Q1 2025 HSBC Holdings PLC Earnings Call

April 29, 2025

Speaker Change: Thanks.

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Speaker Change: Welcome, ladies and gentlemen to the analyst and Investor weapon, Hal on the first quarter results for HSBC.

Operator: Welcome, ladies and gentlemen, to the Analyst and Investor Webinar on the Q1 results for HSBC Holdings PLC. For your information, this webinar is being recorded.

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Jos: Your information. This webinar is being recorded I will now hand over to Jos <unk>.

Operator 2: I will now hand over to Georges Elhedery, Group CEO.

Operator: I will now hand over to Georges Elhedery, Group CEO.

Jos: <unk> group CEO.

Speaker Change: Okay.

Speaker Change: Welcome all to today's call I'm joined here in London by Tom.

Georges Elhedery: Welcome all to today's call. I'm joined here in London by Pam. Before Pam takes you through the numbers, I would like to begin with some opening remarks. Overall, it was a strong quarter marked by three key drivers. One, momentum in our earnings, discipline in our execution, and confidence in our ability to deliver our targets. First, we have strong momentum in our business. We had a strong Q1, with profit before tax up 11% and an annualized return on tangible equity of 18.4%, both excluding notable items. We had our fifth consecutive quarter of double-digit growth in wealth and attracted net new invested assets of $22 billion, as well as another 300,000 new-to-bank customers in Hong Kong, continuing the trend from last year.

Speaker Change: Before Paul takes you through the numbers I would like to begin with some opening remarks.

Paul: Overall, it was a strong quarter marked by three key drivers.

Speaker Change: Momentum in our earnings.

Paul: Disciplined execution and.

Paul: And confidence in our ability to deliver our targets.

Paul: First.

Paul: We have strong momentum in our business.

Paul: We had a strong first quarter with profit before tax up 11% and an annualized return on tangible equity of 18, 4% both excluding notable items.

Paul: We had our fifth consecutive quarter of double digit growth in wealth.

Paul: And attracted net new invested assets of $22 billion.

Paul: As well as another 300000 Youtube bank customers in Hong Kong, continuing the trend from last year.

Paul: We also had a strong performance in transaction banking in particular in effects.

Georges Elhedery: We also had a strong performance in transaction banking, in particular in FX, and in our equities and debt trading businesses, benefiting from higher client activity on the back of higher volatility. Second, we remain focused on executing our strategy with discipline and are on track to deliver the cost actions we set out in February. We are progressing at pace to deliver on the simplification-related cost saves as well as the strategic cost reallocations. We also continue to take a disciplined approach to our investments and capital allocation to drive growth across our four businesses. We will provide you with a full update on this at the half year results in July. Third, the external macroeconomic environment is less favorable and more uncertain than it was in February, as the uncertainty around trade policy dampens business confidence and constrains investment.

Paul: And then on equities and debt trading businesses.

Paul: Fitting from higher client activity on the back of higher volatility.

Paul: Second.

Paul: We remain focused on executing our strategy with discipline and are on track to deliver the cost actions, we set out in February.

Paul: We are progressing at pace to deliver on the simplification related cost saves as well as the strategic cost Reallocations.

Paul: We also continued to take a disciplined approach to investments and capital allocation to drive growth across our four businesses.

Paul: We will provide you with a full update on this at the half year results in July.

Paul: Third.

Paul: The external macroeconomic environment is less favorable and more uncertain than it was in February.

Paul: As the uncertainty around trade policy, dampens business confidence and constrained investment.

Georges Elhedery: However, we remain confident in our ability to deliver our targets. Our balance sheet is strong. This is reflected in the deposit surpluses we hold in every major currency in each of our four businesses in every geography in which we operate. This is why our clients place their trust in us during times of predictability and even more so during times of unpredictability. These provide us with a steady recurring income stream and underpin the lion's share of our banking NII. Growing our structural hedge has reduced the sensitivity of these revenues to interest rate cuts. Our balance sheet is also underpinned by a strong capital position and a high-quality credit portfolio. We also have resilient recurring fee income from stable flow-based activities in transaction banking and in wealth, with a much smaller contribution from investment banking event-driven business.

Paul: However.

Paul: We remain confident in our ability to deliver our targets.

Paul: Our balance sheet is strong this is reflected in the deposit surpluses, we hold in every major currency.

Paul: In each of our four businesses in every geography in which we operate.

Paul: This is why our clients place their trust in us during times of predictability and even more so during times of unpredictability.

Paul: This provides us with a steady recurring income stream and underpin the lion's share of our banking NII.

Paul: Growing our structural hedge has reduced the sensitivity of these revenues two interest rate cuts.

Paul: Our balance sheet is also underpinned by a strong capital position and our high quality credit portfolio.

Paul: We also have resilient recurring fee income from stable floor based activities and transaction banking and then what.

Paul: With a much smaller contribution from investment banking event driven business.

Paul: I encourage you to keep the diversity and quality of our earnings in mind, when considering how changes in trade policy will affect our business.

Georges Elhedery: I encourage you to keep the diversity and quality of our earnings in mind when considering how changes in trade policy will affect our business. Our wholesale transaction banking business covers much broader activities than those related to cross-border trade. Within our trade finance business, we have diverse products and cover all major global and intra-regional corridors. To assess the impact higher tariffs could have on our business, we modeled scenarios that contemplate significant but plausible increases in tariffs by the world's largest trading blocks, resulting in a notable slowdown in global trade, as well as a slowdown in global GDP growth. In a plausible downside tariff scenario, we estimate that there would be a low single-digit percentage impact on the group's revenues. Separately, our consensus downside scenario models a slowdown in global trade and GDP growth as a result of an increase in tariffs.

Paul: Our wholesale transaction banking business covers much broader activities than those related to cross border trade.

Paul: And within our trade finance business, we have diverse products and cover all major global and intra regional quality doors.

Paul: To assess the impact higher tariffs could have on our business.

Paul: We modeled scenarios that contemplate significant but plausible increases in tariffs by the world's largest trading blocks.

Paul: <unk> and a notable slowdown in global trade.

Paul: Well as a slowdown in global GDP growth.

Paul: And the closer build downside tariff scenario.

Paul: We estimate that there would be a low single digit percentage impact on the group's revenues.

Separately.

Paul: Our consensus downside scenario models.

Paul: Slowdown in global trade and GDP growth as a result of an increase in tariffs.

Georges Elhedery: The impact of this scenario would be incremental ECLs of north of $0.5 billion. On this basis, we remain confident in delivering a mid-teens return on tangible equity for 2025, 2026, and 2027, and are reaffirming all of the guidance that we gave in February. We recognize, though, that the broader impacts of the current conditions are more difficult to quantify, and we will continue to monitor these as we formulate our ongoing outlook. Importantly, in the current environment, customers look for the strength, stability, and expertise of a trusted partner. We are extremely well-positioned to support all of our customers wherever they are, however their needs evolve, and whatever the market conditions. Finally, we are also pleased to announce an up to $3 billion share buyback and a $0.10 per share interim dividend, reflecting our continued focus on capital return to our investors.

Paul: The impact of this scenario.

Paul: Would be incremental <unk> of <unk> 5 billion.

Paul: On this basis, we remain confident in delivering a mid teens return on tangible equity for 2025, 2026, and 2027 and are reaffirming all of the guidance that we gave in February.

Paul: We recognize though that the broader impacts of the current conditions are more difficult to quantify and we will continue to monitor these as we formulate our ongoing outlook.

Paul: Importantly in.

Paul: In the current environment customers look for the strength stability and expertise of a trusted partner.

Paul: We are extremely well positioned to support all of our customers wherever they are.

Paul: However, they needs evolve.

Paul: Whatever the market conditions.

Paul: Finally.

Paul: We're also pleased to announce an up to $3 billion share buyback and at 10 cents per share interim dividend, reflecting our continued focus on capital return to our investors.

Georges Elhedery: With that, let me hand over to Pam.

With that let me hand over to Pat.

Paul: Okay.

Pam Kaur: Thank you, Georges. Thank you everyone for joining. The momentum in our business has enabled us to deliver a strong Q1 performance, headlined by an annualized return on tangible equity of 18.4%, excluding notable items. We had very good underlying profit and revenue performances. Credit remained stable, and we maintained a disciplined approach to cost management. We are pleased to announce a first interim dividend of $0.10 per share and a share buyback of up to $3 billion. The buybacks we completed over the last 12 months have helped take us closer to our target range of 14 to 14.5% CET1. We will continue to return surplus capital to shareholders with buybacks remaining our preferred method. As always, a decision on any share buyback will be made on a quarterly basis.

Paul: Thank you Joel.

Paul: Thank you everyone for joining.

Paul: The momentum in our business has enabled us to deliver a strong first quarter performance.

Paul: Headlined by an annualized return on tangible equity of 18, 4% excluding notable items.

Paul: We had very good underlying profit and revenue performances.

Paul: Credit remains stable and we maintained a disciplined approach to cost management.

Paul: We are pleased to announce.

Paul: First interim dividend of 10 cents per share.

Paul: Share buyback of up to $3 billion.

Paul: The buybacks, we completed over the last 12 months have helped take us closer to our target range of 14 to 14, 5% CET one.

Paul: We will continue to return.

Paul: Plus capital to shareholders with buybacks remaining our preferred method.

Paul: As always does.

Paul: On any share buyback will be made on a quarterly basis.

Pam Kaur: It will depend on organic capital generation and the capital needs of the business. Unpacking the revenue story, excluding notable items, revenue of $17.7 billion was up $1.1 billion on the Q1 of last year, driven by fee and other income. It also included a $0.3 billion increase in debt and equity markets, driven by higher volatility and a favorable impact of $0.2 billion in the quarter from the disposal of Argentina, which we completed at the end of last year. On banking NII, excluding the impact of Argentina and other notable items, the banking NII run rate remained broadly stable on the Q4. The impact of interest rate cuts and 2 fewer days in the quarter were offset by the repricing of liabilities and structural hedge assets, and some favorable changes in asset mix.

Paul: It will depend on organic capital generation and the capital needs of the business.

Paul: I'm talking the revenue story.

Paul: Excluding notable items revenue of $17 $7 billion was up $1.1 billion on the first quarter of last year, driven by fee and other income.

Paul: It also included.

Paul: 0.3 billion dollar increase in debt and equity markets driven by higher volatility.

Paul: Favorable impact of zero point $2 billion.

Paul: In the quarter from the disposal of Argentina, which we completed at the end of last year.

Paul: Okay.

Paul: On banking NII, excluding the impact of Argentina, and other notable items.

Paul: The banking NII run rate remained broadly stable for the on the fourth quarter.

Paul: The impact of interest rate cuts.

Paul: Two fewer days in the quarter were offset by the repricing of liabilities on structural hedge assets and some favorable changes in asset mix.

Pam Kaur: We continue to expect banking NII of around $42 billion in 2025. As previously stated, this is not an underpin. It remains our expectation at the present time based on the current market rates outlook and our own projections. Moving to fee and other income. Wholesale transaction banking was up 13% on last year's Q1. This was driven by a strong FX performance as elevated volatility drove substantial volumes of client hedging activity. Excluding the impact of disposals, global payment solutions was up 3% year on year, and global trade solutions was up 6%. In wealth, the strong momentum from the Q4 continued as we delivered our fifth consecutive quarter of double-digit year-on-year growth. High client activity levels in Asia, primarily Hong Kong, were the key driver, and there was broad-based growth.

Paul: We continue to expect banking NII of around $42 billion in 2025.

Paul: As previously stated this is not an underpin it remains our expectation at the present time.

Paul: Just on the current market rates outlook and our own projections.

Paul: Moving to fee and other income.

Paul: Wholesale transaction banking was up 13% on last year's first quarter.

Paul: This was driven by a strong FX performance as elevated volatility drove substantial volumes of client hedging activity.

Paul: Excluding the impact of disposal global payment solutions.

Paul: Up 3% year on year, and global trade solutions was up 6%.

Paul: In wealth the strong momentum from the fourth quarter continued.

Paul: We delivered our fifth consecutive quarter of double digit year on year growth.

Paul: High client activity levels in Asia, primarily Hong Kong, where the key driver and there was broad based growth.

Pam Kaur: We are pleased that the investment we are making in our wealth products, distribution channels, and customer journeys is translating into results. A record new business CSM, 301,000 new-to-bank customers in Hong Kong, and $22 billion of net new invested assets, $16 billion of which was in Asia. The CSM balance, which is a store of future value, was up again this quarter. As you know, the CSM balance is subject to market fluctuations, and sensitivities to key indices are in the earnings release. On credit, our Q1 ECL charge of $0.9 billion, equivalent to an annualized charge of 37 basis points as a percentage of loans and advances. This included a $150 million provision to reflect heightened economic uncertainty.

Paul: We are pleased that the investment we are making in our wealth products distribution channels and customer journeys is translating into results.

Paul: Record new business CSM.

Paul: 101000, new to bank customers in Hong Kong.

Paul: The $22 billion of net new invested assets $16 billion of which was in Asia.

Paul: The <unk> balance, which is the store of future value was up again this quarter.

Paul: As you know the CSM balance is subject to market fluctuations.

Paul: And sensitivities to key indices are in the earning release.

Paul: On credit.

Paul: First quarter, ECL charge, or 0.9 billion equivalent to an annualized charge off 37 basis points as a percentage of loans and advances.

Paul: This included a $150 million provision to reflect heightened economic uncertainty.

Pam Kaur: Excluding this, the Q1 charge was broadly the same as in the Q1 of 2024. The credit risk metrics that we track remain stable, and we continue to monitor them closely. Thinking about the potential impact of tariffs on credit performance, ECLs will be sensitive to macroeconomic performance, the outlook for which remains uncertain. We consider a variety of scenarios as part of our ECL calculation. One of these is the consensus downside scenario, in which an increase in tariffs results in a global economic slowdown. In this scenario, there would be an incremental ECL charge of around $0.5 billion. On costs, we are taking a disciplined approach to cost management and are on target to achieve our target of around 3% cost growth in 2025 compared to 2024 on a target basis.

Paul: Excluding this the first quarter charge was broadly the same as in the first quarter of 2024.

Paul: The credit risk metrics that we track remain stable and we continue to monitor them closely.

Thinking about the potential impact of tariffs on credit performance.

Paul: ECS will be sensitive to macroeconomic performance the outlook for which remains uncertain.

Paul: We consider a variety of scenarios as part of our ECL calculation.

Paul: One of these is the consensus downside scenario.

Paul: In which an increase in Paris results in a global economic slowdown.

Paul: In this scenario there would be an incremental ECL charge of around zero point $5 billion.

Paul: On costs, we are taking a disciplined approach to cost management.

Paul: And are on target to achieve.

Paul: Our target of around 3% cost growth in 2025 compared to 2024 on a target basis.

Pam Kaur: We are also on track to deliver $0.3 billion of simplification savings into the P&L in 2025. On loans and deposits, loan balances were broadly stable quarter-on-quarter as growth in corporate and institutional banking was offset by the reclassification of our retained French home loan portfolio. Deposits were also broadly stable quarter-on-quarter, with a partial reversal of some of the seasonal inflows we saw in Q4. Year-on-year, deposits were up 6% with growth in all entities and businesses. Our CET1 ratio was 14.7%. The reclassification of our retained French home loan portfolio led to a $1.3 billion pre-tax loss in the quarter, recognized in fair value through other comprehensive income. This had a capital impact of around 0.2 percentage points of CET1.

Paul: We are also on track to deliver zero point $3 billion of simplification savings into the P&L in 2025.

Paul: On loans and deposits loan balances for broadly stable quarter on quarter.

Paul: As growth in corporate and institutional banking was offset by the reclassification of our retained French home loan portfolio.

Paul: Deposits were also broadly stable quarter on quarter.

Paul: The partial reversal of some of the seasonal inflows we saw in Q4.

Paul: Year on year deposits were up 6% with growth in all entities and businesses.

Paul: Our CET one ratio was 14, 7%.

Paul: The reclassification of our retained French home loan portfolio led to a $1 3 billion dollar pre tax loss in the quarter, we recognized in fair value through other comprehensive income this had a capital impact of around <unk>.

Paul: 012 percentage points CET one.

Pam Kaur: Looking ahead, we expect the buyback we announced today to have an impact of around 0.4 percentage points in Q2. You will have seen that BoCom has announced that it has approved a share issuance of up to CNY 120 billion. Upon completion, we expect to recognize an accounting impact dilution loss of between $1.2 billion and $1.6 billion on our stake. This will be treated as a material notable item and will have no material impact on CET1 and no impact on the dividend. Let me end by summarizing. First, we have momentum in our earnings. We had a strong Q1 performance with an annualized return on tangible equity of 18.4% excluding notable items. We have also continued to perform well in the quarter to date. Second, we have discipline in our execution.

Paul: Looking ahead, we expect the buyback we announced today to have an impact of around 0.4 percentage points in the second quarter.

Paul: You will have seen that Broadcom has announced that it has approved a share issuance of up to 120 billion revenue beat.

Paul: Upon completion, we expect to recognize an accounting impact dilution loss of between $1 2 billion and $1 $6 billion on our stake.

Paul: This will be treated as a material notable item and will have no material impact on CET, one and no impact on the dividend.

Paul: Let me end by summarizing fast.

Paul: We have momentum in our earnings.

Paul: We had a strong first quarter performance with an annualized return on tangible equity of 18, 4% excluding notable items.

Paul: We have also continued to perform well in the quarter to date.

Paul: Second we have discipline in our execution.

Pam Kaur: We are on track to deliver the cost actions we set out in February. Third, although the external environment is more uncertain, we are confident in our ability to deliver, and we are reaffirming our existing targets and guidance. This includes a mid-teens return on tangible equity in 2025, 2026, and 2027. Louise, can we go to Q&A, please?

Paul: We are on track to deliver the cost actions, we set out in February.

Paul: Good.

Paul: Although the external environment is more uncertain, we are confident in our ability to deliver.

Paul: And we are reaffirming our existing targets and guidance.

Paul: This includes a mid teens return on tangible equity in 2025, 2026 and <unk>.

Paul: <unk> 27.

Louise: Louise can we go to Q&A. Please.

Operator 2: Thank you, Pam. As a reminder, 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 Benjamin Toms at RBC. Please accept the prompt to unmute your line.

Operator: Thank you, Pam. As a reminder, 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 Benjamin Toms at RBC. Please accept the prompt to unmute your line.

Paul: Thank you Pam.

Speaker Change: As a reminder, if you'd like to ask a question today. Please use the right hand function and seen. Please also ensure you'll camera is turned on if you're invited to ask a question. Please accept the prompt to meet your line and if you find your question has been answered you may remove yourself from the queue Butler and Youll hand in seed.

Speaker Change: Our first question today comes from Benjamin Toms RBC.

Speaker Change: Please accept the prompt to meet your line.

Benjamin Toms: Morning, both, and thank you for taking my questions. Firstly, you mentioned in the release that you've launched a strategic review of Malta. At full year results we were relatively early in the strategic refresh process. Are there other geographies that you're also strategically reviewing? In the full year results, you talked about $1.5 billion of gross cost saves. Now you're deeper into that process, have you seen any potential to be able to achieve cost saves in excess of that target? Secondly, one of the features of your Q1 results was the strength in fees and other income. Can you provide some color on how sustainable that trend is and how much is driven by the augmented volatility? Thank you.

Benjamin Toms: Good morning, and thank you for taking my questions. Firstly, you mentioned in the release that you're doing the strategic review of Volta. Our full year results. We were relatively early in the strategic refresh process, although the geography that Youre also strategically reviewing our results you talked about $1 5 billion of gross costs that cost saves now.

Benjamin Toms: Deep into that process have you seen any potential to be able to achieve cost saves in excess of that target.

Benjamin Toms: And then secondly, one of the features of your Q1 results with strength in fees and other income can you provide some color on how sustainable that print is and how much is driven by the augment great volatility. Thank you.

Georges Elhedery: Thank you very much, Ben. So we've announced in February $1.5 billion of cost saves from the organization and simplification, which we expect to take to the bottom line. As Pam shared earlier, we are on track to deliver those, and we're moving at pace. We separately announced $1.5 billion from strategic reallocation of costs from activities that are low non-strategic or low returning into our core strategy where areas of our competitive strength. We continue to progress at pace on those. You know, we've made a number of announcements which we've shared, you know, including the investment banking in Europe and the US, including you know, the French insurance, the private bank in Germany, et cetera.

Speaker Change: Thank you very much Ben.

Benjamin Toms: So we've announced.

Benjamin Toms: In February of $1 $5 billion of cost saves from the organization simplification, which we expect to take to the bottom line.

Benjamin Toms: The spam shared earlier, we are on track to deliver those and we're moving at pace, we separately announced $1 $5 billion from strategic reallocation of costs from activities that are low low non strategic or lower returning into our core strategy.

Benjamin Toms: As opposed competitive strength.

Benjamin Toms: We continue to progress at pace on those.

Benjamin Toms: And we've made a number of announcements, which are which we've shared including the investment banking in Europe, and the U S including.

Benjamin Toms: The French insurance.

Benjamin Toms: Private bank in Germany, et cetera, and we're progressing with those at pace and again.

Georges Elhedery: We're progressing with those at pace. Again, on both items, we continue the execution with discipline and pace, and we're not fazed, we remain unfazed with the, you know, external environment for the execution of those. This is our primary focus now is just focusing on delivering those. You know, matter of cost efficiencies is a matter of BAU. If you identify cost efficiencies, we will of course be taking them as a matter of BAU, but our primary focus is to deliver on those commitments. With regards to fees and other income, look, we've talked through the plausible downside scenario, which may put some.

Benjamin Toms: Both items, we continue the execution with discipline and pace and we're not fazed beltway remain unfazed would be you'd.

Benjamin Toms: The external environment for the execution of course. This is our primary focus though is just focusing on delivering those.

Benjamin Toms: Much of the kind of cost efficiencies as a method of <unk> identify cost efficiencies. We will of course be taking them as a method of being you, but our primary focus is to deliver on those commitments.

Benjamin Toms: With regards fees and other income look we've talked to the plausible downside scenario, which may put some but it's an adverse scenario.

Georges Elhedery: That it's an adverse scenario, but it is a plausible scenario, and it will slow down parts of our business, you know, with trade flows, but also the implication it has on other aspects of our business, including the volumes in general. You know, outside this adverse scenario, I would say we continue to see strength in the wealth business, five quarters double-digit growth, which we expect to continue in the medium term, at least for the medium term. We continue to invest in this space, and we continue investing in a number of areas as we called out in February, because we, you know, we believe in the growth potential that we can exhibit in these areas. Thank you, Ben.

Benjamin Toms: Whether it is a plausible scenario and it will slow down parts of our business.

Benjamin Toms: Been trade flows, but also the <unk>.

Benjamin Toms: Implication that has on other aspects of.

Benjamin Toms: Our business, including the volumes in general.

Benjamin Toms: But.

Benjamin Toms: Outside I would say this adverse scenario, we continue to see strength.

In the wealth business five quarters, the double digit growth, which we expect to continue in the medium term at least for the medium term.

Benjamin Toms: Continue to invest in this space and we continue investing in a number of areas as we called out in February.

Benjamin Toms: We we believe in the growth potential that we can exhibit in these areas.

Benjamin Toms: You bet Brian.

Pam Kaur: Ben, just to add, I mean, for the quarter, there's been good performance and there's been high level of client activity, which has benefited FX, debt, equities, markets, and wealth. Also, I want to just remind that one benefit was also the Argentina headwind that we had of $0.2 billion in Q1 of 2024, which obviously didn't repeat in this quarter because of the sale. The key franchise factors are wealth. It's a structural growth, and those dynamics will persist. They are driven by our brand. They're driven by the range of products we have to offer, the improvements we've made in terms of, technology, and that investment is going to pay. As Georges said, we stay confident in terms of double digit growth in the medium term. On wholesale transaction banking, it remains an area of competitive advantage.

Benjamin Toms: Brian just to add I mean for the quarter Theres been good performance and that's been high level of client activity, which has benefited FX debt equities markets and routes also I want to just remind that one benefit was also the Argentina headwind that we had of 0.2 billion.

Benjamin Toms: In Q1 of 24, which obviously didn't repeat in this quarter, but because of the sale, but the key franchise factors are well, it's a structural growth and those dynamics will persist.

Speaker Change: Given by a brand they are driven by the range of products, we have to offer.

Speaker Change: The improvements you've made in terms of technology.

Speaker Change: Technology and that investment is going to pay and as George said, we stay confident in terms of double digit growth in the medium term on wholesale transaction banking. It remains an area of competitive advantage. We will continue to grow that but it's going to be hard to predict quarter to quarter, especially in the current environment.

Pam Kaur: We will continue to grow there, but it's going to be hard to predict quarter to quarter, especially in the current environment. Volatility has definitely benefited us in this quarter. It may not repeat at the very high levels that we've seen in this quarter, but we are still continuing to see underlying growth as we have progressed through in Q2.

Speaker Change: Volatility has definitely benefited us in this quarter. So it may not repeat at the very high levels that we've seen in this quarter, but we are still continuing to see underlying growth as we.

Speaker Change: Progress through in Q2.

Speaker Change: Okay.

Operator 2: Thank you. Thank you very much, Pam. Our next question today comes from Joseph Dickerson at Jefferies. Please accept the prompt to unmute your line.

Operator: Thank you. Thank you very much, Pam. Our next question today comes from Joseph Dickerson at Jefferies. Please accept the prompt to unmute your line.

Speaker Change: Thank you very much. Our next question today comes from Joseph Dickerson Jefferies. Please accept the prompt to Amit your line.

Joseph Dickerson: Hi, thank you for taking my question. Congrats on the strong set of numbers and some clarity on your thinking on the path forward. Can I just ask on the plausible downside scenarios for the low single-digit impact on revenue, I guess? What was the point of undertaking that exercise? Was it to basically show that the perception of the bank as a global trade bank, in some ways, may be exaggerated about how you're not, basically, overly reliant on any particular corridors? And I guess what kind of elements went into that scenario in terms of magnitude of drawdown on trade?

Speaker Change: Alright. Thank you for taking my question Congrats on a strong set of numbers and some clarity on.

We're thinking on the on the path forward.

Speaker Change: Can I just ask on the possible downside scenarios for the low single digit impact on <unk>.

Speaker Change: Revenue I guess.

Speaker Change: But what was the point of.

Speaker Change: Undertaking that exercise was to basically show that the perception of the bank because of global trade Bank.

Speaker Change: And then in some ways may be exaggerated about how youre not basically youre not overly reliant on any particular corridors.

Speaker Change: And I guess, what kind of elements went into that scenario in terms of magnitude of of drawdown on trade and then secondly, just on that can you opine on any opportunities that you're seeing or that you foresee.

Joseph Dickerson: Then secondly, just on that, could you opine on any opportunities that you're seeing, or that you foresee, as a result of what's happening? Not that what's happening is necessarily certain at the moment, but just any opportunities that you can see based on any initial discussions. Then I would presume that you know, you had very strong new-to-bank customers in Hong Kong, I presume. Can you make any comment on April trends there? I would have presumed that that would have continued from last quarter, if what we're picking up on the ground in Hong Kong is accurate. Thanks.

Speaker Change: As a result of what's happening now but.

Speaker Change: What's happening is necessarily starting at the moment, but just any any opportunities that you're going to see based on any any initial discussions and then I would presume that the you had very strong.

Speaker Change: Drawing new to bank customers in Hong Kong I presume.

Speaker Change: Can you make any comment on April trends, there I would presume that that would have continued.

Speaker Change: From our last quarter.

Speaker Change: What we're picking up on the ground in Hong Kong is accurate.

Georges Elhedery: Thank you very much, Joseph. I'll take your question about the positioning of our trade business and our bank as well as the opportunities. I'll ask Pam to take you through the elements of this analysis. We are the world's trade bank. We have been ranked the number one trade bank for eight consecutive years. Our trade covers variety of products as well as we cover you know all the large corridors of trade, including intra-regional corridors, which have been growing quite fast over the last few years. The exercise that we've conducted you know is meant to basically evaluate the impact of plausible downside scenarios on our overall activities, obviously including trade.

Speaker Change: Thank you very much Joseph.

Speaker Change: I'll take your question about the positioning of our trade business and our bank as well as the opportunities.

Speaker Change: And I'll ask Tom to take you through the elements of this analysis.

Speaker Change:

Speaker Change: So we are the world's trade bank, we have been ranked the number one trade bank for eight consecutive years.

Speaker Change: Our trade the covers.

Speaker Change: Alrighty of product.

As well as we.

Speaker Change: We cover them.

Speaker Change: All the large Korea doors of trade, including intra region in Korea doors, which have been growing quite fast.

Speaker Change: Over the last few years.

Speaker Change: The exercise that we've conducted and you know it.

Speaker Change: It's meant to basically evaluate the impact of plausible downside scenarios on our overall activities, obviously, including trade.

Georges Elhedery: Just to add on trade, number one, we have more than 5,000 trade specialists in 50, more than 50 markets. We're in a unique position to be able to support our customers with our expertise in trade. As the business environment shifts, the business outlook shifts, their trading pattern shifts, and they, you know, our customers need to reconfigure some of their supply chains. We, you know, we expect to be able to deepen our relationships with existing clients, but also thanks to our strength, stability, and expertise, to attract more clients and to continue building market share in the trade business among other of the, you know, kind of robust business proposition and service proposition we have for our customers. Pam?

Speaker Change: So just to add on trade number one we have more than 5000 trade specialists and 50 more than 50 markets. We're in a unique position to be able to support our customers with our expertise in trade.

Speaker Change: The business environment shifts the business outlook shifts there trading pattern shifts and they our customers need to reconfigure some of their supply chains.

Speaker Change: And.

Speaker Change: We expect to be able to deepen our relationships with existing clients, but also thanks to all of our strengths stability and expertise to attract more clients and to continue building market share in the trade business. Among other of the you know kind of robust.

Speaker Change: Business proposition and service proposition, we have put all the customers.

Pam Kaur: Yeah. Thanks, Joseph, for the question. Firstly, broadly in terms of context setting, every quarter we do a range of scenario analysis. This quarter, we looked at the significant but plausible downside scenario resulting from increase in tariffs. We homed in on one scenario after looking at a range of possible outcomes, which, as we know, are uncertain and remain very wide. The specific scenario which we homed in on was based on significant increase in tariffs as well as retaliatory tariffs. We also took a holistic approach. We considered different businesses, different geographies, as well as customer segments. This scenario resulted in significant decline in trade and significant slowdown in global GDP growth. The impact of this, we looked at both in terms of revenue through lower balances, but also on flow-based income.

Speaker Change: Yeah. Thanks, Joseph for the question. So firstly broadly in terms of context, setting every quarter, we do a range of scenario analysis.

Speaker Change: This quarter, we looked at the significant but plausible downside scenario, resulting from increase in tariffs.

Speaker Change: We honed in on one scenario after looking at a range of possible outcomes, which we as you know are uncertain and remain very wide.

Speaker Change: So the specific scenario, which we honed into was based on significant increase in Paris.

Speaker Change: As well as retaliatory tariff. We also took a holistic approach, we can say that different businesses different geographies as well as customer segments.

Speaker Change: And this scenario resulted in significant decline in trade and significant slowdown in global GDP growth the impact of this they looked at both in terms of revenue through lower balances, but also on flow based income. In addition, just like we took a reserve of $150 million.

Pam Kaur: In addition, just like we took a reserve of $150 million in this quarter from a downside scenario, we further looked at the downside scenario on a 100% probability basis and came up with a number which is the $0.5 billion provision best estimate in terms of the tariffs.

Speaker Change: In this quarter from a downside scenario.

Speaker Change: <unk> father looked at the downside scenario on 100% probability basis.

Speaker Change: And came up with a number which is the 0.5 billion provision best estimate in terms of.

Speaker Change: The titles.

Georges Elhedery: With regard to your new-to-bank customers in Hong Kong, we were pleased to announce that we acquired 300,000 new-to-bank customers in Q1. This is after we acquired 800,000 new-to-bank customers in the full year 2024, and we continue to see that trend ongoing. Thank you very much, Joseph.

Speaker Change: Then with regards your new to bank customers in Hong Kong, We were pleased to announce that we acquired 300000 new to bank customers.

Speaker Change: In Q1. This is after we acquired 800000 Youtube bank customers in the full year 2024, and we continue to see that trend ongoing. Thank you very much Joseph.

Speaker Change: Okay.

Operator 2: Thank you both. Our next question today comes from Kunpeng Ma at China Securities. Please accept the prompt to unmute your line.

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

Speaker Change: So next question today comes from <unk> Peng at China Securities. Please accept the prompt to meet your line.

Joseph Dickerson: Hi, Georges Elhedery. Hi, Pam Kaur. This is Kunpeng Ma with China Securities. Thank you for taking my question. I have two questions. The first is also some follow-ups on the plausible downside trade scenario. If we compare the, you have two scenario tests, one for trade, one for ECL. We got your set of assumptions for those ECL tests from your annual report. So if we compare those two tests, are the assumptions for the trade test better or worse than the downside scenario, better or worse than the those set of assumptions used in the ECL test? Also, is the low single digit revenue impact just for some one year revenue or for every year's revenue thereafter? Yeah, that's the first question.

Kunpeng Ma: Hi, Georges Elhedery. Hi, Pam Kaur. This is Kunpeng Ma with China Securities. Thank you for taking my question. I have two questions. The first is also some follow-ups on the plausible downside trade scenario. If we compare the, you have two scenario tests, one for trade, one for ECL. We got your set of assumptions for those ECL tests from your annual report. So if we compare those two tests, are the assumptions for the trade test better or worse than the downside scenario, better or worse than the those set of assumptions used in the ECL test? Also, is the low single digit revenue impact just for some one year revenue or for every year's revenue thereafter? Yeah, that's the first question.

John: Yeah, Josh This is John Thank you for taking my question.

Speaker Change: Joe question Hossein is also some follow ups on that.

John: Possible downside.

Speaker Change: Each scenario.

Speaker Change: If we compare the <unk> you have chosen out of attached small trade off on <unk>.

Speaker Change: And we've got a set of assumptions for those tests Oh no no no.

Speaker Change: Annual report.

Speaker Change: Comparing those two tests are the assumptions for the trade.

Speaker Change: That's how it all worse.

Speaker Change: I mean, the downside the downside scenario.

Speaker Change: Set of assumptions used in the ECL.

Speaker Change: And also is there.

Speaker Change: Low single digits.

Speaker Change: The impact just for some long here.

Speaker Change: Paul.

Speaker Change: <unk> revenue may after Mr.

Speaker Change: That's the first question. The second question is could you. Please give us some color on that that is a trend.

Joseph Dickerson: The second question is, could you please give us some color on the latest trend on Hong Kong CRE? Thank you.

Kunpeng Ma: The second question is, could you please give us some color on the latest trend on Hong Kong CRE? Thank you.

Speaker Change: Thank you.

Georges Elhedery: Thank you very much, Kunpeng. I'm going to ask Pam to address both your questions, Kunpeng.

Tom: Thank you very much comparing I'm going to ask Tom to address both your questions complain.

Pam Kaur: Thanks, Kunpeng. We're not going to get into the detail, but the underpinning of the scenarios, whether it's ECLs or indeed on revenue, has the same starting point. We are comfortable based on the work we have done to reaffirm our guidance on ROTI. I just want to be clear that the scenario does not include the secondary impact of any change in policy rates in terms of the revenue related scenario. Secondly, none of these two scenarios have what you call an extreme downside to scenario with like a double-digit contraction of GDP like we saw in the COVID period. Just to give you some guardrails. In terms of Hong Kong Q3, this was a relatively quiet quarter. We did have one specific name, which in the performing book there was a credit downgrade.

Tom: Thanks, Quinn Fanning, so they're not going to get into the detail, but the underpinning depending of the scenarios where that ecl's orange. Indeed on revenue has the same starting point and we are comfortable based on the work they have done to reaffirm our guidance on roti I just want to be cab that the scenario does not include.

Tom: The secondary impact of any change in policy rates in terms of the the revenue related scenario.

Tom: Secondly, none of the DS. These two scenarios have what you call an extreme downside to scenario with like a double digit contraction of GDP likely signed the Covid period. So just to give you. Some guardrails. So in terms of Hong Kong Cree. This was a relatively quiet quarter. We did have a one specific.

Tom: Fake name.

Name a wedge in the performing book there was a.

Tom: Credit downgrade otherwise, there's really nothing more significant they continue to look at our book in detail and there may be a few names up or down on the credit curve with very modest impact on <unk>, but no significant impact on sales.

Pam Kaur: Otherwise, there's really nothing more significant. We continue to look at our book in detail, and there may be a few names up or down on the credit curve with very modest impact on RWAs, but no significant impact on ECLs.

Georges Elhedery: Thank you, Kunpeng.

Speaker Change: Thank you Kemper.

Operator 2: Thank you both. Our next question today comes from Aman Rakkar at Barclays. Please accept the prompt to unmute your line.

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

Speaker Change: Thank you. Our next question today comes from them on the right call at Barclays. Please accept prompt told me all night.

Aman Rakkar: Hey, Georges. Hey, Pam. Thanks very much for the various updates and sensitivities that you've given us. I had two questions just around customer behavior. I just wondered if you'd observed any material shift in the way that your customers are transacting with you. If you've seen any forward indicators around sentiment, any signs of de-risking or de-leveraging, any shift in particularly your kind of corporate customers that might be on the receiving end of trade tariffs. Any insights there would be really helpful. You know, I definitely get the message around continuing to execute on the existing strategy. I guess just two kind of related points to that. One around capital returns. I mean, it's obviously great that you've announced a $3 billion buyback.

Speaker Change: Hey, George Hey, Pam.

Speaker Change: Thanks very much.

Speaker Change: The various updates and sensitivities that you've given us.

Speaker Change: I'll take questions just around the core.

Speaker Change: Customer behavior so.

Speaker Change: I just wondered if you'd observed any material shift in.

Speaker Change: The way that your customers are transacting with U C.

Speaker Change: Any forward indicators around sentiments.

Speaker Change: Any signs of derisking or deleveraging any shifting.

Speaker Change: Particularly your kind of corporate customers that might be on the receiving end of trade tariffs.

Speaker Change: Any insights there.

Speaker Change: Really helpful.

Speaker Change: And then the second is.

Speaker Change: Definitely get the message around continuing to execute on.

Speaker Change: On the existing strategy.

Speaker Change: I guess just to kind of.

Speaker Change: Related points to that one around capital returns I mean, it's obviously, great that you've announced the $3 billion buyback.

Aman Rakkar: You're talking about a more subdued outlook for lending by extension RWAs. Presumably you might be quite capital generative this year. You know, it seems like you're committed to distributions despite the uncertainty, right? It's an uncertain backdrop, but the pace of distributions that you're kind of executing on, it feels like you're committed to that. Is that the right read? Should we be confident around things like the buyback sustainability from here? Just the related part of that question then is just around, you talk about divestiture on track, the $1.5 billion. In terms of the redeploy, 'cause I think you talked about, yeah, some potential revenue opportunities from the redeploy or cost savings if it doesn't come through.

Speaker Change: You're talking about a more subdued outlook for lending and by extension all Wi So presumably you.

Speaker Change: I'll be quite capital generative this year so.

Speaker Change: It seems like.

Speaker Change: But youre committed to distributions despite the uncertainty right so uncertain backdrop, but the pace of distributions that youre kind of executing on it it feels like you're you're committed to that is that the right rates should we be.

Speaker Change: Current around things like the buybacks sustainability from here.

Speaker Change: Just a related.

Speaker Change: All of that question then is just around you talked about divestiture on track.

Speaker Change: But in terms of the redeploy.

Speaker Change: Because I think you've talked about them.

Speaker Change: Yeah, so some potential revenue opportunities from the redeploy or cost savings if it doesn't come back.

Aman Rakkar: Are you minded to delay any of this redeploy, basically, given the volatile backdrop? Thank you.

Speaker Change: Wanted to redeploy.

Speaker Change: Given given the volatile backdrop. Thank you.

Georges Elhedery: Very good. Thank you very much, Aman. I'm going to take your first question about customer behavior, and I'll ask Pam to address both our capital return strategy as well as the cost redeployment from the reallocations. In terms of customer behavior, I think nothing that would really surprise you. Corporate customers essentially are in a wait and see mode, so some of the CapEx or large investments are on hold. Certainly, some of the shipments from China, specifically to the US, have slowed down, but we've seen no panic. There's been no significant drawdowns. There's, you know, deposit behavior has remained normal. You know, nothing really to call out beyond the wait and see. In terms of personal banking and wealth customers activity, actually, this has been quite strong.

Speaker Change: Very good. Thank you very much I'm on I'm going to take your first question about customer behavior, and I'll ask them to address both our capital return strategy as well as the cost redeployment from these reallocations.

Speaker Change: Relocations. So in terms of customer behavior, I think nothing that will join the surprise you or corporate customers essentially are in a wait and see mode. So some of the capex or large investments on hold certainly some of these shipments from China, specifically to the U S have slowed down.

Speaker Change: But we've seen no panic, so theres been no significant drawdowns this is gil.

Speaker Change: Deposit behavior as it remained normal so.

Speaker Change: Nothing really to call out.

Speaker Change: Beyond the wait and see in terms of personal banking wins customers activity actually this has been quite strong, but remember we have a diversified product offering. So we've seen customers you know rebalance.

Georges Elhedery: Remember, we have a diversified product offering, so we've seen customers, you know, rebalance their investments between various offerings and, you know, be it various geographic equity exposure or other assets such as mutual funds or structured products. You know, when customers wanna take a risk off approach, we see the money flow into our deposit base, so we kind of capture the customer assets, you know, either in invested assets or in deposits. When we look at our NNIA for the first three months of the year, it remained positive, strong. We remain, you know, positive on the outlook of the growth in this business. Remember also we're investing in this business, so we're capturing the underlying growth in the market, but we're also capturing market share in the way we're investing in this business.

Speaker Change: The investments between base offerings, and it'll be advantaged geographic equity exposure or other assets such as mutual funds are structured products.

Speaker Change: And you know when when customers wanted to take a risk off approach, we see the money flow into our deposit base. So we kind of capture the customer assets.

Speaker Change: Invested assets are in deposits.

Speaker Change: But when we look at our MAA for the first three months of the year. It remained positive strong.

Speaker Change: So we remain positive on the outlook of the growth in this business remember also we're investing in this business. So we kept treating the underlying growth in the market, but we are also capturing market share.

Speaker Change: And the way we are investing in this business.

Georges Elhedery: Pam.

Pam Kaur: Thanks, Aman. Just one point to add on the wealth customer behaviors. Our strength really lies in our very broad product proposition. As we see the mix shift between one, you know, US equities or Asian equities, or indeed into short-term fixed income products, we are there to support our customers as well as in terms of insurance and more protection and savings related products. Given that gives us confidence that this double-digit growth continues. We've seen the same trend even through April, and the same trend also, no panic, no drawdowns and deposits behavior normal through April. That's just to say that. Coming down to our distribution. Just as a starting point, we have our policy on ordinary dividends.

Speaker Change: Thanks, Alan I'm, sorry, just one point to add on that.

Speaker Change: <unk> customer behaviors are frankly lies in a very broad product proposition. So as we see the mix shift between.

Speaker Change: One you know U S equities, all our Asian equities are indeed into short term fixed income products. We are there to support our customers as well as a in terms of insurance on more protection and savings related product, though given that gives us confidence that this.

Speaker Change: They did growth continues and we are seeing the same trend and even through April and the same trend also no panic no drawdowns.

Speaker Change: Behavior normal through April so that's just the sad that so coming down to a distribution. So just as a starting point.

Speaker Change: We have a policy on ordinary dividends I'm, assuming your question is much more on share buybacks, but let me see overall on the process. We follow every quarter, we look at where we are in terms of our CET one.

Pam Kaur: I'm assuming your question is much more on share buybacks, but let me see overall on the process we follow every quarter. We look at where we are in terms of our CET1. You know our CET1 operating range is between 14 to 14.5%. We also look at our capital generation, less the capital needs or capital deployment that we want to do. What's very important is we look at a range of scenarios in terms of the macroeconomic environment, and then based on that, we look at the quantum on share buybacks. Clearly, if we have excess capital, share buybacks continues to be our preferred method to return capital. We have not changed our view on capital redeployment.

Speaker Change: Our CET one operating range is between 40% to 14, 5%. They also look at our capital generation.

Speaker Change: The capital needs of capital deployment that we want to do.

Speaker Change: And what's very important is routinely but we look at a range of scenarios in terms of the.

Speaker Change: Gnomic environment, and then based on that we look at the quantum on share buybacks and clearly if we have excess capital share buybacks continues to be our preferred method to return capital we have not changed our view on capital redeployment.

Pam Kaur: As I've said, we look at opportunities, we look at the generative capability quarter-over-quarter, and that's how we make the decision on the quantum of share buybacks.

Speaker Change: But as I've said, we look at opportunities, we look at the generator capability quarter on quarter and that's how we make the decision on the quantum of share buybacks.

Georges Elhedery: On the redeployment of costs.

Speaker Change: And on the redeployment of the redeployment of costs, you're absolutely. So far we have not made any change to the timeline of.

Georges Elhedery: On the redeployment of costs.

Pam Kaur: Yeah, on the redeployment of costs, absolutely. So far, we have not made any change to the timeline of what we said we would do. That redeployment is going to be through the midterm period, so between 25, 26, and 27. Clearly, in terms of a macroeconomic uncertainty, we are very mindful in this current environment that there may be some delays, but overall it doesn't shift the trajectory or indeed the transactions that we have both announced and are working on. They are progressing as we expected.

Speaker Change: What we said we would do that redeployment is going to be through the midterm period. So between 25 26 and 27.

Speaker Change: Clearly in terms of the macroeconomic uncertainty you're very mindful in this current environment.

Speaker Change: That there may be some delays, but overall it doesn't shift the trajectory or indeed, the transactions that we have both.

Speaker Change: Both announced and are working on they are progressing as we expected.

Georges Elhedery: Perfect. Thank you very much, Aman Rakkar.

Speaker Change: Perfect. Thank you very much Omar.

Operator 2: Thank you both. Our next question today comes from Jason Napier at UBS. Please accept the prompt to unmute your line.

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

Speaker Change: Thank you. Our next question today comes from Jason Napier UBS. Please accept the prompt to Amit your line.

Jason Napier: Morning. Can you hear me okay?

Jason Napier: Good morning can you hear me okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Georges Elhedery: We can hear you, Jason.

Speaker Change: We can hear you Jason.

Jason Napier: Oh, perfect. Thank you. So two questions, please. The first, Georges Elhedery, HSBC is a signatory to a letter suggesting to the UK regulators that ring-fencing is something that should go. I think that's the right view. But we've got a lot of investor demand for a sense from you as to the motivation for that. What is it that you'd say in terms of OpEx, funding costs, and what restructuring charges may go with that? When you made that motivation, what was the math behind it?

Speaker Change: Perfect. Thank you.

Speaker Change: Two questions. Please the first.

Speaker Change: Yes.

Speaker Change: HSBC is a signatory to the letter.

Speaker Change: Thanks to the UK regulators the ring fencing is.

Speaker Change: Thanks.

Speaker Change: Right.

Speaker Change: We've got a lot of investor demand for SaaS from us too.

Speaker Change: The motivation for that what is it that your child.

Speaker Change: Terms of Opex funding costs and restructuring charges.

Speaker Change: So when you made that motivation.

Speaker Change: What was the math behind us.

Georges Elhedery: Mm-hmm.

Jason Napier: Secondly, very strong performance in costs in Q1, but guidance held constant for the year ahead. I guess that implies potentially some slippage in efficiency ratios in the quarters to come, notwithstanding the cost saving actions that are underway. Could you talk a little bit about sort of the moving parts, just quarter-to-quarter volatility? Is there anything we should be thinking about in the upcoming quarters as far as cost inflation is concerned?

Speaker Change: And then secondly, very strong performance in costs in Q1.

Speaker Change: Hello.

Speaker Change: Cool.

Speaker Change: The year ahead, I guess that implies, especially some slippage in efficiency ratios in the quarters to come notwithstanding.

Speaker Change: Having actions that are underway can you talk a little bit about some of the moving parts just bought.

Speaker Change: It's a quarter volatility.

Speaker Change: We should be thinking about any upcoming quarters as far as cost inflation.

Georges Elhedery: Yeah.

Yeah, Thanks very much.

Jason Napier: Thanks very much.

Georges Elhedery: Thank you, Jason. Let me address your first question on ring-fencing and Pam will take your second question on the cost. Our view on ring-fencing is that, I mean, there's been major enhancement to the prudential regulations for banks in the UK, in particular, the broader regimes of capital, of, you know, loss absorbency through MREL, liquidity, recovery and resolution, et cetera. All these measures have basically put the bank in a much better, safer prudential space that have made ring-fencing effectively redundant. The second thing to say is that the UK is the only major economy that has applied ring-fencing, so it's quite unique to the UK. You know, as an outcome, it's increased the cost to operate as a bank. It created capital inefficiencies, it trapped liquidity.

Jason Napier: Thank you Jason.

Jason Napier: Let me address your first question on ring fencing, and Tom will take your second question on the on the cost.

Tom: So our view on the ring fencing is that.

Speaker Change: We've taken major I mean, there's been major enhancement to the Prudential regulations for banks in the U K in particular, the broader regimes of capital of.

Speaker Change: Most absorbency through Enbrel liquidity recovery and distribution et cetera. All these measures have basically put the bank in a much better safer prudential space that have made the ring fencing effectively redundant.

Speaker Change: The second thing to say is that the UK is the only major economy that is applied ringfencing. So it's quite unique to the U K.

Speaker Change: So as you know is an outcome it's increased the cost to operate as a bank it created capital inefficiencies it trapped liquidity.

Georges Elhedery: It effectively exposed our customers, including businesses and SMEs, to higher costs. It did somewhat also stifle competition. The bar to be able to compete in the UK for banks has become stiffer and, you know, more difficult. Therefore, we believe that removing ring-fencing, or at least scaling back on some of the ring-fencing considerations, will improve the outcome for customers and ultimately, therefore, will support growth in the UK. Now, just to reiterate, we are very supportive of the government's growth agenda, and we will play our role in the UK for that.

Speaker Change: Hum.

Speaker Change: It effectively exposed our customers, including businesses and Smes two higher cost. It did somewhat also stifle competition that the bar to be able to compete in the U K for banks is has become stiffer in more difficult. So therefore, we believe that removed.

Speaker Change: The ring fencing or at least scaling back on some of the ring fencing considerations wouldn't improve the outcome for customers and ultimately therefore will support growth in the U K.

Speaker Change: No just to reiterate we are very supportive of the government's growth agenda.

Speaker Change: And we will play a role in the U K for that.

Georges Elhedery: As regards the financial impact of the removal or the scaling down of ring-fencing, look, we haven't done, you know, full analysis, but we believe this will be positive for both capital cost and ability to compete and support the growth of the UK economy and our customers. Pam?

Speaker Change: And as regards the financial impact of the removal or the scaling down of <unk>.

Speaker Change: Ringfencing look we haven't we haven't done the full analysis, but we believe this will be positive for both capital cost and ability to compete and support the growth of the U K, Colombia and old customers.

Pam Kaur: Yeah. Thanks, Jason. Firstly, we managed cost to a full-year number. Quarter on quarter, you can see some volatility. Just to clarify, our full year 2025 guidance of +3% is on a base of $31.9 billion, which is the full year 2024, restated to the average FX for Q1 2025. Just unbundling that, the 3%, the dependencies on the 4% inflation investment spend and the benefit of $0.3 billion, so the 1% from the P&L saves from the simplification as we guided on the Q4, and the actions that are going to realize that $300 million a year have been already broadly taken through the P&L, will come through in subsequent months.

Yeah. Thanks, Jason So firstly, we managed costs to a full year number.

Speaker Change: And quarter on quarter, you can see some volatility there.

Speaker Change: Just to clarify are fully are 2025 guidance of plus 3% is on a base of $31 $9 billion, which is the full year 'twenty four restated to the average FX for Q1 25, So just unbundling that the 3% the dependencies on the 4%.

Speaker Change: Inflation investment spend and the benefit of zero point $3 billion. So the 1% from the P&L saves from the simplification as we guided on the Q4 and the actions that are going to rise that 300 million of the had been already probably taken through the P&L will come.

Speaker Change: Through it in subsequent months.

Georges Elhedery: Thank you, Jason.

Speaker Change: Thank you Jason.

Operator 2: Thank you both. Our next question today comes from Kian Abouhossein from J.P. Morgan. Please accept the prompt to unmute your line.

Operator: Thank you both. Our next question today comes from Kian Abouhossein from J.P. Morgan. Please accept the prompt to unmute your line.

Speaker Change: Thank you guys. Our next question today comes from Kian.

Speaker Change: Shane from JP Morgan please accept the prompt to mute your line.

Kian Abouhossein: Hi, Georges Elhedery and Pam Kaur, thanks for taking my questions. Great results, but clearly the focus is on the new tariff world, and I wanna try to understand, first of all, your target and guidance around interest rates in particular, but also GDP assumptions. You mentioned mid-April, but clearly a lot happened in April. Just trying to understand what date, or what week we should use as a guidance in terms of interest rate assumption, if you could give maybe GDP assumptions. Secondly, coming to your sensitivities, or your analysis around, tariff impact, if you could discuss again interest rate assumptions in particular in GDP, but also the assumptions about China as a trading, counterparty in terms of your revenues versus the corridors you talk about.

Speaker Change: Hi, George and Pam Thanks for taking my questions.

Speaker Change: Great results are clearly the focus is on the on the new tariff World and I wanted to try to understand first of all your target and guidance around interest rates in particular, but also GDP assumptions you mentioned mid April but clearly not happened in April so just trying to understand what they are.

Speaker Change: H E.

Speaker Change: We should use as a guide in terms of interest rate assumptions, if you could give maybe GDP assumptions.

Speaker Change: And secondly, coming to your sensitivities.

Speaker Change: Our analysis around.

Speaker Change: Tariff impact if you could discuss again interest rate assumptions in particular in GDP, but also just some sense about China as the trading.

Speaker Change: The counterparty in terms of your revenues.

Speaker Change: Kearney Dorsey talk about because clearly BD into new world the corridor seem to be impacted as well. So are you assuming corridor can grow or do you assume current address would also be negatively impacted in a new tariff growth and lastly in that context can you just talk about cost yes.

Kian Abouhossein: Because clearly, really, in the new world, the corridors seem to be impacted as well. Are you assuming corridors can grow, or do you assume corridors would also be negatively impacted in a new tariff world? Lastly, in that context, can you just talk about cost flexibility, as you didn't discuss that?

Speaker Change: Yes, he didn't discuss that.

Georges Elhedery: Thank you, Kian Abouhossein. Kian Abouhossein, I'm going to make some broad comments on the view of corridors and overall our business. I will ask Pam Kaur to, you know, give you additional information on the tariff scenarios as well as in the cost implications. Okay? A couple of things to know. The first one is, you know, as we did say, the lion's share of our banking NII is driven by our deposit franchise. This deposit franchise is a hallmark, you know, of our balance sheet. You know, we own 50s loan to deposit ratio in three of our four businesses. In the UK, we own 80s, which is the lowest, therefore we have deposit surpluses in every currency, every geography, every business line.

Speaker Change: Thank you Kim Ken I'm going to make some broad comments on the view of Corio doors and overall in our business.

Speaker Change: And I'll ask them to you.

Speaker Change: He will give you additional information on the tariff scenarios as well as in the cost implications. Okay. So a couple of things.

Speaker Change: The first one is you know as we.

Speaker Change: We did see.

Speaker Change: The lion's share of our bank and I always driven by our deposit franchise. This deposit franchises a hallmark.

Speaker Change: All forward balance sheet.

Speaker Change: You know, we own 50 as loan to deposit ratio and three or four businesses in the in the U K, we don't Ats, which is the lowest therefore, we have deposit surpluses in every currency every geography every business line. This franchise is very robust and as a driver of our very important.

Georges Elhedery: This franchise is very robust and is a driver of a very important, you know, lion's share for banking NII, very important revenue stream. The second, when you look at our fee income, wealth so far has, you know, continued to grow at double-digit returns, and we do expect it to continue to grow at double-digit returns in the medium term, given the underlying market opportunities and market growth, as well as our own investment to continue gaining market share. Transaction banking is the one we really are diving into. Remember, first, transaction banking is a wide set of products that cover various areas outside trade.

The Lions share four banking NII very important revenue stream.

Speaker Change: The second when you look at our fee income wins. So far has continued to grow at double digit returns and we do expect it to continue to grow at double digit returns in the medium term given the underlying market opportunities and market growth as well as our own investment to continue gaining market share.

Speaker Change: So transaction banking is the one that really we really diving into remember first transaction bank is a wide set of products that cover various areas outside trade and remember a lot of our businesses, let's say with multinational customers operating in Asia or in China.

Georges Elhedery: Remember, a lot of our businesses, let's say, with multinational customers operating in Asia or in China, a lot of their business is in China for China or in Asia for Asia, where they produce and manufacture locally and distribute locally with limited impact on tariffs, albeit some may be impacted by tariffs. Even within trade, we have seen growth of trade corridors intra-Asia or within Asia, Middle East, at a very fast pace. A number of these corridors have become structurally resilient and on a growth trajectory. Now, some of the China plus one, trade patterns that are still meant to ultimately distribute or, you know, export to the US will be affected for insofar that there's intra-Asia trade flows for that ultimate purpose.

Speaker Change: A lot of their business is in China for China or in Asia for Asia, where they produce and manufacture locally and distribute locally with limited impact on Fedex will be Tom may be impacted by tariffs.

Speaker Change: But even within trade we have seen growth of trade corridor is intra Asia or within Asia Middle East at a very fast pace.

Speaker Change: And in a number of these quality doors have become structurally resilient and on a growth trajectory.

Speaker Change: Some of the China plus one.

Speaker Change: Trade patterns that are still men to ultimately distribute or exports to the U S will be affected for in so far that this intra Asia trade flows for that ultimate purpose, but there is a much bigger intra Asia intra Asia and Middle East trade flows that are two way and that's all related.

Georges Elhedery: There is a much bigger intra-Asia and Middle East trade flows that are two-way and that are related to domestic manufacturing for the purposes of domestic consumption, which we continue to see as structurally growing. Our scenarios have really looked at differentiation between the areas of structural growth and the areas that will be widely impacted by tariffs, which Pam can talk to.

Speaker Change: Two domestic manufacturing for the purposes of domestic consumption, which we continue to see a structurally growing.

Speaker Change: Our scenarios have really looked at differentiation between the areas of structural growth in the areas that would be what is widely impacted by tariffs, which which Tom can talk to.

Pam Kaur: Thank you, Kian. Firstly, just to reiterate, the $42 billion banking NII continues to be our best estimate for full year 2025. Now, we've looked at a range of reasonable upside, downside assumptions, including rates, but we are not immune to all scenarios despite the stress work that we have done. Our Q1 run rate of $10.6 billion puts us on a good trajectory given that range of scenarios we've looked at, all plausible upsides and downsides. Now, as always, therefore, key drivers. The rates that we have included are based on the mid-April curves. The structural hedge will be a tailwind to this headwind of rates. We have $75 billion maturities in the remainder of the year, and they are on 2.8% yield at the moment, so there'll be an upside to that.

Speaker Change: So thank you Ken so firstly just to reiterate the $40 billion bank and I continue to be our best estimate for full year 2025, no. We've looked at a range of reasonable upside downside.

<unk>, including rates.

Speaker Change: But we're not immune to all scenarios. Despite the stress work that we've done on our Q1 run rate of 10.6 billion puts us in a good trajectory given that range of scenario, we've looked at all plausible upsides and downsides.

Speaker Change: As always therefore, a key drivers the rates that we have included a.

Speaker Change: Based on the mid April comps.

Speaker Change: The structural hedge.

Speaker Change: It will be a tailwind to this headwind of race, we have 75 billion maturities in the remainder of the and down 2.8% yield at the moment, so there'll be an upside to that the other two elements are harder to forecast, particularly in terms of balance sheet growth as we've said before and the low.

Pam Kaur: The other two elements are harder to forecast, particularly in terms of balance sheet growth, as we've said before, and the loans stay muted. Having said that, loans and advances were slightly up in the Q1 of this year, primarily because Hong Kong loans and advances were stable compared to Q4 last year, where they had contracted. Now, the deposit migration trend from Hong Kong has stayed stable over last year into this year at 39%, and that is continuing even through April. If I look at in the round in terms of deposit behaviors of our customers, both from a corporate side and as well as from a retail side, we stay quite comfortable.

Speaker Change: <unk> stay muted, having said that loans and advances were slightly up in the first quarter of this year, primarily because Hong Kong loans and advances are stable compared to Q4 last year, where they had contracted now.

Speaker Change: Now the deposit migration trend from Hong Kong has stayed stable over last year into this year at 39% and that is continuing even through April. So if I look at in the round in terms of deposit behaviors of our customers both from a corporate side and as well as from a retail side they stay quiet.

Pam Kaur: On tariffs, just in terms of the broad piece, what we have looked at from a tariff perspective is, and it's all in terms of seeing the various scenarios in terms of delivering the mid-teens ROTE. I mean, firstly, we looked at our income stream beyond banking and IA, which is wholesale transaction banking, and it has many more products beyond trade finance. It also is in diverse products within trade finance and their diverse global and intra-regional corridors. Now, when we have looked at the downside scenario, we've looked at higher tariffs, we have looked at impact on GDP, we have looked more broadly on policy rates, inflation, the big picture.

Speaker Change: So on tariffs just in terms of the broad based what we have looked at from a tariff perspective is and it's all in terms of seeing the various scenarios in terms of delivering the mid teens Roe team.

Speaker Change: I mean, firstly, we looked at our income stream beyond banking and I, which is wholesale transaction banking and it has many more products beyond trade finance.

Speaker Change: It also is in diverse products within trade finance and their diverse global and intra regional Colorado's now when you've looked at the downside scenario, we've looked at higher tell us we have looked at the impact on GDP.

Speaker Change: Look more broadly on policy rates inflation, the big picture, but again to say, we have not looked at GDP to the stress level off a downside scenario that we've called out in our release, which is like a double digit contraction of GDP as we saw in the Covid period. So if you look at all of that we come to a low single digit percent.

Pam Kaur: Again to say we have not looked at GDP to the stress level of a downside two scenario that we have called out in our release, which is like a double-digit contraction of GDP as we saw in the COVID period. If you look at all that, we come to a low single-digit percentage impact on revenues. Within that, and within the incremental $500 million ECLs, we stay very confident for our mid-teens ROTI for the next three years. Now, the broader impacts are going to be hard to quantify. These are your second- and third-order impacts, but we'll continue to monitor them through our various scenarios and review them quarter-on-quarter. On costs. Our cost trajectory is on track, and given this, there's no shift on that.

Speaker Change: That impact on RASM on revenues.

Speaker Change: Yeah.

Speaker Change: And within that and whether the incremental 500 million E. Seattle, we stay very confident for a mid teens royalty for the next three years now the broader impacts are going to be hard to quantify. These are your second third order impact, but we'll continue to monitor them through our various scenarios and reviewed them quarter on quarter.

Speaker Change: On costs, our cost trajectory is.

Speaker Change: On track and given this theres no shift on that.

Pam Kaur: We will still continue through our envelope to be able to invest in the areas which we have been, as Georges has said, because we can see the direct benefit coming very quickly in those areas, even in the current environment and continuing through April, and that's primarily on the wealth side.

Speaker Change: And we will still continue.

Speaker Change: Through our envelope to be able to invest in the areas, which we have been as George has said because we can see the direct benefit coming very quickly in those areas even in the current environment and continuing through April and that's primarily on the website.

Georges Elhedery: Perfect. Kian Abouhossein, thank you very much.

Speaker Change: Right.

Kim Ken: Kim Thank you very much.

Operator 2: Thank you both. Our next question today comes from Amit Goel at Mediobanca. Please accept the prompt to unmute your line.

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

Kim Ken: Thank you Bye. Your next question today comes from Amit coal at Mediobanca. Please accept the prompt to meet your line.

Amit Goel: Hi. Thank you. So potentially follow up, actually to Kian's question. Thank you. I understand so essentially the plausible tariff downside scenario is pretty similar or closer to the ECL downside one rather than the downside two type case. Again, just coming back in terms of the broader profitability mid-teens kind of target. So essentially you're saying that if we were to see that plausible downside scenario, you still believe you can achieve that mid-teens profitability level, and that's before factoring in any further kind of cost actions, or would that be with any kind of rejigging or additional cost action taken by the group to mitigate some of that impact?

Speaker Change: Hi, Thank you.

Speaker Change: And so essentially follow up actually to Ken's question that so thank you and on sensei, essentially thats possible tariff downside scenario is pretty similar or closer to the ECL downside one rather than the downside case.

Speaker Change: And again, just coming back in terms of the broader profitability mid teens.

Speaker Change: Kind of a.

Speaker Change: Target and so essentially you're saying that if it were to say that plausible downside scenario you still believe you can achieve that mid teens profitability. Therefore.

Speaker Change: And that's before factoring in any further cost actions or would that be with any kind of rejigging.

Speaker Change: Or additional cost.

Speaker Change: Action taken by the group to mitigate some of that impact.

Amit Goel: Secondly, I just wanna check, when I look at the downside ECL scenario now versus a full year, it seems like the China and Hong Kong drawdown is not quite as severe. I see the US as maybe a little bit 30 basis points more severe. I was also just kinda curious why that downside scenario is not quite as negative, perhaps as what you assessed at the full year stage. Thank you.

Speaker Change: And then secondly, and I just thought I'd check them when I look at the downside one E tail scenario.

Speaker Change: Now versus our full year it seems like the the China and Hong Kong draw down is not quite as severe.

Speaker Change: I see the U S is maybe a little bit of 30 bps more severe dozens or just kind of curious why that downside scenario is not quite as.

Speaker Change: Negative, perhaps is and what you assessed or the full year stage.

Speaker Change: Thank you.

Georges Elhedery: Okay. Thank you, Amit. Amit, I'm going to ask Pam to comment on your second question, but on your first question, look, we're not going to give more details than what we shared, but I think your analogy to say that it's a downside one like scenario in the sense that it is adverse but plausible is correct. Within that scenario, without additional cost actions than the one that we have set out to do and are on track for doing and obviously committed to do, we are confident we can achieve our targets, in particular our targets of mid-teen returns for 2025, 2026, and 2027. Pam?

Amit: Okay. Thank you Amit.

Speaker Change: On your first so I'm going to ask Pam to comment on your second question, but on your first question look we're not going to give more details than what we shared with I think your analogy to say that it's a downside one like scenario in the sense that it is adverse but plausible is correct and within that scenario.

Speaker Change: Without additional cost actions than the one that we have set out to do and are on track for doing and obviously committed to do we are confident we can achieve our targets and in particular on your targets of mid teen returns for 'twenty five 'twenty six 'twenty seven.

Pam Kaur: Thanks. Just in terms of the scenarios, just to confirm, they are not identical scenarios, but in terms of severity and plausibility, you're right in the ballpark because ECL scenario stresses a lot of things on interest rates, inflation, et cetera, from a range of factors and this one, you know, tariffs is quite specific on the revenue line. To clarify on ECLs, we had to build our reserve for this quarter, change the weightings of the downside run from 15 to 30%. When we look at the $500 million potential impact, that is if you change that downside one scenario weighting to 100%. Just to say that's a $500 additional to the $150.

Thanks, So just in terms of the scenario just to confirm they are not identical scenarios, but in terms of severity and plausibility you're right in that.

Speaker Change: The ballpark because the ECL scenario stress, there's a lot of things on interest rates inflation et cetera from a range of factors and this on on.

Speaker Change: You know tariffs, it's quite specific on the on the revenue line.

Speaker Change: To clarify on Ecl's, we had to build a reserve for this quarter changed the ratings of the downside one from 15% to 30% and when they look at the 500 million.

Speaker Change: Potential impact that is if you change that downside one scenario weighting to 100%. So just to say that's a 500 additional to the 159 times of Hong Kong and China create absolutely in terms of.

Pam Kaur: Now in terms of Hong Kong and China, absolutely, in terms of both from an individual customer level as well on the forward economic guidance, given the starting point, there is a lesser impact, and overall there has been very little noise from a Hong Kong CRE and a China CRE other than isolated names in this quarter. There can be credit downgrades over a period of time. We saw a few now, but the impact from an RWA perspective is very modest. If you look from a US perspective, also there was a specific name, and then when we look at the credit downgrades, so that's also in the quarter. I wouldn't really build any trend from this quarter into a full year.

Speaker Change: Both from an individual customer level as well on the forward economic guidance given the starting point there is a lesser impact in overall than it has been very little noise from a Hong Kong Korea, and China Korea other than isolated names in this quarter.

Speaker Change: There can be credit downgrades over a period of time, we saw few now but the impact from an arguably a perspective is very modest if you look from a U S perspective also there was a specific name and then when we look at the credit downgrades. So that's also in the quarter I Wouldnt really build any trend from this.

Speaker Change: Quarter into our full year.

Pam Kaur: All these factors, bottom line, are part of the scenario analysis which we do on upside and downside before we reaffirm our ROTI guidance.

Speaker Change: And all of these factors bottom line.

Speaker Change: Part of the scenario analysis, which we do on upside and downside before we reaffirm our Ot guidance.

Georges Elhedery: Perfect.

Amit Goel: Perfect.

Pam Kaur: and target.

Amit Goel: and target.

Speaker Change: Target.

Georges Elhedery: Okay. Thank you, Amit.

Speaker Change: Okay. Thank you Amit.

Operator 2: Thank you both. Our next question today comes from Gurpreet Singh Sahi from Goldman Sachs. Please accept the prompt to unmute your line.

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

Speaker Change: Thank you Mike. Our next question today comes from God create sensor from Goldman Sachs. Please accept the approach to meet your line.

Gurpreet Singh Sahi: Thank you for taking my question, Georges and Pam. Good morning. So really on banking NII, a couple if I may please. First is quarter-over-quarter. Banking NII held up pretty much flat, whereas interest rates would have added a headwind of, as per my calculation, $170 million. So can you please double-click and tell us on how much was the benefit from the deposit pass-through being not that high and then improved asset mix and then the hedge, structural hedge? That's one. Second, in the $42 billion, again, on banking NII, $42 billion, around $42 billion guidance, how much are we assuming for average interest earning assets growth? Because that has. If I see deposit growth has been consistent, but that somehow on a year-over-year basis is now showing up as 4% growth.

Speaker Change: Thank you for taking my question, George and Tim Good morning.

Speaker Change: So really on banking NII a couple if I may. Please first is Q on Q banking in a held up are pretty much flat, whereas interest rates would have added a headwind of but as for my calculation 170 million. So can you. Please double quick tell us on how much was the benefit from the.

Speaker Change: Deposit pass through being not that high and then improved asset mix and then the hedge.

Speaker Change: Structural hedge that's one and second in the 42 billion again on back in I 42 billion around 42 billion guidance.

Speaker Change: How much are we assuming for average interest earning assets growth because that has if I see your deposit growth has been consistent but that somehow on a Y O Y basis dollar showing up as 4% growth, but then Q on Q. There is no growth and previously on YY also we could not show any growth and then what is the.

Gurpreet Singh Sahi: Q on Q, there's no growth, and previously on YY also we could not show any growth. What is it around? Is $41.5 billion outcome around $42 billion? Does that tick the box and help us meet the target? Thank you.

Speaker Change: One is 41.5 outcome around 42 does that hit the books.

Speaker Change: And help us meet our target. Thank you.

Georges Elhedery: I am going to ask Pam to address both your questions on banking NII.

Speaker Change: I am going to ask Tom to address both of your questions and thank you yeah. Thank you. Good faith. So firstly banking NII was flat on a quarter on quarter on a constant currency basis, excluding notable items in Argentina, but we don't split out the dollar impact of every moving part, but let me just on.

Pam Kaur: Thank you, Gurpreet. Firstly, banking NII was flat on a quarter-on-quarter, constant currency basis, excluding notable items in Argentina. Now we don't split out the, you know, dollar impact of every moving part, but let me just unbundle. The headwinds were two fewer days in the quarter as well as lower interest rates. The tailwinds was reinvestment of maturing hedge assets at high yields, a bit of change in the mix of our market treasury assets, as well as the benefit of deposit pass-throughs, particularly in the UK, which come through with a delay of 90 days. The interest rate cuts, which we saw in August, came in through for a full quarter in this quarter, and then we saw a bit of a tail of the November cuts as well.

Bundle.

Speaker Change: So the headwinds were two fewer days in the quarter as well as lower interest rates.

Speaker Change: But the tailwind was reinvestment of maturing has assets at high yields.

Speaker Change: A bit of a change in the mix of our market treasury assets as well as the benefit of deposit pass through particularly in the U K, which come through with a delay of 90 days. So the interest rate cuts. We saw in August came in through for a full quarter in this quarter and then we saw a bit of a tail off.

Speaker Change: The November cuts as well so that's how you know is the the impact them.

Pam Kaur: That's how you know the impact is then. In terms of your other question, of course, we look at various upside and downsides, you know, in that $42 billion. I just want to reiterate that $42 billion is not an underpin. It is just around $42 billion, our current best estimate based upon what we see in terms of deposit betas, based upon what we see in terms of actual deposit flows coming through, updated not just for the quarter, but also considering the trend we've seen through April.

Speaker Change: And in terms of your you know other question of course, we look at various upside and downside in that 42 billion and I just wanted to reiterate that 42 billion.

Speaker Change: It is not an underpin it is just around 42 billion.

Speaker Change: Our current best estimate based upon what we see in terms of deposit beta based upon what we see in terms of actual deposit flows coming through updated not just for the quarter, but also considering the trend we've seen through April.

Georges Elhedery: Great. Thank you very much, Gurpreet.

Great.

Speaker Change: Thank you very much corporate.

Yeah.

Operator 2: Thank you both. Our next question today comes from Andrew Coombs at Citigroup. Please accept the prompt to unmute your line.

Operator: Thank you both. Our next question today comes from Andrew Coombs at Citigroup. Please accept the prompt to unmute your line.

Speaker Change: Thank you Bye. So next question today comes from Andrew Coombs Citigroup. Please accept the prompt telling me all night.

Yeah.

Andrew Coombs: Morning. If I could have a couple on the organizational simplification, and then also just one clarification on wealth. On the organizational simplification, you previously guided to $1.8 billion of restructuring costs, and you said the majority of that is expected to be booked in 2025. I think you only took $141 million in Q1. Presumably we should expect a big step-up in the restructuring charges from Q2 onwards the rest of this year. And then the second question kind of attached to this is, you said that the actions you've taken to date will already translate into $300 million of annualized savings.

Speaker Change: Good morning, if I can have a couple on the organizational simplification and then I'll take just one clarification on well.

Speaker Change: On the organization.

Speaker Change: <unk> you previously guided to one 8 billion of restructuring costs and he said the majority of that is expected to be booked in 2025.

Speaker Change: I think he took 141 million in Q1.

Speaker Change: Presumably we should expect a big step up in restructuring charges from Q2.

Speaker Change: On with the rest of this year.

Speaker Change: And then the second question about attached to this is.

Speaker Change: You said that the actions you've taken to date.

Speaker Change: Already translated to $300 million of annualized savings.

Andrew Coombs: I appreciate in Q1 you've had very little of that, but nonetheless, you're still guiding to $300 million for the full year 2025, when you've already achieved $300 million annualized, and there's presumably more to come over the year with the additional restructuring. Can you just clarify a bit there on why more of the savings are not flowing into full year 2025 compared to 2026? On wealth, for clarification, given the segmental split, is it possible to get the split of the Asian invested assets and the $16 billion Asian net new invested assets this quarter that's attributable to Hong Kong? Thank you.

Speaker Change: I appreciate in Q1 due contract literally but nonetheless, you're still guiding to 300 million.

Speaker Change: For the full year 'twenty five.

Speaker Change: When you've already achieved 300 million annualized and presumably moved to kind of maybe to remind you of the additional restructuring.

Speaker Change: To just clarify a bit down why more savings and not knowing who your 'twenty five 'twenty six.

Speaker Change: And then.

Speaker Change: Well the clarification you mean, you segmental split is it possible to get the split of the Asian invested asset and 60 billion Asian net you invest as it gets cold.

Speaker Change: Could you go to Hong Kong.

Speaker Change: Okay.

Georges Elhedery: Okay. Thank you, Andrew. Andrew, I'm going to ask Pam to address your first two questions with regard to the organization simplification. Just saying that we will give the, as I said earlier, we will give a, you know, more thorough update at the interim results. On your final question, let us take it forward and see what we can communicate. $16 billion of net new invested assets in Asia, with you know majority in Hong Kong. We will take it forward to see what additional granularity we're likely to share. Pam?

Speaker Change: Okay.

Speaker Change: Thank you Andrew.

Speaker Change: Andrew I'm going to ask them to address you.

Andrew: Sure Yeah. The first two questions with regard to the organization simplification, just saying that we will give as I as I said earlier, we will give a more photo update at the interim results.

Speaker Change: And then on your final question.

Speaker Change: Let us take it forward and see what we can communicate $16 billion of Matthew invested assets in Asia with the majority in Hong Kong, but we will we will take it forward to see what additional granularity.

Speaker Change: We're likely to share them.

Pam Kaur: Okay. Thanks, Andy. Firstly, in terms of the actions taken and the P&L being coming through for the year, the actions taken typically is when you have colleagues put through at risk and decisions made, communicated. There is always a time lag typically between that and colleagues leaving the platform. Typically, it tends to be about a quarter, 90 days. When you say an action has been taken, you know a saving is going to come through, but there is going to be a time lag between that decision and the savings feeding into the P&L. When we said the majority of the actions have already been taken, the annualized savings that we calculated, it's for the full year. It's not as though these actions are already banked in and there's going to be further. That's sort of the main piece.

Speaker Change: Zandy. So firstly in terms of the actions taken in the P&L being coming through for the yeah.

Speaker Change: The actions taken typically is when you have.

Speaker Change: Colleagues put through.

Speaker Change: At risk and decisions made communicated.

Speaker Change: There is always a time lag typically between that and colleagues, leaving the platform typically tends to be about a quarter 90 days.

Speaker Change: So when you say an action has been taken you know a saving is going to come through but there is going to be a time lag between that decision and the savings feeding into the P&L. So when we said the majority of the actions have already been taken the annualized savings that we calculated it is for the full year. So it's not as though.

Speaker Change: These actions are already banked in and Theres going to be further so that's sort of the main piece not on restructuring costs, you're absolutely right that there is going to be the majority of the restructuring cost taken in 2025, rather than 2026, and I would expect most of that to come through.

Pam Kaur: Now on restructuring costs, you're absolutely right that there is going to be the majority of the restructuring costs taken in 2025 rather than 2026. I would expect most of that to come through Q2, Q3, and then some Q4, and then tapering down as we go into 2026.

Speaker Change: Q2, Q3, and then some Q4 and then tapering down as we go into 2026.

Georges Elhedery: Very good. Thank you, Angie.

Speaker Change: Good.

Thank you Andy.

Operator 2: Thank you very much. Our next question today comes from Ed Firth at KBW. Please accept the prompt to unmute your line.

Operator: Thank you very much. Our next question today comes from Ed Firth at KBW. Please accept the prompt to unmute your line.

Speaker Change: Thank you very much. Our next question today comes from Ed Firth <unk> K B W. E. Please accept the prompt to mute your line.

Ed Firth: Yeah. Good morning, everybody. Thanks very much for taking the questions. Yeah, I just had a couple. The first one, I noticed that your cost guidance is based on an average exchange rate in Q1. The US dollar, I think, is what off about 6% since then. I assume that if we were actually to do that at today's exchange rate, your cost number will be somewhat higher than that. I'm just trying to check, is your revenue guidance also based on those exchange rates? Is it effectively like we should gear up both revenue and costs for the weaker dollar in terms of our expectations? That's the first point.

Speaker Change: Hey, good morning, everybody. Thanks, very much for the taking the questions.

Speaker Change: I just had a couple the first one I noticed that your cost guidance is based on an average exchange rate in Q1.

Speaker Change: But the U S. Dollar I think is what off about 6%. Since then so I assume that if we were actually to do that at today's exchange rate. Your cost number will be somewhat higher than that and I'm. Just trying to your revenue guidance also based on these exchange rates. So you should expect to be back where we should vote.

Speaker Change: Gear up both revenue and costs.

Speaker Change: The weaker dollar in terms of all in terms of our expectations as the first point and then I guess it partly related to that are we actually in the plausible downside scenario now I mean, if I'm looking at it.

Ed Firth: I guess, you know, partly related to that, are we actually in the plausible downside scenario now? I mean, if I'm looking at, you know, trade flows from China to the US are down, what 45% booking, something like that. I mean, that feels to me like a pretty downside scenario. Should we assume that as we go through Q2 and Q3, we are actually in that scenario now? Is that effectively where we are, assuming nothing changes, and I guess nobody has any idea what will happen in terms of the changes, but assuming we stay where we are today? I guess my second question was just about BoCom. I just can't really understand the accounting because you're still running with a valuation that's what, $10 billion above the market value.

Speaker Change: Trade flows China to the U S sedan, where 45% bookings something like that I mean that feels to me like a pretty downside scenario. So should we assume that as we go through Q2 and Q3, we are actually in that scenario. Now is that is that effectively what were we are assuming nothing changes in I guess.

Speaker Change: Nobody has any idea what will happen in terms of the changes, but assuming we stay where we are today.

Speaker Change: And then I guess my second question was just about Bocom.

Speaker Change: I'm, just really understand the accounting because you are still running with evaluation Thats, what 10 billion above the market value.

Ed Firth: You didn't subscribe for new shares with the capital raise, which I sort of assume you would have done if you had thought it really was worth that much more. Should we be expecting you to actually correct that now down to what would be like a market price, rather than just the 1.6? Should we be revisiting how you do the sort of, I think you call it value in use, don't you? Something like that.

Speaker Change: You didn't subscribe.

Speaker Change: The new shares with the capital raise which I.

Speaker Change: I assume you would have done if you had thought it really wasn't that much more so should we be expecting you to actually correct that now down to what would be like a market price.

Speaker Change: Rather than just the 1.6 should we be revisiting how you do the sort of equal value in Houston, you something like that.

Georges Elhedery: Okay.

Speaker Change: Okay. So much oh. Thank you very much let me take your plausible downside scenario and I'll ask them to address your cost of the.

Ed Firth: Thanks so much.

Georges Elhedery: Thank you very much, Ed. Let me take your plausible downside scenario, and I'll ask Pam to address your cost question as well as the BoCom accounting question. The adverse plausible downside scenario is a scenario that is further adverse from where we are today, with significantly higher global tariffs on major trading blocks, on an aggregate basis. We've looked at their impact across obviously our trade business, but more importantly across overall our volumes and the, you know, the economic outlook, you know, of our businesses, on the whole. We do recognize that there is uncertainty, and it's very difficult to understand how much downside or upside there is in, you know, the future outlook for this.

Speaker Change: The cost question as well as the Bocom accounting question.

Speaker Change: Sure.

Speaker Change: Adverse plausible downside scenario the scenario that is further adverse from where we are today.

With significantly higher global tariffs on major trading blocks.

Speaker Change: On the on an aggregate basis, and we've looked at their impact across obviously, our trade business, but more importantly across overall our volumes in the U S.

Speaker Change: Economic outlook.

Speaker Change: Outlook for our businesses.

Speaker Change: A hole.

Speaker Change: We do recognize that there is uncertainty and it's very difficult to understand how much downside or upside there is in the future outlook for this but we believe this plausible downside scenario is is not the expected scenario isn't it is a lower probability.

Georges Elhedery: We believe this plausible downside scenario is not the expected scenario, as in it is a lower probability downside than the expected scenario. Pam?

Speaker Change: Downside then the expected scenario.

Speaker Change: Yeah.

Pam Kaur: Yeah. Thank you, Ed. Agree the downside scenario is not something where we are now because the downside scenario clearly has broader impact in terms of GDP and other areas which then gives the significant impact that we talked about. Just to make that clear. You're absolutely right. The target cost base of $31.9 billion, equivalent to full year 2024 costs was rebased on Q1's average exchange rates. All things being equal, USD depreciation would put an upward pressure on an absolute cost, but in the same way it'll put an upward pressure, i.e. have some benefit on the revenues, and we will do that on the same principle quarter on quarter as we progress. Now, FX rates have been volatile. We'll continue to update you quarter on quarter.

Speaker Change: Yeah. Thank.

Speaker Change: Thank you Ed so agree the downside scenario is not something where we are now because the downside scenario Kelly has broader impact in terms of GDP and other areas, which then gives the significant impact that we talked about just to to make that clear and you're absolutely right.

Speaker Change: The target cost base of $31 9 billion mm equivalent of a full year 'twenty forecast with Rebased on first quarter's average exchange rates, all things being equal U S. Depreciation would put an upward pressure on an absolute cost.

Speaker Change: But in the same way it'll put an upward pressure I accept some benefit on the revenues and we will do that on the same principle quarter on quarter as we progress in our FX rates have been volatile we will continue to update you each quarter on quarter, sometimes of Bocom, just instead of simpler times you know at this point of time.

Pam Kaur: In terms of BoCom, just in sort of simple terms, you know, at this point of time, you know, we continue to say that BoCom is an associate. We have done the assessment as we do every year in terms of further impairment, and there has been no impact for this quarter. The dilution impact into P&L, we will have an accounting impact on the completion of the share issuance, and that's where that'll be taken. I just want to reiterate all said and done, there is an insignificant impact from this dilution on our CET1, and because it's a material notable item, there is no impact on dividend or distribution.

Speaker Change: You know we continue to say that's broke them is.

Speaker Change: As an associate we have done the assessment as we do every year in terms of further impairment.

Speaker Change: And and there has been no.

Speaker Change: Impact for this quarter the dilution impact in the P&L, we will.

Speaker Change: Haven't accounting impact on the completion of the share issuance and that's where that could be taken but I just want to reiterate all set and done.

Speaker Change: There is an insignificant impact from this dilution on our CET, one and because it's a material notable item that has no impact on dividend or distribution.

Georges Elhedery: Sorry, Ed, you're on mute.

Speaker Change: Thanks.

Georges Elhedery: Sorry, Ed, you're on mute.

Speaker Change: Sorry, Ed you're on mute sorry.

Pam Kaur: Sorry.

Georges Elhedery: Oh, sorry.

Pam Kaur: You said sorry.

Speaker Change: Sorry.

Georges Elhedery: Please go ahead.

Speaker Change: Please go ahead sorry.

Pam Kaur: Sorry, you were saying something. Yes.

Speaker Change: Yes.

Ed Firth: Yeah, sorry about that. No, I just don't understand the logic of why you didn't subscribe for this for more capital in the sense that if it is worth that much more, it would seem to me that it was an opportunity to put more capital in and to value it up again, to get the upside in due course.

Speaker Change: Yes, sorry about that.

Speaker Change: No.

Speaker Change: I don't understand the logic of why you didn't subscribe for dish some more capital E. In the sense that the if it is worth that much more.

Speaker Change: It would seem to me that that it was an opportunity to put more capital in.

Speaker Change: To value the up again to get the upside in due course.

Georges Elhedery: Ed, there was, you know, the share issuance was subscribed by government or government related entities in China. We were happy with our holding as it is. Therefore we, you know, we're happy with the outcome. With regard to the actual accounting value, I'd probably, you know, kind of point you to the investor relations team, which can take you through, you know, some of the specificities of this, equity accounting principles, which, you know, which are quite unique in the way we treat, you know, the associate accounting with BoCom. I just wanna, you know, reemphasize, we're happy with our holding in BoCom.

Speaker Change: Hum.

Speaker Change: And then.

Speaker Change: There was a you know the share issuance will subscribe by government or government related entities in China, we were happy with our holding as it is.

Speaker Change: And therefore, we were you know were happy with the outcome.

Speaker Change: And with regards to the actual accounting value, probably you know kind of point you to the Investor Relations team, which can take you through.

Speaker Change: Some of the specificity of this.

Speaker Change: Equity accounting principles, which are.

Speaker Change: But you are quite unique in the way we treat the you know the associate accounting with vocal.

Speaker Change:

Speaker Change: I just want to reemphasize, we're happy with our holding and vocal we're happy with our strategic relationship with Bocom and the fact that they give us exposure to the domestic economy in China be it retail SME outlook, which is not something our organic businesses involved in and very importantly, what Tom said.

Georges Elhedery: We're happy with our strategic relationship with BoCom and the fact that they give us exposure to the domestic economy in China, be it retail, SME and outlook, which is not something our organic business is involved in. Very importantly, what Pam said, the valuation in our NAV is deducted from CET1, which means-

Speaker Change: The valuation and I would love is deducted from CET, one which means.

Pam Kaur: Yeah.

Georges Elhedery: These impairments do not, you know, have a very minimal second order impact on our CET1 ratio and therefore also do not impact our distribution capability.

Speaker Change: These impairments do not have a.

Speaker Change: Very minimal second order impact on our CET, one ratio and therefore also do not impact our distribution capabilities and very happy to offline go through with you on the equity accounting treatment and the rest in detail.

Pam Kaur: Ed, very happy to offline go through with you on the equity accounting treatment and the rest in detail if you so wish.

Speaker Change: As always.

Georges Elhedery: Thank you very much, Ed.

Thank you very much thanks, so much.

Pam Kaur: Thanks very much.

Ed Firth: Thanks very much.

Operator 2: Thank you both. Our next question today comes from Katherine Lei at J.P. Morgan. Please accept the prompt to unmute your line.

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

Speaker Change: Thank you Bye. Your next question today comes from Katherine Lei at J P. Morgan. Please accept the prompt tell me your line.

Katherine Lei: Hey, thank you. I have two questions. The first one I still want to ask about the tariff scenario, because I think, for analysts, at least our investors in this part of the world, I think it's partly, it's widely expected that the Chinese government will have more stimulus policy, because of the tariff. In your downside scenario analysis, have you incorporated some of the positive impact from the stimulus policies which could potentially be benefiting the Hong Kong China market? I think this is number one. Number two, I still want to ask about the loan growth, because now the guidance is that there will be muted loan demand in 2025.

Katherine Lei: Hey, Thank you I have two questions. The first one I still want to ask about the tariff scenario, because I think for analysts and investors in this part of well I think it's partly a.

Katherine Lei: It is widely expected that the Chinese government will have more stimulus policy because of the tariff. So in your downside scenario analysis have you incorporated some of the positive impact.

Katherine Lei: The.

Katherine Lei: Policies, which could potentially be benefiting.

Katherine Lei: China market. So I think this is number one a lemon sue if you want to ask about the loan growth because now the guidance you said that will be immune to lumpy in 2025, so what sorts of terrorists or scenarios that we are like when we're giving this type of guidance, what's sort of the tariff environment, Oh, we're incorporating and also.

Katherine Lei: What sorts of tariff scenarios that we are like when we're giving this type of guidance, what sort of tariff environments are we incorporating? Also that, is there any guidance on, say for example, like deposit growth and also banking asset or interest generating asset growth? Like how should we look at this whole thing? Thank you.

Katherine Lei: That.

Katherine Lei: Is there any guidance on things like that.

Katherine Lei: And also thinking if at all it just generating ethics rules like how should we look at this whole thing. Thank you.

Georges Elhedery: Thank you, Catherine. Catherine, I'm going to make some comments on your first question and I'll ask Pam then to take it forward as well as the loan growth question, which gives you an overview. Firstly, we recognize indeed there's a lot of potential for China, and you know, to take policy measures and other measures to stimulate the economy, and we'd be very encouraged by that. We're confident about the outlook for China. We're optimistic that these measures, as they you know, they are taken and they will be taken, will have a positive impact on the economy. We believe in the foundational strength of the Chinese economy, and we're very encouraged to see the pickup in retail sales and therefore the pickup in domestic consumption also.

Katherine Lei: Thank you Catherine.

Katherine Lei: Catherine I'm going to make some comments on your first question and I'll ask them to take it forward as well as the loan growth question, which gives you an overlooked.

Katherine Lei: So firstly, we recognize the indeed, the the you know there there's a lot of potential for.

Katherine Lei: China The U two two to take policy measures and other measures to stimulate the economy and we'd be very encouraged by that.

Katherine Lei: We're confident about the outlook for China. We are optimistic that these measures is there you know they are taken then they will be taken will have a positive impact on the economy. We believe in the foundational strength of the Chinese economy, and we're very encouraged to see the pickup in retail sales and therefore the pickup in demand.

Katherine Lei: The consumption also.

Georges Elhedery: On the whole, you know, our main scenario is that we are confident in the medium to long term outlook in China. This being said, in a plausible adverse downside scenario, we have not taken into account some of these potential positive impacts, which may be or not likely to come. Pam.

Katherine Lei: So on the whole or via the main scenario is that we are confident in the medium to long term outlook in China, that's being said in a plausible adverse downside scenario, we have not taken into account some of these potential positive impacts, which which may be or not likely to come.

Katherine Lei: Yep.

Pam Kaur: Yeah. Thanks, Catherine. Absolutely being a stressed downside scenario, plausible but severe, we typically take the downside. We don't take the upside of the mitigating actions or any other policy measures. It's purely tariffs and retaliatory tariffs in a plausible range. All said and done, just want to reaffirm it was all calculated as part of the target ROTI guidance that we are giving. On loan growth, the situation is in some ways similar to where we were at the end of Q4 because macroeconomic uncertainty delays decision making. We are not seeing any of those CapEx decisions being brought forward or delayed. They were delayed. They will continue to be delayed. Hopefully at some stage, you know, when some certainty remains, there will be loan growth.

Speaker Change: Yeah. Thanks, Catherine so absolutely being a stress downside scenario plausible, but savannah, we typically take the downside we don't take the upside of the mitigating actions or any other policy measures. It's purely tower center retaliatory tariffs in a plausible range. So.

You know all set and done just wanted to reaffirm it was all calculated as part of the.

Speaker Change: The target royalty guidance that we're giving.

Speaker Change: On loan growth the situation is in some ways similar to where we were at the end of.

Speaker Change: Q4, because my macroeconomic uncertainty delays decision, making so we're not seeing any of those capex decisions being brought forward a delayed they were delayed they will continue to be.

Speaker Change: Delayed hopefully at some stage with some certainty remains there will be loan growth. We're also monitoring very closely to see if there is any increase in drawdowns just like we had observed in Q2 of 2020 at this point of time, there's no increase in drawdowns.

Pam Kaur: We are also monitoring very closely to see if there is any increase in drawdowns, just like we had observed in Q2 of 2020. At this point of time, there's no increase in drawdowns. Overall, from a loan growth perspective, I would say still muted, you know, in terms of what we are seeing. The only thing I would say is that if there is, you know, sort of continued tariff uncertainty, you will see maybe a little bit pick up from an OpEx perspective on working capital, because when you have to pay, you know, import duties upfront and there's some delays and some of the money's coming and so on, so that's gonna will have an impact.

Speaker Change: So overall from a loan growth perspective, I would say still muted you know and in terms of what we are seeing them. The only thing I would say is that if there is.

Speaker Change: You know sort of continued.

Speaker Change: Tariff uncertainty you will see them, maybe a little bit pick up from a opex perspective on working capital. Because then you have to pay you know import duties upfront and there's some delays in some of the moneys coming and so on so that's kind of will have an impact but from a materiality perspective.

Pam Kaur: From a materiality perspective, the real driver for our banking NII guidance of $42 billion Asian deposits, for which we have a very strong franchise, we are in a privileged position to be a trusted partner for our customers, and we expect that to grow. Of course, there'll be a bit of seasonal fluctuation quarter on quarter, but overall that trend has continued.

Speaker Change: The real driver for a banking NII guidance of 42 billion Israeli deposits for which we have a very strong franchise, the having the privilege position to be a trusted partner for our customers and we expect that to grow of course there'll be a bit of seasonal.

Speaker Change: The fluctuation quarter on quarter, but overall that trend has continued.

Georges Elhedery: Thank you very much, Catherine.

Speaker Change: Thank you very much Kathryn.

Operator 2: Thank you both. Our final question today comes from Jiahui Yan from CICC. Please accept the prompt to unmute your line.

Operator: Thank you both. Our final question today comes from Jiahui Yan from CICC. Please accept the prompt to unmute your line.

Speaker Change: Thank you Bye all final question today comes from lung Jack here from C. L. I C C pace, except the prompt you to meet your line.

Jiahui Yan: Thanks for taking my question. My question is also about tariffs. Could you please give an example of how our major clients react to tariff policy in April? Are they facing a sharp decline in business demand, or are they actively seeking the solutions to reduce the adverse effect of tariffs or just cut their business? How HSBC help them navigate through the challenge from tariffs? Beyond the risks, have we seen any new business opportunities for HSBC in this context? Thank you.

[Analyst] (CICC): Thanks for taking my question. My question is also about tariffs. Could you please give an example of how our major clients react to tariff policy in April? Are they facing a sharp decline in business demand, or are they actively seeking the solutions to reduce the adverse effect of tariffs or just cut their business? How HSBC help them navigate through the challenge from tariffs? Beyond the risks, have we seen any new business opportunities for HSBC in this context? Thank you.

Lung Jack: Thanks for taking my question.

Lung Jack: My question is also about terrorists could you. Please give an example of how our major clients react to tariff policy April are they facing a sharp decline in business demand or are they actively seeking the solutions to reduce the ETE back of tariffs on justice.

Lung Jack: Their business is.

Lung Jack: And how HSBC helped them.

Lung Jack: Navigates through the challenge from tariffs and beyond the risks have we seen any new business opportunities for HSBC in this context. Thank you.

Georges Elhedery: Thank you very much, Yan, for your questions. Yes indeed, look, first, the customers aren't taking any decisions in panic. Customers essentially are wait and see mode. Number of CapEx or large investments have been slowed down. Certainly trade between, you know, China and the US, we've seen a major slowdown. But on the whole, customers are looking at their business models. They are looking at their supply chains. They're looking at ways to create more resilience in their business, and we're definitely here to help them. As I said earlier, we are our customers' trusted banking partner. They trust the strength of our, you know, financial strength, the strength of our balance sheet and our proposition.

Lung Jack: Thank you very much and for your questions.

Lung Jack: So.

Lung Jack: Yes, indeed customer I mean look first the customers aren't taking any decisions and panic customers essentially a wait and see mode.

Lung Jack: Number of Capex or large investments had been slowed down and certainly trade between the between the China.

Lung Jack: China and the U S. We've seen a major slowdown but on.

Lung Jack: On the whole customers are looking at their business models. They are looking at their supply chains. They are looking at ways to create more resilience in their business and we are definitely here to help them as I said earlier, we are or we are our customers' trusted banking partner They trust the strength.

Lung Jack: Our financial strength, the strength of our balance sheet and our proposition They trust.

Georges Elhedery: They trust the stability of our commitments to support them through their needs, and through all, you know, predictable and unpredictable times. Very importantly, they trust our expertise. We have more than 5,000 trade experts in more than 50 jurisdictions, working with clients to help them think through what this means for their business model and now how they can, you know, help them adapt and adjust and create resilience. Therefore, in an environment like this one, we expect to deepen relationships with clients. We expect to acquire new clients and to consolidate our position as a leading trade bank. You know, we expect to make a, you know, hopefully a difference for our customers in navigating these uncertainties. Thank you very much, Yan. I think-

Lung Jack: The stability of our commitments to support them through their needs.

Lung Jack: Through all of them.

Lung Jack: Predictable and unpredictable times.

Lung Jack: And very importantly, they trusted expertise we have more than 5000 trained experts in more than 50 jurisdictions.

Lung Jack: Working with clients to help them think through what this means for their business model and know how they can.

Lung Jack: You know, how they can help them adapt and adjust and create resilience.

Lung Jack: So therefore in an environment like this one we expect to deepen relationships with our clients, we expect to acquire new clients and to consolidate our position as a.

Lung Jack: As a leading trade bank.

Lung Jack: You know <unk>.

Lung Jack: We expect to make a hopefully a difference for our customers and navigating these uncertainties.

Lung Jack:

Lung Jack: Thank you very much.

Lung Jack: I think.

Jiahui Yan: Thank you very much.

[Analyst] (CICC): Thank you very much.

Georges Elhedery: We have addressed all the questions. I wanna take this opportunity to thank all of you for your questions. Look, in closing, we had a strong quarter marked by momentum in our earnings, discipline in our execution, and confidence in our ability to deliver our targets. Neil and the team are available for any follow-up questions with our investor relations experts. Meanwhile, Pam and I look forward to speaking with you again soon. Enjoy the rest of the day. Thank you.

Speaker Change: <unk> addressed all the questions. So I wanted to take this opportunity to.

Speaker Change: Thank all of you for your questions. So look in closing we had a strong quarter marked by momentum in our earnings disciplined in our execution.

Speaker Change: Confidence in our ability to deliver our targets.

Speaker Change: And the team are available for any follow up questions with odor Investor Relations experts.

Speaker Change: While Panama I look forward to speaking with you again soon and enjoy the rest of the day. Thank you.

Operator 2: Thank you very much, ladies and gentlemen, for joining today's webinar. You may now disconnect your line. Goodbye.

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

Speaker Change: Thank you very much ladies and gentlemen for joining today's webinar you may now disconnect your line.

Speaker Change: Yeah.

[music] Goodbye.

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