Q3 2024 HSBC Holdings Earnings Call

October 29, 2024

[music].

Welcome, ladies and gentlemen to the analyst and Investor weapon, all on the <unk> 2020 full results for HSBC Holdings plc.

Speaker Change: For your information. This webinar is being recorded I will now hand over to George and dairy group Chief Executive.

George: Thank you Louise Hello, everyone. Thank you for joining today.

George: I'm here with John Bingham, Our group financial controller, who is acting as interim group Chief Financial Officer.

George: We delivered another good quarter, which shows that our strategy is working and we have a strong platform for growth.

George: I am committed to building on that.

Before John takes you through the third quarter numbers I'd like to make a few comments.

George: We made several announcements last week.

George: First.

George: And core will take over as group Chief Financial Officer with effect from first of January.

George: Tom is an exceptional leader, who joined HSBC in 2013 as group head of audit.

George: And this currently our group chief risk and compliance officer.

George: With almost 40 years experience in the financial sector. She brings a global perspective to the strategic challenges and opportunities we face today.

George: I look forward to partnering with her for the next stage of the bank's growth and development.

George: I would also like to thank John for his outstanding support during the interim period.

George: Second.

George: We announced a reorganization to simplify and streamline the group.

George: We're currently organized around three businesses in five regions.

George: The first of January we will operate through for businesses.

George: Hong Kong and the UK, serving personal banking and commercial banking customers and our two home markets.

George: Corporate and institutional banking.

George: In international wealth and Premier banking.

George: We will also streamline our geographic governance structures, reducing them from five regions to two.

George: Further enhancing our ability to serve our customers' needs throughout our global network.

Our current group Executive Committee for 18 members will be replaced by a new group operating committee with 12 members.

George: Okay.

George: The analysis, we've done so far demonstrates that the reorganization will result in net cost savings with a relatively short payback period on any upfront cost.

George: We will share these details with you at our full year results in February as part of a wider business update.

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George: And third turning to the external environment I will come the clarity provided by the U K government on its Prudential rules.

George: The PRA second near final policy statement in the rules on the implementation of Basel, three one, bringing and two years of uncertainty and will help the banking sector to support growth in the U K.

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George: Similarly, I am encouraged by the recent policy measures in mainland China and in Hong Kong.

George: I am confident that the monetary stimulus announced last month and potential for the fishkill and other measures will help to stabilize key sectors and strengthen mainland China's economy.

George: Meanwhile, Hong Kong's easing of macro Prudential constrains is proportionate and timely.

George: We expect these measures to have a positive impact on the Hong Kong economy.

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George: With that John will take you through the Q3 numbers Joe.

George: Yeah.

George: [laughter].

John Bingham: Thanks George.

John Bingham: In summary, we had another good quarter profit before tax of $8 $5 billion was up $9 billion or 11% on the third quarter of last year on a constant currency basis. This brings our annualized return on tangible equity for the first nine months of the year to 19, 3% or $16 set.

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Speaker Change: 10%, excluding notable items.

Speaker Change: Revenue of $17 billion was up $1.1 billion on last year's third quarter and $1.3 billion on the second quarter of this year underlying the good momentum within the business.

Speaker Change: We've announced today, a further $4 8 billion of dollars of distributions consisting of a third interim dividend of 10 cents per share and a new share buyback of up to $3 billion.

Speaker Change: We intend to complete this buyback during the four month period before our full year results announcement in February.

Speaker Change: Last week, we also completed the share buyback announcement at the half year results in July.

These measures to have a positive impact on the Hong Kong economy.

Speaker Change: We've now repurchased 9% of our share count since the start of last year.

Speaker Change: With that John will take you through the Q3 numbers.

Operator: Welcome, ladies and gentlemen, to the Analyst and Investor Webinar on the Q3 2024 results for HSBC Holdings PLC. For your information, this webinar is being recorded. I will now hand over to Georges Elhedery, Group Chief Executive.

Speaker Change: Okay.

Speaker Change: As you can see on the next slide strategic transactions, principally the disposal of Canada in the first quarter were a small impact on a year on year revenue and profit growth.

Speaker Change: Yeah.

Speaker Change: [laughter].

Speaker Change: Thanks George.

Speaker Change: In summary, we had another good quarter.

Speaker Change: Before tax of $8 $5 billion was up $9 billion or 11% on the third quarter of last year on a constant currency basis. This brings our annualized return on tangible equity for the first nine months of the year to 19, 3% or 16, 7% excluding notable items.

Speaker Change: Excluding this impact of these transactions profit before tax excluding notable items was up 13% on the third quarter of last year.

Georges Elhedery: Thank you, Louise. Hello, everyone. Thank you for joining today. I'm here with Jon Bingham, our Group Financial Controller, who's acting as interim Group Chief Financial Officer. We delivered another good quarter, which shows that our strategy is working and we have a strong platform for growth. I am committed to building on that. Before Jon takes you through the Q3 numbers, I'd like to make a few comments. We made several announcements last week. First, Pam Kaur will take over as Group Chief Financial Officer with effect from 1 January. Pam is an exceptional leader who joined HSBC in 2013 as group head of audit and is currently our Group Chief Risk and Compliance Officer. With almost 40 years experience in the financial sector, she brings a global perspective to the strategic challenges and opportunities we face today.

Speaker Change: Revenue of $17 billion was up $1.1 billion on the third quarter of last year, driven by a 1.6 billion dollar increase in fee and other income.

Speaker Change: Yeah.

Speaker Change: Revenue of $17 billion was up $1.1 billion on last year's third quarter and $1.3 billion on the second quarter. This year underlying the good momentum within the business.

Speaker Change: This included a point 7 billion dollar increase in wholesale transaction banking and wealth.

Speaker Change: The remaining $1 billion increase primarily reflected strong performance in equities and global debt markets with global banking and markets.

Speaker Change: We've announced today, a further $4 8 billion of dollars of distributions consisting of a third interim dividend of 10 cents per share and a new share buyback of up to $3 billion.

Speaker Change: First the items in the third quarter of last year that did not repeat including point $3 billion of treasury disposal losses and other notable items.

Speaker Change: We intend to complete this buyback during the four month period before our full year results announcement in February.

Speaker Change: [noise] banking NII of $10 $6 billion was down $3 billion on the second quarter on a reported FX basis, primarily due to a loss arising from the early redemption of legacy Securities.

Speaker Change: Last week, we also completed the share buyback announcement at the half year results in July.

Georges Elhedery: I look forward to partnering with her for the next stage of the bank's growth and development. I would also like to thank Jon for his outstanding support during the interim period. Second, we announced a reorganization to simplify and streamline the group. We are currently organized around three businesses in five regions. From 1 January, we will operate through four businesses: Hong Kong and the UK, serving personal banking and commercial banking customers in our two home markets, Corporate and Institutional Banking, and International Wealth and Premier Banking. We will also streamline our geographic governance structures, reducing them from five regions to two, further enhancing our ability to serve our customers' needs throughout our global network. Our current group executive committee of 18 members will be replaced by a new group operating committee with 12 members.

We've now repurchased 9% of our share count since the start of last year.

Speaker Change: Excluding this the banking NII run rate was stable on the previous quarter.

Speaker Change: As you can see on the next slide strategic transactions, principally the disposal of Canada in the first quarter.

Speaker Change: Our 20 to 25 countries and four banking NII guidance is unchanged at around $43 billion. Our guidance includes the impact of the point 3 billion dollar early redemption loss taken this quarter. It also assumes a 1 billion dollar contribution from Argentina.

Speaker Change: A small impact on the year on year revenue and profit growth.

Excluding this impact of these transactions profit before tax excluding notable items was up 13% on the third quarter of last year.

Speaker Change: This year, which is what we reported in 2023.

Speaker Change: Revenue of $17 billion was up $1.1 billion on the third quarter of last year, driven by a $1 6 billion dollar increase in fee and other income.

Speaker Change: Argentina has contributed $1.2 billion to banking NII in the year to date, but the volatility created by hyperinflation accounting makes that number very difficult forecast from quarter to quarter.

Speaker Change: This included a point 7 billion dollar increase in wholesale transaction banking and wealth.

Speaker Change: Accordingly, I would encourage you to think of our guidance as being around $42 billion, excluding Argentina.

Speaker Change: The remaining $1 billion increase primarily reflected strong performance in equities and global debt markets with global banking and markets and adverse items in the third quarter of last year that did not repeat including point $3 billion of treasury disposal losses and other notable items.

Speaker Change: Turning to fee and other income wholesale transaction banking was up 7% on last year's third quarter. The key driver was global foreign exchange, which grew 12% benefiting from an increased client activity.

Georges Elhedery: The analysis we've done so far demonstrates that the reorganization will result in net cost savings with a relatively short payback period on any upfront costs. We will share these details with you at our full year results in February as part of a wider business update. Third, turning to the external environment, I welcome the clarity provided by the UK government on its prudential rules. The PRA's second near final policy statement and rules on the implementation of Basel 3.1 bring an end to years of uncertainty and will help the banking sector to support growth in the UK. Similarly, I am encouraged by the recent policy measures in Mainland China and in Hong Kong. I'm confident that the monetary stimulus announced last month and potential further fiscal and other measures will help to stabilize key sectors and strengthen Mainland China's economy.

Speaker Change: Higher volumes also contributed to growth in both global trade solutions and global payment solutions.

Speaker Change: <unk> was up 32% on the third quarter last year.

Speaker Change: It was our third consecutive quarter of double digit growth in wealth as our continued investments in this business and the importance of Hong Kong as a global wealth hub have enabled us to capitalize on the favorable operating environment.

Speaker Change: Excluding this the banking NII run rate was stable on the previous quarter.

Speaker Change: [noise], our 20 to 25 countries and four banking NII guidance is unchanged at around $43 billion. Our guidance includes the impact of the $3 billion early redemption loss taken this quarter. It also assumes a 1 billion dollar contribution from Argentina.

Speaker Change: There was double digit well growth in all wealth products, but life insurance was the biggest driver.

Speaker Change: About half of the growth in life insurance was from the non repetition of a charge. We took in Q3 last year, excluding the life insurance still grew well into double digits, mainly because of higher CSM balance drove an increase in CSM release.

Speaker Change: This year, which is what we reported in 2023.

Speaker Change: Argentina has contributed $1.2 billion to banking and I in the year to date, but the volatility created by hyperinflation accounting makes that number very difficult to forecast from quarter to quarter.

Speaker Change: The CSM balance as a store of value all else remaining equal growth in the balance sheet means growth in future earnings.

Speaker Change: Accordingly, I would encourage you to think of our guidance as being around $42 billion, excluding Argentina.

Speaker Change: And our CSM balance continued to grow in the first three quarters of this year, we've generated more than $2 billion of new business CSM.

Georges Elhedery: Meanwhile, Hong Kong's easing of macro-prudential constraints is proportionate and timely, and we expect these measures to have a positive impact on the Hong Kong economy. With that, John will take you through the Q3 numbers. John.

Speaker Change: Turning to fee and other income wholesale transaction banking was up 7% in last year's third quarter. The key driver was global foreign exchange, which grew 12% benefiting from an increased client activity.

Speaker Change: This has driven our CSM balance to $13 $2 billion or 22% increase since last year's third quarter, creating a foundation for future revenue growth.

Speaker Change: Higher volumes also contributed to growth in both global trade solutions and global payment solutions.

Speaker Change: Hong Kong continued to benefit from inflows of international customers.

There were 243000, new to bank customers in the third quarter versus an average of just over 170000 per quarter in the first half.

Jon Bingham: Thanks, Georges. In summary, we had another good quarter. Profit before tax of $8.5 billion was up $0.9 billion or 11% on the Q3 of last year on a constant currency basis. This brings our annualized return on tangible equity for the first nine months of the year to 19.3% or 16.7% excluding notable items. Revenue of $17 billion was up $1.1 billion on last year's Q3 and up $0.3 billion on the Q2 this year, underlying the good momentum within the business. We've announced today a further $4.8 billion dollars of distributions consisting of a third interim dividend of $0.10 per share and a new share buyback of up to $3 billion.

Jonathan Bingham: Thanks, Georges. In summary, we had another good quarter. Profit before tax of $8.5 billion was up $0.9 billion or 11% on the Q3 of last year on a constant currency basis. This brings our annualized return on tangible equity for the first nine months of the year to 19.3% or 16.7% excluding notable items. Revenue of $17 billion was up $1.1 billion on last year's Q3 and up $0.3 billion on the Q2 this year, underlying the good momentum within the business. We've announced today a further $4.8 billion dollars of distributions consisting of a third interim dividend of $0.10 per share and a new share buyback of up to $3 billion.

Speaker Change: <unk> was up 32% on the third quarter last year.

Speaker Change: Net new invested assets were $26 billion in the quarter $11 billion of which were in Asia.

On credits, you'll recall that our second quarter had a lower ECL charge due to recoveries and other items. The third quarter ECL charge was $1 billion of 40 basis points of average loans.

Speaker Change: There was double digit well growth in all wealth products, but life insurance was the biggest driver.

Speaker Change: The wholesale ECL charge was point $6 billion, driven by point $4 billion in Hong Kong of which point $1 billion related to Hong Kong commercial real estate, whilst the personal charge was <unk> $4 billion.

Speaker Change: The CSM balance as a store of value all else remaining equal growth in the balance sheet means growth in future earnings.

Speaker Change: This brings our annualized ECL charge 28 basis points of average loans for the year to date, which is broadly in line with our 30 to 40 basis point guidance for the full year.

Speaker Change: And our CSM balances continued to grow in the first three quarters of this year, we've generated more than $2 billion of new business C. S. M.

Jon Bingham: We intend to complete this buyback during the four-month period before our full year results announcement in February. Last week, we also completed the share buyback announcement at the half year results in July. We've now repurchased 9% of our share count since the start of last year. As you can see on the next slide, strategic transactions, principally the disposal of Canada in Q1, were a small impact on the year-on-year revenue and profit growth. Excluding this impact of these transactions, profit before tax, excluding notable items, was up 13% on Q3 of last year. Revenue of $17 billion was up $1.1 billion on Q3 of last year, driven by a $1.6 billion increase in fee and other income. This included a $0.7 billion increase in wholesale transaction banking and wealth.

Jonathan Bingham: We intend to complete this buyback during the four-month period before our full year results announcement in February. Last week, we also completed the share buyback announcement at the half year results in July. We've now repurchased 9% of our share count since the start of last year. As you can see on the next slide, strategic transactions, principally the disposal of Canada in Q1, were a small impact on the year-on-year revenue and profit growth. Excluding this impact of these transactions, profit before tax, excluding notable items, was up 13% on Q3 of last year. Revenue of $17 billion was up $1.1 billion on Q3 of last year, driven by a $1.6 billion increase in fee and other income. This included a $0.7 billion increase in wholesale transaction banking and wealth.

Speaker Change: Next on costs.

Speaker Change: Costs were up 6% in the first nine months of the year on a target basis, which was 1% lower for the first half.

Speaker Change: This has driven our CSM balance to $13 $2 billion or 22% increase since last just the quarter, creating a foundation for future revenue growth.

Speaker Change: As we explained in the previous quarter, the phasing of performance related pay and the additional levies from the end of last year will give us a tailwind heading into the fourth quarter.

Speaker Change: Hong Kong continued to benefit from inflows of international customers.

Speaker Change: We're on track to meet our target of around 5% cost growth for 2024 on a target basis and remain committed to cost discipline.

Speaker Change: There were 243000, new to bank customers in the third quarter versus an average of just over 170000 per quarter in the first half.

On lending and deposits loan balances were stable in the third quarter deposits were up 1% driven by a 16 billion dollar increase in Hong Kong W. P Bay.

Speaker Change: Net new invested assets with $26 billion in the quarter $11 billion of which were in Asia.

Speaker Change: On credits, you'll recall that our second quarter had a lower ECL charge due to recoveries and other items.

Speaker Change: This reflected short term flows between invested assets and deposits and I would caution you against Annualizing that number.

Speaker Change: Third quarter ECL charge was $1 billion of 40 basis points of average loans.

Speaker Change: Term deposits with 39% of total Hong Kong deposits unchanged since the second quarter.

Speaker Change: The wholesale ECL charge was <unk> $6 billion, driven by point $4 billion in Hong Kong of which point $1 billion related to Hong Kong commercial real estate, whilst the personal charge was point $4 billion.

Jon Bingham: The remaining $1 billion increase primarily reflected strong performance in equities and global debt markets with Global Banking and Markets. Adverse items in Q3 of last year that did not repeat, including $0.3 billion of treasury disposal losses and other notable items. Banking NII of $10.6 billion was down $0.3 billion on Q2 on a reported FX basis, primarily due to a loss arising from the early redemption of legacy securities. Excluding this, the banking NII run rate was stable on the previous quarter. Our 2024 banking NII guidance is unchanged at around $43 billion. Our guidance includes the impact of the $0.3 billion early redemption loss taken this quarter. It also assumes a $1 billion contribution from Argentina this year, which is what we reported in 2023.

Jonathan Bingham: The remaining $1 billion increase primarily reflected strong performance in equities and global debt markets with Global Banking and Markets. Adverse items in Q3 of last year that did not repeat, including $0.3 billion of treasury disposal losses and other notable items. Banking NII of $10.6 billion was down $0.3 billion on Q2 on a reported FX basis, primarily due to a loss arising from the early redemption of legacy securities. Excluding this, the banking NII run rate was stable on the previous quarter. Our 2024 banking NII guidance is unchanged at around $43 billion. Our guidance includes the impact of the $0.3 billion early redemption loss taken this quarter. It also assumes a $1 billion contribution from Argentina this year, which is what we reported in 2023.

Speaker Change: Next our CET one ratio was 15, 2% up 20 basis points from the second quarter of strong organic capital generation was partly offset by distributions.

Speaker Change: This brings our annualized ECL charge 28 basis points of average loans for the year to date, which is broadly in line with our 30 to 40 basis point guidance for the full year.

C T. One grew $3 $1 billion during the quarter on a constant currency basis.

Speaker Change: This growth included $2 $9 billion of all the movements mainly gains in the market value of securities classified as held to collect and sell which are fair value through other comprehensive income.

Next on costs.

Costs were up 6% in the first nine months of the AR on a target basis, which was 1% lower for the first half.

Speaker Change: At <unk> grew by $14 billion on a constant currency basis, mainly due to broader balance sheet growth.

Speaker Change: Finally, I'd like to point out to a number of upcoming events, which will help you with your modeling.

Speaker Change: We're on track to meet our target of around 5% cost growth for 2024 on a target basis and remain committed to cost discipline.

Speaker Change: First we expect the buyback we announced today to have an impact of around <unk> four percentage points on our CET one ratio in the fourth quarter.

On lending and deposits loan balances were stable in the third quarter deposits were up 1% driven by a 16 billion dollar increase in Hong Kong W. P Bay.

It remains our intention to return excess capital to shareholders through a rolling series of share buybacks.

Speaker Change: Secondly, we expect to complete the sale of H B C. Argentina in the fourth quarter.

Jon Bingham: Argentina has contributed $1.2 billion to banking NII in the year to date, but the volatility created by hyperinflation accounting makes that number very difficult to forecast from quarter to quarter. Accordingly, I would encourage you to think of our guidance as being around $42 billion excluding Argentina. Turning to fee and other income. Wholesale transaction banking was up 7% on last year's Q3. The key driver was Global Foreign Exchange, which grew 12% benefiting from an increased client activity. Higher volumes also contributed to growth in both Global Trade Solutions and Global Payment Solutions. Wealth was up 32% on Q3 last year.

Jonathan Bingham: Argentina has contributed $1.2 billion to banking NII in the year to date, but the volatility created by hyperinflation accounting makes that number very difficult to forecast from quarter to quarter. Accordingly, I would encourage you to think of our guidance as being around $42 billion excluding Argentina. Turning to fee and other income. Wholesale transaction banking was up 7% on last year's Q3. The key driver was Global Foreign Exchange, which grew 12% benefiting from an increased client activity. Higher volumes also contributed to growth in both Global Trade Solutions and Global Payment Solutions. Wealth was up 32% on Q3 last year.

Speaker Change: This reflected short term flows between invested assets and deposits and I caution you against Annualizing that number.

Speaker Change: As a reminder, around $5 $1 billion of historical foreign exchange translation and other reserve losses will be recycled to the income statement on completion.

Speaker Change: Term deposits with 39% of total Hong Kong deposits unchanged since the second quarter.

Speaker Change: This is already being recognized in capital and now will be no incremental impact on C. T. One ciena or distributions. These losses will also be excluded from our dividend calculation.

Speaker Change: Next our CET one ratio was 15, 2% up 20 basis points from the second quarter, our strong organic capital generation was partly offset by distributions.

Speaker Change: We expect the completion of the sale to reduce ought to be raised by around $8 billion equivalent to around <unk>, one percentage points of C. T. One.

Speaker Change: C T. One grew $3 $1 billion during the quarter on a constant currency basis.

Speaker Change: Third we intend to begin to actively market, our 8 billion dollar legacy French home loan portfolio during the fourth quarter.

Speaker Change: We expect to reclassify. This portfolio is held to collect and sell in the first quarter next year, leading to a recognition of an estimated $1 billion pretax loss equivalent to around <unk>, one percentage points of CET one.

Jon Bingham: It was our third consecutive quarter of double-digit growth in wealth as our continued investments in this business and the importance of Hong Kong as a global wealth hub have enabled us to capitalize on a favorable operating environment. There was double-digit growth in all wealth products, but life insurance was the biggest driver. About half of the growth in life insurance was from the non-repetition of a charge we took in Q3 last year. Excluding that, life insurance still grew well into double digits, mainly because a higher CSM balance drove an increase in CSM release. The CSM balance is a store of value. All else remaining equal, growth in the balance means growth in future earnings. Our CSM balance has continued to grow. In the first three quarters of this year, we've generated more than $2 billion of new business CSM.

Jonathan Bingham: It was our third consecutive quarter of double-digit growth in wealth as our continued investments in this business and the importance of Hong Kong as a global wealth hub have enabled us to capitalize on a favorable operating environment. There was double-digit growth in all wealth products, but life insurance was the biggest driver. About half of the growth in life insurance was from the non-repetition of a charge we took in Q3 last year. Excluding that, life insurance still grew well into double digits, mainly because a higher CSM balance drove an increase in CSM release. The CSM balance is a store of value. All else remaining equal, growth in the balance means growth in future earnings. Our CSM balance has continued to grow. In the first three quarters of this year, we've generated more than $2 billion of new business CSM.

Speaker Change: Our W. As grew by $14 billion on a constant currency basis, mainly due to broader balance sheet growth.

Speaker Change: Finally, I'd like to point out to a number of upcoming events, which will help you with your modeling.

Speaker Change: Finally, the PRA recently published near final rules on Basel III one.

Speaker Change: First we expect the buyback we announced today to have an impact of around <unk> four percentage points on our CET one ratio in the fourth quarter.

Speaker Change: These are incrementally better than we previously expected we continue to expect them to have an immaterial impact on our CET one ratio upon implementation.

Speaker Change: It remains our intention to return excess capital to shareholders through a rolling series of share buybacks.

Speaker Change: Okay.

Speaker Change: To conclude our guidance remains unchanged, namely a mid teens return on tangible equity excluding notable items for 'twenty 'twenty, four and 'twenty 'twenty five.

Speaker Change: Secondly, we expect to complete the sale of H B C. Argentina in the fourth quarter.

Speaker Change: As a reminder, around $5 $1 billion of historical foreign exchange translation and other reserve losses will be recycled to the income statement on completion.

Speaker Change: Banking NII of around $43 billion in 2024.

Speaker Change: ECL for the full year within our normal medium term planning range of 30 to 40 basis points.

This is already being recognized in capital and there will be no incremental impact on C. T. One Tina on distributions. These losses will also be excluded from our dividend calculation.

Speaker Change: Cost growth of around 5% for 'twenty 'twenty four on a target basis.

Jon Bingham: This has driven our CSM balance to $13.2 billion, a 22% increase since last year's Q3, creating a foundation for future revenue growth. Hong Kong continued to benefit from inflows of international customers. There were 243,000 new to bank customers in the Q3 versus an average of just over 170,000 per quarter in the first half. Net new invested assets were $26 billion in the quarter, $11 billion of which were in Asia. On credit, you'll recall that our Q2 had a low ECL charge due to recoveries and other items. The Q3 ECL charge was $1 billion or 40 basis points of average loans.

Jonathan Bingham: This has driven our CSM balance to $13.2 billion, a 22% increase since last year's Q3, creating a foundation for future revenue growth. Hong Kong continued to benefit from inflows of international customers. There were 243,000 new to bank customers in the Q3 versus an average of just over 170,000 per quarter in the first half. Net new invested assets were $26 billion in the quarter, $11 billion of which were in Asia. On credit, you'll recall that our Q2 had a low ECL charge due to recoveries and other items. The Q3 ECL charge was $1 billion or 40 basis points of average loans.

Speaker Change: Mid single digit loan growth over the medium term.

Speaker Change: We expect the completion of the sale to reduce ought to be ways by around $8 billion equivalent to around 0.1 percentage points of CET one.

Speaker Change: Without Louise can we hand over to Q&A. Thank.

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

Speaker Change: Third we intend to begin to actively market, our 8 billion dollar legacy French home loan portfolio during the fourth quarter we.

Speaker Change: Can you go through and show your camera is turned on.

Speaker Change: We invite you to ask a question. Please accept the prompt you to mute your line. If you find your question has been answered.

Speaker Change: Leave yourself in the queue I know in your hands and say Oh.

Speaker Change: First question today comes from Andrew <unk> at Citi, Great. Please accept the killing me Eli.

Speaker Change: Finally, the PRA recently published near final rules on Basel III one.

Speaker Change: Hello, Andrew.

Andrew: Good morning, and good afternoon.

Hong Kong.

Speaker Change: These are incrementally better than we previously expected we continue to expect them to have an immaterial impact on our CET one ratio upon implementation.

Andrew: Two questions. Please firstly just on the reorganization Jay very simple question, given the new structure.

Jon Bingham: The wholesale ECL charge was $0.6 billion, driven by $0.4 billion in Hong Kong, of which $0.1 billion related to Hong Kong commercial real estate. While the personal charge was $0.4 billion. This brings our annualized ECL charge to 28 basis points of average loans for the year to date, which is broadly in line with our 30 to 40 basis point guidance for the full year. Next, on costs. Costs were up 6% in the first nine months of the year on a target basis, which was 1% lower than for the first half. As we explained in the previous quarter, the phasing of performance-related pay and the additional levies from the end of last year will give us a tailwind heading into Q4.

Jonathan Bingham: The wholesale ECL charge was $0.6 billion, driven by $0.4 billion in Hong Kong, of which $0.1 billion related to Hong Kong commercial real estate. While the personal charge was $0.4 billion. This brings our annualized ECL charge to 28 basis points of average loans for the year to date, which is broadly in line with our 30 to 40 basis point guidance for the full year. Next, on costs. Costs were up 6% in the first nine months of the year on a target basis, which was 1% lower than for the first half. As we explained in the previous quarter, the phasing of performance-related pay and the additional levies from the end of last year will give us a tailwind heading into Q4.

Andrew: Does that mean, Mexico.

Speaker Change: To conclude our guidance remains unchanged, namely a mid teens return on tangible equity excluding notable items for 'twenty 'twenty, four and 'twenty 'twenty five.

Any thoughts on Mexico would be appreciated and secondly on the financials themselves are not unknown NII strengths.

Andrew: Fees and other income were up 2% year on year.

Speaker Change: Banking NII of around $43 billion in 2024.

Andrew: You've now had three consecutive quarters of double digit grades.

Speaker Change: ECL for the full year within our normal medium term planning range of 30 to 40 basis points.

Andrew: Previously if I go back to your Investor day.

Andrew: You talked about high single digit grades as you mouse, specifically, you're clearly running well ahead of back consistently running well ahead of that so to what extent do you think we can extrapolate at double digit growth in future quarters and next year.

Speaker Change: Cost growth of around 5% for 'twenty 'twenty four on a target basis and mid single digit loan growth over the medium term.

Speaker Change: Without Louise can we hand over to Q&A. Thank.

Andrew: Do you.

Speaker Change: Thank you Andrew I'm going to take your first question about Mexico, and John will address the second one.

Speaker Change: Thank you Jan if you'd like to ask a question. Please use the right hand side.

Speaker Change: Can you go through and show your permit is turned on.

Andrew: So we have and.

Jon Bingham: We're on track to meet our target of around 5% cost growth for 2024 on a target basis and remain committed to cost discipline. On lending and deposits, loan balances were stable in Q3. Deposits were up 1%, driven by a $16 billion increase in Hong Kong WPB. This reflected short-term flows between invested assets and deposits, and I'd caution you against annualizing that number. Term deposits were 39% of total Hong Kong deposits, unchanged since Q2. Next, our CT1 ratio was 15.2%, up 20 basis points on Q2. A strong organic capital generation was partly offset by distributions. CT1 grew $3.1 billion during the quarter on a constant currency basis.

Jonathan Bingham: We're on track to meet our target of around 5% cost growth for 2024 on a target basis and remain committed to cost discipline. On lending and deposits, loan balances were stable in Q3. Deposits were up 1%, driven by a $16 billion increase in Hong Kong WPB. This reflected short-term flows between invested assets and deposits, and I'd caution you against annualizing that number. Term deposits were 39% of total Hong Kong deposits, unchanged since Q2. Next, our CT1 ratio was 15.2%, up 20 basis points on Q2. A strong organic capital generation was partly offset by distributions. CT1 grew $3.1 billion during the quarter on a constant currency basis.

Speaker Change: We have a good market position in Mexico, we have a good performance in Mexico.

Speaker Change: We invite you to ask a question please.

Speaker Change: So tell me.

Speaker Change: If you find your question has been answered.

Our wholesale business in Mexico is in a particular strength in our global network of connectivity, it's very strongly connected with our North American business. It's equally very strongly connected with our Asia Pacific business, and therefore as a as a key strategic.

Speaker Change: Leave yourself in the queue I know in your hand.

Speaker Change: Our first question today comes from Andrew <unk> at Citi, Great. Please tell.

Speaker Change: Your line.

Andrew: Good morning, and good afternoon in Hong Kong.

And Keystone put over.

Andrew: Two questions. Please firstly just on the reorganization very simple question given the new structure when does that lead Mexico any thoughts on Mexico would be appreciated.

Speaker Change: For our customers.

Speaker Change: Our retail business in Mexico will form part of the new business segment of international wealth and personal banking as you know all our personal banking businesses outside the Hong Kong and U K O. Two home market will be part of the international wealth and personal thank you and premier banking business.

Andrew: And secondly on the financials themselves are not known NII strengths.

Speaker Change: Fees and other income were up 2% year on year and you're right. It did you've now had three consecutive quarters of double digit grades previously if I go back you invest today in <unk>.

Speaker Change: Which will be focused on growing the affluent segment of the in the market and creating a strategic differentiation for us in the market.

Jon Bingham: This growth included $2.9 billion of other movements, mainly gains in the market value of securities classified as held to collect and sell, which are fair valued through other comprehensive income. RWAs grew by $14 billion on a constant currency basis, mainly due to broader balance sheet growth. Finally, I'd like to point out a number of upcoming events which will help you with your modeling. First, we expect the buyback we announced today to have an impact of around 0.4 percentage points on our CT1 ratio in Q4. It remains our intention to return excess capital to shareholders through a rolling series of share buybacks.

Jonathan Bingham: This growth included $2.9 billion of other movements, mainly gains in the market value of securities classified as held to collect and sell, which are fair valued through other comprehensive income. RWAs grew by $14 billion on a constant currency basis, mainly due to broader balance sheet growth. Finally, I'd like to point out a number of upcoming events which will help you with your modeling. First, we expect the buyback we announced today to have an impact of around 0.4 percentage points on our CT1 ratio in Q4. It remains our intention to return excess capital to shareholders through a rolling series of share buybacks.

Speaker Change: Single digit grades the Asia, specifically, you're clearly running well ahead of that consistently running well ahead of that so and.

Speaker Change: Where do we operate in personal banking space outside of home markets.

Speaker Change: John will take the second question, Andrew as you know we've been investing in our wealth capabilities for some time wealth was up 32% year on year in third quarter and 20% year on year for the nine months that growth was particularly driven in Asia, where we see a favorable operating environment, but we are seeing broad based growth.

To what extent do you think we can extrapolate that double digit growth.

Speaker Change: Each quarters in next year. Thank you. Thank.

Speaker Change: Thank you Andrew I'm going to take your first question about Mexico, and John will address the second one.

Speaker Change: So we have the and do we have a good market position in Mexico, we have a good performance in Mexico.

Speaker Change: Cross the main segments.

Warts by strong customer growth.

Speaker Change: Our wholesale business in Mexico is a particular strength in our global network of connectivity, it's very strongly connected with our North American business. It's equally very strongly connected with our Asia Pacific business, and therefore as a as a key strategic.

Speaker Change: And our growth in net new invested assets. So we have guided previously to.

Speaker Change: High single digit growth I think it's fair that we we may well outperform that in the short term.

Jon Bingham: Secondly, we expect to complete the sale of HSBC Argentina in Q4. As a reminder, around $5.1 billion of historical foreign exchange translation and other reserve losses will be recycled to the income statement on completion. This has already been recognized in capital and there will be no incremental impact on CT1, TNAV, or distributions. These losses will also be excluded from our dividend calculation. We expect the completion of the sale to reduce RWAs by around $8 billion, equivalent to around 0.1 percentage points of CT1. Third, we intend to begin to actively market our $8 billion-dollar legacy French home loan portfolio during Q4.

Jonathan Bingham: Secondly, we expect to complete the sale of HSBC Argentina in Q4. As a reminder, around $5.1 billion of historical foreign exchange translation and other reserve losses will be recycled to the income statement on completion. This has already been recognized in capital and there will be no incremental impact on CT1, TNAV, or distributions. These losses will also be excluded from our dividend calculation. We expect the completion of the sale to reduce RWAs by around $8 billion, equivalent to around 0.1 percentage points of CT1. Third, we intend to begin to actively market our $8 billion-dollar legacy French home loan portfolio during Q4.

John: Thank you Andrew.

Speaker Change: Thank you. Our next question comes from Brian <unk> Barclays.

And Keystone put out there.

Speaker Change: Oh with customers.

Speaker Change: Our retail business in Mexico will form part of the new business segment of international wealth and personal banking as you know all our personal banking businesses outside the Hong Kong and U K O two whole market will be part of the international wealth and personally thank you and premier banking business.

Speaker Change: The problem for me your online.

Speaker Change: Good morning, and good afternoon, and thanks very much for the presentation and the questions.

Speaker Change: Yeah, I had a question on one of them restructuring.

Speaker Change: One on net interest income please.

Speaker Change: We'll be focused on growing the affluent segment of the market and creating a strategic differentiation for us in the market.

Speaker Change: Just trying to scope the degree of ambition that you might have around.

Speaker Change: Restructuring it looks like.

Speaker Change: If it's too.

Speaker Change: <unk> restructured the business are focused on delivering net cost saves you're clearly doing very well on revenues at the moment.

Speaker Change: Where we operate and the personal banking space outside of home markets.

Speaker Change: John will take the second question.

As you know we've been investing in our wealth capabilities for some time wealth was up 32% year on year in third quarter and 20% year on year for the nine months that growth was particularly driven in Asia, where we see a favorable operating environment, but we are seeing broad based growth across the main segments.

Speaker Change: Your fee businesses are presumably a source of near term upside.

Jon Bingham: We expect to reclassify this portfolio as held to collect and sell in Q1 next year, leading to a recognition of an estimated $1 billion pretax loss, equivalent to around 0.1 percentage points of CT1. Finally, the PRA recently published near final rules on Basel 3.1. These are incrementally better than we previously expected. We continue to expect them to have an immaterial impact on our CT1 ratio upon implementation. To conclude, our guidance remains unchanged, namely a mid-teens return on tangible equity, excluding notable items for 2024 and 2025. Banking NII of around $43 billion in 2024. ECLs for the full year within our normal medium-term planning range of 30 to 40 basis points. Cost growth of around 5% for 2024 on a target basis and mid-single digit loan growth over the medium term.

Jonathan Bingham: We expect to reclassify this portfolio as held to collect and sell in Q1 next year, leading to a recognition of an estimated $1 billion pretax loss, equivalent to around 0.1 percentage points of CT1. Finally, the PRA recently published near final rules on Basel 3.1. These are incrementally better than we previously expected. We continue to expect them to have an immaterial impact on our CT1 ratio upon implementation. To conclude, our guidance remains unchanged, namely a mid-teens return on tangible equity, excluding notable items for 2024 and 2025. Banking NII of around $43 billion in 2024. ECLs for the full year within our normal medium-term planning range of 30 to 40 basis points. Cost growth of around 5% for 2024 on a target basis and mid-single digit loan growth over the medium term.

The market expectations, but I think the outlook is volatile.

Speaker Change: These things are outside of U.

Speaker Change: Area of control.

Speaker Change: Well.

Speaker Change: Or is the scale of the ambition.

Round, what you'd be looking to achieve on things like cost Indeed OWS.

Speaker Change: Warts by strong customer growth.

Speaker Change: And growth in net new invested assets. So we have guided previously to.

Speaker Change: As you're trying to kind of future proof the medium term.

Speaker Change: Tangible equity outlook.

Speaker Change: And then I have a second question on net interest income so I think the.

Speaker Change: High single digit growth I think it's fair that we we may well outperform that in the short term.

Speaker Change: I'm, taking the kind of banking NII guide at face value and trying to mix out.

Andrew: Thank you Andrew.

Speaker Change: Thank you. Our next question comes from I'm, Brian <unk> Barclays.

Speaker Change: Argentina, and I think it's implying a kind of annualized run rate.

Speaker Change: Around $41 5 billion at the fourth quarter.

Speaker Change: Your line.

Speaker Change: Okay.

As a jumping off point into 'twenty five.

Speaker Change: Good morning, and good afternoon, thanks, very much for the presentation and the questions.

Speaker Change: Maybe a bit of a low value question, but interested if you are able to at this stage just to comment on.

Yeah, I had a question on one of them restructuring.

Speaker Change: One on net interest income please.

Speaker Change: Banking non interest income aspect consensus in 25, I think the street's at around $41 billion.

Speaker Change: Just trying to scope the degree of ambition that you might have around.

Jon Bingham: With that, Louise, can we hand over to Q&A?

Jonathan Bingham: With that, Louise, can we hand over to Q&A?

Operator: Thank you, Jon. 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 Andrew Coombs at Citigroup. Please accept the prompt to unmute your line.

Speaker Change: So you know as I said about 41.5, not looking for too much <unk>.

Speaker Change: Restructuring it looks like.

Speaker Change: Efforts too.

Our restructuring business are focused on delivering that cost saves, you're clearly doing very well on revenues at the moment.

Speaker Change: Attrition from here would be great to get even if you're not willing to put a number on it but how do you see the moving parts so well that place. Thank you very much.

Speaker Change: If the businesses are presumably a source of near term upside tomorrow.

Speaker Change: Thank you I'll answer the two questions again I'm going to address your first question on the reorganization and John can take us through the NII elements.

Speaker Change: Market expectations, but I think the outlook is volatile.

Speaker Change: These things are outside of U.

Speaker Change: Area of control.

Speaker Change: So the primary reason for the reorganization is to create a simpler more dynamic more agile leaner bank, it's really to allow us to empower our frontline staff.

Speaker Change: So you know what.

Speaker Change: Or is the scale of the ambition.

Jon Bingham: Hello, Andrew.

Jonathan Bingham: Hello, Andrew.

Andrew Coombs: Good morning, and good afternoon for those in Hong Kong. Two questions, please. One, firstly, just on the reorg and strategy. A very simple question, given the new structure, where does that leave Mexico? Any thoughts on Mexico would be appreciated. Then secondly, on the financials themselves, on that non-NII strength, where fees and other income are up 32% year-over-year, and you've highlighted you've now had three consecutive quarters of double-digit growth. Previously, if I go back to your Investor Day in 2023, you talked about high single-digit growth for Asian wealth specifically. You're clearly running well ahead of that and consistently running well ahead of that. To what extent do you think we can extrapolate that double-digit growth into future quarters in next year? Thank you.

Round, what you'd be looking to achieve on things like cost Indeed OWS.

Speaker Change: Because you're trying to kind of future proof the medium term.

Speaker Change: And make it faster to make decisions and ultimately.

Speaker Change: Tangible equity outlook.

Speaker Change: <unk> customers better that's the primary reason now as a result of some.

Speaker Change: And then I had a second question on net interest income so I think the.

Speaker Change: I'm, taking the kind of banking NII guide at face value and trying to mix out.

Speaker Change: Simpler leaner more efficient bank, they will be cost saves.

Speaker Change: Argentina, and I think it's implying an annualized run rate.

Speaker Change: The cost takeout will be essential in the form of severance related cost it will be affecting senior roles that will be duplicated or the reduction of the number of senior roles will drive this we will be giving you.

Speaker Change: Around $41 5 billion at the fourth quarter.

Speaker Change: <unk>.

As a jumping off point into 'twenty five.

Speaker Change:

Maybe a bit of a low value question, but interested if you are able to at this stage just to comment on <unk>.

Speaker Change: Those details about you know the figures about.

Speaker Change: The upfront costs as well as the benefits realization.

Speaker Change: Banking non interest income as both consensus and 25 I think the street's at around $41 billion.

Speaker Change: In the full year in the full year results in February.

Georges Elhedery: Thank you, Andrew. I'm going to take your first question about Mexico, and Jon will address the second one. We have, Andrew, a good market position in Mexico. We have a good performance in Mexico. Our wholesale business in Mexico is in a particular strength in our global network of connectivity. It's very strongly connected with our North American business. It's equally very strongly connected with our Asia Pacific business. Therefore is a key strategic cornerstone for our customers. Our retail business in Mexico will form part of the new business segment of International Wealth and Premier Banking.

Speaker Change: So you know as I said about 41.5, not looking for too much.

Speaker Change: What I can say is number one.

Speaker Change: The benefits will exceed the upfront costs and the payback is going to happen in the short timeframe thereafter.

Attrition from here would be great to get even if you're not willing to put a number on it but how do you see the moving parts. So well that please thank you very much.

Speaker Change: And then the second point to share with you is that we remain fully committed to cost discipline have been sharing this in my.

Speaker Change: Thank you I'll answer the two questions again I'm going to address your first question on the reorganization and John can take us through the NII elements.

Speaker Change: Days as group CFO I carry on this mission of being fully committed to cost discipline and this is now embedded in the firm that you could as you have seen from our Q3 results.

Speaker Change: So the primary reason for the reorganization is to create a simpler more dynamic more agile leaner bank, it's really to allow us to empower our frontline staff.

Speaker Change: For 'twenty 'twenty four we remain on track to deliver on road.

Speaker Change: Cost target, we are committed to it and we are confident we will be able to achieve it.

Speaker Change: And make it faster to make decisions and ultimately showboat customers better. That's the primary reason now as a result.

Speaker Change: Don.

Speaker Change: So on banking I. Thanks for the question I'm on for might be forgive I'm, giving you a slightly longer answer today. So if we start on the 'twenty 'twenty four we've reiterated our guidance on <unk> for a banking NII of around 43 billion, but encourage you to think about that.

Georges Elhedery: As you know, all our personal banking businesses outside Hong Kong and the UK, our two home markets, will be part of the International Wealth and Premier Banking business. Which will be focused on growing the affluent segment in the market and creating a strategic differentiation for us in the market, where we operate in the personal banking space outside home markets. Jon will take the second question.

Speaker Change: Okay.

Speaker Change: Simpler leaner more efficient bank, they will be cost saves.

Speaker Change: Cost take out will be essential in the form of evidence what related cost it will be affecting senior roles.

Speaker Change: <unk>.

Speaker Change: 42 billion ex Argentina.

Speaker Change: That will be duplicated or the reduction of the number of senior roles will drive this we will be giving you.

In total we printed $31 6 billion for the nine months to date and we think the Q3 run rate of 10 6 billion is a pretty clean run rate for you to think about modeling 2025.

Speaker Change: Those details about you know the figures about for.

Jon Bingham: Andrew, as you know, we've been investing in our wealth capabilities for some time. Wealth was up 32% year-on-year in Q3 and 20% year-on-year for the nine months. That growth was particularly driven in Asia, where we see a favorable operating environment, but we are seeing broad-based growth across the main segments. That's supported by strong customer growth, and growth in net new invested assets. We have guided previously to high single digit growth. I think it's fair that we may well outperform that in the short term.

Jonathan Bingham: Andrew, as you know, we've been investing in our wealth capabilities for some time. Wealth was up 32% year-on-year in Q3 and 20% year-on-year for the nine months. That growth was particularly driven in Asia, where we see a favorable operating environment, but we are seeing broad-based growth across the main segments. That's supported by strong customer growth, and growth in net new invested assets. We have guided previously to high single digit growth. I think it's fair that we may well outperform that in the short term.

The upfront costs as well as the benefits realization.

Speaker Change: In the full year in the full year results in February, but what I can say is number one the benefits will exceed the upfront costs and the payback is going to happen in the short timeframe thereafter.

Speaker Change: We don't provide guidance at this stage on 25, 25 banking NII guidance, but if you take that clean run rates of the $10 6 billion, which I agree. Its about 42 billion will have disposed of Argentina. So therefore, we then think of the building blocks for you to model less alone for Fox.

Speaker Change: And then the second point to share with you is that we remain fully committed to cost discipline of pinch hitting this in my.

Speaker Change: Days as group CFO I carry on this mission of being fully committed to cost discipline and this is now embedded in the firm as you could as you have seen from our Q3 results.

Speaker Change: Firstly rates are the reduction in rates implied in markets will be a clearly a headwind.

Speaker Change: For 2024, we remain on track to deliver at all no.

Georges Elhedery: Thank you, Andrew.

Operator: Thank you. Our next question comes from Aman Rakkar at Barclays. Please accept the prompt to unmute your line.

Speaker Change: During the third quarter.

Speaker Change: Cost target, we are committed to it and we are confident we will be able to achieve it.

Speaker Change: Given the timing of them they have a relatively modest impact on the third quarter's results, but we would encourage you to use our banking NII sensitivity against market implied rates to generate that component.

Speaker Change: Don.

Don: So on banking I. Thanks for the question I'm on for might be forgive me I'm, giving you a slightly longer answer today. So if we start on the 'twenty 'twenty four we've reiterated our guidance on 'twenty four of banking NII of around 43 billion, but encourage you to think about that.

Aman Rakkar: Good morning and good afternoon. Thanks very much for the presentation and the questions. Yeah, I had a question on one on restructuring and one on net interest income, please. Just trying to scope the degree of ambition that you might have around restructuring. It looks like, you know, efforts to restructure the business are focused on delivering net cost savings. You're clearly doing very well on revenues at the moment, particularly the fee businesses are presumably a source of near-term upside to market expectations. I think, you know, the outlook is volatile. A lot of these things are outside of your area of control.

Speaker Change: We then have the structural hedge that will provide a tailwind we've got the reinvestment of maturing positions that will enable us to reinvest them at higher rates. We've signaled for 2025, you've got 115 billion.

Don: <unk> 42 billion ex Argentina.

In total we printed $31 6 billion for the nine months to date and we think the Q3 run rate of a $10 6 billion is a pretty clean run rate for you to think about modeling 2025.

Speaker Change: Maturing at an average yield of about two 9% so think about those maturing and being in a place that something along the lines of five year bond.

Speaker Change: Bond rates.

Speaker Change: We then got volume growth, while volume growth has been relatively subdued in 2024, we do hope that with interest rates coming off an economic activity picking up that we will see.

We don't provide guidance at this stage on 2025 banking NII guidance, but if you take that clean run rates of the $10 6 billion, which I agree. Its about 42 billion will have disposed of Argentina. So therefore, we then think of the building blocks for you to model less along fault.

Aman Rakkar: You know, what is the scale of the ambition around what you'd be looking to achieve on things like costs and indeed RWAs? As you try and kind of future-proof the medium term return on tangible equity outlook. I had a second question on net interest income. I think I'm taking the kind of banking NII guide at face value and trying to nix out Argentina. I think it's implying a kind of annualized run rate of around $41.5 billion at Q4, as a jumping off point into 2025. Maybe a bit of a low value question, but interested if you were able to, at this stage, just to comment on banking net interest income as per consensus in 2025. I think the street's at around $41 billion.

More loan growth.

Speaker Change: We are we continue to guide to mid single digits in the medium to long term the timing of getting there will be unpredictable.

Speaker Change: And then lastly, we keep an eye on time deposit migration that has been relatively stable, particularly in Hong Kong at 39% over the last couple of quarters.

Don: Actors firstly rates are the reduction in rates implied in markets will be a clearly a headwind.

Don: The cuts during the third quarter.

Speaker Change: Well the impact on that.

Don: Given the timing of them they have a relatively modest impact on the third quarter's results, but we would encourage you to use our banking NII sensitivity against market implied rates to generate that component.

Speaker Change: As rates come off will will be variable it depends on competitive pressures on customer behavior. So all of those factors is how we have thought about it the model data.

Speaker Change: And included that without a mid teens royalty guidance for 2025.

Don: We then have the structural hedge that will provide a tailwind we've got the reinvestment of maturing positions that will enable us to reinvest them at higher rates. We've signaled for 2025, you've got 115 billion.

Speaker Change: Sean Thank you Omar thank you.

Speaker Change: Can I just one follow up thanks, very much for the really detailed answer.

Sean: In relation to the mid teens royalty aspiration. This year does that include or exclude any potential kind of upfront cost as part of any restructuring.

Aman Rakkar: You know, versus that 41.5, not looking for too much attrition from here. It'd be great to get, you know, if you're not willing to put a number on it, but how you see the moving parts are out there, please. Thank you very much.

Don: Maturing at an average yield of about two 9% so think about those maturing and being placed at something along the lines of five year bond.

Speaker Change: So so the mid teens royalty guidance is excluding notable items, we will come back to you in February with full details of the benefits and costs of the reorganization.

Georges Elhedery: Thank you, Armand, for the two questions. Again, I'm going to address your first question on the reorganization, and Jon can take us through the NII, the elements. Armand, the primary reason for the reorganization is to create a simpler, more dynamic, more agile, leaner bank. It's really to allow us to empower our frontline staff, and make it faster to make decisions and ultimately, serve our customers better. That's the primary reason. Now, as a result of simpler, leaner, more efficient bank, there will be cost saves. The cost takeout will be essentially in the form of severance or related costs. It will be affecting senior roles that will be duplicated or, you know, the reduction of the number of senior roles will drive this.

Don: Bond rates.

Don: We then got volume growth, while volume growth has been relatively subdued in 2024, we do hope that with interest rates coming off an economic activity picking up that we will see.

Speaker Change: Thank you so much thank you Aman.

Speaker Change: Our next question today comes from James in line at Redburn.

Speaker Change: Tell me your line.

Speaker Change: Hi, good morning, as you both or good evening.

More loan growth.

Don: We are we continue to guide to mid single digits in the medium to long term the timing of getting there will be unpredictable.

James: I've got two please the first is on the wealth business. So clearly.

James: There's some really good revenue numbers I was just wondering if you could kind of explain the slight disconnect with the net new invested asset number in Asia.

Don: And then lastly, we keep an eye on time deposit migration that has been relatively stable, particularly in Hong Kong at 39% over the last couple of quarters.

James: Which certainly was positive, but probably not quite as positive as I might have expected given how good the revenue line was and then second could.

Don: Well the impact on that.

Don: As rates come off will will be variable it depends on competitive pressures on customer behavior. So all of those factors is how we have thought about it the model data.

James: Could you just share your thoughts about the outlook for corporate loan growth.

James: Across Asia, So in fact loan growth more generally across Asia.

Georges Elhedery: We will be giving you those details about, you know, the figures about the upfront costs as well as the benefits realization in the full year results in February. What I can say is, number one, the benefits will exceed the upfront costs, and the payback is going to happen in a short timeframe thereafter. The second point to share with you is that we remain fully committed to cost discipline. I've been sharing this in my days as Group CFO. I carry on this mission of being fully committed to cost discipline, and this is now embedded in the firm. As you have seen from our Q3 results for 2024, we remain on track to deliver on our cost target.

James: So I think in the second quarter, we saw both Hong Kong and kind of ex Hong Kong, all slightly but I think three months ago. No. One was sounding a bit more positive at least on some.

And included that within a mid teens royalty guidance for 2025.

Don: Sean Thank you Omar thank you.

Speaker Change: Can I just one follow up thanks, very much for the really detailed answer.

James: Kong also we've had.

Sean: In relation to the mid teens royalty aspiration that she does that.

James: The instruments in China are about a month ago.

Speaker Change: So just where do we go from here on the Asia loan volumes.

Sean: Include or exclude any potential kind of upfront cost as part of any restructuring.

Speaker Change: Thank you James I'm going to share some thoughts on your two questions and I'll ask John to go into more details about both of them.

Speaker Change: So the mid teen royalty guidance is excluding notable items, we will come back to you in February with full details of the benefits and costs of the reorganization.

Speaker Change: First our wealth business as you've seen in this quarter as exhibited double digit returns. This is the third quarter and at all with them with similar type returns.

Speaker Change: Thank you so much thank you Herman.

Speaker Change: Our next question today comes from James in line, where it's been.

Speaker Change: <unk> business as you know is generated from four segments.

Speaker Change: One of which has performed quite twin which is the trading activities of our customers and that manifests both in the private bank as well as node invested assets they have been very strong and they've been.

Speaker Change: The problem for me your line.

James: Hi, Good morning, as you both good evening.

James: I've got two please the first is on the wealth business. So clearly.

Georges Elhedery: We are committed to it, and we're confident we will be able to achieve it. John.

James: There's some really good revenue numbers I was just wondering if you could kind of explain the slight disconnect with the net new invested asset number in Asia.

Jon Bingham: On banking NII. Thanks for the question, Armand. If I might be forgiven giving you a slightly longer answer to this. If we start on 2024, we've reiterated our guidance on 2024 of banking NII of around $43 billion, but encourage you to think about that as $42 billion ex-Argentina. In total, we printed $31.6 billion for the nine months to date. We think the Q3 run rate of $10.6 billion is a pretty clean run rate for you to think about modeling 2025. We don't provide guidance at this stage on 2025 banking NII guidance. If you take that clean run rate of the $10.6 billion, which aggregates about $42 billion, we'll have disposed of Argentina.

Jonathan Bingham: On banking NII. Thanks for the question, Armand. If I might be forgiven giving you a slightly longer answer to this. If we start on 2024, we've reiterated our guidance on 2024 of banking NII of around $43 billion, but encourage you to think about that as $42 billion ex-Argentina. In total, we printed $31.6 billion for the nine months to date. We think the Q3 run rate of $10.6 billion is a pretty clean run rate for you to think about modeling 2025. We don't provide guidance at this stage on 2025 banking NII guidance. If you take that clean run rate of the $10.6 billion, which aggregates about $42 billion, we'll have disposed of Argentina.

Speaker Change: Even stronger following the measures we've seen in China on the outlook for corporate loan growth in Asia.

James: Which certainly was positive, but probably not quite as positive as I might have expected given how good the revenue line was and then second could.

Speaker Change: We are as I shared earlier, we are.

Speaker Change: We are very encouraged by the policy measures that have been taking place that have taken place both in mainland China as well as the as well as in Hong Kong. We see these measures combined with the outlook on the rates coming down.

James: Could you just share your thoughts about the outlook for corporate loan growth.

James: Across Asia, So in fact loan growth more generally across Asia.

Speaker Change: So I think in the second quarter, we saw both Hong Kong and kind of ex Hong Kong, all slightly but I think three months ago. No. One was sounding a bit more positive at least on some.

Speaker Change: As supportive of future growth, specifically in our Hong Kong book.

Speaker Change: And outside Hong Kong rest of Asia remains resilient Southeast Asia.

Speaker Change: <unk> also we've had.

The instruments in China are about a month ago.

Speaker Change: And South Asia remained quite strong in terms of loan growth, although of course, a different size and order books than Hong Kong.

Speaker Change: So just where do we go from here on the Asia loan volumes.

Speaker Change: Thank you James I'm going to share some thoughts on your two questions and I'll ask John to go into more details about both of them.

Speaker Change: John So just to amplify your comments on wealth. So we're seeing good growth in wealth.

Speaker Change: First our wealth business as you've seen in this quarter as exhibited double digit returns. This is the third quarter and at all with them with similar type returns.

Speaker Change: We see.

Speaker Change: The net new and vascular assets, we're very pleased with that they are in Asia. They have grown by 11 billion in the quarter and 49 billion over the nine months.

Jon Bingham: We then think of the building blocks for you to model this along four factors. Firstly, rates. The reduction in rates implied in markets will be clearly a headwind. The cuts during the Q3, given the timing, they had a relatively modest impact on the Q3's results. We'd encourage you to use our banking NII sensitivity against market implied rates to generate that component. We then have the structural hedge that will provide a tailwind. We've got the reinvestment of maturing positions that will enable us to reinvest them at higher rates. We've signaled that for 2025, we've got $115 billion maturing at an average yield of about 2.9%. Think about those maturing and being replaced at something along the lines of five-year bond rates.

Jonathan Bingham: We then think of the building blocks for you to model this along four factors. Firstly, rates. The reduction in rates implied in markets will be clearly a headwind. The cuts during the Q3, given the timing, they had a relatively modest impact on the Q3's results. We'd encourage you to use our banking NII sensitivity against market implied rates to generate that component. We then have the structural hedge that will provide a tailwind. We've got the reinvestment of maturing positions that will enable us to reinvest them at higher rates. We've signaled that for 2025, we've got $115 billion maturing at an average yield of about 2.9%. Think about those maturing and being replaced at something along the lines of five-year bond rates.

Speaker Change: Business as you know is generated from four segments.

Speaker Change: You will see some movements as we Gras wealth franchise. We also have 16 billion of deposits, which George talks about we will see also deposits increase that they will ultimately.

Speaker Change: Feed into the wealth share of of wallets that we've gone so continues to be encouraged.

Speaker Change: Even stronger following the measures we've seen in in China on the outlook for corporate loan growth in Asia.

Speaker Change: On corporate loan growth nothing more to add than George's comments. Thanks. Thank you James.

Speaker Change: We are as I shared earlier, we are.

Speaker Change: Thank you.

Speaker Change: We are very encouraged by the policy measures that have been taking place that have taken place both in mainland China as well as the as well as in Hong Kong, We see these measures combined with the outlook on rates coming down.

Speaker Change: Our next question today will come true.

Speaker Change: China Securities.

Speaker Change: At the pump.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: Hey, good morning, Good morning, Jeff. This is a long China securities. Thank you for taking my question and then one question on <unk>.

Speaker Change: As supportive of future growth specifically in out of Hong Kong book.

Banking because really the thing.

Speaker Change: A slight recovery in our transaction banking income in the third quarter.

Speaker Change: And outside Hong Kong, the rest of Asia remains resilient Southeast Asia, and South Asia remained quite strong in terms of loan growth although of course, a different size and other books than Hong Kong.

Jon Bingham: We've then got volume growth. While volume growth has been relatively subdued in 2024, we do hope that with interest rates coming off and economic activity picking up, that we will see more loan growth. We continue to guide to mid-single digits in the medium to long term. The timing of getting there will be unpredictable. Lastly, we keep an eye on time deposit migration. That has been relatively stable, particularly in Hong Kong, at 39% over the last couple of quarters. The impact on that as rates come off will be variable. It depends on competitive pressures and customer behavior. All of those factors is how we have thought about it and modeled it, and included that within our mid-teens ROTI guidance for 2025. Thanks, Armand.

Jonathan Bingham: We've then got volume growth. While volume growth has been relatively subdued in 2024, we do hope that with interest rates coming off and economic activity picking up, that we will see more loan growth. We continue to guide to mid-single digits in the medium to long term. The timing of getting there will be unpredictable. Lastly, we keep an eye on time deposit migration. That has been relatively stable, particularly in Hong Kong, at 39% over the last couple of quarters. The impact on that as rates come off will be variable. It depends on competitive pressures and customer behavior. All of those factors is how we have thought about it and modeled it, and included that within our mid-teens ROTI guidance for 2025. Thanks, Armand.

Speaker Change: Maybe mainly driven by FX.

Speaker Change: Thanks <unk>.

Speaker Change: We do it and maybe we can see more rate cuts going forward kind of we can maybe see continuous.

Speaker Change: John So just to amplify your comments on wealth and so we're seeing good growth in wealth.

Speaker Change: FX commodities.

Speaker Change: Going forward. So could you. Please give me a little bit more color on it.

Speaker Change: We see.

John So: The net new and vascular assets, we're very pleased with that they are in Asia. They have grown by 11 billion in the quarter and 49 billion over the nine months.

Speaker Change: Excuse me out of the transaction banking so if you can.

Speaker Change: Could you comment on those and then I ended.

Speaker Change: That's going to be quite appreciate it.

John So: You will see some movements as we Gras wealth franchise. We also have 16 billion of deposits, which George talks about we'll see also deposits increase that they will ultimately.

Speaker Change: Thank you campaign I'll ask.

Speaker Change: John to comment on this area, where as you've heard the saying an area of strategic differentiation for us split out of wholesale customers and where do we keep investing and do expect continued growth in this space given our investments in our leadership in this space John.

John So: Feed into the wealth share of of wallets that we've gone so continues to be encouraged.

Speaker Change: On corporate loan growth nothing more to add than George's comments. Thanks. Thank you James.

John: Yeah. So we've been pleased by the growth in wholesale transaction banking in the quarter up 7% as you say, Oh and elements of docs as client driven activity around FX and rates volatility.

John So: Thank you.

Georges Elhedery: Thank you, Armand.

Speaker Change: Our next question today will come true.

Aman Rakkar: Thank you. Could I just one follow-up? Thanks very much for that really detailed answer. In relation to the mid-teens ROTI aspiration next year, does that include or exclude any potential kind of upfront costs as part of any restructuring?

Speaker Change: China Securities.

Speaker Change: Is that the problem.

Speaker Change: Right.

John: But within that we continue to invest in global solutions and global payments.

Speaker Change: Okay.

Speaker Change: Hey, good morning, Good morning, Jeff. This is a long China securities. Thank you for taking my question and then one question on China.

John: And global trade solutions, we continue to grow our market share in both Hong Kong and the U K and so as that market comes back.

Jon Bingham: The mid-teen ROTI guidance is excluding notable items. We'll come back to you in February with full details of the benefits and costs of the reorganization.

Jonathan Bingham: The mid-teen ROTI guidance is excluding notable items. We'll come back to you in February with full details of the benefits and costs of the reorganization.

Speaker Change: Banking because really the thing.

Speaker Change: And a slight recovery in our transaction banking income in the third quarter.

John: There is the opportunity for us to be a platform travel growth. Similarly, you can see us to continue to invest in global payment solutions, and we see a very optimistic path full day payment markets going forward.

Maybe mainly driven by FX.

Kunpeng Ma: Thank you so much.

Speaker Change: Thanks Tejas.

Georges Elhedery: Thank you, Aman.

Speaker Change: We do it and maybe we can see more rate cuts going forward kind of we can maybe see continued.

Operator: Our next question today comes from James Irvine at Redburn. Please accept the prompt to unmute your line.

Speaker Change: FX commodities.

James Irvine: Hi, good morning to you both, or good evening. I've got 2, please. The first is on the wealth business, so clearly notable, some really good revenue numbers. I was just wondering if you could kind of explain the slight disconnect with the net new invested asset number in Asia, you know, which certainly was positive, but probably not quite as positive as I might have expected, given how good the revenue line was. Second, could you just share your thoughts about the outlook for corporate loan growth across Asia. In fact, loan growth more generally across Asia. I think in Q2, we saw both Hong Kong and ex Hong Kong all slightly. But I think three months ago, Noel was sounding a bit more positive, at least on Hong Kong.

Speaker Change: But just going forward. So could you. Please give me a little bit more color on that.

Speaker Change: Thank you. Thank you confirmed.

Speaker Change: Thank you. Our next question today comes from Amit go meet here Brenda please.

Speaker Change: Excuse me out of the transaction banking so if you can.

Could you comment on those and then I know that that's going to be quite appreciate it.

Speaker Change: Your line.

Yeah.

Speaker Change: Thank you campaign I'll ask.

Speaker Change: Yeah.

Speaker Change: Hey, Thank you and two questions for me one just coming back on the simplification program and just curious and I guess in the past and in the group hasn't opted to combine commercial banking GBM and say just curious.

Speaker Change: John to comment on this area, where as you've heard the saying an area of strategic differentiation put us put out a wholesale customers and where do we keep investing and do expect continued growth in this space given our investments in our leadership in this space John Yeah. So we've been pleased by the growth in.

Speaker Change: What's kind of scene is different now.

Speaker Change: Transaction banking in the quarter up 7% as you say.

Speaker Change: Which makes this end.

Speaker Change: And elements of that as client driven activity around FX and rates volatility.

Speaker Change: More feasible and.

Speaker Change: Easy to execute with best maybe revenue attrition or.

James Irvine: Also, we've had, you know, the announcements in China about a month ago. Just where do we go from here on the Asia loan volumes?

Speaker Change: The consideration.

Speaker Change: But within that we continue to invest in global solutions and global payments.

Speaker Change: And then secondly, just on the ECL charges.

Speaker Change: A bit higher than we anticipated it looks like a bit of that from Oh.

Georges Elhedery: Thank you, James. I'm going to share some thoughts on your two questions, and I'll ask Jon to go into more details about both of them. First, our wealth business, as you've seen in this quarter, has exhibited double-digit returns. This is the third quarter in a row with similar type returns. Wealth business, as you know, is generated from four segments, one of which has performed quite well, which is the trading activities of our customers. That manifests both in the private bank as well as in our invested assets. They have been very strong, and they've been even stronger following the measures we've seen in China.

Speaker Change: On global trade solutions, we continue to grow our market share in both Hong Kong and the U K and so as that market comes back.

Speaker Change: Hum challenge in the UK ring fenced bank and say just curious if there's any kind of additional color.

Speaker Change: There is the opportunity for us to be a platform travel growth. Similarly, you can see is to continue to invest in global payment solutions and we see a very optimistic path for the payment markets going forward.

Speaker Change: Okay.

You can provide on that change in how you're thinking about the kind of 40 bps in the context of and getting into guidance into next year. Thank you.

Speaker Change: Thank you Amit.

Speaker Change: Let me address your first question and then John can address the ECL charges question.

Speaker Change: Thank you thank you Catherine.

Speaker Change: Thank you. Our next question today comes from Amit go meet here Brenda please accept the pumps to meet your line.

Speaker Change: So the primary reason of this reorganization is to simplify the bank as we shared.

Speaker Change: Okay.

Georges Elhedery: On the outlook for corporate loan growth in Asia, as I shared earlier, we are very encouraged by the policy measures that have taken place both in mainland China as well as in Hong Kong. We see these measures combined with the outlook on rates coming down, as supportive of future growth, specifically in our Hong Kong book. Outside Hong Kong, the rest of Asia remains resilient. Southeast Asia and South Asia have remained quite strong in terms of loan growth, although, of course, of a different size in our books than Hong Kong. Jon.

Speaker Change: But we've been on them on a multiyear journey to simplify the activities. We're doing the bank we've been exiting activities that were non strategic we've been reshaping our portfolio, we've exited markets or activities.

Speaker Change: Hey, Thank you.

Speaker Change: Two questions for me, one just coming back on the simplification program and just curious and I guess in the past and in.

Speaker Change: The group has an uptick to combine commercial banking GBM and let's say just curious what's kind of scene is different now.

Speaker Change: Currently we're on track to.

Speaker Change: To complete the sale of our Argentina business, our media business and announced two additional exits in September, including South Africa as well as the private.

Speaker Change: Which makes this end.

Speaker Change: More feasible and then an agent you execute with desk, maybe revenue attrition or.

Speaker Change: Private bank in Germany.

Speaker Change: That activity was addressing the what's in terms of what we do as a strategy. The reorganization we have announced last week is basically addressing the how.

Speaker Change: The consideration.

Speaker Change: And then secondly, just on the ECL charges.

Speaker Change: So a little bit higher than we anticipated.

Speaker Change: We execute our strategy is not changing the world is changing the hull.

Speaker Change: Like a bit of that from.

Jon Bingham: Just to amplify your comments on wealth. We're seeing good growth in wealth. We see the net new investor assets. We're very pleased with that. They've in Asia, they've grown by $11 billion in Q3 and 49 billion over the nine months. You will see some movements as we grow our wealth franchise. We also have 16 billion of deposits, which Georges talked about. We'll see also deposits increase. They will ultimately feed into the wealth share of wallets that we've grown. Continue to be encouraged. On corporate loan growth, nothing more to add than Georges's comments. Thanks.

Jonathan Bingham: Just to amplify your comments on wealth. We're seeing good growth in wealth. We see the net new investor assets. We're very pleased with that. They've in Asia, they've grown by $11 billion in Q3 and 49 billion over the nine months. You will see some movements as we grow our wealth franchise. We also have 16 billion of deposits, which Georges talked about. We'll see also deposits increase. They will ultimately feed into the wealth share of wallets that we've grown. Continue to be encouraged. On corporate loan growth, nothing more to add than Georges's comments. Thanks.

Speaker Change: Hum.

Speaker Change: I don't see any.

Speaker Change: And the reason, we could effectively execute the how we change our strategy as in be simpler more agile is because of the work we have done over the past few years and simplifying the what we do so there is the it is the right time now to address how we operate how we execute our strategy because.

Speaker Change: Ring fence bank.

Speaker Change: Say just check if there's any kind of additional kind of.

Speaker Change: Uh huh.

Speaker Change: You can provide on that change in how you're thinking about the kind of 40 bps in the context of <unk>.

Speaker Change: The guidance into next year. Thank you.

Speaker Change: Thank you Amit let.

Speaker Change: We've simplified but we do we've clarified with our core strategic areas for us, where we have competitive strengths and where we have leadership.

Speaker Change: Let me address your first question and then John can address the ECL charges question.

Speaker Change: So the primary reason of this reorganization is to simplify the bank as we shared.

Speaker Change: And opportunities to grow.

Speaker Change: So the timing therefore, as a natural kind of conclusion of the various activities that we have been taking through the through the transformation.

Georges Elhedery: Thank you, James.

James Irvine: Thank you.

Operator: Our next question today comes from Kunpeng Ma at China Securities. Please accept the prompt to unmute your line.

Speaker Change: Over the last five years.

Speaker Change: I want to say that outside the U K and Hong Kong, where we have emerging all our commercial banking activities with global banking and look at activities to form the corporate and institutional bank. It will comprise our core products, including our balance sheet related products credit and lending and deposits or transaction banking products as well as <unk>.

Speaker Change: Currently we're on track to.

Kunpeng Ma: Okay. Good morning, Georges. Good morning, Jon. This is Kunpeng Ma, China Securities. Thank you for taking my question. I got one question on transaction banking, because we've seen a slight recovery in the transaction banking income in Q3, but I think that's maybe driven by the FX volatilities. Going forward, maybe we can see more rate cuts going forward, and maybe we're gonna see continued FX volatilities going forward. Could you please give me a little bit more color on the future outlook of the transaction banking income? If you could, you know, comment on both NII and non-NII, that's gonna be quite appreciated. Thank you.

Speaker Change: To complete the sale of our Argentina business note, our media business and announced two additional exits in September, including South Africa, as well as the private.

Speaker Change: Private bank in Germany now.

That activity was addressing the what's in terms of what we do as a strategy. The reorganization, we announced last week is basically addressing the how.

Other products such as investment banking go to markets.

Speaker Change: And this should give our customers a more seamless way to deal with HSBC across all this product spectrum that we offer them.

Speaker Change: We execute our strategy is not changing the world is changing the hull.

Speaker Change: John.

John: So thanks, Amit I'll give you a bit more color on the ECL charges of 1 billion charge in third quarter, which is 40 basis points of average loans, that's actually a more normal charge because Q2 benefited from releases and recoveries.

Georges Elhedery: Thank you, Kunpeng. I'll ask Jon to comment on this area where, as you've heard us saying, an area of strategic differentiation for us, for our wholesale customers, and where we keep investing and do expect continued growth in this space, given our investment and our leadership in this space. Jon?

John: If you then dissect the third quarter charge, there's three things.

John: Within that so firstly, the U K, which is a point 2 billion charge again not benefited from the release it releases in the second quarter.

Speaker Change: We've simplified but we do we've clarified with our core strategic areas for us where do we have competitive strengths and where we have leadership.

John: It's a more normal charged as nothing more going on in Hong Kong in total we incurred a point 5 billion charge.

Speaker Change: And opportunities to grow.

Speaker Change: So the timing therefore, as a natural kind of conclusion of the various activities that we have been taking through the through the transformation.

Jon Bingham: Yeah. We've been pleased by the growth in wholesale transaction banking in the quarter, up 7%. As you say, an element of that is client-driven activity around FX and rates volatility. But within that, we continue to invest in Global Trade Solutions and Global Payment Solutions. In Global Trade Solutions, we continue to grow our market share in both Hong Kong and the UK. As that market comes back, there is the opportunity for us to be a platform for our growth. Similarly, you can see us continue to invest in Global Payment Solutions, and we see a very optimistic path for the payment markets going forward.

Jonathan Bingham: Yeah. We've been pleased by the growth in wholesale transaction banking in the quarter, up 7%. As you say, an element of that is client-driven activity around FX and rates volatility. But within that, we continue to invest in Global Trade Solutions and Global Payment Solutions. In Global Trade Solutions, we continue to grow our market share in both Hong Kong and the UK. As that market comes back, there is the opportunity for us to be a platform for our growth. Similarly, you can see us continue to invest in Global Payment Solutions, and we see a very optimistic path for the payment markets going forward.

Speaker Change: As you said that was mainly point 4 billion charge in wholesale which included.

Speaker Change: Over the last five years.

Speaker Change: 1 billion of mainland China CRA on point 1 billion of Hong Kong CRA. The rest of it was across a number of sectors again nothing.

Of particular note.

Speaker Change: And relative to third quarter last year, we did have an increase in our Mexico retail charge. So that went up 2.2 billion charge, that's actually been relatively normal through the quarters of 2020 for bulk.

Speaker Change: Other products such as investment banking go to markets.

Speaker Change: And this should give our customers a more seamless way to deal with HSBC across all this product spectrum that we offer them.

Speaker Change: Relative to third quarter 'twenty three is a little higher so we're confident as we see this the way it will be in our 30 to 40 basis points planning range over the medium term uncertainty that for 24.

Speaker Change: John.

John So: So thanks, Amit I'll give you a bit more color on the ECL charges of 1 billion charge in third quarter, which is 40 basis points of average loans, that's actually a more normal charge because Q2 benefited from releases and recoveries.

Kunpeng Ma: Thank you.

Georges Elhedery: Thank you, Kunpeng.

Operator: Thank you. Our next question today comes from Amit Goel at Mediobanca. Please accept the prompt to unmute your line.

Speaker Change: Thank you Amit.

Our next question today comes from a bad thing from Goldman Sachs. Please accept the pump tell me your line.

John So: If you then dissect the third quarter charge, there's three things within that so firstly the U K, which is a point 2 billion charge again not benefited from the release it releases in the second quarter.

Amit Goel: Hey, thank you. Two questions from me. One, just coming back on the simplification program. Just curious, I guess in the past, you know, the group hasn't opted to combine commercial banking GBM. Just curious what's kind of seen as different now, you know, which makes this more feasible and, you know, easier to execute with less maybe a revenue attrition or up-

Speaker Change: Thank you for taking my question and congratulations on a good set of numbers I have two and most of you follow ups first is on wealth and then we'll move to a Hong Kong Scotty.

John So: It's a more normal charged as nothing more going on in Hong Kong in total we incurred a point 5 billion charge.

Speaker Change: Well can I check with the so called policy that skewed in China, only a month old and for this reporting or there may be a court maybe only a week.

As you said that was mainly point 4 billion charge in wholesale which included $1.

Speaker Change: So have we seen like from August as we transitioned into September good wealth management income collection better than what we are reporting in the third quarter and then in October that continued maybe even accelerate so some color there would be helpful.

John So: 1 billion of mainland China CRA on point 1 billion of Hong Kong see already the rest of it was across a number of sectors again, nothing a particular note.

Amit Goel: For consideration. Secondly, just on the ECL charges, those were a little bit higher than what I anticipated. It looks like a bit of that's from Hong Kong also, and in the UK Ring-Fence Bank. Just curious if there's any kind of additional color you can provide on that and, you know, how you're thinking about the kind of fully bits in the context of, you know, the guidance into next year. Thank you.

John So: And then relative to third quarter last year, we did have an increase in our Mexico retail charge. So that went up 2.2 billion charge, that's actually been relatively normal through the quarters of 2024 bought relative to third quarter 'twenty.

Speaker Change: And then on Hong Kong, CRE, specifically not talking about Hong Kong in general can we get numbers on the NPL ratio within the overall global CRT book and also the Hong Kong CRE book.

Speaker Change: At the half year to be about 9% stage II loans in but thank you very much.

Speaker Change: Thank you good breadth.

John So: Three is a little higher so we're confident as we see this.

Speaker Change: Let me just briefly address wealth and I'll ask John to complemented and address your Hong Kong CRD question.

Georges Elhedery: Thank you, Amit. Let me address your first question, and Jon can address the ECL charges question. The primary reason for this reorganization is to simplify the bank as we shared. We've been on a multi-year journey to simplify the activities we do in the bank. We've been exiting activities that were non-strategic. We've been reshaping our portfolio. We've exited markets or activities that, you know, you know. Currently, we're on track to complete the sale of our HSBC Argentina business and our Armenia business, and announced two additional exits in September, including South Africa, as well as the private bank in Germany. Now, that activity was addressing the what in terms of what we do as a strategy.

John So: Where it will be in our 30 to 40 basis points planning range over the medium term and certainly the F 'twenty four.

Speaker Change: So there are two trends in wealth. There is the underlying trend, which is a continued growth in our wealth business, which has been there quarter. After quarter. It's a result of both our increased investment in this space. It is a result of us winning market share given our brand and franchise.

Speaker Change: Thank you Amit.

Speaker Change: Our next question today comes through Bad thing Fang from Goldman Sachs. Please accept the pump tell me your line.

Speaker Change: Thank you for taking my question and congratulations on a good set of numbers I have two and most of you follow ups. Firstly on wealth and then we'll move to a Hong Kong Scotty unveiled can I check with the so called policy that skewed in China, only a month old and for this reporting quarter may be a court maybe.

Speaker Change: As a result of the underlying market growing.

Speaker Change: You know as you've seen the Hong Kong is no.

Speaker Change: I expect it to become the largest private wealth hub in the world by the end of the decade.

Speaker Change: That is definitely a trend in wood privilege without positioned in Hong Kong to be able to benefit from it and the benefit of our customers from it.

Speaker Change: Only a week or so.

Speaker Change: Have we seen like from August as we transitioned into September good wealth management income collection better than what we are reporting in the third quarter and then in October that continued maybe even accelerate it. So some color there would be helpful. And then on Hong Kong CRE, specifically, not talking about Hong Kong and <unk>.

Speaker Change: That is the first component, which is an underlying continued investment and growth trends.

Georges Elhedery: The reorganization we have announced last week is basically addressing the how we execute our strategy. It's not changing the what. It's changing the how. The reason we could effectively execute the how we change our strategy, as in be simpler, more agile, is because of the work we have done over the past few years in simplifying the what we do. It is the right time now to address how we operate, how we execute our strategy, because we've simplified what we do. We've clarified what our core strategic areas for us are, where we have competitive strength, and where we have leadership and opportunities to grow.

Speaker Change: You add to that obviously the additional activity we've seen following the measures that have been taken in China. This has created additional activity which has been.

Speaker Change: Can we get numbers on the NPL ratio within the overall global CRT book and also the Hong Kong CRE book.

Speaker Change: Neil has been you know as you said for a week or so in the in the third quarter. We do see this activity continuing and obviously normalizing, but we do see this are these measures that have been taken to be supportive measures certainly of the economy at large but in particular supportive measures of the financial market.

Speaker Change: At the half year to be about 9% stage II loans in both thank you very much.

Speaker Change: Thank you Godfrey.

Speaker Change: Let me just briefly address wealth and I'll ask John to complemented and address your Hong Kong CRD question.

Speaker Change: So there are two trends in wealth. There is the underlying trend, which is a continued growth in our wealth business, which has been there quarter. After quarter. It's a result of both our increased investments in this space. It is a result of us winning market share given our brand and franchise.

Speaker Change: And the revival of some of the financial market Sluggishness that we've seen in both in mainland China and Hong Kong over the last few quarters John.

John: So if I pick up your second point on the Hong Kong CRE is.

Georges Elhedery: The timing, therefore, is a natural kind of conclusion of the various activities that we have been taking through the transformation over the last 5 years. I wanna say that outside the UK and Hong Kong, where we're merging all our commercial banking activities with Global Banking and Markets activities to form the Corporate and Institutional Banking, it will comprise our core products, including our balance sheet related products, credit and lending, and deposits, our transaction banking products, as well as our other products such as investment banking or markets. This should give our customers a more seamless way to deal with HSBC across all this product spectrum that we offer them. Jon.

It's actually a very similar picture to that we described at the second quarter. So a few customers continue to face cash flow pressures some of thighs rates, a resultant unless rates come off we would hope that begins to abate some of those cash flow pressures. If you look at a H Asia home.

Speaker Change: As a result of the underlying market growing.

Speaker Change: You know as you've seen the Hong Kong is no.

Speaker Change: Expect it to become the largest private wealth hub in the world by the end of the decade.

Speaker Change: So that is definitely a trend in with privilege without positioned in Hong Kong to be able to benefit from it and the benefit of our customers from it.

John: Sales stage threes, they were up $1 1 billion in the quarter.

John: Some of that relates to Hong Kong CRA.

John: That also drove a modest.

That is the first component, which is and the underlying continued investment in growth trend.

John: Amount of additional Oh there'll be ways.

John: E sales on that we've referred to the fact that there was a 100 million a charge on these sales that was both cross stage, one and stage two.

Speaker Change: You add to that obviously the additional activity we've seen following the measures that have been taken in China. This has created additional activity, which has been you know.

Jon Bingham: Thanks, Amit. I'll give you a bit more color on the ECL charge. There's a $1 billion charge in Q3, which is 40 basis points of average loans. That's actually a more normal charge 'cause Q2 benefited from releases and recoveries. If you then dissect the Q3 charge, there are three things within there. Firstly, the UK, which is a $0.2 billion charge. Again, that benefited from the releases in Q2. It's a more normal charge. There's nothing more going on in there. Hong Kong, in total, we incurred a $0.5 billion charge. As you say, that was mainly $0.4 billion charge in wholesale, which included $0.1 billion of Mainland China CRE and $0.1 billion of Hong Kong CRE. The rest of it was across a number of sectors.

Jonathan Bingham: Thanks, Amit. I'll give you a bit more color on the ECL charge. There's a $1 billion charge in Q3, which is 40 basis points of average loans. That's actually a more normal charge 'cause Q2 benefited from releases and recoveries. If you then dissect the Q3 charge, there are three things within there. Firstly, the UK, which is a $0.2 billion charge. Again, that benefited from the releases in Q2. It's a more normal charge. There's nothing more going on in there. Hong Kong, in total, we incurred a $0.5 billion charge. As you say, that was mainly $0.4 billion charge in wholesale, which included $0.1 billion of Mainland China CRE and $0.1 billion of Hong Kong CRE. The rest of it was across a number of sectors.

John: The stage three ratio is slightly up quarter on quarter.

John: But we continue to say.

Speaker Change: It has been you know as you said for a week or so in the in the third quarter. We do see this activity continuing and obviously normalizing, but we do see this these measures that have been taken to be supportive measures certainly of the economy at large but in particular supportive measures of the financial markets and the river.

John: Good collateral across that portfolio and so we don't see this as a material ACL driver going forward, our focus Israeli on supporting our customers through this period and it says precious we should see start to reduce those rates receipt, yes.

Speaker Change: Rival of some of the financial market sluggishness that we've seen in both in mainland China and Hong Kong over the last few quarters.

John: And as we said good for it we are confident about the outlook of the Hong Kong economy at large in the Hong Kong commercial real estate sector in particular.

Speaker Change: John So if I pick up your second point on the Hong Kong CRE.

Speaker Change: Partly because of the H receding as John was just mentioning but also partly due to the policy measures and the countercyclical measures that have been taken.

Speaker Change: It's actually a very similar picture that we described at the second quarter. So a few customers continue to face cash flow pressures some of thighs rates results.

Speaker Change: This month to support the sector, we see these as having positive developments for the outlook of the of the market.

Speaker Change: Our results on an as rates come off we would hold that begins to abate some of those cash flow pressures. If you look at a H Asia wholesale stage three they were up $1 1 billion in the quarter some.

Jon Bingham: Again, nothing of particular note. Then relative to Q3 last year, we did have an increase in our Mexico retail charge, so that went up to $0.2 billion charge. That's actually been relatively normal through the quarters of 2024, but relative to Q3 2023 is a little higher. We're confident as we see this that we will be in our 30 to 40 basis points planning range over the medium term and certainly there for 2024.

Jonathan Bingham: Again, nothing of particular note. Then relative to Q3 last year, we did have an increase in our Mexico retail charge, so that went up to $0.2 billion charge. That's actually been relatively normal through the quarters of 2024, but relative to Q3 2023 is a little higher. We're confident as we see this that we will be in our 30 to 40 basis points planning range over the medium term and certainly there for 2024.

Speaker Change: Thank you very much good put it.

Speaker Change: Our next question today comes from Jeremy.

Speaker Change: C C.

Speaker Change: It sounds to me.

Speaker Change: Okay.

Speaker Change: Some of that relates to Hong Kong CRA.

Speaker Change: Good morning, Joe Good morning, John.

That also drove a modest amount of additional oh there'll be ways.

Speaker Change: Tony.

Speaker Change: My first question is on the structural hedge I think George you mentioned that $25 billion, a good run rate for U F. A whole Youtube buildup, let's try to hedge in the second half, but in Q3 and increased by 27 billion and maybe most of that comes from FX impact. So do you still.

Speaker Change: E sales on that we've referred to the fact that there was a 100 million a charge on these sales that was both cross stage, one and stage two.

Speaker Change: The stage three ratio is slightly up quarter on quarter.

Speaker Change: But we continue to see a good collateral across that portfolio and so we don't see this as a material ECL driver going forward, our focus Israeli on supporting our customers through this period and it says pressures, we should see start to reduce those rates receipt.

Speaker Change: Take 225 billion run rate or you would like to.

Georges Elhedery: Thank you, Amit.

Operator: Thanks.

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

Speaker Change: Accelerated so.

Speaker Change: And the second question is on I would like to hear your thoughts on what area HSBC can further make investments because it feels like over the year our strategy.

Gurpreet Singh Sahi: Thank you for taking my question, and congratulations on a good set of numbers. I have two and mostly follow-ups. First is on wealth, and then we'll move to Hong Kong CRE. On wealth, can I check with the so-called policy rescue in China, only a month old, and for this reporting quarter, maybe only a week. Have we seen like, from August as we transitioned into September, good wealth management income traction better than what we are reporting in Q3, and then in October that continued, maybe it even accelerated? Some color there would be helpful. On Hong Kong CRE specifically, not talking about Hong Kong in general, can we get numbers on the NPL ratio within the overall global CRE book and also the Hong Kong CRE book?

Speaker Change: And as we said good put it we are confident about the outlook of the Hong Kong economy at large in the Hong Kong commercial real estate sector in particular.

We've emphasized that the bank had to make excellent good cost discipline and we.

Speaker Change: And we did it and we made some investments, but mostly small ones. So if we look forward do you see any opportunities that may help us to further drive growth and take market share where do you think it's better to date.

Speaker Change: Partly because of the H receding as John was just mentioning but also partly due to the policy measures and the countercyclical measures that have been taken.

Speaker Change: This month to support the sector, we see these as having positive developments for the outlook of the of the market.

Speaker Change: Cautious we are still facing some top line pressures. Thank you.

Speaker Change: Thank you Jeremy.

Speaker Change: Let me address your second question on investments and then John can address your structural hedge question.

Speaker Change: Thank you very much good for it.

Speaker Change: Our next question today comes from Jeremy true Yeah.

Speaker Change: C C.

Speaker Change: So first as you said cost discipline.

Speaker Change: The pumps to mute your line.

Speaker Change: I've taken it from my.

Speaker Change: Yes.

Good morning, Joe Good morning, John.

Speaker Change: My days in my CFO role with me as she or it is embedded in the organization and we will maintain cost discipline you should expect this.

Jeremy True: Good morning.

Speaker Change: My first question is on the structural hedge I think George you mentioned that.

Gurpreet Singh Sahi: As at the half year, we were 9% stage three loans in both. Thank you very much.

Speaker Change: $5 billion, a good run rate for U F. A whole Youtube buildup, let's try to hedge in the second half, but in Q3 and increased by 27 billion and maybe most of that comes from FX impact. So do you still stick to our 25 billion run rate or you would like to ask.

Speaker Change: To be ingrained in the way we think.

Georges Elhedery: Thank you, Gurpreet. Let me just briefly address wealth, and I'll ask John to complement it and address your Hong Kong CRE question. There are two trends in wealth. There is the underlying trend, which is a continued growth in our wealth business, which has been there quarter after quarter. It's a result of both our increased investment in the space. It's a result of us winning market share, given our brand and franchise. It's also a result of the underlying market growing. You know, as you've seen, Hong Kong is now expected to become the largest private wealth hub in the world by the end of the decade. That is definitely a trend, and we're privileged with our position in Hong Kong to be able to benefit from it and benefit our customers from it.

A spending wisely and in the right places.

Speaker Change: In terms of strategy with with basically in the reorganization, we announced last week, we are basically organizing ourselves alongside our strategic pillars. So this creates clarity and this also creates simplicity in the way we can execute our strategy. We have two home markets, where we have scale.

Speaker Change: Accelerated.

Speaker Change: And the second question is.

Speaker Change: I would like to hear your thoughts on what area HSBC can further.

Speaker Change: Our leading market position and great growth opportunities in certain you're very strong competitive edge.

Make investments because it feels like over the years. Our strategy has always emphasized that the bank had to make excellent good cost discipline and.

In our corporate and institutional banking business, we have the global connectivity capability and the transaction.

Speaker Change: We did it and we made some investments, but mostly small ones. So if we look forward do you see any opportunities that may help us to further drive growth and take market share where do you think it's better to stay calm.

Speaker Change: Banking capability that is second to none that is a very leading.

Speaker Change: And providing excellent service to our customers always positioning us as a very cherished and very valued by our customers and then we have wealth and.

Speaker Change: Sure definitely.

Speaker Change: Still facing some topline pressures thank you.

Georges Elhedery: That is the first component, which is an underlying continued investment and growth trend. You add to that, obviously, the additional activity we've seen following the measures that have been taken in China. This has created additional activity which has been, you know, as you said, for a week or so in the Q3. We do see this activity continuing and obviously normalizing. We do see these measures that have been taken to be supportive measures, certainly of the economy at large, but in particular, supportive measures of the financial markets and the revival of some of the financial market sluggishness that we've seen in both mainland China and Hong Kong over the last few quarters. Jon?

John So: Thank you Jeremy.

Speaker Change: Let me address your second question on investments and then John can address your structural hedge question.

Speaker Change: Premier banking, which is really the proposition aimed at the affluent segment for investment needs in particular across our network and in particular, so in Asia and the Middle East.

Speaker Change: So first as you said cost discipline.

Speaker Change: I've taken it from.

Speaker Change: My days in my CFO role with me as she or it is embedded in the organization and we will maintain cost discipline you should expect this.

Speaker Change: Any.

Speaker Change: Opportunity, we have to accelerate this strategy.

Speaker Change: To be ingrained in the way, we think you know.

Speaker Change: We'll be it organic or inorganic is an opportunity. We will go after we're looking these areas all exhibit fantastic growth opportunities, we have a real competitive edge and we will continuously invest in them, both organically and inorganically, if the opportunities arise what I should say.

Speaker Change: A spending wisely and in the right places.

Jon Bingham: If I pick up your second point on Hong Kong CRE, it's actually a very similar picture to that we described at Q2. A few customers continue to face cash flow pressures. Some of that is rates resulting. As rates come off, we would hope that begins to abate some of those cash flow pressures. If you look at the Asia wholesale stage threes, they were up $1.1 billion in the quarter. Some of that relates to Hong Kong CRE. That also drove a modest amount of additional RWAs. The ECLs on that, we've referred to the fact that there was a $100 million charge on ECLs. That was both across stage one and stage two. The stage three ratio is slightly up quarter-over-quarter.

Jonathan Bingham: If I pick up your second point on Hong Kong CRE, it's actually a very similar picture to that we described at Q2. A few customers continue to face cash flow pressures. Some of that is rates resulting. As rates come off, we would hope that begins to abate some of those cash flow pressures. If you look at the Asia wholesale stage threes, they were up $1.1 billion in the quarter. Some of that relates to Hong Kong CRE. That also drove a modest amount of additional RWAs. The ECLs on that, we've referred to the fact that there was a $100 million charge on ECLs. That was both across stage one and stage two. The stage three ratio is slightly up quarter-over-quarter.

Speaker Change: There is.

Speaker Change: We do have the capital to support our needs we have the capital to support obviously, our dividend distribution to support organic growth.

Speaker Change: Our leading market position and great growth opportunities and certainly a very strong competitive edge.

Speaker Change: And to support.

The organic opportunities should we find some that can accelerate our strategy and allow us to gain market share.

Speaker Change: In our corporate and institutional banking business, we have the global connectivity capability and the transaction.

Speaker Change: Joe Jeremy if I pick up your question on the structural hedge as you rightly say, we have increased our structural hedge during the period from 504 billion of the <unk>.

Speaker Change: Banking capability that is second to none that has a very leading.

Speaker Change: And providing excellent services to large customers always positioning us as a very cherished and very valued by our customers and then we have the wealth and.

Speaker Change: 13th of June 531 billion of the 30th September, but Oh that was mostly FX driven.

Speaker Change: Duration of that remains to point out yes.

Speaker Change: Premier banking, which is really the proposition aimed at the affluent segment for investment needs in particular.

Would continue to expect to increase.

Speaker Change: Our structural hedge.

Speaker Change: But that will depend on market conditions that we have and I would say the big increases of our structural hedge are probably behind us. So further increases from here will only have a modest impact on our banking NII sensitivity.

Speaker Change: Our network and in particular, so in Asia, and the Middle East.

Jon Bingham: We continue to see good collateral across that portfolio, and so we don't see this as a material ECL driver going forward. Our focus is really on supporting our customers through this period. Pressures we should see start to reduce as rates recede.

Jonathan Bingham: We continue to see good collateral across that portfolio, and so we don't see this as a material ECL driver going forward. Our focus is really on supporting our customers through this period. Pressures we should see start to reduce as rates recede.

Speaker Change: Any opportunity we have to accelerate this strategy.

Speaker Change: Well be it organic or inorganic is an opportunity. We will go after we're looking these areas all exhibit fantastic growth opportunities, we have a real competitive edge and we will continuously invest in them, both organically and inorganically if the opportunities arise.

Speaker Change: Thanks, Jeremy Thank you Jeremy.

Our next question comes from tougher like J P. Morgan.

Speaker Change: Your line.

Georges Elhedery: Yeah. As we said, Gurpreet, we are confident about the outlook of the Hong Kong economy at large and the Hong Kong commercial real estate sector in particular, partly because of the rates receding, as Jon was just mentioning, but also, partly due to the policy measures and the counter-cyclical measures that have been taken, this month to support the sector. We see these as having positive developments for the outlook of the market. Thank you very much, Gurpreet.

Speaker Change: Alright, Thanks, Josh and thanks John.

Speaker Change: You should ask one I would like to ask and I I think.

Speaker Change: I should say there is a.

Speaker Change: We do have the capital to support our needs we have the capital to support.

Speaker Change: And I think on the headline and I add the headline and I I actually let me say expectation.

Speaker Change: Obviously, our dividend distribution to support organic growth.

Speaker Change: He wiped out that banking and I I guess moderate and also we tried to calculate what is the banking net interest margin.

Speaker Change: And to support inorganic opportunities should we find something that can accelerate our strategy and the lowest to gain market share.

Speaker Change: By and large stable.

Speaker Change: Joe Jeremy if I pick up your question on the structural hedge as you rightly say, we have increased our structural hedge during the period from 504 billion of the 13th of June 531 billion of the 30th September but that was mostly FX driven.

Speaker Change: Hi, Brian actually went down kind of like on average 50 basis points.

Operator: Our next question today comes from Jeremy Hou at CICC. Please accept the prompt to unmute your line.

What is driving that stable net interest margin.

Speaker Change: From the liability management side.

Jeremy Hou: Good morning, Georges. Good morning, Jon.

Georges Elhedery: Morning.

Jeremy Hou: My first question is on the structural hedge. I think, Georges, you mentioned that $25 billion is a good run rate for you for how you to build up the structural hedge in the second half. In Q3, that increased by $27 billion, and maybe most of that comes from FX impact. Do you still stick to a $25 billion run rate, or you would like to accelerate it? The second question is, I would like to hear your thoughts on what area HSBC can further make investments, because it feels like over the years, our strategy always emphasized that the bank had to make excellent good cost discipline. We did it, and we made some investments, but mostly small ones.

Speaker Change: Right now John gave some color in terms of like say department migration.

Speaker Change: The duration of that remains to point out yes.

Is that possible to give me some.

Speaker Change: On my numbers right around what is the.

Speaker Change: We would continue to expect to increase our.

Speaker Change: That that ratio in Hong Kong and how the how the trend has changed.

Speaker Change: Our structural hedge.

But that will depend on market conditions that we have and I would say the big increases of our structural hedge are probably behind us. So further increases from here will only have a modest impact on our banking NII sensitivity.

Speaker Change: So this would be nice.

Speaker Change: First question. My second question is that when I look at the all of them be a migration I saw.

Speaker Change: Hum.

I saw that in the migration.

Speaker Change: Thanks, Jeremy Thank you Jeremy.

Speaker Change: In addition to the CET one capital.

Speaker Change: Our next question comes from tougher like J P. Morgan.

Speaker Change: You too.

Can we get them.

Your line.

Speaker Change: How does the color on that one.

Speaker Change: Alright, Thanks, Joshua and thanks John.

Speaker Change: Some kind of movement.

Speaker Change: So that's one I would like to ask and I think.

Speaker Change: In the coming quarters actually I had one additional question on the loans that we were talking about the legacy securities.

Jeremy Hou: If we look forward, do you see any opportunities that may help us to further drive growth and take market share, or do you think it's better to stay, cautious as we are still facing some top-line pressures? Thank you.

Speaker Change: And I think on the headline and I add the headline and I actually let me say expectation.

Speaker Change: Can you give us.

Speaker Change: Hello on this one and I understand that management teams and notable items.

Speaker Change: Right out of the banking NII does moderate and also we tried to calculate what is the banking net interest margin.

Speaker Change: It may trend, where we have either.

Georges Elhedery: Thank you, Jeremy. Let me address your second question on investments, and then Jon can address your structural hedge question. First, as you said, cost discipline, you know, I've taken it from my, you know, my role, my days and my CFO role, with me as CEO. It is embedded in the organization, and we will maintain cost discipline. You should expect this to be ingrained in the way we think, you know, in spending wisely and in the right places. In terms of strategy, we've basically, in the reorganization we announced last week, we are basically organizing ourselves alongside our strategic pillars. This creates clarity, and this also creates simplicity in the way we can execute our strategy.

Speaker Change: By and large stable despite aynsley.

Speaker Change: Securities perpetual bonds that we would like to give me the future.

Speaker Change: Well actually went down kind of like on average 50 basis points.

Speaker Change: Oh do we have another 10 type of.

Speaker Change: And Patrick one currency.

Speaker Change: Okay.

Speaker Change: Joining that stable net interest margin.

Speaker Change: We may be looking to.

Speaker Change: Maybe from the liability management side right now John gave some color in terms of like say Mike.

Speaker Change: Opportunity alright, thank you.

Speaker Change: Thank you Katherine I'm going to let John answer the three questions, but allow me one comment on the legacy Securities and we have said that we will look at our legacy securities continuously, but we will take actions that are accretive or neutral we will not take action on legacy securities that are detrimental.

Speaker Change: Migration.

Speaker Change: Is that possible to give me some some numbers to work around what is the cat ratio in Hong Kong and how the how the trend has changed.

So this would be nice.

Speaker Change: First question. My second question is that when I look at the R. W. A migration.

Speaker Change: Investors and those.

Speaker Change: Shareholders.

Speaker Change: In this case, we've taken an action on the legacy security that has a more than 10% coupon that could be naturally and easily replaced with a much lower rates and therefore, there is a positive impact on the net present value basis of the actions. We've taken in these actions we will.

Speaker Change: Migration I saw.

Speaker Change: Hum.

Speaker Change: I saw that in their migration.

Speaker Change: Is that a triple in addition to the CET one capital I do too.

Georges Elhedery: We have two home markets where we have scale, a leading market position, and great growth opportunities, and certainly very strong competitive edge. In our Corporate and Institutional Banking business, we have a global connectivity capability and a transaction banking capability that is second to none. That is very leading and providing excellent services to our customers. Our positioning is very cherished and very valued by our customers. Then we have Wealth and Premier Banking, which is really the proposition aimed at the affluent segment for investment needs, in particular across our network, and in particular so in Asia and the Middle East. Any opportunity we have to accelerate this strategy, be it organic or inorganic, is an opportunity we will go after.

Speaker Change: Can we get it picks up.

Speaker Change: How does the color on that one.

Speaker Change: Always look at where where there is value in it.

Speaker Change: Some kind of movement.

Speaker Change: In the coming quarters actually I had one additional question on the loans that we were talking about how to make a few securities.

Speaker Change: Yeah. So thanks, Kathryn three questions that so if I start on your net interest margin.

Speaker Change: We give some detail on the net interest margin on page 17 of the slide deck, but effectively the net interest margin has moved from 162 to 146, there's three things driving that one the loss on the early redemption of legacy Securities as you've mentioned to some Argentina volatility.

Speaker Change: Uh huh.

Speaker Change: Hello on this one and I understand that management produced notable items.

Speaker Change: It may trend, we will have other securities.

Speaker Change: Securities perpetual bonds that will relate to the future.

Speaker Change: Oh do we have another 10 type of pets.

Speaker Change: Petrobras.

Speaker Change: We may be looking to.

Speaker Change: And then the remaining is on we've allocated more funding to the trading book and as you know that will be.

Speaker Change: Alright, thank you.

Speaker Change: Thank you Katherine I'm going to let John answer the three questions, but allow me one comment on the legacy Securities.

Speaker Change: A drag on net interest income, but also an equal and opposite benefit on non net interest income. So our preferred measure on the way we think about it is through the banking NII lens, there you'll see that.

John So: We have said that we will look at our legacy securities continuously, but we will take action that are accretive or neutral we will not take action on legacy securities that are detrimental to our investors and our shareholders.

Georges Elhedery: These areas all exhibit fantastic growth opportunities. We have a real competitive edge, and we will continuously invest in them both organically and inorganically if the opportunities arise. What I should say there is, we do have the capital to support our needs. We have the capital to support obviously our dividend distribution, to support organic growth, and to support inorganic opportunities should we find some that can accelerate our strategy and allow us to gain market share. Jon?

Speaker Change: Our clean run rate.

John So: In this case, we've taken an action on the legacy security that has a more than 10% coupon that could be naturally and easily replaced with a much lower rate and therefore, there is a positive impact on the net present value basis of the actions. We've taken in these actions we will all.

Speaker Change: Argentina and extra multiples has been relatively stable period on period, reflecting the fact that the Q3 rate cuts hard given that timing had a modest impact on on Q3.

Speaker Change: If I am.

Speaker Change: You'd also asked about deposit migration.

We look at where where there is value in it.

Speaker Change: We've again got some detail and not on slide 17 that has remained relatively stable at 39% for the Hong Kong deposits.

John So: Sure.

Speaker Change: Yeah. So thanks, Kathryn three questions. There so if I start on your net interest margin.

Jon Bingham: Jeremy, if I pick up your question on the structural hedge. As you rightly say, we have increased our structural hedge during the period from $504 billion at 30 June to $531 billion at 30 September. That was mostly FX driven. The duration of that remains 2.8 years. We would continue to expect to increase our structural hedge, but that will depend on market conditions that we have. I would say that the big increases of our structural hedge are probably behind us, so further increases from here will only have a modest impact on our banking NII sensitivity. Thanks, Jeremy.

Jonathan Bingham: Jeremy, if I pick up your question on the structural hedge. As you rightly say, we have increased our structural hedge during the period from $504 billion at 30 June to $531 billion at 30 September. That was mostly FX driven. The duration of that remains 2.8 years. We would continue to expect to increase our structural hedge, but that will depend on market conditions that we have. I would say that the big increases of our structural hedge are probably behind us, so further increases from here will only have a modest impact on our banking NII sensitivity. Thanks, Jeremy.

Speaker Change: If I move on to your seats.

Speaker Change: C. T. One question and then, particularly the change and other adjustments the CET one capital doctors around the fair value movements of our Ah.

Speaker Change: Securities are classified as fair value through OCI. So we've generated a gain on those which is giving US also a capital benefit on that.

And then the remaining is on we've allocated more funding to the trading book and as you know that will be.

Speaker Change: I think on legacy Securities Yours, just covered most of the questions on that but we're not signaling a.

Speaker Change: A drag on net interest income, but also an equal and opposite benefit on non net interest income. So all our preferred measure on the way we think about it is through the banking NII lens that you'll see that.

Speaker Change: Anything up this store.

Speaker Change: Stage around for the legacy Securities redemptions.

Georges Elhedery: Thank you, Jeremy.

Operator: Our next question comes from Katherine Lei at JP Morgan. Please accept the prompt to unmute your line.

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

Speaker Change: Thank you Catherine.

Speaker Change: Our final question comes from Edward.

Katherine Lei: Hi. Thanks, Georges, and thanks, Jon. My questions will be 2. The first one I would like to ask about NII. I think the confusing thing here is that I think on the headline NII actually slightly missed expectation. But if we work out the banking NII, there's a modest beat, and also we try to calculate what is the banking net interest margin. It seems it's by and large stable, despite that in Q3, HIBOR actually went down on average 50 basis points. May I ask, like, what is driving that stable net interest margin? Will it be from the liabilities management side?

Speaker Change: Our clean run.

Speaker Change: <unk> please.

Speaker Change: Run rate thanks.

Speaker Change: Your line.

Speaker Change: Argentina and ex notables has been relatively stable period on period, reflecting the fact that the Q3 rate cuts how do given that timing had a modest impact on on Q3.

Edward: Yes, good morning, everybody and thanks for taking the questions.

Edward: Two questions. One was just a clarification just to be clear the $1 1 billion increase in stage three loans in Hong Kong is that CRE debt. That's just so just to just to be clear on that that was first question.

Speaker Change: If I am are.

Speaker Change: You'd also asked about deposit migration.

Edward: Second one is we don't see that U S election coming up in the next couple of weeks and I just wondered if you could.

Speaker Change: We've again got some detail and not on slide 17 that has remained relatively stable at 39% for the Hong Kong deposits.

Edward: Give us some thoughts from your perspective in terms of the possible set of risks and opportunities that you see that could come out of that I guess.

Speaker Change: If I move on to your C. T. One question and then particularly the change in other adjustments for CET, one capital DOCSIS around the fair value movements of our.

Edward: Two real estate options.

Katherine Lei: Just now Jon gave us some color in terms of like, say, deposit migration, but is it possible to give us some, like, numbers to work around? Like, what is the CASA ratio in Hong Kong and how the trend has changed? This will be my first questions. My second question is that when I look at the RWA migration, I saw that in the migration side, and there is a favourable addition to CET1 capital due to movement in reserves. Can we get a bit of color on that one? Will we be seeing some kind of movement, like similar type of movement in the coming quarters?

Edward: And I guess just related to that there was a lot of press comment legal reorganization was driven by splitting up the Asian.

Speaker Change: Securities are classified as fair value through OCI.

Edward: And I guess, the U K or developed market businesses.

Speaker Change: It's actually right or was that just sort of idle speculation from Jonas alright. Thanks, so much.

Speaker Change: So we've generated a gain on those which is giving US also a capital benefit on that.

Speaker Change: Thank you Ed Let me take your second and third questions in.

Speaker Change: I think on legacy Securities Yours, just covered most of the questions on that but we're not signaling.

Speaker Change: John can address the.

The stage three question.

Speaker Change: Absolutely.

Speaker Change: Anything of this Ah.

Speaker Change: This is this is a matter for the U S electorate to choose their precedent.

Speaker Change: Stage around for the legacy Securities redemptions.

Speaker Change: I'm not going to speculate or comment we will see the outcomes on the fifth of November.

Speaker Change: Thank you Catherine.

Speaker Change: But what is important for us is that we we serve our customers.

Our final question today comes from Edward.

Speaker Change: <unk> please.

Speaker Change: We have been serving our customers through various.

Speaker Change: Your line.

Katherine Lei: Actually, I have one slight additional question on the loss that we were talking about, the legacy securities. Can you give us a bit of color on this one? I understand that management put this into notable items, so supposedly to be one-off, but is it really one-off in nature? Will we have other securities, perpetual bonds that we would like to redeem in the future? Like say for example, do we have another 10% type of perpetual bond currently in our book that we may be looking to redeem it when opportunities arise? Thank you.

Edward: Yeah morning, everybody and thanks for taking the questions I just had.

Speaker Change: Or through an evolving set of rules and regulations on the on the job.

Two questions. One was just a clarification just to be clear the $1 1 billion increase in stage three loans in Hong Kong is that CRE that that's just to just to just to be clear on that that's first question.

Speaker Change: On the on the global scale.

Speaker Change: We serve them for their needs, especially for their cross border needs, where we're unique in being able to do so.

Speaker Change: We obviously comply with all rules and regulations, we will make sure that our customers are able to comply with all rules and regulations and so far that their financial needs are concerned in any new rules and regulations, which may come with any new administration are things that we will obviously comply with and support our customers to comply with.

The second one is we don't see the U S election coming up in the next couple of weeks and I just wondered if you could.

Edward: Give us some thoughts from your perspective in terms of the possible set of risks and opportunities that you see that could come out of that I guess with the team.

Edward: Real estate options.

Georges Elhedery: Thank you, Katherine. I'm going to let Jon answer the three questions, but allow me one comment on the legacy securities. We have said that we will look at our legacy securities continuously, but we will take action that are accretive or neutral. We will not take action on legacy securities that are detrimental to our investors and our shareholders. In this case, we've taken an action on a legacy security that has a more than 10% coupon that could be naturally and easily replaced with much lower rates and therefore there is a positive impact on the net present value basis of the actions we've taken. These actions we will always look at where there is value in it. Jon.

Edward: And I guess just related to that there was a lot of press comment. Thank you, a reorganization, which driven by splitting up the Asian.

Speaker Change: What I can say, though is it remains a distinctive.

Speaker Change: Skill that we have in supporting our customers cross border needs. This.

Edward: And I guess, the U K or developed market businesses.

This is a this is a.

Speaker Change: This is one of our unique areas of competitive edge and this remains unchanged and the customer needs remain broad broad based and global and we will continue supporting them on that on that mission.

Speaker Change: It's actually right or was that just sort of idle speculation from journalists alright. Thanks, so much.

Speaker Change: Thank you Ed Let me take your second and third questions in.

Speaker Change: John can address the.

Speaker Change: Stage three question.

Speaker Change: And with regards to the reorganization.

Speaker Change: So look we're.

Speaker Change: This is categorically not either an intent or the preparation as has been speculated.

Speaker Change: This is this is a matter for the U S electorate to choose their precedent unloved.

Speaker Change: I'm not going to speculate or comment we will see the outcomes on the fifth of November.

Speaker Change: By some splitting of the Asia business or etcetera, absolutely not this is a simplification of the bank, where we today govern our sell through five regions and we're bringing this regional setup down to too that as part of the simplification. It is also meant to help.

Speaker Change: But what is important for us is that we we serve our customers.

Speaker Change: We have been serving our customers through various we're.

Jon Bingham: Yeah. Thanks, Katherine. Three questions there. If I start on your net interest margin, we give some detail on the net interest margin on page 17 of the slide deck, but effectively the net interest margin has moved from 162 to 146. There are three things driving that. One, the loss on the early redemption of legacy securities, as you've mentioned. Two, some Argentina volatility. The remaining is we've allocated more funding to the trading book. As you know, that will be a drag on net interest income, but also an equal and opposite benefit on non-net interest income. Our preferred measure and the way that we think about it is through the banking NII lens.

Jonathan Bingham: Yeah. Thanks, Katherine. Three questions there. If I start on your net interest margin, we give some detail on the net interest margin on page 17 of the slide deck, but effectively the net interest margin has moved from 162 to 146. There are three things driving that. One, the loss on the early redemption of legacy securities, as you've mentioned. Two, some Argentina volatility. The remaining is we've allocated more funding to the trading book. As you know, that will be a drag on net interest income, but also an equal and opposite benefit on non-net interest income. Our preferred measure and the way that we think about it is through the banking NII lens.

Speaker Change: Through an evolving set of rules and regulations on the on the job.

On the on the global scale.

Speaker Change: We serve them for their needs, especially for their cross border needs, where we're unique in being able to do so.

Speaker Change: US speed up the build out of what is a very promising corridor between the middle Eastern Asia, We're seeing material growth in this corridor over the last few years, our customers across both middle Eastern Asia are looking for opportunities of trade and investments.

Speaker Change: We obviously.

Speaker Change: To comply with all rules and regulations, we will make sure that our customers are able to comply with all rules and regulations and so far that their financial needs are concerned.

Speaker Change: Any new rules and regulations, which may come with any new administration are things that we will obviously comply with and support our customers to comply with.

Speaker Change: Between them and we've been we have a leading we have a unique position to be able to help our customers across this corridor that simplification should also help speed up the build of that corridor.

What I can say, though is it remains a distinctive.

Speaker Change: Skill that we have in supporting our customers cross border needs. This.

Speaker Change: I'd remind you in our western geographies now with essentially a wholesale bank, we have sold our retail banking activities in France, we sold the message to the activities in the U S. We sold the bank in Canada for the bank in Greece, we are in the process of extending the bank in Argentina, and with that we'll be left with.

Speaker Change: This is a this is a.

Jon Bingham: There you'll see that, our clean run rate ex Argentina and ex the notables has been relatively stable period-on-period, reflecting the fact that the Q3 rate cuts had, given their timing, a modest impact on Q3. You'd also asked about deposit migration. We've again got some detail in that on slide 17, but that has remained relatively stable at 39% for the Hong Kong deposits. If I move on to your CT1 question, and then particularly the change in other adjustments for CT1 capital. That is around the fair value movements of our securities that are classified as fair value through OCI. So we've generated a gain on those, which has given us also a capital benefit on that.

Jonathan Bingham: There you'll see that, our clean run rate ex Argentina and ex the notables has been relatively stable period-on-period, reflecting the fact that the Q3 rate cuts had, given their timing, a modest impact on Q3. You'd also asked about deposit migration. We've again got some detail in that on slide 17, but that has remained relatively stable at 39% for the Hong Kong deposits. If I move on to your CT1 question, and then particularly the change in other adjustments for CT1 capital. That is around the fair value movements of our securities that are classified as fair value through OCI. So we've generated a gain on those, which has given us also a capital benefit on that.

Speaker Change: And with regards to the reorganization.

Speaker Change: What is essentially a corporate and institutional banking business that also bring.

Speaker Change: This is categorically notes either in intend order preparation as has been speculated.

Speaker Change: Some simplification aspects to the way we govern our self industry. So these are the reasons why we did the simplification of the organization get announced last week.

Speaker Change: By some.

Speaker Change: Splitting of the Asia business or etcetera, absolutely not this is a simplification of the bank, where we today govern our sell through five regions and we're bringing this regional setup down to too that as part of the simplification. It is also meant to help us speed up.

Speaker Change: On the CRE question, Ed So of the $1 1 billion increase in Asia wholesale stage threes. Most of that was Hong Kong see already the picture is very similar to how we describe data at.

Speaker Change: The build out of what is a very promising corridor between the middle East in Asia, We're seeing material growth in this corridor over the last few years, our customers across both middle Eastern Asia are looking for opportunities of trade and investments.

Speaker Change: The second quarter, we could see more migration into stage three until interest rates begin to ease the cash flow pressures in those businesses.

Speaker Change: Given the collateral level to levels that we have against that portfolio, we don't see that as a major driver of ECL risk going forward.

Between them and we've been we have a leading we have a unique position to be able to help our customers across the corridor.

Speaker Change: We're focused on supporting our customers through this transition period.

Jon Bingham: I think on legacy securities, Georges has covered most of the questions on that, but we're not signaling anything at this stage around further legacy securities redemptions. Thank you, Katherine.

Jonathan Bingham: I think on legacy securities, Georges has covered most of the questions on that, but we're not signaling anything at this stage around further legacy securities redemptions. Thank you, Katherine.

Speaker Change: That simplification should also help speed up the build of that corridor.

Speaker Change: Thanks, Greg.

Speaker Change: Very much Ed.

Speaker Change: I remind you in our western geographies now with essentially a wholesale bank, we have sold our retail banking activities in France, we sold domestically at activities in the U S. We sold the bank in Canada for the bank in Greece, we are in the process of extending the bank in Argentina, and with that we'll be left with.

Speaker Change: Not today's Q&A session I will now hand back to George for closing remarks. Thank.

George: Thank you Louise and thank you everyone for your questions today to recap we delivered another good quarter, which shows that our strategy is working we have reconfirmed all of our guidance, including a mid teens return on tangible equity for 2024, and 420 25, excluding notable items.

Georges Elhedery: Thank you, Katherine.

Operator: Our final question today comes from Edward Firth at KBW. Please accept the prompt to unmute your line.

Speaker Change: What is essentially a corporate and institutional banking business that also bring.

Edward Firth: Yeah, morning, everybody, and thanks for taking the questions. I just have two questions. One was just a clarification. Just to be clear, the $1.1 billion increase in stage three loans in Hong Kong, is that all CRE? That's just to be clear on that. That was the first question. The second one is, we've obviously got a US election coming up in the next couple of weeks. I just wondered if you could give us some thoughts from your perspective in terms of the possible sort of risks and opportunities that you see that could come out of that, I guess with the two realistic options.

Speaker Change: Some simplification aspects to the way the government or central distribution. These are the reasons why we did the simplification of the organization getting those last week.

George: <unk> and I'm committed to building on this which our organization will enable us to do by simplifying and streamlining the group.

George: We will share more details at our full year results in February as part of a wider business update.

George: And the team are available to answer any questions and I look forward to speaking with you again very soon.

George: The rest of the day wherever you are and thank you again.

Speaker Change: The second quarter, we could see more migration into stage three until interest rates begin to ease the cash flow pressures in those businesses.

Speaker Change: Thank you, ladies and gentlemen, situating today's webinar you may now disconnect your lines.

Edward Firth: I guess just related to that, there was a lot of press comment that your reorganization was driven by splitting up the Asian, and I guess the UK or developed markets businesses. Is that actually right, or was that just sort of idle speculation from journalists? Great. Thanks so much.

Speaker Change: [noise].

Speaker Change: Given the collateral level to levels that we have against that portfolio, we don't see that as a major driver of ECL risk going forward.

Georges Elhedery: Okay. Thank you, Edward. Let me take your second and third questions, and Jon can address the stage three question. Look, you know, this is a matter for the US electorate to choose their president. I'm not going to speculate or comment. We will see the outcomes on 5 November 2024. What is important for us is that we serve our customers. We have been serving our customers through various, well, through an evolving set of rules and regulations, you know, on the global scale. We serve them for their needs, especially for their cross-border needs, where we're unique at being able to do so. We obviously comply with all rules and regulations.

Speaker Change: We're focused on supporting our customers through this transition period.

Speaker Change: Thanks, Greg.

Speaker Change: Very much Ed.

Speaker Change: Not today's Q&A session I will now hand back to yours closing remarks, Tracy. Thank you Louise and thank you everyone for your questions today to recap we delivered another good quarter, which shows that our strategy is working we have reconfirmed all of our guidance, including a mid teens return on tangible.

Speaker Change: But equity for 2024, and 420 25, excluding notable items and I'm committed to building on this which our organization will enable us to do by simplifying and streamlining the group.

Speaker Change: We will share more details at our full year results in February as part of a wider business update.

Georges Elhedery: We will make sure that our customers are able to comply with all rules and regulations as far as their financial needs are concerned. Any new rules and regulations which may come with any new administration are things that we will obviously comply with and support our customers to comply with. What I can say, though, is it remains a distinctive skill that we have in supporting our customers' cross-border needs. This is one of our unique areas of competitive edge, and this remains unchanged. Our customer needs remain broad-based, and global, and we will continue supporting them on that mission.

Speaker Change: Neil and the team are available to answer any questions and I look forward to speaking with you again very soon.

Speaker Change: The rest of the day wherever you are and thank you again.

Speaker Change: Thank you, ladies and gentlemen for joining today's webinar you may now disconnect your lines.

Speaker Change: [noise].

Speaker Change: Yeah.

Georges Elhedery: With regard to the reorganization, this is categorically not either an intent or a preparation, as has been speculated by some, splitting of the Asia business or et cetera. Absolutely not. This is a simplification of the bank where we today govern ourselves through five regions, and we're bringing this regional setup down to two. That is part of the simplification. It is also meant to help us speed up the build-out of what is a very promising corridor between the Middle East and Asia. We're seeing material growth in this corridor over the last few years. Our customers across both Middle East and Asia are looking for opportunities of trade and investments between them, and we have a unique position to be able to help our customers across this corridor.

Georges Elhedery: That simplification should also help speed up the build of that corridor. I remind you in our, you know, Western geographies now, we're essentially a wholesale bank. We have sold our retail banking activities in France. We've sold the mass retail activities in the US. We've sold the bank in Canada. We've sold the bank in Greece. We are in the process of selling the bank in Argentina. With that, we'll be left with what is essentially a corporate institutional banking business that also bring some simplification aspects to the way we govern ourselves in this region. These are the reasons why we did the simplification and reorganization we announced last week. Jon?

Jon Bingham: On your CRE question, Ed. Of the $1.1 billion increase in Asia wholesale stage threes, most of that was Hong Kong CRE. The picture is very similar to how we described it at the Q2. We could see more migrations into stage three until interest rates begin to ease the cash flow pressures in those businesses. Given the collateral levels that we have against that portfolio, we don't see that as a major driver of ECL risk going forward. We're focused on supporting our customers through this transition period. Thanks, Ed.

Jonathan Bingham: On your CRE question, Ed. Of the $1.1 billion increase in Asia wholesale stage threes, most of that was Hong Kong CRE. The picture is very similar to how we described it at the Q2. We could see more migrations into stage three until interest rates begin to ease the cash flow pressures in those businesses. Given the collateral levels that we have against that portfolio, we don't see that as a major driver of ECL risk going forward. We're focused on supporting our customers through this transition period. Thanks, Ed.

Georges Elhedery: Thank you very much, Ed.

Operator: That ends today's Q&A, so I will now hand back to Georges for closing remarks. Thank you.

Georges Elhedery: Thank you, Louise, and thank you everyone for your questions, today. To recap, we delivered another good quarter, which shows that our strategy is working. We have reconfirmed all of our guidance, including a mid-teens return on tangible equity for 2024 and for 2025, excluding notable items. I'm committed to building on this, which our organization will enable us to do by simplifying and streamlining the group. We will share more details at our full year results in February as part of a wider business update. Neal and the team are available to answer any questions, and I look forward to speaking with you again very soon. Please enjoy the rest of the day wherever you are, and thank you again.

Operator: Thank you, ladies and gentlemen, for joining today's webinar. You may now disconnect your line.

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