cases, and these are the activities that our business is, you know, operating on.

Speaker Change: When you look at our transaction banking activities.

Speaker Change: From a change with how.

Speaker Change: This increase is related to Q1 'twenty three with the very high volatility has performed across the various areas of its fee earning activities.

Georges Elhedery: And then our activity is very much benefiting from cross-border trends. If you look at some of the investments or foreign direct investments or trade flows taking place intra-regionally in Asia, between China and ASEAN, between, you know, India and ASEAN, between, you know, India and the West, etc., all of those trends are growing. I mean, the numbers are staggering in some cases, and these are the activities that our business is, you know, operating on.

And then our activity is very much benefiting from cross border trends.

Speaker Change: If you look at some of the investments or foreign direct investments or treat fluids, taking place intra region in Asia between China, and ASEAN between India, and ASEAN between India, and the west et cetera, all of those trends are growing I mean the numbers.

Speaker Change: Being in some cases and these are the activities that our businesses.

Georges Elhedery: So therefore, we, you know, while recognizing that there will be some interest rate challenges for borrowers at these levels, there is still a very strong underlying network activity, which is benefiting our overall businesses, particularly in wholesale transaction banking.

Georges Elhedery: we, you know, while recognizing that there will be some interest rate challenges for borrowers at these levels, there is still a very strong underlying network activity which is benefiting our overall businesses, particularly in wholesale transaction banking and wealth. Thank you, Pearly.

Speaker Change: Operating on.

Speaker Change: So therefore, we are recognizing that there will be some.

Speaker Change: Interest rate challenges for borrowers at these levels. There is still a very strong underlying network activity, which is benefiting our overall businesses, particularly in wholesale transaction banking and.

Perlie Mong: Just on that. It's just I've also noticed that China exports volume's been going up, but value's been coming down, and that is in part because of various things. FX has been part of it, but also government subsidies. How does that affect your, I guess, your profitability in the region? Your volume's going up and value's going down.

Georges Elhedery: Thank you. I've also noticed that China exports and volumes have been going up, but values have been coming down. And that is in part because of various things, FX is a big part of it, but also government subsidies. How does that affect your, I guess, your profitability in the region, your volumes going up and values going down?

Speaker Change: Thank you Brent.

Brent: Got it.

Brent: I've also noticed got Kevin China exports and volume has been coming up but that has been coming down and that is that in part because of various things.

Brent: Part of it and but also government subsidies.

Brent: Does that too.

Speaker Change: Back to you.

Speaker Change: Yes.

Speaker Change: Profitability in the region, if volume is going up in value is going down.

Noel Quinn: Perlie, if I can just give you an indication. What we are seeing at the moment is a very strong level of activity of China corporates, expanding across the rest of Asia. Our outbound activity from mainland China to the rest of the world is seeing a significant increase in activity over the past 12 months. We're seeing that trend continue in Q1 of this year. A lot of people talk about inward investment into China slowing down, but what I would say is outward investment from China to the rest of the world is actually picking up at quite a pace, a very significant pace. We're very well placed to capture that outflow, and we are capturing that outflow.

Speaker Change: Well if I can just give you an indication what we are seeing at the moment is a very strong level of activity of China corporates.

Spanned in across the rest of Asia, So alright band activity from mainland China. So the rest of the world.

Georges Elhedery: Well, if I can just give you an indication, what we are seeing at the moment is a very strong level of activity in China's corporate sector, uh... expanding across the rest of Asia, so uh... our outbound activity from mainland China to the rest of the world has seen a significant increase in activity over the past twelve months. We've seen that trend continue in the first quarter of this year, and a lot of people talk about So we'll give more updates on that at the half-year, but we are capturing that. And that is why, actually, I think the rest of Asia is performing well on the balance sheet because a lot of it is being fed by good intra-Asia activity and outbound from mainland China.

Speaker Change: Seen a significant increase in activity over the past 12 months, we've seen that trend continue in the first half in the first quarter of this year.

Speaker Change: So a lot of people talk about.

Speaker Change: And what are your investment into China slowing down, but what I will say is I would invest in from China to the rest of the world is actually picking up a quite a pace.

Noel Quinn: We're very well placed to capture that outflow, and we are capturing that outflow. Our business in mainland China performed well last year, is performing well again in Q1 of this year, and its outbound activity is performing extremely well. We'll give more updates on that at H1, we are capturing that. That is why actually I think the rest of Asia is performing well on balance sheet because a lot of it is being fed by good intra-Asia activity and outbound from mainland China.

Speaker Change: Very significant pace.

Speaker Change: We're very well placed.

To capture that outflow.

Noel Quinn: Our business in mainland China performed well last year, is performing well again in Q1 of this year, and its outbound activity is performing extremely well. We'll give more updates on that at H1, we are capturing that. That is why actually I think the rest of Asia is performing well on balance sheet because a lot of it is being fed by good intra-Asia activity and outbound from mainland China.

Speaker Change: And we are capturing that outflow.

Speaker Change: And our business in mainland China performed well last year.

Speaker Change: <unk> is performing well again in the first quarter of this year and.

Speaker Change: And its activity is performing extremely well.

Speaker Change: We'll give more updates on that at the half year, but we are capturing that and that is why actually I think the rest of Asia is performing well on balance sheet, because a lot of it is being fed by good intra Asia activity and I buy from mainland China.

Perlie Mong: Our next question today.

Operator: Our next question today,

Operator: The next question today comes from Katherine Lei at J.P. Morgan. Please accept the prompt to unmute your line.

Operator: Thank you, Pearly.

Georges Elhedery: Thank you, Pearly.

Operator: comes from Katherine Lei at JP Morgan.

Operator: comes from Kaitlyn Lei at JP Morgan. Please accept the prompt to unmute your line.

Speaker Change: Yeah.

Speaker Change: Our next question today comes from Catherine at J P. Morgan please accept prompt to meet your line.

Katherine Lei: Okay, thanks. I have three questions, actually three small questions.

Katherine Lei: Okay, thanks. I have three questions, three small questions actually. The first one is on non-interest income. I looked at the breakdown on non-interest income; it seems like wealth is doing quite well, but on transaction banking, there is some weakness. I think it's down 9% YOY. Can we know what is the reason and should we triangulate this to the full year? You know, what are the drivers to that? So this is the first one. The second one is on Hong Kong. With Hong Kong relaxing some LTV ratios, I think basically not only LTV, they relax the purchase requirements, and the stamp duty requirements on residential properties. So I think that there is a significant jump in transactions.

Kaitlyn Lei: Okay, thanks. I have three questions, three small questions actually. The first one is on non-interest income. I looked at the breakdown on non-interest income; it seems like wealth is doing quite well, but on transaction banking, there is some weakness. I think it's down 9% YOY. Can we know what is the reason and should we triangulate this to the full year? You know, what are the drivers to that? So this is the first one. The second one is on Hong Kong. With Hong Kong relaxing some LTV ratios, I think basically not only LTV, they relax the purchase requirements, and the stamp duty requirements on residential properties. So I think that there is a significant jump in transactions.

Catherine: Okay. Thanks.

Katherine Lei: The first one is on non-interest income. I look at the breakdown on non-interest income. It seems like wealth is doing quite well, but on transaction banking, there is some weakness. I think it's down 9% worldwide. Can we know why and should we triangulate this to the full year? You know, what are the drivers of that?

Catherine: So the question three small questions actually the first one is on.

Catherine: Non interest income.

Catherine: I looked at the breakdown of non interest income it seems like what else is doing quite well, but on transaction banking days.

Catherine: Weakness I think it's.

Catherine: A 9% Y O Y can we know what are the lead ship each triangulate as to the full year what are the drivers to that.

Katherine Lei: So this is the first one. The second one is on Hong Kong. With Hong Kong relaxing the LTV ratios, I think basically, not only the LTV ratio, but they relaxed the purchase requirements and the stamp duty requirements on residential properties. So I think that there is a significant jump in transactions. So I was thinking that this should be positive for mortgages, at least, and we are big mortgage providers in Hong Kong. So will that have any impact on our outlook in terms of growth, particularly related to Hong Kong?

Speaker Change: The first one.

Speaker Change: Second one.

Speaker Change: On Hong Kong with Hong Kong Relaxing L.

Speaker Change: Bell TV ratios I think basically they not only have they relaxed.

Speaker Change: Apache's requirements.

Speaker Change: PMT requirement on residential.

Katherine Lei: I was thinking that this should be positive for mortgage at least. Then we are big mortgage providers in Hong Kong. Would that have any impact on our outlook in terms of growth, particularly related to Hong Kong? Second one. Then the last one, I think is on cost. If I look at Q1, I think cost is up 8%, including levy. How should I look at this? Then are we on track to the 5% cost growth this year? Thank you.

Kaitlyn Lei: I was thinking that this should be positive for mortgage at least. Then we are big mortgage providers in Hong Kong. Would that have any impact on our outlook in terms of growth, particularly related to Hong Kong? Second one. Then the last one, I think is on cost. If I look at Q1, I think cost is up 8%, including levy. How should I look at this? Then are we on track to the 5% cost growth this year? Thank you.

Speaker Change: Our properties, so I think that.

Speaker Change: A significant jump in transaction. So I was thinking that there should be positive to mortgage at least than we are.

Speaker Change: Okay providers in Hong Kong So we're.

Speaker Change: Would that have any impact on our outlook.

Katherine Lei: Second one. And then the last one, I think it's on cost. If I look at the first quarter, I think cost is up 8%, including levy. How should I look at this? And then are we on track to the 5% cost growth this year? Thank you.

Speaker Change: Particularly related to Hong Kong.

Speaker Change: Second one.

Speaker Change: And then the last one I think on costs, if I look at the first quarter I think Pos is up 8%.

Speaker Change: How should I look at those and then are we.

Speaker Change: On track for that.

Georges Elhedery: Katherine, I'll take questions one and three, and I'll hand over to Noel to address your second question about the outlook for Hong Kong. So first, on non-NII, wealth has performed well. Transaction banking weakness is specifically due to foreign exchange, and that's driving the whole weakness.

5% cost growth.

Georges Elhedery: Thank you, Katherine. I'll take question one and three, and I'll hand over to Noel to address your second question about the outlook for Hong Kong. First on non-NII. Wealth has performed well. Transaction banking weakness is specifically due to foreign exchange. That's driving the whole weakness. The reason, as I called it out earlier, is that foreign exchange had a very strong, a record strong Q1 2023 on the back of a heightened, you know, market anxiety and volatility back then due to the banking crisis. Therefore, we're doing a comparison to a record quarter, and it will show that drop. If you look at the number itself, at the revenue itself for, you know, foreign exchange, it is back to normalized levels. There is nothing to worry about here.

Speaker Change: Yeah. Thank you.

Speaker Change: Thank you Katherine and I'll take question, one and three and I'll hand over to <unk> to address your second question about the outlook for Hong Kong.

Speaker Change: So first on non NII.

Speaker Change: Once this performed when transaction banking weakness is specifically due to foreign exchange, that's driving the whole weakness and the reason as I called it out earlier. The reason is that foreign exchange had a very strong.

Georges Elhedery: And the reason, as I called it out earlier, the reason is that foreign exchange had a very strong, a record-strong quarter of 1.23 on the back of heightened market anxiety and volatility back then due to the banking crisis. So therefore, we're doing a comparison to a record quarter, and it will show that drop. But if you look at the number itself, at the revenue itself for foreign exchange, it is back to normalized levels.

Speaker Change: A record strong quarter 123.

Speaker Change: On the back of a heightened.

Speaker Change: The market anxiety.

Speaker Change: And volatility back then to the banking crisis.

Speaker Change: So therefore, we're doing a comparison to a record quarter and it will show that drop but if you look at the number itself, but the revenue itself.

Georges Elhedery: So there is nothing to worry about here. It's, on the contrary, back to normalized levels. And, you know, we continue to expect some cyclicality in that space while we continue to expect growth in the other areas of transaction banking. So I wouldn't read more than that into it.

Speaker Change: And exchange it is back to normalized levels. So there is nothing to worry about here, it's on contrary back to normalized levels.

Georges Elhedery: It's on the contrary, back to normalized levels. You know, we continue to expect some cyclicality in that space while we continue expecting growth in the other areas of transaction banking. I wouldn't read more than that into it. We remain very confident that the investment we're putting both in wealth and in transaction banking and in the technology supporting our transaction banking activities do remain strategic focus, you know, as we look into future quarters and years. On your third question about cost. First, I just wanna reiterate, it is a clear priority for us to maintain cost discipline. Okay? We're very confident we will limit cost growth to circa 5%. Excuse me. Bless you. We'll limit cost growth to circa 5% on a target basis.

Speaker Change: We continue to expect some cyclicality in that space, while we continue expecting growth in the other areas of transaction banking, So I would I wouldn't read more than that into it and we remain very confident that the investments we're putting both in wealth and transaction banking and then the technology supporting distribution banking activities do.

Georges Elhedery: And we remain very confident that the investment we're putting both in wealth and transaction banking and in the technology supporting our transaction banking activities will remain a strategic focus and produce results. You know, as we look into future quarters and years on your third question about cost. So first, I just want to reiterate, it is a clear priority for us to maintain cost discipline. Okay, and we're very confident we will limit cost growth to circa 5% on a, bless you, we'll limit cost growth to circa 5% on a target basis.

We remain strategic focus and bearing results.

Speaker Change: Looking to future quarters and years.

Speaker Change: On your third question about cost so first.

Speaker Change: Just wanted to reiterate it is a clear priority for us to maintain cost discipline. Okay.

Speaker Change: And I'm very confident we will limit cost growth to circa 4% excuse me on a bless you [laughter].

Georges Elhedery: We're confident about it, and we're actually on track to do so. The reason why we're kind of on track to do so, yet we show the 7% Q1 growth on a target basis, is because of a few idiosyncratic items related to the quarter, which are not repeated in future quarters, or some of them will reverse in future quarters. I'll just call the few of them out that matter. First, there was a 2% accrual of the performance-related pay, where we decided to phase that accrual more evenly throughout the year than we did last year. This will manifest in a higher performance-related pay accrual in Q1, hence the 2% contribution towards the 7%.

Georges Elhedery: We're confident about it, and we're actually on track to do so. And the reason why we're kind of on track to do so yet we show the 7% quarter one growth on a target basis is because of a few idiosyncratic items related to the court, which are not repeated in future quarters, or some of them will reverse in future quarters. I'll just call the three of them out that matter. First, there was a two percent accrual of performance-related pay, where we decided to phase that accrual more evenly throughout the year than we did last year.

Speaker Change: With limited cost growth of circa 5% on their target business.

Speaker Change: We're confident about it and we're actually on track to do so.

Speaker Change: And the reason why we are kind of on track to disclose we showed a 7%.

Speaker Change: Quarter one growth.

Speaker Change: Hum basis is because of a few idiosyncratic items related to the quarter, which are not repeated in future quarters.

Speaker Change: Or some of them will reverse in future quarters, I'll just call. It a few of them out there first.

Speaker Change: There was a 2%.

Speaker Change:

Speaker Change: A cooling of the performance related pay where we decided to phase that who will.

Georges Elhedery: This will manifest in a higher performance rate pay accrual in Q1, hence the 2% contribution towards the 7%. But it will contribute to lower accruals in future quarters because, on a full year basis, we are not accruing to a significantly different number than the full year 23 performance-related pay.

Speaker Change: More evenly throughout the year than it did last year this will manifest in a higher.

Speaker Change: Performance related accrual in Q1, hence the 2% contribution towards the 7%.

Georges Elhedery: It will contribute to lower accrual in future quarters, because on a full year basis, we are not accruing to a significantly different number than the full year 2023, performance-related pay. Second, there was 1% contribution from HSBC Innovation Banking this quarter because last year's Q1, we only acquired SVB in the middle of March, which means we practically didn't have it in the Q1 last year, and that's a base effect. And then third, we had the one-offs or the expected nonrecurrence of the FDIC special assessment additional charge this quarter, as well as the Bank of England levy. Bank of England levy is a new charge which used to be an interest expense, as an NII, and now it's moved to operational expense as in cost.

Speaker Change: But it will contribute to lower accrual in future quarters, because on a full year basis, we are not accruing to a significantly different number than the full year 'twenty free performs.

Noel Quinn: There was a 1% contribution from HSBC Innovation Banking this quarter because, in last year's first quarter, we only acquired SBB in the middle of March, which means we practically didn't have it in the first quarter last year. And that's a basic. And then third, we had the one-offs, or the expected non-recurrence of the FDIC special assessment additional charge this quarter as well as the Bank of England lev Bank of England levy is a new charge which used to be an interest expense and an NII, and now it's moved to operations as an expense as in cost.

Speaker Change: Performance related pay.

Speaker Change: Good.

Speaker Change: There was 1% contribution from HSBC innovation banking this quarter because last year's first quarter, we only acquired SBB in the middle of March which means we only we practically didnt have at the first quarter last year and that is a base effect.

Speaker Change: And then third we had these one offs or the non rig expected nonrecurring Sophie <unk>.

Speaker Change: The FDIC special assessment additional charge this quarter as well as the banking Levy lengthening. The Navy is a new charge, which used to be in interest expense and as an NII and now it's moved to operations expense and cost.

Georges Elhedery: Bank of England levy is a new charge which used to be an interest expense, as an NII, and now it's moved to operational expense as in cost. Those between the two of them contributed to 1%. If you adjust for those, you know, you bake them in, we're still, you know, and remain confident to meet our 5% cost target on a full year or circa 5% on a full year basis. On your second question, I'll hand over to Noel about Hong Kong.

Georges Elhedery: Those between the two of them contributed to 1%. If you adjust for those, you know, you bake them in, we're still, you know, and remain confident to meet our 5% cost target on a full year or circa 5% on a full year basis. On your second question, I'll hand over to Noel about Hong Kong.

Noel Quinn: And those, between the two of them, they contributed to 1%. So if you adjust for those, and you know, you bake them in, we're still, you know, and remain confident to meet our 5% cost target for a full year or, circa 5% for a full year basis. On your second question, I'll hand over to Noel about Hong Kong. Katherine, I was in Hong Kong recently and spoke to a number of the market participants there and the developers, and I think, firstly, I think the change to the stamp duty arrangements in Hong Kong in March in the budget was very well received, and it's had a positive impact on the activity levels of sales in the Hong Kong residential property market.

Between the two of them they contributed to 1%.

So if you adjust for those.

Speaker Change: You bake them in with them.

Speaker Change: We remain confident to meet our 5% cost target on a full year or circa 5% on this year.

Katherine Lei: Yeah. Katherine, I was in Hong Kong recently and spoke to a number of the market participants there and the developers. I think firstly, I think the change, the stamp duty arrangements in Hong Kong in March in the budget was very well received, and it's had a positive impact on the activity levels of sales in the Hong Kong market, residential sales. It was an extremely significant inflow of activity in the first month. That will be very beneficial to the liquidity positions of many of those developers. We have to wait and see how that stabilizes, 'cause undoubtedly there was an element of catch up in that first month because people were anticipating some change. Therefore, there was low activity in the preceding months.

Noel Quinn: Yeah. Kaitlyn, I was in Hong Kong recently and spoke to a number of the market participants there and the developers. I think firstly, I think the change, the stamp duty arrangements in Hong Kong in March in the budget was very well received, and it's had a positive impact on the activity levels of sales in the Hong Kong market, residential sales. It was an extremely significant inflow of activity in the first month. That will be very beneficial to the liquidity positions of many of those developers.

Speaker Change: <unk>.

Speaker Change: On your second question I'll hand over to Kathryn and I was in Hong Kong recently and spoke to a number of the.

Kathryn: Market participants, there and developers and I think firstly I think the the change to stump you Jussi.

Kathryn: Arrangements in Hong Kong in March in the budget was very well received and it's had a positive impacts on the App server activity levels.

Noel Quinn: It was an extremely significant inflow of activity in the first month, and that will be very beneficial to the liquidity positions of many of those developers. We have to wait and see how that stabilizes, because undoubtedly there was an element of catch-up in that first month because people were anticipating some change. Therefore, there was low activity in the preceding month.

Kathryn: Of sales in the Hong Kong market residential sales.

Kathryn: <unk>.

Kathryn: It was an extremely significant inflow of activity in the first one.

Noel Quinn: We have to wait and see how that stabilizes, 'cause undoubtedly there was an element of catch up in that first month because people were anticipating some change. Therefore, there was low activity in the preceding months. Then we're gonna see how that stabilizes. I think that is a very positive move. It will enhance liquidity within the market. It will enhance activity in the mortgage market. I think it's too early to call a trend at the moment. I think we need to see how Q2 stabilizes following those changes, but a very helpful intervention. Thank you.

Kathryn: That will be very beneficial to the liquidity position of many of those developers.

Kathryn: We have to wait and see how that stabilizes.

Kathryn: Undoubtedly there was an element to catch up in that first month, because people were anticipating some change. Therefore, there was low activity in the preceding months.

Georges Elhedery: Then we're gonna see how that stabilizes. I think that is a very positive move. It will enhance liquidity within the market. It will enhance activity in the mortgage market. I think it's too early to call a trend at the moment. I think we need to see how Q2 stabilizes following those changes, but a very helpful intervention. Thank you.

Noel Quinn: And I think we've got to see how that stabilizes, but I think that is a very positive move. It will enhance liquidity within the market. It will enhance activity in the mortgage market. But I think it's too early to call a trend at the moment. I think we need to see how Q2 stabilizes following those changes. But a very helpful intervention. Thank you.

Kathryn: Let's see how that stabilizes.

Kathryn: That is a very positive move they will enhance liquidity within the market it will enhance activity it will be.

Kathryn: Market.

Kathryn: But I guess too early to call a trend at the moment I think we need to see how Q2 stabilizes following those changes are.

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

Speaker Change: Very helpful intervention. Thank you.

Speaker Change: We have time for one last question today comes from Andrew Coombs Citigroup. Please accept the problem.

Andrew Coombs: Thank you. Firstly, just to commend Noel as well; it's five years to see you able to acknowledge your interest in HSBC beforehand too. Two questions please. Firstly, on UK NIM, you've seen an improvement for the second consecutive quarter, another six basis points, so outperforming some of the domestic peers. I can see your loans and deposit balance fairly flat in that entity. Perhaps you could just comment on what you're seeing in terms of deposit migration, mortgage refi, and what's driving that NIM improvement and how sustainable that improvement is going forward as well.

Andrew Coombs: Thank you. Firstly, just to commend Noel as well in his five years as CEO, but also to acknowledge your lifespan at HSBC beforehand too.

Speaker Change: Nine.

Andrew Coombs: Thank you.

Andrew Coombs: Lastly, just to comment.

Andrew Coombs: And then no one is wireless.

Georges Elhedery: Thanks, Andrew.

Noel Quinn: Thanks, Andrew.

Andrew Coombs: Two questions, please. Firstly, on the UK NIM, you've seen an improvement in the second consecutive quarter, another 6 basis points, so outperforming some of the domestic peers. I can see your loans and deposit balance look fairly flat in that entity. But perhaps you could just comment on what you're seeing in terms of deposit migration, mortgage refi, and what's driving that NIM improvement and how sustainable you think that improvement is going forward as well. And then the second one's a clarification on Argentina. Booked $0.5 billion in Q1, guiding to $1 billion for full year based on last year's experience. Presumably what you're therefore saying is a step down to $0.2 billion per quarter for the remainder of the year, given that you don't expect the transaction to necessarily close until 12 months' time. Thank you.

Andrew Coombs: Good morning, Joe.

Andrew Coombs: It's an H E C before him too.

Andrew Coombs: Two questions. Please.

Joe: Firstly on the UK name you can improve its second consecutive quarter of another six basis points outperforming.

Andrew Coombs: Outperforming.

Andrew Coombs: So the domestic page I can see your loans and deposit balance.

Andrew Coombs: And I'm going to take.

Andrew Coombs: Perhaps you could just comment on what you're seeing in terms of migration mortgage refi and what's driving that improvement and how sustainable you think that prepays going forward is now.

Andrew Coombs: And then the second one is clarification on Argentina. Booked 0.5 in Q1, guiding to 1 billion for the full year based on last year's experience. Presumably, what you're therefore saying is a step down to 0.2 billion per quarter for the remainder of the year, given that you don't expect the transaction to necessarily close until 12 months' time.

Andrew Coombs: And then the second one just clarification on Argentina.

Andrew Coombs: The 45 in Q1 1 billion full year based on last year's experience.

Andrew Coombs: Because you can believe what you're saying is.

Andrew Coombs: Down.

Andrew Coombs: Two 2 billion the remainder of the year given that you don't expect the transaction to necessarily queries.

Georges Elhedery: So the UKNM was up six places, a point indeed, and essentially benefited from some idiosyncrasies of structural hedges and timing of structural hedge maturities and reinvestment. So if you consider broadly flat to be broadly a range of plus or minus 10 basis points, I would say UK NIM has been broadly flat for the last couple of quarters, and we foresee it to remain broadly flat in the next quarter

Georges Elhedery: Thank you, Andrew. The UK NIM was up 6 basis points indeed, essentially benefited from some idiosyncrasies of structural hedges and timing of structural hedge maturities and reinvestments. If you consider broadly flat to be broadly a range of ±10 basis points, I would say UK NIM has been broadly flat for the last couple of quarters, and we foresee it to remain broadly flat in the next quarter. You will therefore add to that broadly flat some structural hedge idiosyncrasies, which will drive you within this ±10 basis points range. We are, you know, as regards our loans and deposits, have been stable. Again, you know, the UK economy has been resilient. We're very optimistic about the outlook for the UK, specifically around inflation and employment.

Andrew Coombs: 12 months time thank.

Speaker Change: Thank you.

Speaker Change: Thank you Angela so the UK NIM was up six basis points indeed.

Speaker Change: Essentially benefited from some idiosyncrasies of structural hedges and timing of such alleged maturities and reinvestment.

Speaker Change: So if you consider a broadly flat to be broadly a range of plus or minus 10 basis points I would say U K NIM has been broadly flat for the last couple of quarters.

Speaker Change: And we foresee it to remain broadly flat in the next quarter.

Georges Elhedery: And you will therefore add to that broadly flat some structural heterosyncrasies which will drive you within this plus or minus 10 basis point range, um we are you know as regards our loans and deposits have been stable again you know the UK economy has been resilient we're we're we're we're very optimistic about the outlook for the UK specifically around inflation and employment uh it remains a very important customer franchise for us it remains a very important market for us and we continue gaining market share I mean you know we continue gaining market share in mortgages with a 10% new business market share when our back book now market shares moved from or our kind of overall portfolio market shares moved from seven to eight percent uh you know we are 25% market share in SME lending and and obviously uh you know we continue investing in this business you can look at the uh you know ring fence bank cost growth and how much we can support cost and investment growth for the ring bank within our you know overall circa five percent cost growth so all this demonstrates the you know the confidence we have in our business in the UK our clients activity in the UK and the outlook for the UK. If I move to Argentina, you know, I wish I could give you a trend for Argentina, then the way it works is the numbers balloon with hyperinflation. And then they, they kind of they they shrink with devaluation. And it depends how they manifest themselves over month, you know, month over month.

Speaker Change: And you will therefore add to a broadly flat some structural hedge idiosyncrasies, which will drive you within the plus or minus 10 basis point Beach.

Speaker Change: We are you know yes.

You guys are with loan and deposits have been stable again, the U K economy has been resilient with.

Speaker Change: We're we're we're very optimistic about the outlook for the U K, specifically around inflation employment.

Georges Elhedery: It remains a very important customer franchise for us. It remains a very important market for us, and we continue gaining market share. I mean, you know, we continue gaining market share in mortgages with a 10% new business market share when our back book now market share has moved from, or our kind of overall portfolio market share has moved from 7% to 8%. You know, we are at 25% market share in SME lending, and obviously, you know, we continue investing in this business. You can look at the ring-fence bank cost growth and how much we can support cost and investment growth for the ring-fence bank within our overall circa 5% cost growth.

Speaker Change: It remains a very important franchise for us it remains a very important market for us and we continue gaining market share I mean, you know we continue gaining market share in mortgages with a 10% new business market share when our back book now market Share's moved from our kind of overall portfolio, Mike chairs moved from 72%.

Speaker Change: 8%.

Speaker Change: We have 25% market share in SME lending and obviously.

Speaker Change: We continue investing in this business you can look at the.

Speaker Change: Ring fencing costs grow and how much we can support costs and investment growth for the ring fenced bank within the hour.

Georges Elhedery: All this demonstrates the, you know, the confidence we have in our business in the UK, our clients' activity in the UK, and the outlook for the UK. If I move to Argentina, you know, I wish I could give you a trend for Argentina, then the way it works is, the numbers balloon with hyperinflation, and then they kind of shrink with devaluation, and it depends how they manifest themselves over month, you know, month over month. Q4 last year has seen hyperinflation to some level, but they've seen a massive devaluation. If you recall, in December, we've seen more than 50% currency devaluation. That's contributed to a disinflation of the amount that banking NII Argentina brought to Q4. This quarter is exactly the opposite.

Speaker Change: Overall circa 4% cost growth. So all of this demonstrates the you know the.

Speaker Change: The confidence we have in our business in the U K, our client activity in the UK and the outlook for the U K.

I move to Argentina.

Speaker Change: Wish I could give you a trend for Argentina the way it works is the.

Speaker Change: The numbers balloon with upper inflation and then they.

Speaker Change: They kind of they shrink with devaluation and it depends how they manifest themselves over month over month Q4 last year.

Georges Elhedery: Q4 last year saw hyperinflation to some level, but they've seen a massive devaluation. If you recall, in December, we saw more than, you know, 50% currency devaluation. That contributed to a disinflation of the amount that banking and Argentina brought to Q4. And then this quarter is exactly the opposite.

Speaker Change: Hyperinflation to some level, but they've seen a massive valuation if you recall in December we see more than.

50% currency devaluation that has contributed to a disinflation of the amount that backend Argentina.

Georges Elhedery: We've seen 6% devaluation only, but we've seen 54% inflation, and that will just inflate the numbers. It will be volatile quarter on quarter. Our best estimate for the full year is that it may average out to what it averaged out over last year, which is around $1 billion. Now, if just looking at the overall Argentina, if you take in the non-NII, you take in the cost base, et cetera, last year's Argentina contribution to our PBT was $0.2 billion. Just to put it in perspective, this is about 1 cent earnings per share or half a cent dividend per share. Therefore, I think as you look at the full year 2024, that's the quantum that Argentina volatility will create.

Speaker Change: Brought to Q4 and then this quarter is exactly the opposite we've seen 6% devaluation only but we've seen 54% completion and that would just keep the numbers. So it wouldn't be volatile quarter on quarter.

Georges Elhedery: We've seen 6% devaluation only, but we've seen 54% inflation, and that will just inflate the numbers. So it will be volatile quarter on quarter. And our best estimate for the full year is that it may average out to what it averaged out over last year, which is around one billion. Now, just looking at Argentina as a whole, if you take in the non-banking NII, you take in the cost base, etc. Last year's Argentina contribution to our PBT was $0.2 billion. To put it in perspective, this is about 1 cent of earnings per share or half a cent of dividend per share.

Speaker Change: Our best estimate for the full year is that it may average out to what it averaged out over last year, which is around $1 billion.

But just looking at the overall, Argentina if you.

Speaker Change: Taken the nonbanking NII.

Speaker Change: Take care.

Speaker Change: Cost base, etc, last year's Argentina contribution toward PBT was north of $2 billion.

Speaker Change: Just to put it in perspective, there's about one cents.

Georges Elhedery: Therefore, I think as you look at the full year 24, that's the quantum that Argentina will create volatility. So it should not distract you from the way you're, you know, you're forecasting the banks out.

Speaker Change: Earnings per share half a cent dividend.

Speaker Change: Dividend per share therefore, I think as you look at the full year 'twenty four that's the quantum that Argentina when volatility will create so.

Georges Elhedery: It should not distract you from the way you're, you know, you're forecasting the bank's outcomes.

It should not distract you from the way you're you're forecasting the bank's outcome.

Andrew Coombs: I guess just to follow up on this, in a scenario whereby you didn't have any devaluation of the peso, inflation was a more moderate, normal amount, what would the NII contribution be under that more kind of BAU scenario, a quarter?

Andrew Coombs: I guess just to follow up on this. In a scenario whereby you didn't have any devaluation of peso, inflation was a more moderate normal amount, what would the NII contribution be under that more kind of BAU scenario per quarter for Argentina?

Speaker Change: I guess just on that.

Speaker Change: In a scenario whereby you didnt have any devaluation of payday.

Speaker Change: Inflation was a more moderate nominal amount with the NII contribution be under that more kind of be I use scenario, our core task of Argentina.

Georges Elhedery: Look, again, it's a difficult one to say, but, you know, if you just do the arithmetic of our one billion expected for the full year, of which half a billion has manifested in the first quarter, a smoothed out outcome would be the other half billion phased out or, you know, evenly over three quarters. But that's a, you know, that's a highly volatile number, so I wouldn't use it as a... You know, as a support guy. Okay, I understand. Thank you, guys. Thank you, Andrew.

Georges Elhedery: Look, again, it's a difficult one to say. You know, if you just do the arithmetic of our $1 billion expected for the full year, of which already half a billion has manifested in Q1, a smoothed-out outcome would be the other half billion phased out or, you know, evenly over three quarters. That's, you know, that's a highly volatile number, so I wouldn't use it as a, you know, as a sort of forecast.

Speaker Change: And again this is a well it's a difficult one to say it but you know if you just do the arithmetic of our $1 billion expected for the full year of which already have 4 billion has manifested in the first quarter.

Speaker Change: Without <unk> would be the other half billion phased out evenly over the quarters, but that's a.

Speaker Change: That's a highly volatile number so I wouldn't use it as a.

Andrew Coombs: Okay. Understood.

Georges Elhedery: Yeah.

Andrew Coombs: Thank you, Pep.

Andrew Coombs: Thank you, both.

Georges Elhedery: Thank you, Andrew.

Speaker Change: Understood.

Operator: Thank you, ladies and gentlemen. That concludes today's webinar. You may now disconnect your line and enjoy the rest of your day.

Thanks, Greg.

Operator: Thank you, ladies and gentlemen. That ends today's webinar. You may now disconnect your line and enjoy the rest of your day.

Greg: Thank you Andrew.

Speaker Change: Thank you ladies and gentlemen, today's webinar you may now disconnect your line and enjoy rest of your day.

Speaker Change: [music].

Speaker Change: Yeah.

Yeah.

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