Q3 2025 HSBC Holdings PLC Earnings Call

October 28, 2025

Speaker #3: Welcome ladies and gentlemen , to the analyst and Investor webinar on the three Q results for HSBC Holdings plc . For your information , this call is being recorded .

Speaker #3: I will now hand over to Pam Kerr, Group CFO.

Speaker #4: Welcome , everyone . Thank you for joining . We are making positive progress towards creating a simple , more agile , growing HSBC .

Pam Kaur: Welcome, everyone. Thank you for joining. We are making positive progress towards creating a simple, more agile, growing HSBC. The intent and discipline with which we are executing our strategy is reflected in the momentum this quarter and our target upgrades, most notably our annualized RoTE of 17.6% year-to-date, excluding notable items. Throughout this presentation, I'll focus on year-over-year comparisons. This will exclude notable items and be on a constant currency basis. The equivalent comparisons on a reported basis can be found on slides 16 and 22. Let's turn straight to the highlights. We reported a strong quarter. Total revenues grew $500 million to $17.9 billion. Wealth had another good quarter, with 29% growth in fee and other income. Our customer deposit balances stand at $1.7 trillion.

Speaker #4: The intent and discipline with which we are executing our strategy is reflected in the momentum this quarter and our target upgrades. Most notably, our annualized return on tangible equity (RoTE) of 17.6% year-to-date.

Speaker #4: Excluding notable items . Throughout this presentation , I'll focus on year over year comparisons . This will exclude notable items and be on a constant currency basis .

Pam Kaur: This will exclude notable items and be on a constant currency basis. The equivalent comparisons on a reported basis can be found on slides 16 and 22. Let's turn straight to the highlights. We reported a strong quarter. Total revenues grew $500 million to $17.9 billion. Wealth had another good quarter, with 29% growth in fee and other income. Our customer deposit balances stand at $1.7 trillion.

Speaker #4: The equivalent comparisons on a reported basis can be found on slides 16 and 22. Let's turn straight to the highlights. We reported a strong quarter.

Speaker #4: Total revenues grew by $500 million to $17.9 billion. Wealth had another good quarter, with 29% growth in fee and other income. Our customer deposit balances stand at $1.7 trillion.

Speaker #4: If we include held for sale balances . These grew by $86 billion . We are also investing for growth . On 9th October , we announced our intention to privatise Hang Seng Bank .

Pam Kaur: If we include held for sale balances, these grew by $86 billion. We are also investing for growth. On 9 October, we announced our intention to privatize Hang Seng Bank. We see this as a compelling opportunity. Let me set out clearly our reasoning. First, it meets all four of our criteria for acquisitions. Second, we see good growth in Hong Kong in the years ahead. It's a business in a home market we know very well. Third, we see an opportunity to create greater alignment for better operational leverage and efficiencies. Fourth, we are acquiring a business with structurally high pre-impairment margins, and while we are not calling the credit cycle, we believe it is a cycle. Fifth, we are removing a $3 billion capital inefficiency. This is a transaction which we initiated as a growth investment.

Speaker #4: We see this as a compelling opportunity. Let me set out clearly our reasoning. First, it meets all four of our criteria for acquisitions.

Speaker #4: Second, we see good growth in Hong Kong in the years ahead. It's a business in a home market we know very well.

Speaker #4: Third, we see an opportunity to create greater alignment for better operational leverage and efficiencies. Fourth, we are acquiring a business with structurally high pre-employment margins.

Pam Kaur: Third, we see an opportunity to create greater alignment for better operational leverage and efficiencies. Fourth, we are acquiring a business with structurally high pre-impairment margins, and while we are not calling the credit cycle, we believe it is a cycle. Fifth, we are removing a $3 billion capital inefficiency. This is a transaction which we initiated as a growth investment.

Speaker #4: And while we are not calling the credit cycle, we believe it is a cycle. Fifth, we are removing a $3 billion capital inefficiency.

Speaker #4: This is a transaction that we initiated as a growth investment. It is also a statement of our confidence in the outlook for Hong Kong.

Pam Kaur: It is also a statement of our confidence in the outlook for Hong Kong. We are in an offer period, so we are unable to give more details on synergies at this stage. What I will say is that consolidating the non-controlling interest from the profit and loss increases our profit attributable to ordinary shareholders. We have also said that we see the potential for additional revenue through expanded capital market products to Hang Seng commercial clients and wealth products to its affluent clients. We can simplify and streamline decision-making processes, improve operational risk management, and better align operations, which we expect will result in efficiencies. We are confident the integration will not distract us from organic growth, and it's more value generative than a share buyback. Turning now to upgrades. We are delivering against the targets we set out to you. We are now upgrading 2 items.

Speaker #4: We are in an offer period, so we are unable to give more details on synergies at this stage. What I will say is that consolidating the non-controlling interest from the profit and loss increases our profit attributable to ordinary shareholders.

Speaker #4: We have also said that we see the potential for additional revenue through expanded capital market products to Hang Seng commercial clients and wealth products to its affluent clients.

Speaker #4: And we can simplify and streamline decision-making processes, improve operational risk management, and better align operations, which we expect will result in efficiencies.

Pam Kaur: We can simplify and streamline decision-making processes, improve operational risk management, and better align operations, which we expect will result in efficiencies. We are confident the integration will not distract us from organic growth, and it's more value generative than a share buyback. Turning now to upgrades. We are delivering against the targets we set out to you. We are now upgrading 2 items.

Speaker #4: We are confident the integration will not distract us from organic growth, and it's more value generative than a share buyback. Turning now to upgrades.

Speaker #4: We are delivering against the targets we set out to you. We are now upgrading two items: our 2025 banking NII to $43 billion or better.

Pam Kaur: Our 2025 banking NII to $43 billion or better. Our 2025 ROTCE, excluding notable items, to be mid-teens or better. We remain disciplined with our shareholders' capital, investing it where we see growth, exiting businesses with the intention to redeploy the costs where we don't. We are progressing at pace with the exit of non-strategic activities. This quarter, we have announced the exits of HSBC Malta and Retail Banking in Sri Lanka. This brings our total announced exits to 11 so far this year. Last week, we announced that we are conducting a strategic review of our Egyptian retail banking business. The review will not include our wholesale banking activities in Egypt, which remains an important market and one we believe has strong potential for growth.

Speaker #4: Our 2025 ROTY, excluding notable items, is expected to be in the mid-teens or better. We remain disciplined with our shareholders' capital, investing it where we see growth and exiting businesses with the intention to redeploy the costs where we don't.

Speaker #4: We are progressing at pace with the exit of non-strategic activities. This quarter, we have announced the exits of HSBC Malta and retail banking in Sri Lanka.

Speaker #4: This brings our total announced exits to 11 so far this year. Last week, we announced that we are conducting a strategic review of our Egyptian retail banking business.

Pam Kaur: This brings our total announced exits to 11 so far this year. Last week, we announced that we are conducting a strategic review of our Egyptian retail banking business. The review will not include our wholesale banking activities in Egypt, which remains an important market and one we believe has strong potential for growth.

Speaker #4: The review will not include our wholesale banking activities in Egypt, which remains an important market and one we believe has strong potential for growth.

Speaker #4: Finally, we are on track to achieve our target of around 3% cost growth in 2025 compared to 2024, on a targeted basis.

Pam Kaur: Finally, we are on track to achieve our target of around 3% cost growth in 2025 compared to 2024 on a target basis. Let's now turn to the firm-wide financial results. First, the income statement. Annualized ROTCE was 16.4% in Q3 or 17.6% year to date, both excluding notable items. Revenue grew 3% year-on-year to $17.9 billion in the quarter. This was driven by a return to growth in banking NII and strong fee and other income. Profit before tax was $9.1 billion. Looking at our capital and distributions, our CET1 capital ratio is 14.5%, and we continue to target a dividend payout ratio for 2025 of 50% of earnings per ordinary share, excluding material notable items and related impacts.

Speaker #4: Let's now turn to the firmwide financial results. First, the income statement annualized RoTI was 16.4% in the third quarter, or 17.6% year to date.

Speaker #4: Both excluding notable items . Revenue grew 3% year on year to $17.9 billion in the quarter . This was driven by a return to growth in banking .

Pam Kaur: This was driven by a return to growth in banking NII and strong fee and other income. Profit before tax was $9.1 billion. Looking at our capital and distributions, our CET1 capital ratio is 14.5%, and we continue to target a dividend payout ratio for 2025 of 50% of earnings per ordinary share, excluding material notable items and related impacts.

Speaker #4: NII and strong fee and other income. Profit before tax was $9.1 billion. Looking at our capital and distributions, our CET1 capital ratio is 14.5%, and we continue to target a dividend payout ratio for 2025 of 50% of earnings per ordinary share, excluding material.

Speaker #4: Notable items and related impacts: Let's now turn to our business segment performance. We grew total revenue by 3%, and each of our four businesses returned greater than mid-teens annualized ROIT.

Pam Kaur: Let's now turn to our business segment performance. We grew total revenue by 3%, and each of our 4 businesses returned greater than mid-teens annualized ROTCE. Moving now to banking NII. $11 billion this quarter is a return to growth driven by deposit volumes. We are raising our full-year guidance to $43 billion or better. I know you'll have questions on the outlook, so I'll note here the multiple drivers of banking NII. HIBOR, which has recovered, deposit growth, which continues, interest rates, where the Fed is still cutting. We have grown our structural hedge to $585 billion, and it's rolling onto higher yields. I'll also just mention that the chart on the left is on a constant currency basis. While our full-year guidance is as reported. There is a reconciliation in the footnote. Turning now to wholesale transaction banking.

Speaker #4: Moving now to banking, NII of $11 billion this quarter is a return to growth driven by deposit volumes. We are raising our full year guidance to $43 billion or better.

Speaker #4: I know you'll have questions on the outlook , so I'll note here the multiple drivers of banking NII . However , which has recovered deposit growth , which continues interest rates where the fed is still cutting .

Pam Kaur: HIBOR, which has recovered, deposit growth, which continues, interest rates, where the Fed is still cutting. We have grown our structural hedge to $585 billion, and it's rolling onto higher yields. I'll also just mention that the chart on the left is on a constant currency basis. While our full-year guidance is as reported. There is a reconciliation in the footnote. Turning now to wholesale transaction banking.

Speaker #4: We have grown our structural hedge to $585 billion, and it's rolling onto higher yields. I'll also just mention that the chart on the left is on a constant currency basis.

Speaker #4: While our full year guidance is as reported . There is a reconciliation in the footnote . Turning now to wholesale transaction banking , we are pleased with our strong ongoing customer engagement .

Pam Kaur: We are pleased with our strong ongoing customer engagement. This year has really validated the strength of our franchise in a range of economic and tariff situations. Both payments and trade grew again in Q3. In trade, I would note the first half was particularly strong as we supported customers to navigate a fast-changing trade landscape. In security services, fee and other income grew 15%. This was due to higher asset balances given improved valuations and new customer mandates in Asia and the Middle East. In FX, performance reflects lower currency volatility and a strong prior year comparison. Looking through this, performance of $1.3 billion was strong. Turning now to wealth. We delivered 29% fee and other income growth to $2.7 billion. This shows our strategy is working.

Speaker #4: This year has really validated the strength of our franchise in a range of economic and tariff situations. Both payments and trade grew again in the third quarter.

Speaker #4: In trade . I would note the first half was particularly strong as we supported customers to navigate a fast changing trade landscape . In security services , fee and other income grew 15% .

Pam Kaur: This was due to higher asset balances given improved valuations and new customer mandates in Asia and the Middle East. In FX, performance reflects lower currency volatility and a strong prior year comparison. Looking through this, performance of $1.3 billion was strong. Turning now to wealth. We delivered 29% fee and other income growth to $2.7 billion. This shows our strategy is working.

Speaker #4: This was due to higher asset balances, given improved valuations and new customer mandates in Asia and the Middle East. In FX, performance reflects lower currency volatility and a strong prior year comparison.

Speaker #4: Looking through this performance of $1.3 billion was strong. Turning now to wealth, we delivered 29% fee and other income growth to $2.7 billion.

Speaker #4: This shows our strategy is working. Net new invested assets were $29 billion, with more than half coming from Asia at $15 billion.

Pam Kaur: Net new invested assets were $29 billion, with more than half coming from Asia at $15 billion. This takes total invested assets to $1.5 trillion. Wealth was driven by all four income lines. Our insurance CSM balance is up by $2.5 billion year to date. This is driven by strong new business. I would note that we review our insurance assumptions in Q3, favorable experience, and strong market performance slightly flattered these figures. Private banking grew 8%, and asset management 6%, respectively. Investment distribution also performed very well, up 39%, reflecting strength in our customer franchise in Hong Kong. Wealth is not just a Hong Kong story. It runs across our Asian franchise with double-digit fee and other income growth in Singapore, Mainland China, and other markets.

Speaker #4: This takes total invested assets to $1.5 trillion. Wealth was driven by all four income lines. Our insurance CSM balance is up by $2.5 billion year to date.

Speaker #4: This is driven by strong new business. I would note that we review our insurance assumptions in the third quarter. Favorable experience and strong market performance.

Pam Kaur: This is driven by strong new business. I would note that we review our insurance assumptions in Q3, favorable experience, and strong market performance slightly flattered these figures. Private banking grew 8%, and asset management 6%, respectively. Investment distribution also performed very well, up 39%, reflecting strength in our customer franchise in Hong Kong. Wealth is not just a Hong Kong story. It runs across our Asian franchise with double-digit fee and other income growth in Singapore, Mainland China, and other markets.

Speaker #4: Slightly flatter these figures . Private banking grew 8% and asset management 6% , respectively . Investment distribution also performed very well up 39% , reflecting strength in our customer franchise in Hong Kong and wealth is not just a Hong Kong story .

Speaker #4: It runs across our Asian franchise with double-digit fee and other income growth in Singapore, Mainland China and other markets. We are providing you with a little extra color this quarter on our Hong Kong flows.

Pam Kaur: We are providing you with a little extra color this quarter on our Hong Kong flows on the next slide. We are pleased to have added 318,000 new to bank customers this quarter. This brings us to more than 900,000 year to date. What this slide shows over a slightly longer period is that non-resident customers have been a significant driver of customer activity and balances. These new to bank customers have contributed up to a third of flows across deposits, investments, and insurance. We see new non-resident customers as a significant and long-dated opportunity for the bank. Now let's turn to credit. ECL of $1 billion is flat year-over-year and down modestly on the Q2. We retain our full ECL guidance of around 40 basis points.

Speaker #4: On the next slide . We are pleased to have added 318,000 new to bank customers this quarter . This brings us to more than 900,000 .

Speaker #4: Year to date, what this slide shows over a slightly longer period is that non-resident customers have been a significant driver of customer activity and balances.

Speaker #4: These new to bank customers have contributed up to a third of flows across deposits , investments and insurance . We see new non-resident customers as a significant and long dated opportunity for the bank .

Pam Kaur: These new to bank customers have contributed up to a third of flows across deposits, investments, and insurance. We see new non-resident customers as a significant and long-dated opportunity for the bank. Now let's turn to credit. ECL of $1 billion is flat year-over-year and down modestly on the Q2. We retain our full ECL guidance of around 40 basis points.

Speaker #4: Now let's turn to credit. ECL, or $1 billion, is flat year over year and down modestly from the second quarter. We retain our full ECL guidance of around 40 basis points.

Speaker #4: Our ECL charge this quarter includes $0.2 billion in Hong Kong commercial real estate. On slide 19, you will see we have updated the Hong Kong commercial real estate.

Pam Kaur: Our ECL charge this quarter includes $0.2 billion Hong Kong commercial real estate. On slide 19, you will see we have updated the Hong Kong commercial real estate slide we showed you at the half year. Other charges include $150 million from a Middle East-based customer, $0.3 billion in the UK, $0.2 billion in Mexico, and a $0.1 billion release due to improved economic assumptions. Now let's turn to costs. We remain on track to achieve our target of around 3% cost growth in 2025 compared to 2024 on a target basis. Year to date, we have taken actions to realize $1 billion of annualized simplification savings with no meaningful impact on revenues.

Speaker #4: Slide . We showed you at the half year . Other charges include $150 million from a middle East based customer , $0.3 billion in the UK , $0.2 billion in Mexico and a $0.1 billion release due to improved economic assumptions .

Speaker #4: Now, let's turn to costs. We remain on track to achieve our target of around 3% cost growth in 2025, compared to 2020.

Pam Kaur: Now let's turn to costs. We remain on track to achieve our target of around 3% cost growth in 2025 compared to 2024 on a target basis. Year to date, we have taken actions to realize $1 billion of annualized simplification savings with no meaningful impact on revenues.

Speaker #4: Four on a targeted basis. Year to date, we have taken actions to realize $1 billion of annualized simplification savings with no meaningful impact on revenues.

Speaker #4: We continue to expect $0.4 billion in simplification savings to be realized in the full year 2025, PNL. It's worth noting that there is some slight seasonality to costs in the fourth quarter, which also includes the U.K.

Pam Kaur: We continue to expect $0.4 billion simplification savings to be realized in the full year 2025 P&L. It's worth noting that there is some slight seasonality to costs in the Q4, which also includes the UK Bank Levy. This quarter, we have $1.4 billion of legal provisions on historical matters, which don't impact our ongoing business. They consist of $1.1 billion, as you will have seen in yesterday's announcement relating to Madoff litigation, which is a material notable item and therefore does not impact any dividend, and $0.3 billion related to historical trading activities in Europe, which is a notable item. I would also just draw your attention to appendix slide 16 and 17, where we detail recent and potential future notable items.

Speaker #4: bank levy this quarter . We have $1.4 billion of legal provisions on historical matters , which don't impact our ongoing business . They consist of $1.1 billion , as you will have seen in yesterday's announcement relating to Madoff litigation , which is a material notable item and therefore does not impact any dividend .

Pam Kaur: They consist of $1.1 billion, as you will have seen in yesterday's announcement relating to Madoff litigation, which is a material notable item and therefore does not impact any dividend, and $0.3 billion related to historical trading activities in Europe, which is a notable item. I would also just draw your attention to appendix slide 16 and 17, where we detail recent and potential future notable items.

Speaker #4: And $0.3 billion related to historical trading activities in Europe , which is a notable item . I would also just draw your attention to appendix .

Speaker #4: Slide 16 and 17 , where we detail recent and potential future notable items . This leads us to our exit of non-strategic activities , which we will discuss on the next slide .

Pam Kaur: This leads us to our exit of non-strategic activities, which we will discuss on the next slide. We are progressing at pace with our exit of non-strategic activities. This slide sets out that progress. The red boxes show the exits announced in each quarter, the gray, those in prior quarters. Given the phasing of the sale processes, only Grupo Galicia is currently complete, with others to follow. In Q3, we have announced Malta and retail banking in Sri Lanka. Last week, we announced that we are conducting a strategic review of our Egyptian retail banking business. As I said earlier, the review will not include our wholesale banking activities in Egypt, which remains an important market. As a reminder, costs released from the exits of a non-strategic activities will be invested in our priority growth areas at accretive returns. Now let's turn to customer deposits and loans.

Speaker #4: We are progressing at pace with our exit of non-strategic activities. This slide sets out that progress. The red boxes show the exits announced in each quarter.

Speaker #4: The gray those in prior quarters. Given the phasing of the sale processes, only Group Galicia is currently complete, with others to follow.

Speaker #4: In the third quarter , we have announced Malta and Retail Banking in Sri Lanka . Last week we announced that we are conducting a strategic review of our Egyptian Retail banking business .

Speaker #4: As I said earlier , the review will not include our wholesale banking activities in Egypt , which remains an important market . As a reminder , cost released from the exits of a non-strategic activities will be invested in our priority growth areas at accretive returns .

Pam Kaur: As I said earlier, the review will not include our wholesale banking activities in Egypt, which remains an important market. As a reminder, costs released from the exits of a non-strategic activities will be invested in our priority growth areas at accretive returns. Now let's turn to customer deposits and loans.

Speaker #4: Now let's turn to customer deposits and loans . Including help for sale balances . We've had another strong quarter with $86 billion of growth in deposits in the last 12 months .

Pam Kaur: Including held for sale balances, we've had another strong quarter with $86 billion of growth in deposits in the last 12 months. By business, there is some volatility this quarter. Silver Bond subscriptions in Hong Kong moved deposits from Hong Kong business to CIB for a few days over quarter end, benefiting CIB balances. CIB also benefited from some large client deposits, which may be short-dated. Overall, we see good momentum in our customer deposit franchise. In the UK, lending was the standout. We saw continued growth in mortgages and our commercial lending book, infrastructure being a key area of focus. In our UK business, the book has grown 5% year-over-year, which includes a drag from the repayment of COVID loans.

Speaker #4: By business , there is some volatility this quarter . Silver bond subscriptions in Hong Kong moved deposits from Hong Kong business to CIB for a few days over quarter end , benefiting CIB balances .

Speaker #4: CIB also benefited from some large client deposits, which may be short-dated. Overall, we see good momentum in our customer deposit franchise in the U.K.

Pam Kaur: Overall, we see good momentum in our customer deposit franchise. In the UK, lending was the standout. We saw continued growth in mortgages and our commercial lending book, infrastructure being a key area of focus. In our UK business, the book has grown 5% year-over-year, which includes a drag from the repayment of COVID loans.

Speaker #4: Lending was the standout. We saw continued growth in mortgages and our commercial lending book, with infrastructure being a key area of focus in our U.K.

Speaker #4: business . The book has grown 5% year over year , which includes a drag from the repayment of Covid loans . We see low levels of household and corporate debt in the U.K.

Pam Kaur: We see low levels of household and corporate debt in the UK, which we expect to provide a platform for the continued growth of our franchise. In Hong Kong, we saw customer repayments and corporate deleveraging, notably in the commercial real estate space. Credit demand remains muted. Turning to capital. Our CET1 is 14.5%, reflecting strong organic capital generation during the quarter. We said with the announcement of the Hang Seng offer that we do not expect buybacks for the next 3 quarters. That is, of course, dependent on underlying capital generation. With strong profitability and currently modest loan growth, we are highly capital generative. Let's turn to targets and guidance. The intent with which we are executing our strategy is reflected in the growth and momentum in our performance this quarter. It again shows discipline, performance, and delivery.

Speaker #4: , which we expect to provide a platform for the continued growth of our franchise in Hong Kong . We saw customer repayments and corporate deleveraging , notably in the commercial real estate space .

Speaker #4: Credit demand remains muted . Now turning to capital . Our Cet1 is 14.5% , reflecting strong organic capital generation during the quarter . We said with the announcement of the Hang Seng offer that we do not expect buybacks for the next three quarters .

Speaker #4: That is , of course , dependent on underlying capital generation with strong profitability and currently modest loan growth . We are highly capital generative .

Pam Kaur: That is, of course, dependent on underlying capital generation. With strong profitability and currently modest loan growth, we are highly capital generative.Let's turn to targets and guidance. The intent with which we are executing our strategy is reflected in the growth and momentum in our performance this quarter. It again shows discipline, performance, and delivery.

Speaker #4: Finally, let's turn to targets and guidance. In summary, the intent with which we are executing our strategy is reflected in the growth and momentum in our performance.

Speaker #4: This quarter . It again shows discipline , performance and delivery discipline in the way we are applying strong cost control . We are on target to achieve our target of around 3% cost growth in 2025 , compared to 2020 .

Pam Kaur: Discipline in the way we are applying strong cost control. We are on target to achieve our target of around 3% cost growth in 2025 compared to 2024 on a target basis. Our simplification saves are ahead of our previous expectation. We have announced 11 exits so far this year. We will continue to progress at pace and invest costs released from exits into priority growth areas. Performance in our earnings. Each of our 4 businesses is making mid-teens ROTI or better, excluding notable items. Delivery. Our Q3 results show that we are creating a simple, more agile, growing HSBC. Revenues grew, excluding notable items, our year-to-date 17.6% ROTI demonstrates that we are delivering against the targets we set out to you.

Speaker #4: For on a target basis . Our simplification saves are ahead of our previous expectation . We have announced 11 exits so far this year .

Speaker #4: We will continue to progress at pace and invest costs released from exits into priority growth areas. Performance in our earnings: each of our four businesses is making mid-teens ROTI or better, excluding notable items.

Pam Kaur: Performance in our earnings. Each of our 4 businesses is making mid-teens ROTI or better, excluding notable items. Delivery. Our Q3 results show that we are creating a simple, more agile, growing HSBC. Revenues grew, excluding notable items, our year-to-date 17.6% ROTI demonstrates that we are delivering against the targets we set out to you.

Speaker #4: Delivery . Our third quarter results show that we are creating a simple , more agile , growing HSBC revenues grew and excluding notable items are year to date , 17.6% roti demonstrates that we are delivering against the targets we set out to you .

Speaker #4: That is why we expect 2025 roti excluding notable items to be mid-teens or better . With that , I'm happy to take your questions .

Pam Kaur: That is why we expect 2025 RoTE, excluding notable items, to be mid-teens or better. With that, I'm happy to take your questions.

Speaker #3: Thank you Pam . If you would like to ask a question today , please use the raise hand function in zoom . If you're invited to ask a question , please accept the prompt to unmute your line .

Operator: Thank you, Pam. If you would like to ask a question today, please use the Raise Hand function in Zoom. 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 Aman Rakkar at Barclays. Please accept the prompt to unmute your line.

Speaker #3: 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 Aman Raka at Barclays.

Speaker #3: Please accept the prompt to unmute your line .

Speaker #5: Wanted to ask about .

Aman Rakkar: Wanted to ask about banking NII, rather predictably, please. Just at face value, your guide does imply a decent step off in net interest income in Q4. I don't think that you really mean that. I just wanted to kind of check in around what your expectations are for net interest income in kinda Q4. I guess I'm particularly mindful of the tailwind from average HIBOR in the quarter, alongside things like the structural hedge and hopefully balance sheet momentum. You know, my best guess is that Q4 NII is actually up Q on Q. Any color you can give us there in terms of what you mean and what the drivers are, would be very helpful. Then the second question is around deposits.

Speaker #6: Banking NII rather predictably pleased so just at face value , your your guide does imply a decent step off in the interest income in Q4 , but I don't think that you really mean that .

Speaker #6: I just wanted to kind of check in around what your expectations are for net interest income in kind of Q4 . I guess I'm particularly mindful of the tailwind from average high BAU in the quarter .

Speaker #6: Alongside things like the structural hedge and hopefully balance sheet momentum, you know, my best guess is that Q4 is actually up.

Aman Rakkar: You know, my best guess is that Q4 NII is actually up Q on Q. Any color you can give us there in terms of what you mean and what the drivers are, would be very helpful. Then the second question is around deposits.

Speaker #6: Q-on-q . But any color you can give us there in terms of what you mean and what the drivers are , be very helpful .

Speaker #6: And then the second question is around deposits. I’m interested in your take on the sustainability of the kind of current 5% underlying deposit growth that you’re benefiting from at a system level.

Aman Rakkar: I'm interested in your take on the sustainability of the kind of current 5% underlying deposit growth that you're benefiting from at a system level. Obviously, you know, Hong Kong year to date has been a key driver of that. How sustainable do you think this level of pace is, and what confidence does it give you around things like net interest income growth next year? Thank you very much.

Speaker #6: Obviously , you know , Hong Kong year to date has been a key driver of that . And how sustainable do you think this level of pace is and what confidence does it give you around things like net interest , income growth next year ?

Speaker #6: Thank you very much .

Speaker #4: Thank you, Aman. So, firstly on banking NII, I want to say that we are not walking back the Q4 as a starter.

Pam Kaur: Thank you, Aman. Firstly, on banking NII, I want to say that we are not walking back the Q4 as a starter. As the math would show, we are saying that the banking NII would be no less than $10.6 billion. Absolutely that's why it is $43 billion or better. You are quite right from a balance sheet momentum, we see that continuing from the Q3 onwards, albeit there can be a few seasonality fluctuations. HIBOR is a tailwind, structural hedge is a tailwind, we should be mindful that the US dollar rate curve will be a headwind. That's where we are on banking NII.

Speaker #4: As the math would show, we are saying that the banking NII would be no less than $10.6 billion. So absolutely, that's why it is $43 billion or better.

Speaker #4: And you are quite right. From a balance sheet momentum, we see that continuing from the third quarter onwards, albeit there can be a few seasonality fluctuations.

Speaker #4: However, as a tailwind, structural hedge is a tailwind. But we should be mindful that the U.S. dollar rate curve will be a headwind.

Speaker #4: So, that's where we are on banking NII in terms of deposits. And, as you know, we are not giving guidance on banking.

Pam Kaur: In terms of deposits, as you know, we are not giving a guidance on banking NII for 2026. Our deposit franchise is very strong across all markets, all currencies, all business areas, so it is not just dependent on Hong Kong dollars. Of course, we are very pleased with our preeminent position and strength in Hong Kong, which is a key driving force for the deposit growth. Very positive on deposit growth from here on, as we've had before.

Speaker #4: NII for 2026 . But our deposit franchise is very strong across all markets , all currencies , all business areas . So it's not just dependent on Hong Kong dollars , but of course we are very pleased with our pre-eminent position and strength in Hong Kong , which is a key driving force for the deposit growth .

Speaker #4: So very positive on deposit growth from here on, as we've had before.

Speaker #3: Thank you . Pam . Our next question today comes from Guy Stebbings at BNP Paribas . Please accept the prompt to unmute your line .

Operator: Thank you, Pam. Our next question today comes from Guy Stebbings at BNP Paribas. Please accept the prompt to unmute your line.

Speaker #7: Hi . Morning . Thanks for taking the questions . The first one was back on banking and I then one on insurance . So obviously quite a big move in the banking guidance outside of Highbaugh .

Guy Stebbings: Hi. Morning. Thanks for taking the questions. The first one was back on banking NII, then one on insurance. Obviously quite a big move in the banking NII guidance. Outside of HIBOR, is it really the deposit strength that's the delta in terms of the guidance here? I mean, you also referenced yield curve steepening. I'm just wondering if you would encourage us to think about anything above and beyond the structural hedge role when you think about yield curve steepening when it comes to NII. On insurance, really strong quarter, but there's quite a lot going on there I think. 46% growth. You mentioned model changes, experience variance. I don't know if you can help quantify that. I think there might have been $150 million or so type model changes.

Speaker #7: Is it really the deposit strength ? That's the delta in terms of the guidance here . I mean you also referenced yield curve steepening .

Speaker #7: So, I'm just wondering if you would encourage us to think about anything above and beyond the structural hedge role. When you think about yield curve steepening, when it comes to NOI.

Guy Stebbings: I'm just wondering if you would encourage us to think about anything above and beyond the structural hedge role when you think about yield curve steepening when it comes to NII. On insurance, really strong quarter, but there's quite a lot going on there I think. 46% growth. You mentioned model changes, experience variance. I don't know if you can help quantify that. I think there might have been $150 million or so type model changes.

Speaker #7: And then on insurance , really strong quarter . But there's quite a lot going on there I think . So 46% growth . But you mentioned model changes , experienced variance .

Speaker #7: And then if you can help quantify that I think there might have been 150 million or so type model changes . I mean , if that's the case , we're still talking about a sort of 20% clean run rate .

Guy Stebbings: I mean, if that's the case, we're still talking about a sort of 20% clean run rate. If you'd encourage us to sort of think along those sorts of lines. With the CSM now at $50 billion, looks like a very sort of useful underpin from here. If I can sort of briefly follow up on that, there was $1.1 billion of CSM build year to date from economic factors. I'm just interested how much of that is sort of purely lumpy items. Some of your peers show the normalized unwind or expected return of in force, which can be sort of quite material and a consistent tailwind to the CSM build above and beyond the new business CSM.

Speaker #7: So if you'd encourage us to think along those sorts of lines in the CSM now at 15 billion , looks like a very sort of useful underpin from here .

Speaker #7: And if I can sort of briefly follow up on that, there was $1.1 billion of CSM build year to date from economic factors.

Speaker #7: I'm just interested in how much of that is sort of purely lumpy items. Some of your peers show the normalized unwind or expected return of in-force, which can be quite material in a consistent tailwind to the CSM build above and beyond the new business.

Speaker #7: So I'm just wondering whether we should treat that 1.1 billion boost as very much one off or an element of that is repeatable , if you like .

Guy Stebbings: I'm just wondering whether we should treat that $1.1 billion boost as very much one-off or an element of that is repeatable, if you like. Thank you.

Speaker #7: Thank you .

Speaker #4: Okay , great . Thank you . Guy . So firstly in coming through with your question on banking NII . So it's our deposit strength as I've called out .

Pam Kaur: Okay, great. Thank you, Guy. Firstly, in coming through with your question on banking NII. It's our deposit strength, as I've called out, but our structural hedge is also important tailwind for us on banking NII and the stabilization of HIBOR, which impacted banking NII almost equivalently on the negative side in Q2 and Q3, is not expected for Q4 and have not shown that at all in Q4 so far. The insurance growth, you're again right. It's one-offs are circa $150 million, as you've called out in terms of the change in assumptions, which is a normalized, you know, annual process that we go through. We are very pleased with a very strong CSM balance build, which gives the underpin in terms of the growth in this business.

Speaker #4: But our structural hedge is also an important tailwind for us on banking NII and the stabilization of Hibor, which impacted banking and our results almost equivalently on the negative side in Q2 and Q3. This is not expected for Q4 and has not shown that at all in Q4 so far.

Speaker #4: The insurance growth . You're again right . It's the one offs are circa 150 million , as you've called out in terms of the change in assumptions , which is a normalised , you know , annual process that we go through .

Pam Kaur: The insurance growth, you're again right. It's one-offs are circa $150 million, as you've called out in terms of the change in assumptions, which is a normalized, you know, annual process that we go through. We are very pleased with a very strong CSM balance build, which gives the underpin in terms of the growth in this business.

Speaker #4: So we are very pleased with a very strong CSM balance build , which gives the underpin in terms of the growth in this business , in terms of any one offs or lumpy items , nothing material to note , but I'll ask our IR team to follow up with you .

Pam Kaur: In terms of any one-offs or lumpy items, nothing material to note, but I'll ask our IR team to follow up with you. You can see some of the work on the CSM balances on slide 21.

Speaker #4: You can see some of the work on the CSM balances on slide 21.

Speaker #3: Thank you, Pam. Our next question today comes from Katherine Li at JP Morgan. Please accept the prompt to unmute your line.

Operator: Thank you, Pam. Our next question today comes from Katherine Lei at JPMorgan. Please accept the prompt to unmute your line.

Speaker #8: Okay . Thanks for giving me this question . I also have a follow up on NII and then I would like to ask about Hong Kong CRE on NII line .

Katherine Lei: Okay, thanks for giving me this question. I also have a follow-up on NII, and then I would like to ask about Hong Kong CRE. On the NII line, I noticed that in Hong Kong, the composite deposit rate actually come down pretty significantly in Q3. I think this is because that there's migration from time deposit to demand deposits, and also that banks generally lower the time deposit rate. Into Q4, because of the rebound in HIBOR, do we expect some of the reversal of that decline in composite deposit cost? Will that lead to some sort of risk to the banking NII? This is number 1 question. Have we seen any, like, a further migrations or what's the trends of deposits in cash deposits?

Speaker #8: I noticed that in Hong Kong , the composite deposit rate actually came down pretty significantly in VQ . I think this is because that this move migration from time deposit to demand deposits , and also that banks generally lower the time deposit deposit rate .

Speaker #8: So into VQ , into fourth Q because of the rebound in because of the rebound in high ball , do we expect some of the reversal of that decline in deposit cost ?

Katherine Lei: Into Q4, because of the rebound in HIBOR, do we expect some of the reversal of that decline in composite deposit cost? Will that lead to some sort of risk to the banking NII? This is number 1 question. Have we seen any, like, a further migrations or what's the trends of deposits in cash deposits?

Speaker #8: Will that lead to some sort of risk to the banking NII? This is the number one question. And then, have we seen any further migrations, or what's the trend of deposits in past deposits?

Speaker #8: And then the next question is, will be in Hong Kong. We noticed that the stage three loan ratio increased from 16% to 20%.

Katherine Lei: The next questions will be in Hong Kong CRE. We noticed that the Stage 3 loan ratio increased from 16% to 20%. However, if we look at the impairment charges on Hong Kong CRE, this quarter is actually lower than that of last quarter. I would like to have some color from management, say, for example, what is the latest trend in terms of the asset quality and what is our thought behind that, while the Stage 3 loan ratio continue to increase, we slow down the pace in making provision against Hong Kong CRE risk. Thank you.

Speaker #8: But, however, if we look at the impairment charges on Hong Kong, this quarter is actually lower than that of last quarter.

Speaker #8: So I would like to have some color from management , say , for example , what is the latest trend in terms of the asset quality and what is our fault behind that ?

Speaker #8: While the stage three loan ratio continue to increase , but then we slow down the the pace in making provision against Hong Kong risks .

Speaker #8: Thank you .

Speaker #4: Thank you , Catherine . So in terms of highball , it continues to be a tailwind from a deposit perspective . We see the trends from sort of prior quarters continuing to Q4 .

Pam Kaur: Thank you, Katherine. In terms of HIBOR, it continues to be a tailwind from a deposit perspective. We see the trends from sort of prior quarters continuing to Q4, so nothing much to call out there. Specifically, yes, there has been some small rise in time deposits, but that is all factored in terms of our banking NII guidance. I'm speaking both from what we saw at the end of the September as well as the ongoing trend. The banking NII, as I've said earlier, in addition to HIBOR, the structural hedge also continues to be a tailwind for us. That is the reason why we have obviously upgraded our banking NII guidance. You know we are very conservative in HSBC. It takes a lot for us to upgrade the guidance and also to add the word or better.

Speaker #4: So nothing much to call out there specifically . Yes , there has been some small rise in time deposits , but that is all factored in in terms of our banking NII guidance .

Speaker #4: And I'm speaking both from what we saw at the end of the September as well as the ongoing trend , the banking NII , as I've said earlier , in addition to highball , the structural hedge also continues to be a tailwind for us .

Pam Kaur: The banking NII, as I've said earlier, in addition to HIBOR, the structural hedge also continues to be a tailwind for us. That is the reason why we have obviously upgraded our banking NII guidance. You know we are very conservative in HSBC. It takes a lot for us to upgrade the guidance and also to add the word or better.

Speaker #4: And that is the reason why we have . Obviously upgraded our banking NII guidance . And , you know , we are very conservative in HSBC .

Speaker #4: It takes a lot for us to upgrade the guidance and also to add the word or better . So take from that what you will in terms of Hong Kong commercial real estate .

Pam Kaur: Take from that what you will. In terms of Hong Kong commercial real estate, I would like to take a little bit of time to share with you our reflections in the Hong Kong commercial real estate. Firstly, in terms of residential properties, the trend has stabilized and is getting stronger. The resi property index has grown 2% year-to-date. September transaction volumes were up 79% year-on-year, and valuations as well as rentals have held well. We have also seen some supportive developments in the retail sector. Hong Kong retail sales have grown since May and are up 4% year-on-year in August. It is also underpinned by increase in year-to-date tourist arrivals of 12% year-on-year.

Speaker #4: I would like to take a little bit of time to share with you our reflections on the Hong Kong commercial real estate. So firstly, in terms of residential properties, the trend has stabilized and is getting stronger.

Speaker #4: The resi property index has grown 2% year to date . September transaction volumes were up 79% year on year , and the valuations , as well as rentals have held well .

Pam Kaur: The resi property index has grown 2% year-to-date. September transaction volumes were up 79% year-on-year, and valuations as well as rentals have held well. We have also seen some supportive developments in the retail sector. Hong Kong retail sales have grown since May and are up 4% year-on-year in August. It is also underpinned by increase in year-to-date tourist arrivals of 12% year-on-year.

Speaker #4: We have also seen some supportive developments in the retail sector . Hong Kong retail sales have grown since May and are up 4% year on year in August .

Speaker #4: It is also underpinned by increase in year to date tourist arrivals of 12% year on year . Now , if I look at the office sector , of course the office sector continues to be challenging and under pressure and we expect that to continue through most of next year as well .

Pam Kaur: Now, if I look at the office sector, of course, the office sector continues to be challenging and under pressure, and we expect that to continue through most of next year as well. However, there has been a slight uptick for take up for grade A office space. This is in the best locations with the best specs, and that is an improvement which we see quarter-on-quarter. As you know, our portfolio is well collateralized. This quarter, of course, there was some slippage, which is expected as part of our review within at midyear, as things move through from, you know, some good to satisfactory, substandard to impaired. They were names which you are aware of, no big surprises, and hence the ECL pickup was relatively modest.

Speaker #4: However, there has been a slight uptick in the take-up for Grade A office space. This is in the best locations with the best specifications.

Pam Kaur: This is in the best locations with the best specs, and that is an improvement which we see quarter-on-quarter. As you know, our portfolio is well collateralized. This quarter, of course, there was some slippage, which is expected as part of our review within at midyear, as things move through from, you know, some good to satisfactory, substandard to impaired. They were names which you are aware of, no big surprises, and hence the ECL pickup was relatively modest.

Speaker #4: And that is an improvement, which we see quarter on quarter. As you know, our portfolio is well collateralized this quarter.

Speaker #4: Of course , there were some slippage , which is expected as part of our review . Even at media as things move through from , you know , some some , some good to satisfactory substandard to , to impaired .

Speaker #4: But there were names we are aware of, no big surprises, and hence the ECL pickup was relatively modest.

Speaker #3: Thank you Pam . Our next question today comes from Ben Toms at RBC . Please accept the prompt to unmute your line .

Operator: Thank you, Pam. Our next question today comes from Benjamin Toms at RBC. Please accept the prompt to unmute your line.

Benjamin Toms: Hey, thanks. In relation to the $1.1 billion provision in relation to Madoff litigation. The provision is one of ongoing cases with a cumulative total contingent liability of, I think, gross $5 billion. Can you just provide some sense that the case that was decided last week does not set any legal precedent for the other four cases, especially the three cases that are in the Luxembourg courts, where there's a more material exposure? Can you confirm that the litigation charge does not change your aspiration to resume the buyback at H1 2026? Secondly, on slide 10, which is a really nice slide, you made 11 disposals year to date. It can be quite difficult sometimes to track the transactions coming out of the P&L.

Speaker #9: You, in relation to the $1.1 billion provision in connection with Madoff litigation, the provision is one of five ongoing cases with a cumulative total contingent liability of.

Speaker #9: I think $5 billion. Can you just divide that? The case that was decided last week does not set any legal precedent for the other four cases, especially the three cases that are in the Luxembourg courts, where there's a more material exposure.

Speaker #9: And can you confirm that the litigation charge does not change your aspiration to resume the buyback at half 126 ? And then secondly , on slide ten , which is a really nice slide , you made 11 disposals year to date .

Benjamin Toms: Can you confirm that the litigation charge does not change your aspiration to resume the buyback at H1 2026? Secondly, on slide 10, which is a really nice slide, you made 11 disposals year to date. It can be quite difficult sometimes to track the transactions coming out of the P&L.

Speaker #9: It can be quite difficult sometimes to track the transactions coming out of the P&L. Is it possible to give us some idea of the annualized cumulative PBT lost as a result of these sales?

Benjamin Toms: Is it possible to give us some idea of the annualized cumulative PBT lost as a result of these sales? Although the transactions may be RoTE positive together, it'd just be good to get a sense of the PBT headwind going into next year. Thank you.

Speaker #9: Although the transactions may be RT positive together, it’d be good to get a sense of the PBT headwind going into next year.

Speaker #9: Thank you .

Speaker #4: Okay . Thank you Ben . So firstly , on the mayor of litigation provision charges , you can expect that we did a thorough exercise with advice from internal external counsel as well as colleagues in the accounting function to determine what would be our best judgment on this case in terms of the other cases , of course , we look at , read across and those gets factored in .

Pam Kaur: Okay. Thank you, Ben. Firstly, on the Madoff litigation provision charge, as you can expect that we did a thorough exercise, with advice from internal, external counsel, as well as colleagues in the accounting function, to determine what would be our best judgment on this case. In terms of the other cases, of course, we look at read across and those gets factored in, but each case has very distinct factual considerations, so there's nothing more to add on that other than what we've already called out as disclosures in the mid-year. Please don't read more into that.

Speaker #4: But each case has very distinct factual considerations, so there's nothing more to add on that other than what we've already called out as a disclosure in the media.

Speaker #4: So please don't read more into that . As you know , on this case , we won on the cash side of the element of the case , but it was the securities element that we are providing against in terms of our share buyback and announcements at the time of Hang Seng privatisation offer .

Pam Kaur: As you know, on this case, we won on the cash side of the element of the case. It is a securities element that we are providing against. In terms of our share buyback and announcements at the time of Hang Seng privatization offer, as you can imagine, this case had been pending for a while. We had looked at all kinds of downside scenarios. When we came with our view of suspension of share buyback for the Hang Seng offer for up to three quarters, we still stand behind that number. That was all included. As you know well, we will go through a rigorous process every quarter. We continue to be highly capital generative, as you've seen with also the upgrades on our guidance.

Speaker #4: As you can imagine , this case had been pending for a while . We had looked at all kinds of downside scenarios . So when we came with our view of suspension , of share buyback for the Hang Seng offer , for up to three quarters , we still stand behind that number and that was all included .

Pam Kaur: When we came with our view of suspension of share buyback for the Hang Seng offer for up to three quarters, we still stand behind that number. That was all included. As you know well, we will go through a rigorous process every quarter. We continue to be highly capital generative, as you've seen with also the upgrades on our guidance.

Speaker #4: As you know . Well , we will go through a rigorous process every quarter . We continue to be highly capital generative . As you've seen with also the upgrades on our guidance .

Speaker #4: And once we look at that, we see where the organic growth opportunities are. Obviously, inorganic growth is where the Hang Seng privatization offer comes in.

Pam Kaur: Once we look at that, we see where the organic growth opportunities are. Obviously inorganic, that's where the Hang Seng privatization offer comes in. The residual after obviously looking at the 50% dividend payout, which is a key element of our capital distribution, then we look at share buyback. Don't expect any headwinds in that. The up to three-quarters still holds. In terms of the 11 disposals, I note your point. These are all relatively, as you can see, small disposals. What is very important is each time a disposal happens and is completed, like we had the Grupo Galicia, but also as we did with the closure of the investment bank, we immediately reinvest.

Speaker #4: And then the residual , after obviously looking at the 50% dividend payout , which is a key element of our capital distribution , then we look at share buybacks .

Speaker #4: So don't expect any headwinds in that . The up to three quarters still holds in terms of the 11 disposals , I note your point .

Speaker #4: These are all relatively, as you can see, small disposals. What is very important is each time a disposal happens and is completed, like we had with the group of Galicia, but also as we did with the closure of the investment bank, we immediately reinvest in the kinds of areas we've invested in, and we've actually seen the benefits come through.

Pam Kaur: These are all relatively, as you can see, small disposals. What is very important is each time a disposal happens and is completed, like we had the Grupo Galicia, but also as we did with the closure of the investment bank, we immediately reinvest.

Pam Kaur: The kind of areas we've invested and we've actually seen the benefits come through is we have invested in the UK, and as you see, we've seen some loan growth in the UK. We have invested in wealth, both in the UK and Asia and the Middle East. Of course, the numbers speak for themselves. Also we take very specific opportunities where we see either growth in volumes or new customer mandates, as we saw in security services, so that we can be in a prime position to take those opportunities. That's an ongoing piece of work. We don't stop at the end of each quarter or regularly to see what we need to reinvest. As soon as we have the money available, we reinvest.

Speaker #4: Is we have invested in the UK and as you see , we have seen some loan growth in the UK . We have invested in wealth both in UK and Asia and the Middle East , and of course , the numbers speak for themselves .

Speaker #4: But also we take very specific opportunities where we see either growth in volumes or new customer mandates . As we saw in security services , so that we can be in a prime position to take this opportunities .

Speaker #4: So that's an ongoing piece of work . We don't stop at the end of each quarter or regularly to see what we need to reinvest as soon as we have the money available , we reinvest .

Pam Kaur: That's an ongoing piece of work. We don't stop at the end of each quarter or regularly to see what we need to reinvest. As soon as we have the money available, we reinvest.

Speaker #3: Thank you, Pam. We will take our next question today from Joe Dickerson at Jefferies. Please accept the prompt to unmute your line.

Operator: Thank you, Pam. We will take our next question today from Joseph Dickerson at Jefferies. Please accept the prompt to unmute your line.

Speaker #10: Great . Thanks . I just it's just a more of a conceptual question , really , in terms of the return profile of the bank .

Joseph Dickerson: Great, thanks. It's just more of a conceptual question really in terms of the return profile of the bank. I guess why isn't HSBC post Hang Seng integration more of a high teens bank than a mid-teens bank? I mean, clearly the exit rate for this year on banking NII is going to be much higher, I think, than what most analysts would have thought, particularly given that the HIBOR move, you only had about six weeks of that embedded in Q3. You get a full quarter of that in Q4. Effectively, you know, you feed that through to next year. Yes, you can have lower rates, ultimately you probably have a structurally higher banking NII given the deposit mix.

Speaker #10: I guess . Why isn't this a why isn't HSBC post Hang Seng integration more of a high teens bank than a mid-teens bank ?

Speaker #10: I mean , clearly the the exit rate for this year on banking NII is going to be much higher , I think , than what most analysts would have thought , particularly given that the high BAU move you only had about six weeks of that embedded in Q3 .

Speaker #10: So you get a full quarter of that in Q4. And effectively, you know, you feed that through to next year.

Joseph Dickerson: You get a full quarter of that in Q4. Effectively, you know, you feed that through to next year. Yes, you can have lower rates, ultimately you probably have a structurally higher banking NII given the deposit mix.

Speaker #10: And yes , you can have lower rates , but ultimately , you probably have a structurally higher banking NII , given the deposit mix .

Speaker #10: And then, if you look at your invested assets in wealth, you clearly have a strong business there that continues to grow. The marginal ROE is much higher.

Joseph Dickerson: If you look at your invested assets in wealth, you clearly have a strong business there that continues to grow and the marginal ROE is much higher. Throw in Hang Seng, you're 70, 80 basis points just from the minority deduction. I guess why don't we get to a number that's in the high teens here as opposed to mid-teens?

Speaker #10: And throwing in Hang Seng, you're looking at 70 to 80 bps just from the minority deduction. Why don't we get to a number that's in the high teens here as opposed to the mid-teens?

Speaker #4: Thank you, Joe. It's a really good question. As you can imagine, we in the bank obviously reflect on this very closely as well.

Pam Kaur: Thank you, Joe. It's a really good question. As you can imagine, we in the bank obviously reflect on this very closely as well. You'd see that we have upgraded obviously our guidance for this year. Let me just remind you, when we came up with our target of mid-teens RoTE for the medium term, 2025, 2026, 2027, that's a target. There's nothing that says that you will stop working once you achieve the target. You continue to work to both achieve to target as well as to improve on the target. In terms of the target itself, we are not making any change. We will of course reflect on it as we go through our, you know, year-end results and go into next year and give greater details on our forward-looking guidance.

Speaker #4: And you see that we have upgraded obviously our guidance for this year . But let me just remind you , when we came up with our target of mid-teens roti for the medium term , 25 , 26 , 27 that's a target .

Speaker #4: There's nothing that says that you will stop working once you achieve the target; you continue to work to both achieve the target as well as to improve on the target.

Pam Kaur: There's nothing that says that you will stop working once you achieve the target. You continue to work to both achieve to target as well as to improve on the target. In terms of the target itself, we are not making any change. We will of course reflect on it as we go through our, you know, year-end results and go into next year and give greater details on our forward-looking guidance.

Speaker #4: In terms of the target itself . We are not making any change . We will , of course , reflect on it as we go through our , you know , year end results and go into next year and give greater details on our forward looking guidance .

Speaker #4: But just remember , a target is something that you have to achieve or better , target is not where you stop .

Pam Kaur: Just remember, a target is something that you have to achieve or better. Target is not where you stop.

Speaker #3: Thank you Pam . Our next question today comes from Kendra Yang at CIBC . Please accept the prompt to unmute your line .

Operator: Thank you, Pam. Our next question today comes from Kendra Yang at CICC. Please accept the prompt to unmute your line.

Speaker #11: Thanks for taking my questions . My question . My first question is regarding to the wealth management revenue . We observed a very strong , very rapid growth rate in the third quarter .

Kendra Yang: Thanks for taking my questions. My first question is regarding to the wealth management revenue. We've observed a very strong, very rapid growth rate in Q3. Could you elaborate on the key drivers behind this performance and its sustainability? My second question concerns credit risk. In recent weeks, we've seen some risk involving the US market, like the small and medium-sized banks in the US, they have some risk. Also, JPMorgan, they cautious the market about the credit risk during its earnings call. Although HSBC's primary client base is not in this segment, I'd like to ask whether HSBC has any exposure or concern in loans to Non-Bank Financial Institutions, or say those private credit corporate sector. Thanks.

Speaker #11: Could you elaborate on the key drivers behind this performance and its sustainability ? And my second question concerns is about the credit risk .

Kendra Yang: My second question concerns credit risk. In recent weeks, we've seen some risk involving the US market, like the small and medium-sized banks in the US, they have some risk. Also, JPMorgan, they cautious the market about the credit risk during its earnings call. Although HSBC's primary client base is not in this segment, I'd like to ask whether HSBC has any exposure or concern in loans to Non-Bank Financial Institutions, or say those private credit corporate sector. Thanks.

Speaker #11: In recent weeks, we've seen some risk involving U.S. markets, like the small and medium-sized banks in the U.S. They have some risk.

Speaker #11: And also the JP Morgan , they cautious the market about the credit risk during its earnings call . Although HSBC primary client base is not in this segment .

Speaker #11: But I still would like to ask whether HSBC has any exposure or concern in loans to non-bank financial institutions or, say, those in the private credit corporate sector.

Speaker #11: Thanks .

Speaker #4: Thank you . Kendra . Two really good questions . So firstly , in terms of wealth , we are very comfortable with our medium term guidance of a double digit growth in fees , though obviously quarter on quarter it can vary .

Pam Kaur: Thank you, Kendra. Two really good questions. Firstly, in terms of wealth, we are very comfortable with our medium-term guidance of a double digit growth in fees. Though obviously quarter on quarter it can vary. What has been really strong this year has been investment distribution, notably in Hong Kong, and strong equity volumes. As I said earlier, our insurance business has continued to grow, and that momentum is helped both in terms of existing client base but also the new clients we are onboarding in Hong Kong in particular. Obviously strong equity markets have been favorable and that becomes a lever for wealth in terms of both the sentiment and the activity we see. Overall, not changing our guidance, but very optimistic for wealth in future as seen from Q3 results. Of course, be mindful there are some seasonal fluctuations.

Speaker #4: So what has been really strong this year has been investment distribution, notably in Hong Kong, and strong equity volumes. As I said earlier, our insurance business has continued to grow.

Pam Kaur: As I said earlier, our insurance business has continued to grow, and that momentum is helped both in terms of existing client base but also the new clients we are onboarding in Hong Kong in particular. Obviously strong equity markets have been favorable and that becomes a lever for wealth in terms of both the sentiment and the activity we see. Overall, not changing our guidance, but very optimistic for wealth in future as seen from Q3 results. Of course, be mindful there are some seasonal fluctuations.

Speaker #4: And that momentum is helped both in terms of the existing client base but also the new clients we are onboarding in Hong Kong, in particular.

Speaker #4: Obviously , strong equity markets have been favorable and that becomes a lever for for wealth in terms of both the sentiment and the activity we see .

Speaker #4: But overall, we are not changing our guidance. We are very optimistic about wealth in the future, as seen from Q3 results. And of course, we must be mindful that there are some seasonal fluctuations.

Speaker #4: Q4 can be a little less and Q1 more , but we'll see how it progresses . So far all on very good trajectory from a credit risk perspective .

Pam Kaur: Q4 can be a little less, Q1 more. We'll see how it progresses. Far, all on a very good trajectory. From a credit risk perspective, as you can appreciate, I've been a chief risk officer for five years. Indulge me, I'll share my thoughts on that with you. Private credit as a sector, of course, is going to have stronger players and weaker players. What is very key is how you do the due diligence and what are the kind of underwriting standards you apply in this new area. You're quite right, this is primarily US driven, 80% a US driven business. Our footprint in US is relatively small. All I can tell you is that our direct exposure in the private credit space is $1 billion.

Speaker #4: And as you can appreciate, I've been a Chief Risk Officer for five years. So indulge me; I'll share my thoughts on that with you.

Speaker #4: Private credit as a sector of course , is going to have stronger players and weaker players . What is very key is how you do the due diligence , and what are the kind of underwriting standards you apply in this new area .

Pam Kaur: What is very key is how you do the due diligence and what are the kind of underwriting standards you apply in this new area. You're quite right, this is primarily US driven, 80% a US driven business. Our footprint in US is relatively small. All I can tell you is that our direct exposure in the private credit space is $1 billion.

Speaker #4: You are quite right. This is primarily U.S.-driven. Eighty percent of U.S.-driven business, and our footprint in the U.S. is relatively small.

Speaker #4: All I can tell you is that our direct exposure in the private credit space is $1 billion. We apply the same strong credit underwriting principles there.

Pam Kaur: We apply the same strong credit underwriting principles there, so I'm very comfortable in that space. What I do want to call out is, you are right, it is always the second and the third order risk that you should be very mindful of, which are not your direct exposures, but exposures you may have through weaker counterparties. We have always taken a very conservative view in terms of our exposures to smaller banks, regional banks in the US and elsewhere. We've been doing that right through the COVID period, through Russia-Ukraine, through inflation, high interest rates, so on, as well as exposure to smaller hedge funds.

Speaker #4: So I'm very comfortable in that space . What I do want to call out is you are right . It is always the second and the third order risk that you should be very mindful of , which are not your direct exposures , but exposures you may have through weaker counterparties .

Speaker #4: We have always taken a very conservative view in terms of our exposures to smaller banks , regional banks in the US and elsewhere .

Pam Kaur: We have always taken a very conservative view in terms of our exposures to smaller banks, regional banks in the US and elsewhere. We've been doing that right through the COVID period, through Russia-Ukraine, through inflation, high interest rates, so on, as well as exposure to smaller hedge funds.

Speaker #4: We've been doing that right through the Covid period , through Russia , Ukraine , through inflation , high interest rates and so on , as well as exposure to smaller hedge funds .

Speaker #4: Having said that, we closely monitor this space because you can never get too comfortable in this space. Good risk management really means looking forward to see what else can impact the overall ecosystem, which then can cause, indirectly, concerns to all participants.

Pam Kaur: Having said that, we closely monitor the space because you can never get too comfortable in this space. Good risk management really means looking forward to see what else can impact the overall ecosystem, which then can cause indirectly concerns to all participants.

Speaker #3: Thank you, Pam. Our next question today comes from Kian al-Hussein at JP Morgan. Please accept the prompt to unmute your line.

Operator: Thank you, Pam. Our next question today comes from Kian Abouhossein at JP Morgan. Please accept the prompt to unmute your line.

Speaker #12: Yeah , thanks for taking my questions . Just to come back on the NFI exposure , because you mentioned private credit just now , a single digit NFI would be similar .

Kian Abouhossein: Yeah, thanks for taking my questions. Just to come back on the NDF exposure, because you mentioned private credit just now, a single digit. NDF would be similar. Clearly you get your US legal entity exposure as well as the branches, which is below $10 billion. Should we see that as overall group exposure, roughly for total NDF? Can you confirm that? Secondly, on tariff scenarios, you gave a impact scenario or sensitivity scenario of low single digit on group revenues before. Clearly things have changed, but also that was on a very specific part of your business. I'm just trying to understand how you're thinking about impact scenario going forward in the current situation and expectation of a trade deal. Secondly, also what the impact has been so far.

Speaker #12: Clearly, you guess your US legal entity exposure, as well as branches, which is below $10 billion. So should we see that as overall group exposure roughly for total NFI?

Speaker #12: Can you confirm that? And then secondly, on tariffs, you gave an impact scenario or sensitivity scenario of low single digits on group revenues before clearly things have changed.

Kian Abouhossein: Can you confirm that? Secondly, on tariff scenarios, you gave a impact scenario or sensitivity scenario of low single digit on group revenues before. Clearly things have changed, but also that was on a very specific part of your business. I'm just trying to understand how you're thinking about impact scenario going forward in the current situation and expectation of a trade deal. Secondly, also what the impact has been so far.

Speaker #12: But also that was on a very specific part of your business . So I'm just trying to understand how you're thinking about impact scenario going forward in the current situation .

Speaker #12: And the expectation of a trade deal. And secondly, also what the impact has been so far.

Speaker #4: So, let me come to the NBF exposures. As you can appreciate, NBF is a very broad industry. My comment on our disciplined and conservative approach to weaker NBFIs holds.

Pam Kaur: Let me come to the NBFI exposures. As you can appreciate, NBFI is a very broad industry. My comment on our discipline and conservative approach to weaker NBFIs holds. From an exposure perspective, both in terms of quantum that I've called out and beyond, I am very comfortable in terms of our approach to date as well as going forward. For the tariffs exposure and the impact, as you've seen, the trade segment has continued to perform well. We have the advantage that as much as there is a impact on US dollar related corridors, there are other corridors which are growing, which we have a strong presence in, whether it's India, UK, Middle East, Asia, intra Asia. That's been quite good for us. Overall, our guidance that we've given on the direct impact of tariffs has not changed.

Speaker #4: So from an exposure perspective, both in terms of quantum that I've called out and beyond, I am very comfortable in terms of our approach to date as well as going forward.

Pam Kaur: For the tariffs exposure and the impact, as you've seen, the trade segment has continued to perform well. We have the advantage that as much as there is a impact on US dollar related corridors, there are other corridors which are growing, which we have a strong presence in, whether it's India, UK, Middle East, Asia, intra Asia. That's been quite good for us. Overall, our guidance that we've given on the direct impact of tariffs has not changed.

Speaker #4: For the tariffs , exposure and the impact , as you've seen , the trade business segment has continued to perform well . We have the advantage that as much as there is a impact on US dollar related corridors , there are other corridors which are growing , which we have a strong presence in , whether it's India , UK , Middle East , Asia , intra Asia .

Speaker #4: So that's been quite good for us. Overall, our guidance that we've given on the direct impact of tariffs has not changed.

Speaker #4: And of course we look at that as part of our downside risk scenarios , even for the from an overall , you know , view on the macro environment with all the trade deals being done , I'll just give one reflection that our probabilities that we we give to our upside , downside and base case scenarios have now normalized .

Pam Kaur: Of course, we look at that as part of our downside risk scenarios, even for the ECLs. From an overall, you know, view on the macro environment with all the trade deals being done, I'll just give one reflection that our probabilities that we give to our upside, downside and base case scenarios have now normalized. That's resulted in some modest releases of ECLs because we think the situation is improving compared to where they were more weighted towards the downside scenarios in the previous quarters.

Speaker #4: And that's resulted in some modest releases of ecls , because we think the situation is improving compared to where there were more weighted towards the downside scenarios in the previous quarters .

Speaker #3: Thank you . Pam . As a reminder , if you would like to ask a question , please use the raise hand function in zoom .

Operator: Thank you, Pam. As a reminder, if you would like to ask a question, please use the raise hand function in Zoom. We will take our next question today from Amit Goel at Mediobanca. Please accept the prompt to unmute your line.

Speaker #3: We will take our next question today from Amit Gole at Mediobanca. Please accept the prompt to unmute your line.

Speaker #12: Hi .

Speaker #13: Thank you . So two questions for me . The first , just on the UK business , it looked like there was a bit more investment and there was also a little bit of a tick up in the impairment rate versus prior quarters .

Amit Goel: Hi, thank you. Two questions from me. The first just on the UK business. It looked like there was a bit more investment, and there was also a little bit of a tick up in the impairment rate versus prior quarters. Just wanted to check what kind of investments you're making there, for what kind of opportunity and then on the impairment, what's driving that? The second one is just a follow-up on the Madoff litigation. I was just kinda curious, what is really the range of outcomes? I know obviously it says that it could be materially different to the provision. There are a lot of kind of numbers in the release. Just curious how you see that range.

Speaker #13: So just wanted to check what kind of investments you're you're making there for what kind of opportunity . And , and then on the impairment , what's driving that .

Speaker #13: And then the second one is just a follow up on the Madoff litigation . I'm just kind of curious what is really the range of outcomes .

Amit Goel: The second one is just a follow-up on the Madoff litigation. I was just kinda curious, what is really the range of outcomes? I know obviously it says that it could be materially different to the provision. There are a lot of kind of numbers in the release. Just curious how you see that range.

Speaker #13: I know obviously , it says that it could be materially different to the to the provision . There are a lot of kind of numbers in the in the release .

Speaker #13: So just curious how you see that range . And I was I was also kind of curious why a provision wasn't taken in , you know , in December 24th when you had the original ruling that went against .

Amit Goel: I was also kinda curious why a provision wasn't taken, you know, in December 2004 when you had the original ruling that went against. Thank you.

Speaker #13: Thank you .

Speaker #4: Okay . Thank you . Amit . So first on the UK business , we have continued to invest for wealth , both in terms of hiring of Rmbs to grow our premier customer numbers and to sell more wealth products for the customers with who we already have very strong deposit base with .

Pam Kaur: Okay. Thank you, Amit. First on the UK business. We have continued to invest for wealth, both in terms of hiring of RMs to grow our premier customer numbers and to sell more wealth products for the customers with whom we already have very strong deposit base with. We are also investing as we've opened a new wealth center in the UK in this space. Business banking has been important for us for investing in terms of customer service, customer journeys, and that's primarily a liability driven business. Having said that, we are very pleased that our corporate lending book in the UK has shown sustainable growth in the sectors that we have lent into, so more into the new economy sectors, into infrastructure, into social housing, into innovation and so on. That has been really positive for us.

Speaker #4: We are also investing as we've opened a new wealth center in the UK . In this space , and then business banking has been important for us for investing in in terms of customer service , customer journeys , and that's primarily a liability driven business .

Pam Kaur: Business banking has been important for us for investing in terms of customer service, customer journeys, and that's primarily a liability driven business. Having said that, we are very pleased that our corporate lending book in the UK has shown sustainable growth in the sectors that we have lent into, so more into the new economy sectors, into infrastructure, into social housing, into innovation and so on. That has been really positive for us.

Speaker #4: Having said that , we are very pleased that our corporate lending book in the UK has shown sustainable growth in the sectors that we have lent into .

Speaker #4: So more into the new economy sectors , into infrastructure , into social housing , into innovation . And so on . So that has been really positive for us from an impairment perspective , just to give you a context , a 300 million charge in a quarter for the UK is not abnormal in prior quarters , where had release the charge can fluctuate between 200 to 300 million .

Pam Kaur: From an impairment perspective, just to give you context, a GBP 300 million charge in a quarter for the UK is not abnormal. In prior quarters, where we had to release, the charge can fluctuate between GBP 200 to 300 million. In terms of the specifics, there were a few single name defaults, but they were all of very small amounts, so nothing notable and no specific concentration in any sector. I feel quite comfortable in that space. From a Madoff perspective, just to be clear, we had an appeal as at December, and the outcome of the appeal was only known to us on Friday, 24 October, and therefore we gave our RNS an announcement on the provision yesterday. The provision we have given is our best judgment of likely outcomes.

Speaker #4: In terms of the specifics , there were a few single name name defaults , but there were all of very small amounts , so nothing notable .

Speaker #4: And no specific concentration in any sector . So I feel quite comfortable in that space from a madoff perspective , just to be clear , we had an appeal as a December and the outcome of the appeal was only known to us on Friday , the 24th of October .

Pam Kaur: From a Madoff perspective, just to be clear, we had an appeal as at December, and the outcome of the appeal was only known to us on Friday, 24 October, and therefore we gave our RNS an announcement on the provision yesterday. The provision we have given is our best judgment of likely outcomes.

Speaker #4: And therefore we give our an announcement on the on the provision yesterday . So the provision we have given is our best judgment of likely outcomes .

Speaker #4: It's not a midpoint; it's not a broad range, as people may think, but it's just our best judgment based upon advice from our both internal and external legal counsel.

Pam Kaur: It's not a midpoint, it's not a broad range as people may think, but it's just our best judgment based upon advice from our both internal and external legal counsel.

Speaker #13: Thank you .

Amit Goel: Thank you.

Speaker #4: Thanks .

Pam Kaur: Thanks.

Speaker #3: Thank you . Pam . Our next question comes from Kung Pang Ma at China Securities . Please accept the prompt to unmute your line .

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

Speaker #14: Thanks, Pam. It's Chen Li from China Securities, and I also have two questions about the wealth management because of the further interest rate cuts.

Chen Li: Thanks, Pam. It's Le Chen Li from China Securities. I also have the questions about the wealth management, because of the further interest rate cut. Will the non-resident new customers in Hong Kong slow down or keep stable? Also, how will the migration of retail deposits into wealth management products impact our wealth management revenue? Thank you.

Lechen Li: Thanks, Pam. It's Le Chen Li from China Securities. I also have the questions about the wealth management, because of the further interest rate cut. Will the non-resident new customers in Hong Kong slow down or keep stable? Also, how will the migration of retail deposits into wealth management products impact our wealth management revenue? Thank you.

Speaker #14: So will the non-resident new customers in Hong Kong will slow down or keep stable . Also , how will the migration of retail deposits into wealth management products impact our wealth management revenue ?

Speaker #14: Thank you .

Speaker #4: Thank you . So on wealth management , the growth of wealth management that we've seen comes both from new customers , but primarily from our existing customer base in Hong Kong .

Pam Kaur: Thank you. On wealth management, the growth of wealth management that we've seen comes both from new customers, but primarily from our existing customer base in Hong Kong. We do not believe that at a normalized hybrid rate, which we've had seen for quite a long period of time, despite the fluctuations we've had earlier this year, that that should have an impact on both the appetite of our customers for wealth management products, their desire to diversify, and our matched product offering, which is in a prime position to meet their needs. I don't think there's anything more to call. Obviously, a positive stock market is a good optimism factor and encourages customers to invest even more. The baseline growth that we are seeing quarter-on-quarter is very much expected to continue.

Speaker #4: We do not believe that at a normalized hibor rate , which we've had seen for quite a long period of time , despite the fluctuations we've had earlier this year , that that should have an impact on both the appetite of our customers for wealth management products .

Speaker #4: Their desire to diversify and our matched product offering is in a prime position to meet their needs. So I don't think there is anything more to call.

Pam Kaur: I don't think there's anything more to call. Obviously, a positive stock market is a good optimism factor and encourages customers to invest even more. The baseline growth that we are seeing quarter-on-quarter is very much expected to continue.

Speaker #4: Obviously a positive stock market is a good optimism factor and encourages customers to invest even more . But the baseline growth that we are seeing quarter on quarter is very much expected to continue .

Speaker #3: Thank you . Pam . Our next question today comes from Alastair Waugh at Autonomous . Please accept the prompt to unmute your line .

Operator: Thank you, Pam. Our next question today comes from Alastair Wall at Autonomous. Please accept the prompt to unmute your line.

Speaker #15: Morning , Pam . Thanks for making the time for us . I just wanted to quickly return to that Hong Kong CRE question you saw as you touched on yourself some some downward migration .

Alastair Ryan: Morning, Pam. Thanks for making the time for us. I just wanted to quickly return to that Hong Kong CRE question. You saw, as you touched on yourself, some downward migration. You'd said before you've been focused particularly on the higher LTV problem loans, and those have gone up quite a bit as again, to Q3 versus the half year. Could you just give us a little bit more about what's going on in collateral there in the background, why the ECL would be able to come down by quite a bit, in terms of, say, you know, individual clients posting more collateral, what the values have been doing in the quarter? Thank you.

Speaker #15: You said before you've been focused particularly on the higher LTV problem loans , and those have gone up quite a bit . Again , third quarter versus the half year .

Speaker #15: So could you just give us a little bit more about what's going on in collateral there in the background ? Why the ACL would be able to come down by quite a bit in terms of say , you know , individual clients posting more collateral , what the values have been doing in the quarter .

Speaker #15: Thank you .

Speaker #4: So thank you for the question , Alastair . So in terms of the Hong Kong CRE , you're right . If you look at the LTV , 70% plus the number which has grown , but in the same note , we've taken more provisions .

Pam Kaur: Thank you for the question, Alastair. In terms of the Hong Kong CRE, you're right. If you look at the LTV 70% plus, the number which has grown, but in the same note, we've taken more provisions. Net of the provisions, quarter-on-quarter, that number has pretty much stayed steady around the $900 million. In terms of valuations, of course, we look at valuations across the board, and particularly for these, we look at them on a quarterly basis as well as if there are any, you know, transactions or events that cause us to pause and look at the valuations again. We are looking at that. The real distinction between perhaps what you saw in the middle of the year and now is that there is no individual surprise, name, or situation.

Speaker #4: So net of the provisions quarter on quarter , that number has pretty much stayed steady around the 900,000,009 times of valuations . Of course , we look at valuations across the board and particularly for these we look at them on a quarterly basis as well as if they are any .

Speaker #4: You know, transactions or events that cause us to pause and look at the valuations. Again, we are looking at that.

Pam Kaur: We are looking at that. The real distinction between perhaps what you saw in the middle of the year and now is that there is no individual surprise, name, or situation.

Speaker #4: The real distinction between perhaps what you saw in the middle of the year and now is that there is no individual surprise name or situation.

Speaker #4: And overall in Hong Kong , CRE retail has got better residential , as we know , has stabilized . And on the office space , which is challenging .

Pam Kaur: Overall in Hong Kong CRE, retail has got better, residential, as we know, has stabilized. On the office space, which is challenging, we are not so far seeing improvements which are coming from the momentum, even slight as it may be, in terms of A-type properties going into the rest of the office space. Hence, I think that challenge will continue.

Speaker #4: We are not so far seeing improvements which are coming from the momentum , even slight as it may be in terms of a type .

Speaker #4: Properties going into the rest of the office space . So hence , I think that challenge will continue .

Speaker #3: Thank you Pam . Our last question today will be from Andrew Coombs at Citi . Please accept the prompt to unmute your line .

Operator: Thank you, Pam. Our last question today will be from Andrew Coombs at Citi. Please accept the prompt to unmute your line.

Speaker #16: Good morning . A couple of questions please . Firstly , just to follow up on divestments , you've now announced Sri Lanka . You've talked about Egypt Retail being up for review .

Andrew Coombs: Good morning. A couple of questions, please. Firstly, just to follow up on divestments. You've now announced Sri Lanka. You've talked about Egypt retail being up for review. I see there's no mention of Australia or Indonesia in the slides this time, whereas there was in Q2. Can you just provide us with an update there, particularly Australia, because that is a potentially more sizable divestment? The second question, just on the new disclosure on slide 7, where you provided the resident versus non-resident split of the additional customer base, in Hong Kong.

Speaker #16: I see there's no mention of Australia or Indonesia in the slides this time , whereas there was in Q2 . Can you just provide us with an update there , particularly Australia , because that is a potentially more sizable divestment .

Speaker #16: And then the second question , just on the new disclosure on slide seven , where you provided the resident versus non-resident split of the additional customer base in Hong Kong , perhaps you could just give us an idea of what the split is of the stock , as well as the flow , how that changes with Hang Seng Bank .

Andrew Coombs: Perhaps you could just give us an idea of what the split is of the stock as well as the flow, how that changes with Hang Seng Bank, if you were to combine the two, not just look at the HSBC Red, and how the revenue margins compare between resident versus non-resident. Thank you.

Speaker #16: If you were to combine the two , not just look at the rebrand and how the revenue margins compare between resident versus non-resident .

Speaker #16: Thank you .

Speaker #4: Thank you , Andrew . So firstly , your questions on the the divestments that we had called out in terms of strategic reviews .

Pam Kaur: Thank you, Andrew. Firstly, your questions on the divestments that we had called out in terms of strategic reviews, there is no further news. They are continuing through that strategic review process. That's why we haven't called out anything specific here. It's work in progress, no turning back as such. The slide that we have said on the resident, non-resident, the reason for that slide is really twofold. Firstly, to explain to you that why this growth and the reasoning of how it's grown up since the borders opened up in 2023 and see that trajectory, and that shows how the trajectory is continuing. However, it does show that fundamentally, the customers who are coming in to begin with are coming with small balances, and it's a deposit-led growth story.

Speaker #4: There is no further news. We are continuing through that strategic review process. So that's why we haven't called out anything specific here.

Speaker #4: It's a work in progress. No turning back as such. So the slide that we have on the resident and non-resident, the reason for that slide is really twofold.

Speaker #4: Firstly , to explain to you that why this growth and the reasoning of how it's grown up since the , the , the borders opened up in 23 and see that trajectory and that shows how the trajectory is continuing .

Pam Kaur: Firstly, to explain to you that why this growth and the reasoning of how it's grown up since the borders opened up in 2023 and see that trajectory, and that shows how the trajectory is continuing. However, it does show that fundamentally, the customers who are coming in to begin with are coming with small balances, and it's a deposit-led growth story.

Speaker #4: However , it does show that fundamentally the customers who are coming in to begin with are coming with small balances . And it's a deposit led growth story .

Speaker #4: There is also an uptake on insurance , which is a preferred product . So we call that out . The other wealth products , it takes time to convert .

Pam Kaur: There is also an uptick on insurance, which is a preferred product, so we called it out. The other wealth products, it takes time to convert. Overall, if you look at the premier customer base between the start and the end, it stays pretty much stable, 15% to 16%. That's how I would look at it. New customers coming in terms of the trajectory has continued pretty consistently, at least through this year, at 100,000 plus every quarter. It's little higher than what it was in 2024, which was a little high to begin with from where it was in 2023. You can see that as a continuum. In terms of Hang Seng, they don't do a Q3 filing, so I don't want to say anything about that. There's no news to share.

Speaker #4: Overall , if you look at the Premier customer base between the start and the end , it stays pretty much stable . 15 to 16% .

Speaker #4: So, that's how I would look at it. The new customers coming in, in terms of a trajectory, have continued pretty consistently, at least through this year.

Speaker #4: At 100,000 plus , every quarter , it's a little higher than what it was in 24 , which was a little high to begin with from where it was in 23 .

Pam Kaur: It's little higher than what it was in 2024, which was a little high to begin with from where it was in 2023. You can see that as a continuum. In terms of Hang Seng, they don't do a Q3 filing, so I don't want to say anything about that. There's no news to share.

Speaker #4: So you can see that as a as a continuum in terms of Hang Seng , they don't do a third quarter filing . So I don't want to say anything about that .

Speaker #4: There's no news to share there . You know , listed company in their own right . But obviously as we have talked about the opportunities for revenue growth and operating leverage as part of our offer that does call out that from a revenue perspective , particularly on wealth products .

Pam Kaur: They're a, you know, listed company in their own right. Obviously, as we have talked about the opportunities for revenue growth and operating leverage as part of our offer, that does call out that from a revenue perspective, particularly on wealth products, we will have greater opportunities to leverage the wealth products in the Red brand for the green brand customers, both existing and new, which continue.

Speaker #4: We will have greater opportunities to leverage the wealth products in the red brand for the green brand , customers , both existing and new , which continue .

Speaker #3: Thank you, Pam, and thank you all for your questions today and for joining our webinar on the three key results for HSBC Holdings PLC.

Operator: Thank you, Pam, thank you all for your questions today and for joining our webinar on the Q3 results for HSBC Holdings PLC. You may now disconnect your line. Goodbye.

Q3 2025 HSBC Holdings PLC Earnings Call

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