HSBC Holdings plc 1Q19 Earnings Release

HSBC Holdings PLC

May 03 2019 08:00 BSTSource: RNS

RNS Number : 9606X

HSBC Holdings PLC

03 May 2019

HSBC HOLDINGS PLC

1Q19 EARNINGS RELEASE - HIGHLIGHTS

John Flint, Group Chief Executive, said:

"These are an encouraging set of results, particularly in the context of heightened economic uncertainty globally. We remain focused on executing the strategy we outlined last June, while also being alert to risks in the global economy."

Financial performance (vs. 1Q18)

• Reported profit after tax up 31% to $4.9bn.

• Reported revenue up 5%. Adjusted revenue up 9%, supported by positive market impacts and disposal gains.

• Reported operating expenses down 12%. Adjusted operating expenses up 3.2% in 1Q19, which has slowed from 5.6% at FY18 (compared with FY17). Returned to positive adjusted jaws of 6.0%, supported by favourable markets-related movements and disposal gains in Latin America.

• Earnings per share of 21 cents, up 40%. Return on tangible equity (annualised) up 220bps to 10.6%.

• Common equity tier 1 ('CET1') ratio up 30bps from 31 December 2018 to 14.3%, including a 7bps adverse impact of IFRS 16. We are committed to the discipline of scrip neutralisation and will announce our decision on 2019 share buybacks at the half-year.

Strategic progress

• Continued growth momentum in RBWM and CMB. Adjusted revenue up 10% in RBWM and 11% in CMB, compared with 1Q18. Strong adjusted revenue performances in Retail Banking (up 11%) and Global Liquidity and Cash Management (up 17%).

• Strong growth in Asia, despite a softer rate and growth environment. Reported revenue up 7% compared with 1Q18; reported lending growth of $11bn or 2% compared with 4Q18.

• Investments of $1.0bn in 1Q19, up 15% compared with 1Q18, on near- and medium-term initiatives to grow the business and enhance our digital capabilities.

• Revenue growth from our international network, with transaction banking revenue up 9% compared with 1Q18.

• US turnaround progressing, but this remains our most challenging strategic priority. In 1Q19, we increased retail customer numbers and continued to capitalise on our international network, despite the softening rate environment.

Financial highlights and key ratios
	Quarter ended 31 Mar
	2019	2018	Change
	$m	$m	%
Reported profit before tax	6,213	4,755	30.7
Adjusted profit before tax	6,350	5,800	9.5
Reported profit after tax	4,910	3,738	31.4
	$	$	%
Basic earnings per share	0.21	0.15	40.0
Diluted earnings per share	0.21	0.15	40.0
Net asset value per ordinary share	8.20	8.40	(2.4	)
Tangible net asset value per ordinary share	7.05	7.29	(3.3	)
Tangible net asset value per fully diluted ordinary share	7.02	7.25	(3.2	)
	Millions	Millions
Basic number of ordinary shares outstanding	20,082	20,013
Basic number of ordinary shares outstanding and dilutive potential ordinary shares	20,177	20,118
	%	%
Net interest margin	1.59	1.67
Return on average ordinary shareholders' equity (annualised)	10.2	7.5
Return on average tangible equity (annualised)	10.6	8.4
Adjusted jaws	6.0

We use adjusted performance to understand the underlying trends in the business. The main differences between reported and adjusted figures are foreign currency translation and significant items, which include litigation and regulatory items.

Capital and balance sheet
		At
		31 Mar	31 Dec
		2019	2018
	Footnotes	%	%
Common equity tier 1 ratio	1	14.3	14.0
Leverage ratio	1	5.4	5.5
		$m	$m
Loans and advances to customers		1,005,279	981,696
Customer accounts		1,356,511	1,362,643
Loans and advances to customers as a percentage of customer accounts		74.1%	72.0%
Risk-weighted assets	1	879,485	865,318

1 The Group has adopted the EU's regulatory transitional arrangements for IFRS 9 'Financial Instruments'. These apply to reported and adjusted RWAs, regulatory capital and related ratios throughout this 1Q19 Earnings Release, unless otherwise stated.

Contents
	Page		Page
Highlights	1	Risk-weighted assets	2
Group Chief Executive's review	2	Summary information - global businesses	2
Adjusted performance	2	Summary information - geographical regions	2
Financial performance commentary	2	Appendix - selected information	2
Cautionary statement regarding forward-looking statements	2	- Reconciliation of reported and adjusted results - global businesses	2
Summary consolidated income statement	2	- Reconciliation of reported and adjusted risk-weighted assets	2
Summary consolidated balance sheet	2	- Reconciliation of reported and adjusted results - geographical regions	2
Credit risk	2	- Reconciliation of capital with and without IFRS 9 transitional arrangements	2
Capital	2	First interim dividend for 2019	2
Leverage	2	Terms and abbreviations	2

HSBC Holdings plc will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 07.30am BST. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investors.

Note to editors

HSBC Holdings plc

HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in
66 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of $2,659bn at 31 March 2019, HSBC is one of the world's largest banking and financial services organisations.

Review by John Flint, Group Chief Executive

We have made a good start to 2019. Reported profit after tax was up significantly on 1Q18, thanks largely to strong revenue growth in our Retail Banking and Wealth Management and Commercial Banking businesses, and favourable movements in significant items. Return on tangible equity - our headline measure - was up considerably on the same period last year, and we delivered positive adjusted jaws over the quarter.

Our three main global businesses performed well. Retail Banking and Wealth Management generated a significant increase in adjusted revenue on the back of higher lending and deposit balances, notably in the UK and Hong Kong, and from positive market impacts in insurance manufacturing. Commercial Banking delivered a double-digit increase in adjusted revenue, owing mainly to our continued strength in transaction banking, with growth across all regions. Global Banking and Markets adjusted revenue was up relative to a strong first quarter last year, with favourable movements on credit and funding valuation adjustments and growth in transaction banking more than offsetting the impact of economic uncertainty on our Global Banking, equities and fixed income businesses.

These are an encouraging set of results, and we remain focused on executing the strategy we outlined last June. At the same time, we remain alert to risks in the global economy. We are proactively managing costs and investment in line with this more uncertain outlook, and will continue to do so.

Adjusted performance

Adjusted performance is computed by adjusting reported results for the effects of foreign currency translation differences and significant items, which both distort period-on-period comparisons.

We consider adjusted performance to provide useful information for investors by aligning internal and external reporting, identifying and quantifying items management believes to be significant, and providing insight into how management assesses period-on-period performance.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies. We exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a like-for-like basis and better understand the underlying trends in the business.

Foreign currency translation differences

Foreign currency translation differences for 1Q19 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

• the income statements for 4Q18 and 1Q18 at the average rates of exchange for 1Q19; and

• the closing prior period balance sheets at the prevailing rates of exchange on 31 March 2019.

No adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. The constant currency data of HSBC's Argentinian subsidiaries has not been adjusted further for the impacts of hyperinflation. When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC's operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.

Significant items

'Significant items' refers collectively to the items that management and investors would ordinarily identify and consider separately to understand better the underlying trends in the business.

The tables on pages 33 to 41 detail the effects of significant items on each of our global business segments and geographical regions during 1Q19, 4Q18 and 1Q18.

Adjusted performance - foreign currency translation of significant items

The foreign currency translation differences related to significant items are presented as a separate component of significant items. This is considered a more meaningful presentation as it allows better comparison of period-on-period movements in performance.

Global business performance

The Group Chief Executive, supported by the rest of the Group Management Board ('GMB'), is considered to be the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's reportable segments.

The Group Chief Executive and the rest of the GMB review operating activity on a number of bases, including by global business and geographical region. Global businesses are our reportable segments under IFRS 8 'Operating Segments'. Global business results are assessed by the CODM on the basis of adjusted performance, which removes the effects of significant items and currency translation from reported results. We therefore present these results on an adjusted basis as required by IFRSs.

A reconciliation of the Group's adjusted results to the Group's reported results is presented on page 4. Supplementary reconciliations of adjusted to reported results by global business are presented on pages 33 to 35 for information purposes.

Management view of adjusted revenue

Our global business segment commentary includes tables that provide breakdowns of adjusted revenue by major product. These reflect the basis on which revenue performance of the businesses is assessed and managed.

Reconciliation of reported and adjusted results
		Quarter ended
		31 Mar		31 Dec		31 Mar
		2019		2018		2018
	Footnotes	$m		$m		$m
Revenue
Reported		14,428		12,695		13,710
Currency translation				75		(656	)
Significant items		(22	)	(129	)	142
- customer redress programmes		-		(7	)	-
- disposals, acquisitions and investment in new businesses		-		(29	)	112
- fair value movement on financial instruments	1	(22	)	(95	)	28
- currency translation of significant items				2		2
Adjusted		14,406		12,641		13,196
Change in expected credit losses and other credit impairment charges
Reported		(585	)	(853	)	(170	)
Currency translation				(10	)	18
Adjusted		(585	)	(863	)	(152	)
Operating expenses
Reported		(8,222	)	(9,144	)	(9,383	)
Currency translation				(55	)	446
Significant items		159		265		1,123
- cost of structural reform	2	53		61		126
- customer redress programmes		56		(16	)	93
- disposals, acquisitions and investment in new businesses		-		(2	)	2
- past service costs of guaranteed minimum pension benefits equalisation		-		228		-
- restructuring and other related costs		50		15		20
- settlements and provisions in connection with legal and regulatory matters		-		(24	)	897
- currency translation of significant items				3		(15	)
Adjusted		(8,063	)	(8,934	)	(7,814	)
Share of profit in associates and joint ventures
Reported		592		558		598
Currency translation				13		(28	)
Adjusted		592		571		570
Profit before tax
Reported		6,213		3,256		4,755
Currency translation				23		(220	)
Significant items		137		136		1,265
- revenue		(22	)	(129	)	142
- operating expenses		159		265		1,123
Adjusted		6,350		3,415		5,800
Loans and advances to customers (net)
Reported		1,005,279		981,696		981,165
Currency translation				5,923		(43,391	)
Adjusted		1,005,279		987,619		937,774
Customer accounts
Reported		1,356,511		1,362,643		1,379,679
Currency translation				7,573		(55,166	)
Adjusted		1,356,511		1,370,216		1,324,513

1 Includes fair value movements on non-qualifying hedges and debit value adjustments ('DVA') on derivative contracts.

2 Comprises costs associated with preparations for the UK's exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong.

Financial performance commentary
Distribution of results by global business
	Quarter ended
	31 Mar	31 Dec		31 Mar
	2019	2018		2018
	$m	$m		$m
Adjusted profit/(loss) before tax
Retail Banking and Wealth Management	2,231	1,354		1,876
Commercial Banking	2,016	1,676		2,030
Global Banking and Markets	1,639	704		1,640
Global Private Banking	98	60		111
Corporate Centre	366	(379	)	143
Total	6,350	3,415		5,800

Distribution of results by geographical region
	Quarter ended
	31 Mar		31 Dec		31 Mar
	2019		2018		2018
	$m		$m		$m
Reported profit/(loss) before tax
Europe	(14	)	(1,559	)	(18	)
Asia	5,006		3,951		4,768
Middle East and North Africa	465		399		437
North America	379		290		(596	)
Latin America	377		175		164
Total	6,213		3,256		4,755
Adjusted profit/(loss) before tax
Europe	69		(1,402	)	134
Asia	5,040		3,974		4,662
Middle East and North Africa	466		401		431
North America	388		294		426
Latin America	387		148		147
Total	6,350		3,415		5,800

Tables showing adjusted profit before tax by global business and region are presented to support the commentary on adjusted performance on the following pages.

The tables on pages 33 to 41 reconcile reported to adjusted results for each of our global business segments and geographical regions.

Group

1Q19 compared with 1Q18 - reported results

Movement in reported profit before tax compared with 1Q18
	Quarter ended
	31 Mar		31 Mar		Variance
	2019		2018		1Q19 vs. 1Q18
	$m		$m		$m		%
Revenue	14,428		13,710		718		5
ECL	(585	)	(170	)	(415	)	>(100)
Operating expenses	(8,222	)	(9,383	)	1,161		12
Share of profit from associates and JVs	592		598		(6	)	(1	)
Profit before tax	6,213		4,755		1,458		31

Reported profit before tax

Reported profit before tax of $6.2bn in 1Q19 was $1.5bn or 31% higher than in 1Q18. This increase reflected higher revenue in RBWM due to balance sheet growth and wider margins in Retail Banking, and in CMB due to growth in Global Liquidity and Cash Management ('GLCM') and Credit and Lending ('C&L'). Revenue growth included the favourable effects of market impacts in insurance manufacturing, credit and funding valuation adjustments in GB&M and the non-recurrence of a 1Q18 adverse swap mark-to-market loss on a bond reclassification in Corporate Centre. Growth also included 1Q19 disposal gains in RBWM and CMB of $157m.

Operating expenses were $1.2bn lower, reflecting net favourable movements in significant items, notably as 1Q18 included a charge of $0.9bn for settlements and provisions in connection with legal and regulatory matters. This was partly offset by an increase in expenditure on investments to grow the business, including enhancements of digital capabilities. In addition, expected credit losses and other credit impairment charges ('ECL') increased, notably in CMB in the UK and Asia.

Excluding net favourable movements in significant items of $1.1bn and adverse foreign currency translation differences of $0.2bn, profit before tax increased by $0.6bn or 9%.

Reported revenue

Reported revenue of $14.4bn was $0.7bn or 5% higher than in 1Q18.

The increase in reported revenue included adverse foreign currency translation differences of $0.7bn, partly offset by a net favourable movement in significant items of $0.2bn.

Excluding foreign currency translation differences and significant items, revenue increased by $1.2bn or 9%.

Reported ECL

Reported ECL of $0.6bn were $0.4bn higher than in 1Q18, notably in CMB, reflecting charges in 1Q19, compared with net releases in 1Q18. In addition, there were lower net ECL releases in Corporate Centre in 1Q19.

The effect of foreign currency translation differences between the periods was minimal.

Reported operating expenses

Reported operating expenses of $8.2bn were $1.2bn or 12% lower than in 1Q18. This primarily reflected a favourable effect of foreign currency translation differences of $0.4bn and net favourable movements in significant items of $1.0bn, which included the non-recurrence of settlements and provisions in connection with legal and regulatory matters of $0.9bn in 1Q18. These favourable movements were partly offset by an increase in operating expenses from near- and medium-term investments to grow the business, together with higher performance-related pay.

Excluding significant items and foreign currency translation differences, operating expenses increased by $0.2bn or 3%.

Reported share of profit from associates and JVs

Reported income from associates of $0.6bn was broadly unchanged.

Group

1Q19 compared with 1Q18 - adjusted results

Movement in adjusted profit before tax compared with 1Q18
	Quarter ended
	31 Mar		31 Mar		Variance
	2019		2018		1Q19 vs. 1Q18
	$m		$m		$m		%
Revenue	14,406		13,196		1,210		9
ECL	(585	)	(152	)	(433	)	>(100)
Operating expenses	(8,063	)	(7,814	)	(249	)	(3	)
Share of profit from associates and JVs	592		570		22		4
Profit before tax	6,350		5,800		550		9

Adjusted profit before tax

On an adjusted basis, profit before tax of $6.4bn was $0.6bn or 9% higher than in 1Q18.

From 1 July 2018, Argentina was deemed a hyperinflationary economy for accounting purposes. The impact of applying IAS 29 'Financial Reporting in Hyperinflationary Economies' from 1 July 2018 and presenting in accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates' resulted in a $50m decrease in profit before tax in 1Q19. The effects of hyperinflation accounting in Argentina have not been deemed a significant item and are therefore included within adjusted results.

Adjusted revenue

Adjusted revenue of $14.4bn was $1.2bn or 9% higher than in 1Q18, reflecting continued growth momentum in RBWM and CMB, notably in Asia. Revenue increased in GB&M, while in GPB revenue fell. We also recorded a net favourable movement in revenue in Corporate Centre.

• In RBWM, revenue increased by $0.5bn or 10%, mainly in Retail Banking, reflecting growth in lending and deposit balances, primarily in the UK and Hong Kong, and wider margins resulting from interest rate rises. In Wealth Management, revenue growth was mainly due to favourable market impacts in 1Q19 of $181m in insurance manufacturing (1Q18: $40m adverse), partly offset by lower investment distribution revenue compared with a strong 1Q18.

• In CMB, revenue increased by $0.4bn or 11%, primarily in GLCM as we benefited from wider deposit margins, notably in Hong Kong and the UK, as well as growth in average balances in the UK. In addition, revenue increased in C&L due to balance sheet growth, partly offset by the effects of margin compression. Revenue growth in Global Trade and Receivables Finance ('GTRF') was due to improved margins and higher fees.

• In GB&M, revenue increased by $0.1bn or 3% and included a net favourable movement on credit and funding valuation adjustments. Revenue increases in GLCM and Securities Services were driven by the impact of higher interest rates and average balance growth. Revenue also increased in GTRF, primarily in MENA and Asia, as we grew average lending balances. In Global Banking, revenue fell as 1Q18 included gains on corporate lending restructuring, while in Global Markets, revenue was down due to reduced client activity, driven by market uncertainty, partly offset by a provision release of $106m in Equities.

• In GPB, revenue decreased by $17m or 4%, primarily in the US, reflecting the impact of our repositioning actions and lower investment revenue in Switzerland. This was partly offset by an increase in Asia from growth in deposit revenue and annuity fees, partly offset by lower brokerage and trading revenue.

• In Corporate Centre, we recorded a net favourable movement in revenue of $0.2bn. This primarily reflected higher revenue in Central Treasury, mainly as 1Q18 included a $177m loss arising from swap mark-to-market movements following a bond reclassification under IFRS 9 'Financial Instruments'. This was partly offset by the adverse effects of hyperinflation accounting in Argentina of $56m.

Adjusted ECL

Adjusted ECL of $0.6bn were $0.4bn higher, driven by a small number of individual corporate exposures, mainly in the UK. There was no material change in the quarter to allowances relating to economic uncertainty in the UK.

The ECL variance was driven by:

• CMB (up $0.3bn), mainly in HSBC UK, our UK ring-fenced bank, from charges related to a small number of customers, and an allowance to reflect current economic uncertainty in the UK. ECL were also higher in Asia, reflecting higher specific charges in various sectors in 1Q19 compared with net releases in 1Q18; and

• Corporate Centre (up $0.1bn) from lower net releases related to our legacy credit portfolio.

Adjusted ECL in RBWM, GB&M and GPB were broadly in line with charges in 1Q18.

In 1Q19, adjusted ECL as a percentage of average gross loans and advances to customers was 0.24%, compared with 0.07% at 1Q18.

Adjusted operating expenses

Adjusted operating expenses of $8.1bn were $0.2bn or 3% higher than in 1Q18. This included an increase in investments (up $0.1bn), notably from near- and medium-term investments to grow the business, mainly in RBWM and CMB, and continued investment in digital across all global businesses. In addition, performance-related pay increased by $0.1bn.

Adjusted share of profit from associates and JVs

Adjusted income from associates of $0.6bn was $22m or 4% higher than in 1Q18, mainly reflecting an increase in share of income from Bank of Communications Co., Limited ('BoCom').

Tax expense

The effective tax rate for 1Q19 of 21.0% was lower than 21.4% in 1Q18, as 1Q18 contained a non-deductible regulatory settlement. The impact of this was partly offset by the effect of changes in profit mix and adjustments in respect of prior periods.

First interim dividend for 2019

On 3 May 2019, the Board announced a first interim dividend for 2019 of $0.10 per ordinary share. Further details are set out at the end of this release.

Retail Banking and Wealth Management

1Q19 compared with 1Q18 - adjusted results

Management view of adjusted revenue
		Quarter ended
		31 Mar	31 Dec	31 Mar	Variance
		2019	2018	2018	1Q19 vs. 1Q18
	Footnotes	$m	$m	$m	$m		%
Retail Banking		3,870	3,944	3,494	376		11
- current accounts, savings and deposits		2,197	2,328	1,786	411		23
- personal lending		1,673	1,616	1,708	(35	)	(2	)
mortgages		433	418	551	(118	)	(21	)
credit cards		789	723	694	95		14
other personal lending	1	451	475	463	(12	)	(3	)
Wealth Management		1,907	1,129	1,768	139		8
- investment distribution	2	855	673	1,019	(164	)	(16	)
- life insurance manufacturing		793	207	479	314		66
- asset management		259	249	270	(11	)	(4	)
Other	3	194	62	181	13		7
Net operating income	4	5,971	5,135	5,443	528		10
RoTE excluding significant items and UK bank levy (annualised) (%)		22.1	-	23.1

For footnotes, see page 13.

Adjusted profit before tax of $2.2bn was $0.4bn or 19% higher than in 1Q18. This increase reflected a strong revenue performance in Retail Banking due to balance sheet growth and the impact of interest rates on margins. The increase also included favourable market impacts in life insurance manufacturing, as well as disposal gains in Argentina and Mexico. This was partly offset by higher operating expenses.

Adjusted revenue of $6.0bn was $0.5bn or 10% higher.

In Retail Banking, revenue of $3.9bn was up $0.4bn or 11%. The increase reflected deposit balance growth of $20bn or 3%, particularly in the UK and Hong Kong, and lending balance growth of $30bn or 9% compared with 1Q18, notably in mortgages in the UK and Hong Kong, together with improved deposit margins from higher interest rates.

In Wealth Management, revenue of $1.9bn was up $0.1bn or 8%, reflecting:

• higher life insurance manufacturing revenue (up $0.3bn or 66%), mostly from net favourable market impacts of $0.2bn (favourable movement of $181m in 1Q19, compared with an adverse movement of $40m in 1Q18), and the growth in value of new business written (up 23% to $366m).

This was partly offset by:

• lower investment distribution revenue (down $0.2bn or 16%), as exceptional market conditions in Asia in 1Q18 did not recur in 1Q19.

Revenue in 1Q19 also included disposal gains in Argentina and Mexico of $133m.

Adjusted ECL were $0.3bn, up 4% from 1Q18, driven by growth in unsecured lending, although credit quality remained stable across the loan portfolio at 33 basis points of average gross loans and advances to customers.

Adjusted operating expenses of $3.5bn were $0.2bn or 5% higher. These were mainly driven by increased staff costs and inflation, particularly in Asia, and the impact of strategic investment in growth initiatives. During 1Q19, we added additional staff to support business growth initiatives, and continued to enhance our technology and digital capabilities. We also continued to invest in regulatory and compliance programmes.

Commercial Banking

1Q19 compared with 1Q18 - adjusted results

Management view of adjusted revenue
		Quarter ended
		31 Mar	31 Dec	31 Mar	Variance
		2019	2018	2018	1Q19 vs. 1Q18
	Footnotes	$m	$m	$m	$m	%
Global Trade and Receivables Finance		473	457	448	25	6
Credit and Lending		1,360	1,339	1,262	98	8
Global Liquidity and Cash Management		1,508	1,534	1,292	216	17
Markets products, Insurance and Investments, and Other	5	580	385	533	47	9
Net operating income	4	3,921	3,715	3,535	386	11
RoTE excluding significant items and UK bank levy (annualised) (%)		13.9	-	15.5

For footnotes, see page 13.

Adjusted profit before tax of $2.0bn was $14m or 1% lower than in 1Q18. Broad-based revenue growth reflected favourable performance in GLCM, C&L and GTRF. This increase was more than offset by an ECL charge in 1Q19 compared with a net release in 1Q18, notably in the UK, and higher operating expenses from increased investment.

Adjusted revenue of $3.9bn was $0.4bn or 11% higher, with growth in all major products and in all regions.

• In GLCM, revenue was $0.2bn or 17% higher, with growth in all regions. The increase was mainly in Hong Kong from wider margins, and in the UK reflecting wider margins and average balance sheet growth. In C&L, revenue growth of $0.1bn or 8% reflected balance sheet growth in most countries, partly offset by the effects of margin compression. In addition, revenue increased in GTRF by $25m or 6%, reflecting higher margins in Asia, higher balances in the UK and fee growth in MENA. Revenue was also higher in Other products, notably from a disposal gain of $24m in Latin America.

• CMB revenue growth continued to be broadly based, with increases in our largest markets - Hong Kong (8%) and the UK (6%), and also in the rest of Asia and Europe, MENA, Latin America and North America.

Adjusted ECL were $0.2bn compared with net releases of $0.1bn in 1Q18. The increase was driven by higher ECL in HSBC UK relating to a small number of clients and an increase in allowances reflecting current economic uncertainty in the UK. ECL were also higher in Asia from higher specific charges in Hong Kong and mainland China across various sectors.

Adjusted operating expenses of $1.7bn were $0.1bn or 5% higher, reflecting increased investment-related spend and higher staff costs. This includes a continued increase in investment in our digital capabilities (up $0.1bn), enabling us to provide simpler and faster customer experience.

Global Banking and Markets

1Q19 compared with 1Q18 - adjusted results

Management view of adjusted revenue
		Quarter ended
		31 Mar		31 Dec		31 Mar		Variance
		2019		2018		2018		1Q19 vs. 1Q18
	Footnotes	$m		$m		$m		$m		%
Global Markets		1,741		1,108		1,833		(92	)	(5	)
- FICC		1,364		891		1,422		(58	)	(4	)
Foreign Exchange		698		607		718		(20	)	(3	)
Rates		490		210		455		35		8
Credit		176		74		249		(73	)	(29	)
- Equities		377		217		411		(34	)	(8	)
Securities Services		478		488		463		15		3
Global Banking		935		943		1,026		(91	)	(9	)
Global Liquidity and Cash Management		687		684		610		77		13
Global Trade and Receivables Finance		211		199		189		22		12
Principal Investments		84		(61	)	70		14		20
Credit and funding valuation adjustments	6	47		(179	)	(61	)	108		>100
Other	7	(115	)	(99	)	(176	)	61		35
Net operating income	4	4,068		3,083		3,954		114		3
RoTE excluding significant items and UK bank levy (annualised) (%)		11.3		-		11.9

For footnotes, see page 13.

Adjusted profit before tax of $1.6bn was broadly unchanged from 1Q18 as increased revenue was offset by continued investment in the business. The strength of our diversified product offering delivered a stable performance, despite economic uncertainty that resulted in lower primary issuance and market activity.

Adjusted revenue of $4.1bn was $0.1bn or 3% higher, and included a net favourable movement of $0.1bn on credit and funding valuation adjustments. 1Q19 also included a provision release in Equities, which was broadly equal to 1Q18 restructuring gains in Global Banking.

• We grew revenue across our transaction banking products. GLCM rose by $0.1bn or 13% and Securities Services by $15m or 3%, driven by the impact of higher interest rates and increased average balances. GTRF revenue (up $22m or 12%) was higher, primarily in MENA and Asia, as we grew average lending balances while reducing risk-weighted assets.

• Global Banking revenue fell $0.1bn or 9%, reflecting 1Q18 gains on corporate lending restructuring, the impact of tightening credit spreads on portfolio hedges and lower event-driven activity.

• Global Markets revenue decreased by $0.1bn or 5%, due to reduced client activity, particularly in Credit and Equities, partly offset by a provision release of $106m in Equities.

Adjusted ECL were $40m, up $23m. The charge in 1Q19 largely related to a single corporate exposure in the UK.

Adjusted operating expenses of $2.4bn were $0.1bn or 4% higher, driven by investment in people to support growth across our businesses, and in our Chinese securities joint venture HSBC Qianhai, as well as higher performance-related pay.

Global Private Banking

1Q19 compared with 1Q18 - adjusted results

Management view of adjusted revenue
		Quarter ended
		31 Mar	31 Dec	31 Mar	Variance
		2019	2018	2018	1Q19 vs. 1Q18
	Footnotes	$m	$m	$m	$m		%
Investment revenue		184	162	204	(20	)	(10	)
Lending		97	93	100	(3	)	(3	)
Deposit		121	126	120	1		1
Other		48	44	43	5		12
Net operating income	4	450	425	467	(17	)	(4	)
RoTE excluding significant items and UK bank levy (annualised) (%)		10.9	-	12.3

For footnotes, see page 13.

Adjusted profit before tax of $98m fell $13m or 12% compared with 1Q18, largely due to the impact of our repositioning actions in the US, partly offset by lower operating expenses, despite continued investment in growth.

Adjusted revenue of $450m decreased by $17m or 4%, mainly in the US following repositioning actions, and lower revenue in Switzerland. This was partly offset by revenue growth in Asia.

Investment revenue was $20m or 10% lower, mainly in Switzerland and Asia from lower client activity, partly offset by higher annuity fees in Asia. Deposit revenue was broadly unchanged from 1Q18 as growth in Asia from wider margins and balance growth was offset by lower revenue in the US following the client exits mentioned above, together with margin compression.

In 1Q19, we attracted $10bn of net new money inflows, mainly in Asia and Europe.

Adjusted ECL were $2m, mainly in the UK. This compared with a net release of $3m in 1Q18, mainly in the US.

Adjusted operating expenses of $350m were $9m or 3% lower. This was mainly due to the partial release of a provision associated with the wind-down of our operations in Monaco. This reduction was partly offset by an increase in Asia, driven by investments to support business growth.

Corporate Centre⁸

1Q19 compared with 1Q18 - adjusted results

Management view of adjusted revenue
		Quarter ended
		31 Mar		31 Dec		31 Mar		Variance
		2019		2018		2018		1Q19 vs. 1Q18
	Footnotes	$m		$m		$m		$m		%
Central Treasury	9	326		304		(21	)	347		>100
Legacy portfolios		(71	)	(12	)	4		(75	)	>(100)
Other	10	(259	)	(9	)	(186	)	(73	)	(39	)
Net operating income	4	(4	)	283		(203	)	199		98
RoTE excluding significant items and UK bank levy (annualised) (%)		(6.7	)	-		(2.5	)

For footnotes, see page 13.

Adjusted profit before tax of $0.4bn was $0.2bn higher than in 1Q18.

Adjusted negative revenue of $4m compared with adjusted negative revenue of $0.2bn in 1Q18. This reflected higher revenue in
Central Treasury, partly offset by a revenue reduction in legacy portfolios and Other.

In Central Treasury, revenue of $326m compared with negative revenue of $21m in 1Q18 and included:

• the non-recurrence of a $177m loss arising from adverse swap mark-to-market movements following a bond reclassification under IFRS 9 'Financial Instruments' in 1Q18;

• favourable fair value movements of $50m in 1Q19, compared with adverse movements of $64m in 1Q18, relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives; and

• higher revenue in Balance Sheet Management ('BSM') (up $53m), primarily driven by the non-recurrence of portfolio restructuring losses in 1Q18 related to the establishment of HSBC UK.

Lower revenue from legacy portfolios (down $0.1bn) reflected losses on portfolio disposals and funding fair value adjustments.

Other income decreased by $0.1bn, mainly due to the adverse effects of hyperinflation accounting in Argentina, and also due to a change in the allocation of liquidity costs in anticipation of a change in the regulatory environment relating to the net stable funding ratio.

A net release of adjusted ECL of $6m primarily related to our legacy portfolios. This compared with a net release of $84m in 1Q18.

Adjusted operating expenses of $0.2bn decreased by $0.1bn or 30%, mainly as 1Q18 included a $41m charge in relation to the 2017 UK bank levy. In addition, costs relating to our legacy portfolios reduced compared with 1Q18.

Adjusted income from associates of $0.6bn increased by $12m or 2%, driven by higher income from BoCom.

Group

1Q19 compared with 4Q18 - reported results

Movement in reported profit before tax compared with 4Q18
	Quarter ended
	31 Mar		31 Dec		Variance
	2019		2018		1Q19 vs. 4Q18
	$m		$m		$m	%
Revenue	14,428		12,695		1,733	14
ECL	(585	)	(853	)	268	31
Operating expenses	(8,222	)	(9,144	)	922	10
Share of profit from associates and JVs	592		558		34	6
Profit before tax	6,213		3,256		2,957	91

Reported profit before tax

Reported profit before tax of $6.2bn in 1Q19 was $3.0bn or 91% higher than in 4Q18, reflecting higher revenue and lower operating expenses, primarily as 4Q18 included the UK bank levy charge. ECL were also lower, as 4Q18 included allowances relating to the economic uncertainty in the UK.

The effect of foreign currency translation differences and net movements in significant items between the periods was minimal.

Reported revenue

Reported revenue of $14.4bn was $1.7bn or 14% higher, which primarily reflected revenue increases in Global Markets in GB&M, and Wealth Management in RBWM. The increase in reported revenue included favourable foreign currency translation differences of $0.1bn, broadly offset by a net adverse movement in significant items of $0.1bn.

Excluding significant items and currency translation differences, revenue increased by $1.8bn or 14%.

Reported ECL

Reported ECL of $0.6bn were $0.3bn lower than in 4Q18, primarily driven by reductions in CMB, and to a lesser extent in RBWM.

The effect of foreign currency translation differences between the periods was minimal.

Reported operating expenses

Reported operating expenses of $8.2bn were $0.9bn or 10% lower than in 4Q18, primarily due to the UK bank levy charge of $0.9bn recorded in 4Q18. Net favourable movements in significant items of $0.1bn were broadly offset by an adverse effect of foreign currency translation differences of $0.1bn.

Significant items included:

• the non-recurrence of a provision in relation to past service costs of guaranteed minimum pension benefits equalisation of $0.2bn in 4Q18.

This was partly offset by:

• customer redress programme costs of $56m, compared with a net release of $16m in 4Q18.

Excluding significant items and foreign currency translation differences, operating expenses decreased by $0.9bn or 10%.

Reported share of profit from associates and JVs

Reported income from associates of $0.6bn was $34m or 6% higher than in 4Q18, primarily reflecting an increase in income from the Saudi British Bank ('SABB').

Excluding favourable foreign currency translation differences of $13m, income from associates increased by $21m.

Group

1Q19 compared with 4Q18 - adjusted results

Movement in adjusted profit before tax compared with 4Q18
	Quarter ended
	31 Mar		31 Dec		Variance
	2019		2018		1Q19 vs. 4Q18
	$m		$m		$m	%
Revenue	14,406		12,641		1,765	14
ECL	(585	)	(863	)	278	32
Operating expenses	(8,063	)	(8,934	)	871	10
Share of profit from associates and JVs	592		571		21	4
Profit before tax	6,350		3,415		2,935	86

Adjusted profit before tax

On an adjusted basis, profit before tax of $6.4bn was $2.9bn or 86% higher than in 4Q18, reflecting revenue increases mainly in GB&M and RBWM. Operating expenses reduced, primarily as 4Q18 included the UK bank levy charge, and ECL were also lower.

The effect of hyperinflation accounting in Argentina reduced adjusted profit before tax by $35m.

Adjusted revenue

Adjusted revenue of $14.4bn increased by $1.8bn or 14% compared with 4Q18.

• In GB&M, revenue was $1.0bn or 32% higher, mainly in Global Markets due to a seasonal increase in client activity at the start of the calendar year compared with subdued markets activity in 4Q18. The increase also included a net favourable movement on credit and funding valuation adjustments.

• In RBWM, revenue increased by $0.8bn or 16%, driven by growth in Wealth Management, notably in insurance manufacturing revenue following a net favourable movement in market impacts. Investment distribution revenue also rose, largely due to a seasonal increase in market activity. In Retail Banking, growth in deposit and loan balances was more than offset by margin compression.

• In CMB, revenue increased by $0.2bn or 6%, driven by higher insurance income and Global Markets product revenue in Asia. In addition, higher revenue reflected favourable revaluation movements on an equity investment in the UK and a disposal gain in
Latin America. Revenue growth in GTRF and C&L was broadly offset by lower revenue in GLCM.

These increases were partly offset:

• In Corporate Centre, revenue fell by $0.3bn. This included the adverse effects of hyperinflation accounting in Argentina of $129m and the adverse effect of a change in accounting treatment following the implementation of IFRS 16 'Leases' on 1 January 2019. Revenue from our legacy portfolios also decreased, mainly driven by losses on portfolio disposals.

Adjusted ECL

Adjusted ECL of $0.6bn were $0.3bn lower, as 4Q18 included higher allowances relating to economic uncertainty in the UK, as well as charges relating to a small number of CMB customers in Asia.

Adjusted operating expenses

Adjusted operating expenses of $8.1bn were $0.9bn or 10% lower, primarily due to the UK bank levy charge of $0.9bn recorded in 4Q18. Excluding this charge, adjusted operating expenses increased by $0.1bn or 1%, mainly reflecting higher performance-related pay
(up $0.2bn) and growth in transaction volumes. These increases were partly offset by a reduction in investments of $0.2bn.

The number of employees expressed in full-time equivalent staff ('FTEs') at 31 March 2019 was 238,359, an increase of 3,141 from
31 December 2018. This was primarily driven by investments in business growth programmes across RBWM and CMB. The number of contractors as at 31 March 2019 was 10,278, a decrease of 576 from 31 December 2018.

The effect of hyperinflation accounting in Argentina reduced adjusted operating expenses by $81m.

Adjusted share of profit from associates and JVs

Adjusted share of income from associates of $0.6bn was $21m or 4% higher than in 4Q18, reflecting an increase in share of income from SABB.

Balance sheet - 31 March 2019 compared with 31 December 2018

At 31 March 2019, our total assets of $2.7tn were $100.9bn higher on a reported basis. On a constant currency basis, our total assets were $86.6bn higher, reflecting targeted lending growth, notably in Asia.

Loans and advances to customers as a percentage of customer accounts were 74%, up from 72%.

Loans and advances to customers

Reported loans and advances to customers grew by $23.6bn or 2%. This included favourable effects of foreign currency translation differences of $5.9bn. On a constant currency basis, customer lending increased by $17.7bn or 2%.

Customer lending growth was primarily in Asia (up $10.1bn). This increase was notably in GPB (up $3.2bn), mainly in Hong Kong
(up $2.5bn) driven by a small number of marketable securities-backed lending transactions. Customer lending also increased in CMB
(up $2.9bn) and GB&M (up $1.3bn), reflecting higher term lending from our continued strategic focus on growth throughout Asia.
In RBWM, customer lending increased by $2.7bn, primarily in Hong Kong (up $1.7bn), maintaining a leading position in mortgages and personal lending, and in Australia (up $0.8bn), as we continued to increase mortgage lending.

In Europe, customer lending increased by $6.7bn, notably in HSBC UK (up $3.5bn) from growth in mortgage balances (up $1.6bn), due to our focus on broker-originated mortgages. We increased lending to our corporate clients within HSBC UK mainly through term lending, primarily to large corporates and commercial real estate clients. The remaining increase in Europe primarily reflected growth in France in GB&M.

Customer accounts

Customer accounts fell by $6.1bn on a reported basis, including favourable foreign currency translation differences of $7.6bn. On a constant currency basis, customer accounts fell by $13.7bn or 1%.

In Asia, customer accounts fell by $8.8bn, primarily in CMB (down $9.3bn) and GB&M (down $4.3bn). These reductions were notably in Hong Kong and mainland China, primarily in term deposits and savings accounts from ongoing remediation, seasonal outflows and as customers redeployed their surplus funds. This was partly offset by growth in RBWM (up $4.7bn), notably in Hong Kong and Australia, mainly in savings accounts, from higher customer inflows due to competitive rates.

Customer accounts also fell in North America (down $4.2bn), primarily in GB&M (down $3.6bn) and in CMB (down $1.9bn), reflecting a decrease in non-interest bearing demand deposits and savings accounts, notably due to seasonal reductions. These reductions were partly offset by customer accounts growth in RBWM (up $2.0bn), reflecting higher savings inflows arising from promotional rates and growth initiatives.

Risk-weighted assets

Risk-weighted assets ('RWAs') totalled $879.5bn at 31 March 2019, a $14.2bn increase during 1Q19 that included an increase of $3.2bn due to foreign currency translation differences. The $11.0bn increase (excluding foreign currency translation differences) was primarily due to:

• lending and transactional growth across CMB, GB&M and RBWM, which increased RWAs by $10.6bn;

• the implementation of IFRS 16 'Leases', which resulted in the recognition of right of use assets totalling $4.5bn and a corresponding rise in RWAs; and

• a $1.7bn increase in RWAs as a result of an increase in the value of significant holdings in Corporate Centre.

These movements were partly offset by decreases due to management initiatives of $4.5bn, market risk reductions of $0.7bn,
model updates of $0.3bn and improved asset quality of $0.2bn.

Net interest margin

	Quarter ended				Year ended
	31 Mar		31 Mar		31 Dec
	2019		2018		2018
	$m		$m		$m
Net interest income	7,468		7,456		30,489
Average interest-earning assets	1,902,912		1,812,194		1,839,346
	%		%		%
Gross interest yield	2.89		2.55		2.70
Less: cost of funds	(1.53	)	(1.02	)	(1.21	)
Net interest spread	1.36		1.53		1.49
Net interest margin	1.59		1.67		1.66

The Group's net interest margin ('NIM') in 1Q19 was 1.59%, which was 7 basis points ('bps') lower compared with the year ended 2018. This was driven by a 32bps increase in the cost of funds, notably from the increased cost of customer accounts in Asia, partly offset by a 19bps increase in gross yields, driven mainly by higher yields on surplus liquidity in most regions and rising lending yields. Hyperinflation accounting in Argentina had a 1bp adverse impact in 2018, with a corresponding favourable impact in 1Q19.

The cost of funds rose by 32bps from the increased cost of customer accounts. This was driven by Asia and reflected the repricing of deposits in Hong Kong as well as a change in funding mix, with a 4bps adverse impact on Group NIM. The cost of Group debt also rose, primarily relating to the higher cost of issuances of senior debt by HSBC Holdings plc, with a 3bps adverse impact on Group NIM.

Gross yields benefited from loan book growth, in particular term lending and mortgages in Asia. Gross yields on surplus liquidity also increased in most regions, mainly on Treasury bills and debt securities. These benefits were partly offset by the adverse effect of the implementation of IFRS 16 in 1Q19 of 1bp.

Compared with 1Q18, NIM dropped by 8bps, reflecting higher cost of funds, notably from the increased cost of customer accounts in Asia. This was partly offset by higher gross yields, driven mainly by rising lending yields and increased yields on surplus liquidity.

Notes

• Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2019 and the quarter ended
31 March 2018. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2019 and the corresponding balances at 31 December 2018.

• The financial information on which this Earnings Release is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with HSBC's significant accounting policies as described on pages 224 to 237 of our Annual Report and Accounts 2018.

• The Board has adopted a policy of paying quarterly interim dividends on ordinary shares. Under this policy, it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.

Footnotes to financial performance commentary
1	'Other personal lending' includes personal non-residential closed-end loans and personal overdrafts.
2	'Investment distribution' includes Investments, which comprises mutual funds (HSBC manufactured and third party), structured products and securities trading, and Wealth Insurance distribution, consisting of HSBC manufactured and third-party life, pension and investment insurance products.
3	'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.
4	'Net operating income' means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as 'Revenue').
5	'Markets products, Insurance and Investments and Other' includes revenue from Foreign Exchange, insurance manufacturing and distribution, interest rate management and Global Banking products.
6	From 1 January 2018, the qualifying components according to IFRS 7 'Financial Instruments: Disclosures' of fair value movements relating to changes in credit spreads on structured liabilities were recorded through other comprehensive income. The residual movements remain in credit and funding valuation adjustments, and comparatives have not been restated.
7	'Other' in GB&M includes allocated funding costs and gains resulting from business disposals. Within the management view of total operating income, notional tax credits are allocated to the businesses to reflect the economic benefit generated by certain activities that is not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included within 'Other'.
8	Corporate Centre comprises Central Treasury, including Balance Sheet Management ('BSM'), our legacy businesses, interests in our associates and joint ventures, central stewardship costs and the UK bank levy.
9	Central Treasury includes revenue relating to BSM of $623m (4Q18: $637m; 1Q18: $570m), interest expense of $317m (4Q18: $340m; 1Q18: $299m) and favourable valuation differences on issued long-term debt and associated swaps of $50m (4Q18: favourable movements of $67m; 1Q18: adverse movements of $241m). Revenue relating to BSM includes other internal allocations to reflect the economic benefit generated by certain activities, which is not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included in other Central Treasury.
10	Other miscellaneous items in Corporate Centre include internal allocations relating to legacy credit.

Cautionary statement regarding forward-looking statements

This Earnings Release contains certain forward-looking statements with respect to HSBC's financial condition, results of operations, capital position and business.

Statements that are not historical facts, including statements about HSBC's beliefs, targets and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'targets', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.

Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.

Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement.

These include, but are not limited to:

• changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates, including the accounting impact resulting from financial reporting in respect of hyperinflationary economies; volatility in equity markets; lack of liquidity in wholesale funding markets; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks' policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; consumer perception as to the continuing availability of credit and price competition in the market segments we serve; and deviations from the market and economic assumptions that form the basis for our ECL measurements;

• changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the conduct of business of financial institutions in serving their retail customers, corporate clients and counterparties; the standards of market conduct; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; and

• factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques). Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models we use; our success in addressing operational, legal and regulatory, and litigation challenges; and other risks and uncertainties we identify in the 'top and emerging risks' on pages 69 to 73 of the Annual Report and Accounts 2018.

For further information contact:

Investor Relations	Media Relations
UK - Richard O'Connor	UK - Gillian James
Tel: +44 (0) 20 7991 6590	Tel: +44 (0) 20 7992 0516

Hong Kong - Hugh Pye	Hong Kong - Patrick Humphris
Tel: +852 2822 4908	Tel: +852 2822 2052

Summary consolidated income statement

	Quarter ended
	31 Mar		31 Dec		31 Mar
	2019		2018		2018
	$m		$m		$m
Net interest income	7,468		7,709		7,456
Net fee income	3,026		2,827		3,507
Net income from financial instruments held for trading or managed on a fair value basis	2,881		2,046		2,384
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	1,710		(1,444	)	(155	)
Changes in fair value of long-term debt and related derivatives	11		32		10
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	270		154		117
Gains less losses from financial investments	99		57		101
Dividend income	8		19		9
Net insurance premium income	3,296		2,171		3,078
Other operating income	850		372		41
Total operating income	19,619		13,943		16,548
Net insurance claims and benefits paid and movement in liabilities to policyholders	(5,191	)	(1,248	)	(2,838	)
Net operating income before change in expected credit losses and other credit impairment charges	14,428		12,695		13,710
Change in expected credit losses and other credit impairment charges	(585	)	(853	)	(170	)
Net operating income	13,843		11,842		13,540
Total operating expenses	(8,222	)	(9,144	)	(9,383	)
Operating profit	5,621		2,698		4,157
Share of profit in associates and joint ventures	592		558		598
Profit before tax	6,213		3,256		4,755
Tax expense	(1,303	)	(1,163	)	(1,017	)
Profit after tax	4,910		2,093		3,738
Attributable to:
- ordinary shareholders of the parent company	4,134		1,537		3,086
- preference shareholders of the parent company	22		23		22
- other equity holders	410		234		288
- non-controlling interests	344		299		342
Profit after tax	4,910		2,093		3,738
	$		$		$
Basic earnings per share	0.21		0.07		0.15
Diluted earnings per share	0.21		0.07		0.15
Dividend per ordinary share (in respect of the period)	0.10		0.21		0.10
	%		%		%
Return on average ordinary shareholders' equity (annualised)	10.2		3.8		7.5
Return on average tangible equity (annualised)	10.6		3.9		8.4
Cost efficiency ratio	57.0		72.0		68.4

Summary consolidated balance sheet

	At
	31 Mar	31 Dec
	2019	2018
	$m	$m
Assets
Cash and balances at central banks	172,731	162,843
Trading assets	264,414	238,130
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	39,324	41,111
Derivatives	213,093	207,825
Loans and advances to banks	71,581	72,167
Loans and advances to customers	1,005,279	981,696
Reverse repurchase agreements - non-trading	227,029	242,804
Financial investments	409,780	407,433
Other assets	255,765	204,115
Total assets	2,658,996	2,558,124
Liabilities and Equity
Liabilities
Deposits by banks	65,844	56,331
Customer accounts	1,356,511	1,362,643
Repurchase agreements - non-trading	166,224	165,884
Trading liabilities	92,290	84,431
Financial liabilities designated at fair value	159,726	148,505
Derivatives	210,978	205,835
Debt securities in issue	99,038	85,342
Liabilities under insurance contracts	90,860	87,330
Other liabilities	221,197	167,574
Total liabilities	2,462,668	2,363,875
Equity
Total shareholders' equity	188,362	186,253
Non-controlling interests	7,966	7,996
Total equity	196,328	194,249
Total liabilities and equity	2,658,996	2,558,124

Credit risk

A summary of our current policies and practices for the management of credit risk is set out in 'Credit risk management' on page 79 of the Annual Report and Accounts 2018.

Summary of credit risk

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
		At 31 Mar 2019			At 31 Dec 2018
		Gross carrying/nominal amount	Allowance for ECL¹		Gross carrying/nominal amount	Allowance for ECL¹
	Footnotes	$m	$m		$m	$m
Loans and advances to customers at amortised cost		1,013,829	(8,550	)	990,321	(8,625	)
- personal		404,797	(3,025	)	394,337	(2,947	)
- corporate and commercial		542,898	(5,372	)	534,577	(5,552	)
- non-bank financial institutions		66,134	(153	)	61,407	(126	)
Loans and advances to banks at amortised cost		71,594	(13	)	72,180	(13	)
Other financial assets measured at amortised cost		619,969	(85	)	582,917	(55	)
- cash and balances at central banks		172,734	(3	)	162,845	(2	)
- items in the course of collection from other banks		5,808	-		5,787	-
- Hong Kong Government certificates of indebtedness		36,672	-		35,859	-
- reverse repurchase agreements - non-trading		227,029	-		242,804	-
- financial investments		63,628	(21	)	62,684	(18	)
- prepayments, accrued income and other assets	2	114,098	(61	)	72,938	(35	)
Total gross carrying amount on-balance sheet		1,705,392	(8,648	)	1,645,418	(8,693	)
Loans and other credit-related commitments		617,164	(341	)	592,008	(325	)
- personal		213,322	(12	)	207,351	(13	)
- corporate and commercial		268,763	(321	)	271,022	(305	)
- financial		135,079	(8	)	113,635	(7	)
Financial guarantees		22,577	(56	)	23,518	(93	)
- personal		920	(1	)	927	(1	)
- corporate and commercial		16,391	(50	)	17,355	(85	)
- financial		5,266	(5	)	5,236	(7	)
Total nominal amount off-balance sheet	3	639,741	(397	)	615,526	(418	)
		2,345,133	(9,045	)	2,260,944	(9,111	)

		Fair value	Memorandum allowance for ECL⁴		Fair value	Memorandum allowance for ECL⁴
		$m	$m		$m	$m
Debt instruments measured at fair value through other comprehensive income ('FVOCI')		344,244	(80	)	343,110	(84	)

1 The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision.

2 Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. 'Prepayments, accrued income and other assets' as presented within the summary consolidated balance sheet on page 16 includes both financial and non-financial assets.

3 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

4 Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in 'Change in expected credit losses and other credit impairment charges' in the income statement.

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 March 2019
	Gross carrying/nominal amount¹					Allowance for ECL										ECL coverage %
	Stage 1	Stage 2	Stage 3	POCI²	Total	Stage 1		Stage 2		Stage 3		POCI²		Total		Stage 1	Stage 2	Stage 3	POCI²	Total
	$m	$m	$m	$m	$m	$m		$m		$m		$m		$m		%	%	%	%	%
Loans and advances to customers at amortised cost	934,547	65,931	13,016	335	1,013,829	(1,253	)	(2,231	)	(4,861	)	(205	)	(8,550	)	0.1	3.4	37.3	61.2	0.8
- personal	384,886	15,252	4,659	-	404,797	(540	)	(1,320	)	(1,165	)	-		(3,025	)	0.1	8.7	25.0	-	0.7
- corporate and commercial	485,914	48,496	8,154	334	542,898	(660	)	(867	)	(3,641	)	(204	)	(5,372	)	0.1	1.8	44.7	61.1	1.0
- non-bank financial institutions	63,747	2,183	203	1	66,134	(53	)	(44	)	(55	)	(1	)	(153	)	0.1	2.0	27.1	100.0	0.2
Loans and advances to banks at amortised cost	71,015	579	-	-	71,594	(11	)	(2	)	-		-		(13	)	-	0.3	-	-	-
Other financial assets measured at amortised cost	617,857	2,014	97	1	619,969	(39	)	(8	)	(38	)	-		(85	)	-	0.4	39.2	-	-
Loan and other credit-related commitments	593,485	22,843	832	4	617,164	(144	)	(126	)	(71	)	-		(341	)	-	0.6	8.5	-	0.1
- personal	210,765	2,096	461	-	213,322	(11	)	(1	)	-		-		(12	)	-	-	-	-	-
- corporate and commercial	248,743	19,663	353	4	268,763	(126	)	(124	)	(71	)	-		(321	)	0.1	0.6	20.1	-	0.1
- financial	133,977	1,084	18	-	135,079	(7	)	(1	)	-		-		(8	)	-	0.1	-	-	-
Financial guarantees	19,919	2,448	207	3	22,577	(19	)	(26	)	(11	)	-		(56	)	0.1	1.1	5.3	-	0.2
- personal	917	2	1	-	920	(1	)	-		-		-		(1	)	0.1	-	-	-	0.1
- corporate and commercial	14,136	2,050	202	3	16,391	(17	)	(23	)	(10	)	-		(50	)	0.1	1.1	5.0	-	0.3
- financial	4,866	396	4	-	5,266	(1	)	(3	)	(1	)	-		(5	)	-	0.8	25.0	-	0.1
At 31 Mar 2019	2,236,823	93,815	14,152	343	2,345,133	(1,466	)	(2,393	)	(4,981	)	(205	)	(9,045	)	0.1	2.6	35.2	59.8	0.4

Stage 2 days past due analysis at 31 March 2019
	Gross carrying/nominal amount¹			Allowance for ECL						ECL coverage %
		Of which:	Of which:			Of which:		Of which:			Of which:	Of which:
	Stage 2	1 to 29 DPD³	30 and > DPD³	Stage 2		1 to 29 DPD³		30 and > DPD³		Stage 2	1 to 29 DPD³	30 and > DPD³
	$m	$m	$m	$m		$m		$m		%	%	%
Loans and advances to customers at amortised cost	65,931	2,475	1,582	(2,231	)	(213	)	(230	)	3.4	8.6	14.5
- personal	15,252	1,836	1,336	(1,320	)	(191	)	(208	)	8.7	10.4	15.6
- corporate and commercial	48,496	634	246	(867	)	(22	)	(22	)	1.8	3.5	8.9
- non-bank financial institutions	2,183	5	-	(44	)	-		-		2.0	-	-
Loans and advances to banks at amortised cost	579	-	-	(2	)	-		-		0.3	-	-
Other financial assets measured at amortised cost	2,014	16	38	(8	)	-		-		0.4	-	-

For footnotes, see page 19.

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2018
	Gross carrying/nominal amount¹					Allowance for ECL										ECL coverage %
	Stage 1	Stage 2	Stage 3	POCI²	Total	Stage 1		Stage 2		Stage 3		POCI²		Total		Stage 1	Stage 2	Stage 3	POCI²	Total
	$m	$m	$m	$m	$m	$m		$m		$m		$m		$m		%	%	%	%	%
Loans and advances to customers at amortised cost	915,188	61,786	13,023	324	990,321	(1,276	)	(2,108	)	(5,047	)	(194	)	(8,625	)	0.1	3.4	38.8	59.9	0.9
- personal	374,681	15,075	4,581	-	394,337	(534	)	(1,265	)	(1,148	)	-		(2,947	)	0.1	8.4	25.1	-	0.7
- corporate and commercial	481,262	44,779	8,212	324	534,577	(698	)	(812	)	(3,848	)	(194	)	(5,552	)	0.1	1.8	46.9	59.9	1.0
- non-bank financial institutions	59,245	1,932	230	-	61,407	(44	)	(31	)	(51	)	-		(126	)	0.1	1.6	22.2	-	0.2
Loans and advances to banks at amortised cost	71,873	307	-	-	72,180	(11	)	(2	)	-		-		(13	)	-	0.7	-	-	-
Other financial assets measured at amortised cost	581,118	1,673	126	-	582,917	(27	)	(6	)	(22	)	-		(55	)	-	0.4	17.5	-	-
Loan and other credit-related commitments	569,250	21,839	912	7	592,008	(143	)	(139	)	(43	)	-		(325	)	-	0.6	4.7	-	0.1
- personal	205,183	1,760	408	-	207,351	(12	)	(1	)	-		-		(13	)	-	0.1	-	-	-
- corporate and commercial	251,478	19,034	503	7	271,022	(126	)	(136	)	(43	)	-		(305	)	0.1	0.7	8.5	-	0.1
- financial	112,589	1,045	1	-	113,635	(5	)	(2	)	-		-		(7	)	-	0.2	-	-	-
Financial guarantees	20,884	2,334	297	3	23,518	(19	)	(29	)	(45	)	-		(93	)	0.1	1.2	15.2	-	0.4
- personal	920	3	4	-	927	(1	)	-		-		-		(1	)	0.1	-	-	-	0.1
- corporate and commercial	15,011	2,053	288	3	17,355	(16	)	(25	)	(44	)	-		(85	)	0.1	1.2	15.3	-	0.5
- financial	4,953	278	5	-	5,236	(2	)	(4	)	(1	)	-		(7	)	-	1.4	20.0	-	0.1
At 31 Dec 2018	2,158,313	87,939	14,358	334	2,260,944	(1,476	)	(2,284	)	(5,157	)	(194	)	(9,111	)	0.1	2.6	35.9	58.1	0.4

Stage 2 days past due analysis at 31 December 2018
	Gross carrying/nominal amount¹			Allowance for ECL						ECL coverage %
		Of which:	Of which:			Of which:		Of which:			Of which:	Of which:
	Stage 2	1 to 29 DPD³	30 and > DPD³	Stage 2		1 to 29 DPD³		30 and > DPD³		Stage 2	1 to 29 DPD³	30 and > DPD³
	$m	$m	$m	$m		$m		$m		%	%	%
Loans and advances to customers at amortised cost	61,786	2,554	1,914	(2,108	)	(204	)	(254	)	3.4	8.0	13.3
- personal	15,075	1,807	1,383	(1,265	)	(165	)	(220	)	8.4	9.1	15.9
- corporate and commercial	44,779	737	485	(812	)	(39	)	(34	)	1.8	5.3	7.0
- non-bank financial institutions	1,932	10	46	(31	)	-		-		1.6	-	-
Loans and advances to banks at amortised cost	307	-	-	(2	)	-		-		0.7	-	-
Other financial assets measured at amortised cost	1,673	10	26	(6	)	-		-		0.4	-	-

1 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

2 Purchased or originated credit-impaired ('POCI').

3 Days past due ('DPD'). Up-to-date accounts in Stage 2 are not shown in amounts presented above.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees

The following disclosure provides a reconciliation by stage of the Group's gross carrying/nominal amount and allowances for loans and advances to banks and customers, including loan commitments and financial guarantees. The transfers of financial instruments represents the impact of stage transfers upon the gross carrying/nominal amount and associated allowance for ECL. The net remeasurement of ECL arising from stage transfers represents the increase or decrease due to these transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis. Net remeasurement excludes the underlying customer risk rating ('CRR')/probability of default ('PD') movements of the financial instruments transferring stage. This is captured, along with other credit quality movements in the 'changes in risk parameters - credit quality' line item. The 'Net new and further lending/repayments' represent the gross carrying/nominal amount and associated allowance ECL impact from volume movements within the Group's lending portfolio.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees
	Non-credit impaired								Credit impaired
	Stage 1				Stage 2				Stage 3				POCI				Total
	Gross carrying/ nominal amount		Allowance for ECL		Gross carrying/ nominal amount		Allowance for ECL		Gross carrying/ nominal amount		Allowance for ECL		Gross carrying/ nominal amount		Allowance for ECL		Gross carrying/ nominal amount		Allowance for ECL
	$m		$m		$m		$m		$m		$m		$m		$m		$m		$m
At 1 Jan 2019	1,511,839		(1,449	)	86,241		(2,278	)	14,232		(5,135	)	334		(194	)	1,612,646		(9,056	)
Transfers of financial instruments:	(14,411	)	(90	)	13,330		227		1,081		(137	)	-		-		-		-
- transfers from stage 1 to stage 2	(24,962	)	93		24,962		(93	)	-		-		-		-		-		-
- transfers from stage 2 to stage 1	10,686		(186	)	(10,686	)	186		-		-		-		-		-		-
- transfers to stage 3	(225	)	10		(1,065	)	156		1,290		(166	)	-		-		-		-
- transfers from stage 3	90		(7	)	119		(22	)	(209	)	29		-		-		-		-
Net remeasurement of ECL arising from transfer of stage	-		128		-		(197	)	-		(5	)	-		-		-		(74	)
Net new and further lending/repayments	23,497		(46	)	(8,947	)	155		(555	)	266		9		(9	)	14,004		366
Changes in risk parameters - credit quality	-		37		-		(268	)	-		(694	)	-		(3	)	-		(928	)
Changes to model used for ECL calculation	-		-		-		-		-		-		-		-		-		-
Assets written off	-		-		-		-		(700	)	693		-		-		(700	)	693
Foreign exchange	7,911		(11	)	530		(20	)	68		(6	)	(2	)	2		8,507		(35	)
Others	1,505		3		647		(4	)	(71	)	76		1		(1	)	2,082		74
At 31 Mar 2019	1,530,341		(1,428	)	91,801		(2,385	)	14,055		(4,942	)	342		(205	)	1,636,539		(8,960	)
ECL release/(charge) for the period			119				(310	)			(433	)			(12	)			(636	)
Recoveries																			89
Others																			(39	)
Total ECL charge for the period																			(586	)

	At 31 Mar 2019			3 months ended 31 Mar 2019
	Gross carrying/nominal amount	Allowance for ECL		ECL charge
	$m	$m		$m
As above	1,636,539	(8,960	)	(586	)
Other financial assets measured at amortised cost	619,969	(85	)	(1	)
Non-trading reverse purchase agreement commitments	88,625	-		-
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement	2,345,133	(9,045	)	(587	)
Debt instruments measured at FVOCI	344,244	(80	)	2
Total allowance for ECL/total income statement ECL charge for the period	n/a	(9,125	)	(585	)

As shown in the above table, the allowance for ECL for loans and advances to customers and banks and relevant loan commitments and financial guarantees decreased $96m during the period from $9,056m at 31 December 2018 to $8,960m at 31 March 2019.

This decrease was primarily driven by:

• $366m relating to underlying net book volume movements, which included the ECL allowance associated with new originations, assets derecognised, and net further lending; and

• $693m of assets written off.

These decreases were partly offset by increases of:

• $928m relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages;

• $74m relating to the net remeasurement impact of stage transfers; and

• foreign exchange and other movements of $39m.

The ECL charge for the period of $636m presented in the previous table comprises $928m relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stage, $74m relating to the net remeasurement impact of stage transfers, partly offset by $366m relating to underlying net book volume movements.

Personal lending

Total personal lending for loans and advances to customers by stage distribution
	Gross carrying amount				Allowance for ECL
	Stage 1	Stage 2	Stage 3	Total	Stage 1		Stage 2		Stage 3		Total
	$m	$m	$m	$m	$m		$m		$m		$m
By portfolio
First lien residential mortgages	291,520	6,472	2,990	300,982	(40	)	(67	)	(430	)	(537	)
- of which: interest only (including offset)	32,053	1,423	341	33,817	(4	)	(13	)	(92	)	(109	)
affordability (including US adjustable rate mortgages)	15,662	1,168	534	17,364	(3	)	(4	)	(5	)	(12	)
Other personal lending	93,366	8,780	1,669	103,815	(500	)	(1,253	)	(735	)	(2,488	)
- other	70,968	4,472	1,139	76,579	(222	)	(463	)	(466	)	(1,151	)
- credit cards	20,018	4,146	452	24,616	(272	)	(775	)	(249	)	(1,296	)
- second lien residential mortgages	926	132	73	1,131	(1	)	(11	)	(16	)	(28	)
- motor vehicle finance	1,454	30	5	1,489	(5	)	(4	)	(4	)	(13	)
At 31 Mar 2019	384,886	15,252	4,659	404,797	(540	)	(1,320	)	(1,165	)	(3,025	)
By geography
Europe	173,530	5,981	2,069	181,580	(105	)	(479	)	(457	)	(1,041	)
- of which: UK	143,376	4,614	1,375	149,365	(95	)	(449	)	(237	)	(781	)
Asia	161,540	5,472	711	167,723	(202	)	(366	)	(184	)	(752	)
- of which: Hong Kong	108,830	2,694	169	111,693	(70	)	(231	)	(37	)	(338	)
MENA	5,454	321	401	6,176	(59	)	(69	)	(263	)	(391	)
North America	38,076	2,567	1,239	41,882	(29	)	(95	)	(139	)	(263	)
Latin America	6,286	911	239	7,436	(145	)	(311	)	(122	)	(578	)
At 31 Mar 2019	384,886	15,252	4,659	404,797	(540	)	(1,320	)	(1,165	)	(3,025	)

By portfolio
First lien residential mortgages	284,103	6,286	2,944	293,333	(41	)	(62	)	(432	)	(535	)
- of which: interest only (including offset)	31,874	1,324	338	33,536	(3	)	(13	)	(92	)	(108	)
affordability (including US adjustable rate mortgages)	16,110	1,065	507	17,682	(3	)	(4	)	(5	)	(12	)
Other personal lending	90,578	8,789	1,637	101,004	(493	)	(1,203	)	(716	)	(2,412	)
- other	67,196	4,400	1,121	72,717	(214	)	(435	)	(465	)	(1,114	)
- credit cards	20,932	4,259	453	25,644	(272	)	(756	)	(233	)	(1,261	)
- second lien residential mortgages	1,022	100	57	1,179	(2	)	(9	)	(13	)	(24	)
- motor vehicle finance	1,428	30	6	1,464	(5	)	(3	)	(5	)	(13	)
At 31 Dec 2018	374,681	15,075	4,581	394,337	(534	)	(1,265	)	(1,148	)	(2,947	)
By geography
Europe	169,782	5,731	2,051	177,564	(105	)	(453	)	(450	)	(1,008	)
- of which: UK	139,237	4,308	1,315	144,860	(93	)	(421	)	(219	)	(733	)
Asia	155,661	5,413	693	161,767	(207	)	(353	)	(180	)	(740	)
- of which: Hong Kong	104,909	2,715	169	107,793	(71	)	(220	)	(39	)	(330	)
MENA	5,565	350	411	6,326	(61	)	(70	)	(263	)	(394	)
North America	38,283	2,552	1,186	42,021	(29	)	(90	)	(142	)	(261	)
Latin America	5,390	1,029	240	6,659	(132	)	(299	)	(113	)	(544	)
At 31 Dec 2018	374,681	15,075	4,581	394,337	(534	)	(1,265	)	(1,148	)	(2,947	)

Wholesale lending

Total wholesale lending for loans and advances to banks and customers at amortised cost
	Gross carrying amount					Allowance for ECL
	Stage 1	Stage 2	Stage 3	POCI	Total	Stage 1		Stage 2		Stage 3		POCI		Total
	$m	$m	$m	$m	$m	$m		$m		$m		$m		$m
Corporate and commercial	485,914	48,496	8,154	334	542,898	(660	)	(867	)	(3,641	)	(204	)	(5,372	)
- agriculture, forestry and fishing	5,718	1,049	228	2	6,997	(14	)	(40	)	(119	)	(1	)	(174	)
- mining and quarrying	11,392	2,178	307	2	13,879	(32	)	(42	)	(107	)	(2	)	(183	)
- manufacture	94,570	11,680	1,445	128	107,823	(121	)	(175	)	(686	)	(85	)	(1,067	)
- electricity, gas, steam and air-conditioning supply	12,856	1,973	89	62	14,980	(12	)	(66	)	(20	)	(52	)	(150	)
- water supply, sewerage, waste management and remediation	3,390	196	24	-	3,610	(6	)	(2	)	(17	)	-		(25	)
- construction	11,851	2,608	924	60	15,443	(19	)	(39	)	(424	)	(55	)	(537	)
- wholesale and retail trade, repair of motor vehicles and motorcycles	84,191	12,004	1,686	35	97,916	(99	)	(133	)	(918	)	(7	)	(1,157	)
- transportation and storage	23,846	1,792	356	37	26,031	(35	)	(51	)	(104	)	-		(190	)
- accommodation and food	19,552	1,850	314	2	21,718	(46	)	(37	)	(145	)	(1	)	(229	)
- publishing, audiovisual and broadcasting	22,323	1,374	211	-	23,908	(48	)	(21	)	(72	)	-		(141	)
- real estate	116,975	7,423	1,300	1	125,699	(107	)	(103	)	(535	)	-		(745	)
- professional, scientific and technical activities	21,312	1,104	350	-	22,766	(29	)	(34	)	(117	)	-		(180	)
- administrative and support services	22,154	1,761	430	4	24,349	(36	)	(54	)	(160	)	(1	)	(251	)
- public administration and defence, compulsory social security	1,338	36	-	-	1,374	(1	)	(3	)	-		-		(4	)
- education	1,663	61	33	-	1,757	(11	)	(4	)	(6	)	-		(21	)
- health and care	4,229	430	140	-	4,799	(12	)	(17	)	(35	)	-		(64	)
- arts, entertainment and recreation	4,973	303	49	1	5,326	(10	)	(10	)	(24	)	-		(44	)
- other services	12,399	337	254	-	12,990	(16	)	(22	)	(146	)	-		(184	)
- activities of households	713	66	-	-	779	-		-		-		-		-
- extra-territorial organisations and bodies activities	1,291	1	6	-	1,298	(1	)	-		(1	)	-		(2	)
- government	8,348	256	8	-	8,612	(5	)	(1	)	(5	)	-		(11	)
- asset-backed securities	830	14	-	-	844	-		(13	)	-		-		(13	)
Non-bank financial institutions	63,747	2,183	203	1	66,134	(53	)	(44	)	(55	)	(1	)	(153	)
Loans and advances to banks	71,015	579	-	-	71,594	(11	)	(2	)	-		-		(13	)
At 31 Mar 2019	620,676	51,258	8,357	335	680,626	(724	)	(913	)	(3,696	)	(205	)	(5,538	)
By geography
Europe	198,535	18,349	4,357	178	221,419	(393	)	(571	)	(1,500	)	(118	)	(2,582	)
- of which: UK	139,481	14,540	3,129	35	157,185	(331	)	(515	)	(988	)	(20	)	(1,854	)
Asia	316,818	20,548	1,665	89	339,120	(190	)	(144	)	(979	)	(36	)	(1,349	)
- of which: Hong Kong	192,826	9,605	777	66	203,274	(103	)	(66	)	(429	)	(34	)	(632	)
MENA	24,545	3,274	1,703	53	29,575	(47	)	(92	)	(939	)	(46	)	(1,124	)
North America	62,339	8,023	296	-	70,658	(33	)	(83	)	(99	)	-		(215	)
Latin America	18,439	1,064	336	15	19,854	(61	)	(23	)	(179	)	(5	)	(268	)
At 31 Mar 2019	620,676	51,258	8,357	335	680,626	(724	)	(913	)	(3,696	)	(205	)	(5,538	)

Total wholesale lending for loans and advances to banks and customers at amortised cost (continued)
	Gross carrying amount					Allowance for ECL
	Stage 1	Stage 2	Stage 3	POCI	Total	Stage 1		Stage 2		Stage 3		POCI		Total
	$m	$m	$m	$m	$m	$m		$m		$m		$m		$m
Corporate and commercial	481,262	44,779	8,212	324	534,577	(698	)	(812	)	(3,848	)	(194	)	(5,552	)
- agriculture, forestry and fishing	5,361	1,102	236	2	6,701	(15	)	(34	)	(117	)	(1	)	(167	)
- mining and quarrying	12,094	1,717	359	2	14,172	(29	)	(51	)	(94	)	(2	)	(176	)
- manufacture	92,606	11,404	1,569	125	105,704	(132	)	(156	)	(791	)	(83	)	(1,162	)
- electricity, gas, steam and air-conditioning supply	14,522	1,422	40	60	16,044	(18	)	(60	)	(15	)	(54	)	(147	)
- water supply, sewerage, waste management and remediation	3,335	164	24	-	3,523	(5	)	(2	)	(17	)	-		(24	)
- construction	12,919	1,116	1,168	51	15,254	(27	)	(41	)	(524	)	(44	)	(636	)
- wholesale and retail trade, repair of motor vehicles and motorcycles	83,751	12,225	1,652	37	97,665	(115	)	(128	)	(968	)	(7	)	(1,218	)
- transportation and storage	23,327	1,825	351	38	25,541	(37	)	(46	)	(82	)	(1	)	(166	)
- accommodation and food	19,385	1,889	270	3	21,547	(43	)	(41	)	(83	)	(1	)	(168	)
- publishing, audiovisual and broadcasting	19,758	1,224	189	1	21,172	(42	)	(16	)	(84	)	-		(142	)
- real estate	116,132	5,985	1,115	1	123,233	(97	)	(80	)	(594	)	-		(771	)
- professional, scientific and technical activities	21,282	941	350	-	22,573	(29	)	(29	)	(113	)	-		(171	)
- administrative and support services	22,820	1,843	437	3	25,103	(41	)	(48	)	(166	)	(1	)	(256	)
- public administration and defence, compulsory social security	1,425	30	8	-	1,463	(1	)	(3	)	(5	)	-		(9	)
- education	1,713	102	14	-	1,829	(11	)	(7	)	(6	)	-		(24	)
- health and care	3,710	457	141	-	4,308	(10	)	(16	)	(33	)	-		(59	)
- arts, entertainment and recreation	4,326	676	39	-	5,041	(9	)	(9	)	(15	)	-		(33	)
- other services	13,259	411	242	1	13,913	(31	)	(31	)	(140	)	-		(202	)
- activities of households	770	59	1	-	830	-		-		-		-		-
- extra-territorial organisations and bodies activities	49	3	7	-	59	-		-		(1	)	-		(1	)
- government	7,905	168	-	-	8,073	(6	)	(1	)	-		-		(7	)
- asset-backed securities	813	16	-	-	829	-		(13	)	-		-		(13	)
Non-bank financial institutions	59,245	1,932	230	-	61,407	(44	)	(31	)	(51	)	-		(126	)
Loans and advances to banks	71,873	307	-	-	72,180	(11	)	(2	)	-		-		(13	)
At 31 Dec 2018	612,380	47,018	8,442	324	668,164	(753	)	(845	)	(3,899	)	(194	)	(5,691	)
By geography
Europe	190,387	19,073	4,233	150	213,843	(366	)	(529	)	(1,598	)	(102	)	(2,595	)
- of which: UK	133,004	15,370	2,928	8	151,310	(313	)	(471	)	(998	)	-		(1,782	)
Asia	314,591	17,729	1,736	92	334,148	(179	)	(121	)	(1,040	)	(36	)	(1,376	)
- of which: Hong Kong	194,186	8,425	729	69	203,409	(99	)	(54	)	(413	)	(35	)	(601	)
MENA	25,684	2,974	1,769	53	30,480	(73	)	(77	)	(974	)	(46	)	(1,170	)
North America	62,631	6,928	314	-	69,873	(37	)	(107	)	(101	)	-		(245	)
Latin America	19,087	314	390	29	19,820	(98	)	(11	)	(186	)	(10	)	(305	)
At 31 Dec 2018	612,380	47,018	8,442	324	668,164	(753	)	(845	)	(3,899	)	(194	)	(5,691	)

Capital

Key metrics (KM1/IFRS9-FL)
			At
			31 Mar	31 Dec	30 Sep	30 Jun	31 Mar
Ref*		Footnotes	2019	2018	2018	2018	2018
	Available capital ($bn)	1
1	Common equity tier 1 ('CET1') capital		125.8	121.0	123.1	122.8	129.6
2	CET1 capital as if IFRS 9 transitional arrangements had not been applied		124.9	120.0	122.1	121.8	128.6
3	Tier 1 capital		151.8	147.1	149.3	147.1	157.1
4	Tier 1 capital as if IFRS 9 transitional arrangements had not been applied		150.9	146.1	148.3	146.1	156.1
5	Total capital		177.8	173.2	178.1	176.6	185.2
6	Total capital as if IFRS 9 transitional arrangements had not been applied		176.9	172.2	177.1	175.6	184.2
	Risk-weighted assets ('RWAs') ($bn)
7	Total RWAs		879.5	865.3	862.7	865.5	894.4
8	Total RWAs as if IFRS 9 transitional arrangements had not been applied		878.9	864.7	862.1	864.9	893.8
	Capital ratios (%)	1
9	CET1		14.3	14.0	14.3	14.2	14.5
10	CET1 as if IFRS 9 transitional arrangements had not been applied		14.2	13.9	14.2	14.1	14.4
11	Tier 1		17.3	17.0	17.3	17.0	17.6
12	Tier 1 as if IFRS 9 transitional arrangements had not been applied		17.2	16.9	17.2	16.9	17.5
13	Total capital		20.2	20.0	20.7	20.4	20.7
14	Total capital as if IFRS 9 transitional arrangements had not been applied		20.1	19.9	20.6	20.3	20.6
	Additional CET1 buffer requirements as a percentage of RWA (%)
	Capital conservation buffer requirement		2.50	1.88	1.88	1.88	1.88
	Countercyclical buffer requirement		0.67	0.56	0.45	0.46	0.34
	Bank G-SIB and/or D-SIB additional requirements		2.00	1.50	1.50	1.50	1.50
	Total of bank CET1 specific buffer requirements		5.17	3.94	3.83	3.84	3.72
	Total capital requirement (%)
	Total capital requirement	2	11.0	10.9	11.5	11.5	11.5
	CET1 available after meeting the bank's minimum capital requirements	3	8.1	7.9	7.8	7.7	8.0
	Leverage ratio	4
15	Total leverage ratio exposure measure ($bn)		2,735.2	2,614.9	2,676.4	2,664.1	2,707.9
16	Leverage ratio (%)		5.4	5.5	5.4	5.4	5.6
17	Leverage ratio as if IFRS 9 transitional arrangements had not been applied (%)		5.4	5.5	5.4	5.3	5.5
	Liquidity coverage ratio ('LCR')	5
	Total high-quality liquid assets ($bn)		535.4	567.2	533.2	540.2	533.1
	Total net cash outflow ($bn)		374.8	368.7	334.1	341.7	338.5
	LCR ratio (%)	6	142.9	153.8	159.6	158.1	157.5

* The references in this table identify the lines prescribed in the relevant European Banking Authority ('EBA') template where applicable and where there is a value.

For footnotes, see page 28.

Own funds disclosure
		At
		31 Mar		31 Dec
		2019		2018
Ref*		$m		$m
6	Common equity tier 1 capital before regulatory adjustments	159,001		155,483
28	Total regulatory adjustments to common equity tier 1	(33,199	)	(34,461	)
29	Common equity tier 1 capital	125,802		121,022
36	Additional tier 1 capital before regulatory adjustments	26,106		26,180
43	Total regulatory adjustments to additional tier 1 capital	(60	)	(60	)
44	Additional tier 1 capital	26,046		26,120
45	Tier 1 capital	151,848		147,142
51	Tier 2 capital before regulatory adjustments	27,112		26,729
57	Total regulatory adjustments to tier 2 capital	(1,160	)	(633	)
58	Tier 2 capital	25,952		26,096
59	Total capital	177,800		173,238
60	Total risk-weighted assets	879,485		865,318
	Capital ratios	%		%
61	Common equity tier 1 ratio	14.3		14.0
62	Tier 1 ratio	17.3		17.0
63	Total capital ratio	20.2		20.0

* The references in this table identify the lines prescribed in the relevant EBA template.

Capital

At 31 March 2019, our common equity tier 1 ('CET1') capital ratio increased to 14.3% from 14.0% at 31 December 2018. This was primarily due to CET1 capital growth during the quarter and was partly offset by the $14.2bn rise in RWAs.

CET1 capital increased by $4.8bn during the quarter, mainly as a result of:

• capital generation of $2.0bn through profits, net of cash and scrip dividends;

• favourable foreign currency translation differences of $0.9bn;

• a $0.8bn increase in FVOCI reserve; and

• higher than expected scrip take-up in the final dividend, which added $0.3bn.

Leverage

Leverage ratio
		At
		31 Mar	31 Dec
		2019	2018
Ref*		$bn	$bn
20	Tier 1 capital	148.3	143.5
21	Total leverage ratio exposure	2,735.2	2,614.9
		%	%
22	Leverage ratio	5.4	5.5
EU-23	Choice of transitional arrangements for the definition of the capital measure	Fully phased-in	Fully phased-in
	UK leverage ratio exposure - quarterly average	2,521.9	2,464.4
		%	%
	UK leverage ratio - quarterly average	5.9	5.8
	UK leverage ratio - quarter end	5.9	6.0

* The references identify the lines prescribed in the EBA template.

Our leverage ratio calculated in accordance with the Capital Requirements Directive and Regulation ('CRD IV') was 5.4% at
31 March 2019, down from 5.5% at 31 December 2018. The increase in exposure was primarily due to growth in customer lending, trading and other assets.

The Group's UK leverage ratio at 31 March 2019 was 5.9%. This measure excludes qualifying central bank balances from the calculation of exposure.

At 31 March 2019, our UK minimum leverage ratio requirement of 3.25% was supplemented by an additional leverage ratio buffer of 0.7% and a countercyclical leverage ratio buffer of 0.2%. These additional buffers translated into capital values of $17.7bn and $5.9bn respectively. We exceeded these leverage requirements.

Risk-weighted assets

Overview of RWAs (OV1)
			31 Mar	31 Dec	31 Mar
			2019	2018	2019
			RWAs	RWAs	Capital requirement⁷
Ref*		Footnotes	$bn	$bn	$bn
1	Credit risk (excluding counterparty credit risk)		649.8	638.1	52.0
2	- standardised approach		130.1	128.6	10.4
3	- foundation internal ratings based ('IRB') approach		30.8	30.5	2.5
4	- advanced IRB approach		488.9	479.0	39.1
6	Counterparty credit risk		50.0	47.2	4.0
7	- mark-to-market		27.0	24.7	2.2
10	- internal model method ('IMM')		16.3	16.2	1.3
11	- risk exposure amount for contributions to the default fund of a central counterparty		0.4	0.4	-
12	- credit valuation adjustment		6.3	5.9	0.5
13	Settlement risk		0.1	0.1	-
14	Securitisation exposures in the non-trading book		8.5	8.4	0.7
15	- IRB method		3.7	4.6	0.3
17	- IRB internal assessment approach		1.4	1.7	0.1
18	- standardised approach		2.2	2.1	0.2
14a	- exposures subject to the new securitisation framework	8	1.2	N/A	0.1
19	Market risk		35.1	35.8	2.8
20	- standardised approach		5.4	5.7	0.4
21	- internal models approach ('IMA')		29.7	30.1	2.4
23	Operational risk		91.1	91.1	7.3
25	- standardised approach		91.1	91.1	7.3
27	Amounts below the thresholds for deduction (subject to 250% risk weight)		44.9	44.6	3.6
29	Total		879.5	865.3	70.4

* The references in this table identify the lines prescribed in the relevant EBA template where applicable and where there is a value.

For footnotes, see page 28.

RWAs by global business
	RBWM	CMB	GB&M	GPB	Corporate Centre	Total
	$bn	$bn	$bn	$bn	$bn	$bn
Credit risk	99.2	301.1	173.2	13.8	115.9	703.2
Counterparty credit risk	-	-	48.3	0.2	1.6	50.1
Market risk	-	-	32.5	-	2.6	35.1
Operational risk	27.3	24.3	31.5	2.8	5.2	91.1
At 31 Mar 2019	126.5	325.4	285.5	16.8	125.3	879.5

RWAs by geographical region
		Europe	Asia	MENA	North America	Latin America	Total
	Footnotes	$bn	$bn	$bn	$bn	$bn	$bn
Credit risk		225.7	296.1	46.7	104.0	30.7	703.2
Counterparty credit risk		29.5	9.6	1.1	8.6	1.3	50.1
Market risk	9	23.8	21.6	1.7	9.5	1.7	35.1
Operational risk		27.3	39.5	6.8	11.7	5.8	91.1
At 31 Mar 2019		306.3	366.8	56.3	133.8	39.5	879.5

For footnotes, see page 28.

RWA movement by global business by key driver
	Credit risk, counterparty credit risk and operational risk
	RBWM		CMB		GB&M		GPB		Corporate Centre		Market risk		Total RWAs
	$bn		$bn		$bn		$bn		$bn		$bn		$bn
RWAs at 1 Jan 2019	126.9		321.2		248.6		16.8		116.0		35.8		865.3
Asset size	1.4		4.2		5.0		0.1		1.5		(0.7	)	11.5
Asset quality	(0.3	)	0.5		(1.3	)	-		0.9		-		(0.2	)
Model updates	(0.1	)	-		(0.1	)	-		(0.1	)	-		(0.3	)
Methodology and policy	(1.8	)	(2.5	)	0.2		(0.1	)	4.2		-		-
Foreign exchange movements	0.4		2.0		0.6		-		0.2		-		3.2
Total RWA movement	(0.4	)	4.2		4.4		-		6.7		(0.7	)	14.2
RWAs at 31 Mar 2019	126.5		325.4		253.0		16.8		122.7		35.1		879.5

RWA movement by geographical region by key driver
	Credit risk, counterparty credit risk and operational risk
	Europe		Asia		MENA		North America		Latin America		Market risk		Total RWAs
	$bn		$bn		$bn		$bn		$bn		$bn		$bn
RWAs at 1 Jan 2019	274.1		340.6		54.8		123.1		36.9		35.8		865.3
Asset size	5.0		5.4		0.3		0.3		1.2		(0.7	)	11.5
Asset quality	0.7		-		(0.3	)	(0.3	)	(0.3	)	-		(0.2	)
Model updates	(0.1	)	-		-		(0.2	)	-		-		(0.3	)
Methodology and policy	0.8		(1.8	)	(0.1	)	0.9		0.2		-		-
Foreign exchange movements	2.0		1.0		(0.1	)	0.5		(0.2	)	-		3.2
Total RWA movement	8.4		4.6		(0.2	)	1.2		0.9		(0.7	)	14.2
RWAs at 31 Mar 2019	282.5		345.2		54.6		124.3		37.8		35.1		879.5

RWAs

Risk-weighted assets ('RWAs') increased by $14.2bn during 1Q19, including an increase of $3.2bn due to foreign currency translation differences. The $11.0bn increase (excluding foreign currency translation differences) was primarily due to $11.5bn asset size growth during the quarter, which was offset by reductions of $0.3bn from model updates and a $0.2bn decrease due to improved asset quality.

Asset size

The $11.5bn growth during 1Q19 was mainly due to:

• lending growth of $4.2bn in CMB and $1.5bn in GB&M, mainly in Asia and Europe, and $1.4bn in RBWM, mainly in Asian mortgage lending;

• growth of $3.5bn in GB&M counterparty credit risks in Europe, largely in the form of securities financing transactions, new derivative trades, and mark-to-market movements; and

• a $1.7bn increase in RWAs as a result of an increase in the value of significant holdings in Corporate Centre.

This was partly offset by:

• a $0.7bn fall in market risk mainly due to a reduction in equity risk and exposures in Europe and Asia.

Model updates

The $0.3bn reduction in RWAs mainly resulted from the application of IRB models to receivables finance in North America.

Methodology and policy

Movements largely comprised a $4.5bn increase in tangible fixed assets within Corporate Centre as a result of implementing IFRS 16 'Leases' with effect from 1 January 2019, reflecting the recognition of right of use assets for assets formerly under operating leases, offset by a $4.5bn reduction in RWAs due to management initiatives, most notably in CMB and GB&M.

RWA flow statements of credit risk exposures under IRB approach¹⁰ (CR8)
		RWAs		Capital requirement⁷
Ref*		$bn		$bn
1	RWAs at 1 Jan 2019	509.5		40.7
2	Asset size	5.7		0.6
3	Asset quality	(0.1	)	-
4	Model updates	(0.1	)	-
5	Methodology and policy	1.6		0.1
7	Foreign exchange movements	3.1		0.2
9	RWAs at 31 Mar 2019	519.7		41.6

* The references in this table identify the lines prescribed in the relevant EBA template where applicable and where there is a value.

For footnotes, see page 28.

RWAs under the IRB approach increased by $10.2bn in the quarter, including an increase of $3.1bn due to foreign currency translation differences. The $7.1bn increase (excluding foreign currency translation differences) was primarily due to asset size growth of $5.7bn and methodology and policy driven increases of $1.6bn during the quarter.

Asset size

The $5.7bn growth in RWAs during 1Q19 was mainly driven by lending growth in CMB, GB&M and RBWM, mostly in Asia and Europe.

Methodology and policy

The $1.6bn increase primarily comprised:

• the $3.9bn impact of recognising right of use assets under operating leases upon implementation of IFRS 16 'Leases'; and

• a $0.8bn increase due to internal policy updates.

This was partly offset by:

• a $3.1bn reduction in RWAs due to management initiatives, most notably in CMB.

RWA flow statements of counterparty credit risk exposures under the IMM (CCR7)
		RWAs		Capital requirement⁷
Ref*		$bn		$bn
1	RWAs at 1 Jan 2019	21.1		1.8
2	Asset size	0.5		-
5	Methodology and policy	(0.6	)	(0.1	)
9	RWAs at 31 Mar 2019	21.0		1.7

* The references in this table identify the lines prescribed in the relevant EBA template where applicable and where there is a value.

For footnotes, see page 28.

RWAs under the IMM decreased by $0.1bn. Methodology and policy changes, which included increased recognition of hedging, reduced RWAs by $0.6bn, offsetting asset size growth of $0.5bn due to increased exposures.

RWA flow statements of market risk exposures under the IMA (MR2-B)
		VaR		Stressed VaR		IRC	Other		Total RWAs		Capital requirement⁷
Ref*		$bn		$bn		$bn	$bn		$bn		$bn
1	RWAs at 1 Jan 2019	7.1		12.1		6.4	4.5		30.1		2.4
2	Movement in risk levels	(0.4	)	(1.4	)	2.5	(1.1	)	(0.4	)	-
8	RWAs at 31 Mar 2019	6.7		10.7		8.9	3.4		29.7		2.4

* The references in this table identify the lines prescribed in the relevant EBA template where applicable and where there is a value.

For footnotes, see page 28.

RWAs under the IMA decreased by $0.4bn due to:

• VaR/Stressed VaR reductions of $1.8bn as a result of lower equity correlation and reduced exposure in principal Asian and European indices; and

• reductions in positions under Other, which reduced RWAs by $1.1bn.

These movements were partly offset by a $2.5bn increase in IRC RWAs as a result of increased sovereign exposure.

Footnotes to capital, leverage and risk-weighted assets
1	Capital figures and ratios are reported on the CRD IV transitional basis for additional tier 1 and tier 2 capital in accordance with articles 484-92 of the Capital Requirements Regulation.
2	Total capital requirement is defined as the sum of Pillar 1 and Pillar 2A capital requirements set by the PRA.
3	The minimum requirements represent the total capital requirement to be met by CET1.
4	Leverage ratio is calculated using the CRD IV end-point basis for additional tier 1 capital.
5	The EU's regulatory transitional arrangements for IFRS 9 in article 473a of the Capital Requirements Regulation do not apply to liquidity coverage measures.
6	LCR is calculated as at the end of each period rather than using average values.
7	'Capital requirement' represents the minimum capital charge set at 8% of RWAs by article 92 of the Capital Requirements Regulation.
8	On 1 January 2019, a new securitisation framework came into force in the EU for new transactions entered into on or after that date. Existing positions are subject to 'grandfathering' provisions and will transfer to the new framework on 1 January 2020. Our exposures subject to the approaches under the new framework at 31 March 2019 include $293m under the external ratings-based approach, $651m under the internal assessment approach, and $293m under the standardised approach.
9	RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
10	Securitisation positions are not included in this table.

Summary information - global businesses

HSBC adjusted profit before tax
	Quarter ended 31 Mar 2019
	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	$m		$m		$m		$m		$m		$m
Net operating income/(expense) before change in expected credit losses and other credit impairment charges	5,971		3,921		4,068		450		(4	)	14,406
of which: net interest income/(expense)	3,965		2,800		1,422		216		(935	)	7,468
Change in expected credit losses and other credit impairment (charges)/recoveries	(302	)	(247	)	(40	)	(2	)	6		(585	)
Net operating income	5,669		3,674		4,028		448		2		13,821
Total operating expenses	(3,451	)	(1,658	)	(2,389	)	(350	)	(215	)	(8,063	)
Operating profit/(loss)	2,218		2,016		1,639		98		(213	)	5,758
Share of profit in associates and joint ventures	13		-		-		-		579		592
Adjusted profit before tax	2,231		2,016		1,639		98		366		6,350
	%		%		%		%		%		%
Share of HSBC's adjusted profit before tax	35.2		31.7		25.8		1.5		5.8		100.0
Adjusted cost efficiency ratio	57.8		42.3		58.7		77.8		(5,375.0	)	56.0

	Quarter ended 31 Dec 2018
	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	$m		$m		$m		$m		$m		$m
Net operating income before change in expected credit losses and other credit impairment charges	5,135		3,715		3,083		425		283		12,641
of which: net interest income/(expense)	4,077		2,788		1,445		220		(788	)	7,742
Change in expected credit losses and other credit impairment (charges)/recoveries	(344	)	(448	)	(65	)	(9	)	3		(863	)
Net operating income	4,791		3,267		3,018		416		286		11,778
Total operating expenses	(3,450	)	(1,591	)	(2,314	)	(356	)	(1,223	)	(8,934	)
Operating profit/(loss)	1,341		1,676		704		60		(937	)	2,844
Share of profit in associates and joint ventures	13		-		-		-		558		571
Adjusted profit before tax	1,354		1,676		704		60		(379	)	3,415
	%		%		%		%		%		%
Share of HSBC's adjusted profit before tax	39.6		49.1		20.6		1.8		(11.1	)	100.0
Adjusted cost efficiency ratio	67.2		42.8		75.1		83.8		432.2		70.7

	Quarter ended 31 Mar 2018
	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	$m		$m		$m		$m		$m		$m
Net operating income/(expense) before change in expected credit losses and other credit impairment charges	5,443		3,535		3,954		467		(203	)	13,196
of which: net interest income/(expense)	3,640		2,407		1,125		217		(273	)	7,116
Change in expected credit losses and other credit impairment (charges)/recoveries	(289	)	67		(17	)	3		84		(152	)
Net operating income/(expense)	5,154		3,602		3,937		470		(119	)	13,044
Total operating expenses	(3,281	)	(1,572	)	(2,297	)	(359	)	(305	)	(7,814	)
Operating profit/(loss)	1,873		2,030		1,640		111		(424	)	5,230
Share of profit in associates and joint ventures	3		-		-		-		567		570
Adjusted profit before tax	1,876		2,030		1,640		111		143		5,800
	%		%		%		%		%		%
Share of HSBC's adjusted profit before tax	32.3		35.0		28.3		1.9		2.5		100.0
Adjusted cost efficiency ratio	60.3		44.5		58.1		76.9		(150.2	)	59.2

Global Private Banking - reported client assets¹
	Quarter ended
	31 Mar	31 Dec		31 Mar
	2019	2018		2018
	$bn	$bn		$bn
Opening balance	309	326		330
Net new money	10	1		3
Value change	14	(11	)	(2	)
Disposals	-	-		-
Exchange and other	2	(7	)	-
Closing balance	335	309		331

For footnotes, see page 32.

Global Private Banking - reported client assets by geography¹
		Quarter ended
		31 Mar	31 Dec	31 Mar
		2019	2018	2018
	Footnotes	$bn	$bn	$bn
Europe		158	149	162
Asia		139	124	131
North America		38	36	38
Latin America		-	-	-
Middle East	2	-	-	-
Closing balance		335	309	331

For footnotes, see page 32.

Summary information - geographical regions

HSBC reported profit/(loss) before tax
	Quarter ended 31 Mar 2019
	Europe		Asia		MENA		North America		Latin America		Intra-HSBC items		Total
	$m		$m		$m		$m		$m		$m		$m
Net interest income	1,524		3,996		437		853		508		150		7,468
Net fee income	911		1,409		159		424		123		-		3,026
Net income from financial instruments held for trading or managed on a fair value basis	1,207		1,209		104		218		215		(72	)	2,881
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	747		948		-		-		15		-		1,710
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	291		8		(1	)	2		47		(77	)	270
Other income/(expense)³	(75	)	249		3		179		63		(1,346	)	(927	)
Net operating income before change in expected credit losses and other credit impairment charges	4,605		7,819		702		1,676		971		(1,345	)	14,428
Change in expected credit losses and other credit impairment charges	(303	)	(158	)	(6	)	(3	)	(115	)	-		(585	)
Net operating income	4,302		7,661		696		1,673		856		(1,345	)	13,843
Total operating expenses	(4,318	)	(3,131	)	(345	)	(1,294	)	(479	)	1,345		(8,222	)
Operating profit	(16	)	4,530		351		379		377		-		5,621
Share of profit in associates and joint ventures	2		476		114		-		-		-		592
Profit before tax	(14	)	5,006		465		379		377		-		6,213
	%		%		%		%		%				%
Share of HSBC's profit before tax	(0.2	)	80.5		7.5		6.1		6.1				100.0
Cost efficiency ratio	93.8		40.0		49.1		77.2		49.3				57.0

	Quarter ended 31 Dec 2018
Net interest income	1,629		4,132		431		889		570		58		7,709
Net fee income	910		1,199		144		457		128		(11	)	2,827
Net income from financial instruments held for trading or managed on a fair value basis	894		1,064		88		77		213		(290	)	2,046
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	(753	)	(703	)	-		-		12		-		(1,444	)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	(95	)	-		(3	)	6		10		236		154
Other income³	1,411		1,191		8		144		10		(1,361	)	1,403
Net operating income before loan impairment charges and other credit risk provisions	3,996		6,883		668		1,573		943		(1,368	)	12,695
Change in expected credit losses and other credit impairment charges	(422	)	(197	)	(6	)	(41	)	(187	)	-		(853	)
Net operating income	3,574		6,686		662		1,532		756		(1,368	)	11,842
Total operating expenses	(5,136	)	(3,203	)	(348	)	(1,242	)	(583	)	1,368		(9,144	)
Operating profit	(1,562	)	3,483		314		290		173		-		2,698
Share of profit in associates and joint ventures	3		468		85		-		2		-		558
Profit before tax	(1,559	)	3,951		399		290		175		-		3,256
	%		%		%		%		%				%
Share of HSBC's profit before tax	(47.9	)	121.3		12.3		8.9		5.4				100.0
Cost efficiency ratio	128.5		46.5		52.1		79.0		61.8				72.0

HSBC reported profit/(loss) before tax (continued)
	Quarter ended 31 Mar 2018
	Europe		Asia		MENA		North America		Latin America		Intra-HSBC items		Total
	$m		$m		$m		$m		$m		$m		$m
Net interest income	1,739		3,831		461		870		528		27		7,456
Net fee income	1,087		1,678		157		444		141		-		3,507
Net income from financial instruments held for trading or managed on a fair value basis	1,155		956		42		212		121		(102	)	2,384
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	(227	)	70		-		-		2		-		(155	)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	155		(34	)	5		10		8		(27	)	117
Other income/(expense)³	561		806		11		89		(3	)	(1,063	)	401
Net operating income before loan impairment charges and other credit risk provisions	4,470		7,307		676		1,625		797		(1,165	)	13,710
Change in expected credit losses and other credit impairment (charges)/recoveries	(62	)	(32	)	(4	)	47		(119	)	-		(170	)
Net operating income	4,408		7,275		672		1,672		678		(1,165	)	13,540
Total operating expenses	(4,437	)	(2,986	)	(343	)	(2,268	)	(514	)	1,165		(9,383	)
Operating profit/(loss)	(29	)	4,289		329		(596	)	164		-		4,157
Share of profit in associates and joint ventures	11		479		108		-		-		-		598
Profit/(loss) before tax	(18	)	4,768		437		(596	)	164		-		4,755
	%		%		%		%		%				%
Share of HSBC's profit before tax	(0.4	)	100.3		9.2		(12.5	)	3.4				100.0
Cost efficiency ratio	99.3		40.9		50.7		139.6		64.5				68.4

Footnotes to summary information - global businesses and geographical regions
1	Client assets are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet, and customer deposits, which are reported on the Group's balance sheet.
2	'Middle East' is an offshore business, therefore client assets are booked across to various regions, primarily in Europe.
3	Other income in this context comprises where applicable changes in fair value of long-term debt and related derivatives, gains less losses from financial investments, dividend income, net insurance premium income and other operating income less net insurance claims and benefits paid and movement in liabilities to policyholders.

Appendix - selected information

Analysis of significant items by global business, geographical regions and countries/territories are presented below.

Reconciliation of reported and adjusted results - global businesses
		Quarter ended 31 Mar 2019
		Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported		5,971		3,921		4,015		450		71		14,428
Significant items		-		-		53		-		(75	)	(22	)
- fair value movement on financial instruments	2	-		-		53		-		(75	)	(22	)
Adjusted		5,971		3,921		4,068		450		(4	)	14,406
Change in expected credit losses and other credit impairment (charges)/recoveries
Reported		(302	)	(247	)	(40	)	(2	)	6		(585	)
Adjusted		(302	)	(247	)	(40	)	(2	)	6		(585	)
Operating expenses
Reported		(3,508	)	(1,662	)	(2,440	)	(352	)	(260	)	(8,222	)
Significant items		57		4		51		2		45		159
- costs of structural reform	3	-		2		13		-		38		53
- customer redress programmes		56		-		-		-		-		56
- restructuring and other related costs		1		2		38		2		7		50
Adjusted		(3,451	)	(1,658	)	(2,389	)	(350	)	(215	)	(8,063	)
Share of profit in associates and joint ventures
Reported		13		-		-		-		579		592
Adjusted		13		-		-		-		579		592
Profit before tax
Reported		2,174		2,012		1,535		96		396		6,213
Significant items		57		4		104		2		(30	)	137
- revenue		-		-		53		-		(75	)	(22	)
- operating expenses		57		4		51		2		45		159
Adjusted		2,231		2,016		1,639		98		366		6,350
Loans and advances to customers (net)
Reported		369,178		339,729		252,180		42,497		1,695		1,005,279
Adjusted		369,178		339,729		252,180		42,497		1,695		1,005,279
Customer accounts
Reported		653,969		349,352		281,462		64,489		7,239		1,356,511
Adjusted		653,969		349,352		281,462		64,489		7,239		1,356,511

For footnotes, see page 41.

Reconciliation of reported and adjusted results - global businesses (continued)
		Quarter ended 31 Dec 2018
		Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported		5,110		3,703		3,112		429		341		12,695
Currency translation		25		19		21		1		9		75
Significant items		-		(7	)	(50	)	(5	)	(67	)	(129	)
- customer redress programmes		-		(7	)	-		-		-		(7	)
- disposals, acquisitions and investment in new businesses		-		-		-		(5	)	(24	)	(29	)
- fair value movement on financial instruments	2	-		-		(49	)	-		(46	)	(95	)
- currency translation on significant items		-		-		(1	)	-		3		2
Adjusted		5,135		3,715		3,083		425		283		12,641
Change in expected credit losses and other credit impairment (charges)/recoveries
Reported		(339	)	(444	)	(64	)	(8	)	2		(853	)
Currency translation		(5	)	(4	)	(1	)	(1	)	1		(10	)
Adjusted		(344	)	(448	)	(65	)	(9	)	3		(863	)
Operating expenses
Reported		(3,445	)	(1,574	)	(2,271	)	(355	)	(1,499	)	(9,144	)
Currency translation		(20	)	(8	)	(15	)	(1	)	(11	)	(55	)
Significant items		15		(9	)	(28	)	-		287		265
- costs of structural reform	3	(1	)	3		14		-		45		61
- customer redress programmes		17		(11	)	(22	)	-		-		(16	)
- disposals, acquisitions and investment in new businesses		-		-		-		(2	)	-		(2	)
- past service costs of guaranteed minimum pension benefits equalisation		-		-		-		-		228		228
- restructuring and other related costs		-		-		-		-		15		15
- settlements and provisions in connection with legal and regulatory matters		-		-		(21	)	-		(3	)	(24	)
- currency translation on significant items		(1	)	(1	)	1		2		2		3
Adjusted		(3,450	)	(1,591	)	(2,314	)	(356	)	(1,223	)	(8,934	)
Share of profit in associates and joint ventures
Reported		12		-		-		-		546		558
Currency translation		1		-		-		-		12		13
Adjusted		13		-		-		-		558		571
Profit before tax
Reported		1,338		1,685		777		66		(610	)	3,256
Currency translation		1		7		5		(1	)	11		23
Significant items		15		(16	)	(78	)	(5	)	220		136
- revenue		-		(7	)	(50	)	(5	)	(67	)	(129	)
- operating expenses		15		(9	)	(28	)	-		287		265
Adjusted		1,354		1,676		704		60		(379	)	3,415
Loans and advances to customers (net)
Reported		361,872		333,162		244,978		39,217		2,467		981,696
Currency translation		2,978		1,950		1,010		(51	)	36		5,923
Adjusted		364,850		335,112		245,988		39,166		2,503		987,619
Customer accounts
Reported		640,924		357,596		290,914		64,658		8,551		1,362,643
Currency translation		3,285		2,159		2,253		(126	)	2		7,573
Adjusted		644,209		359,755		293,167		64,532		8,553		1,370,216

For footnotes, see page 41.

Reconciliation of reported and adjusted results - global businesses (continued)
		Quarter ended 31 Mar 2018
		Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported		5,669		3,699		4,178		482		(318	)	13,710
Currency translation		(226	)	(164	)	(195	)	(15	)	(56	)	(656	)
Significant items		-		-		(29	)	-		171		142
- disposals, acquisitions and investment in new businesses		-		-		-		-		112		112
- fair value movement on financial instruments	2	-		-		(30	)	-		58		28
- currency translation on significant items		-		-		1		-		1		2
Adjusted		5,443		3,535		3,954		467		(203	)	13,196
Change in expected credit losses and other credit impairment (charges)/recoveries
Reported		(303	)	64		(22	)	3		88		(170	)
Currency translation		14		3		5		-		(4	)	18
Adjusted		(289	)	67		(17	)	3		84		(152	)
Operating expenses
Reported		(3,573	)	(1,653	)	(2,387	)	(415	)	(1,355	)	(9,383	)
Currency translation		189		80		113		15		49		446
Significant items		103		1		(23	)	41		1,001		1,123
- costs of structural reform	3	1		1		7		-		117		126
- customer redress programmes		93		-		-		-		-		93
- disposals, acquisitions and investment in new businesses		-		-		-		2		-		2
- restructuring and other related costs		-		-		-		-		20		20
- settlements and provisions in connection with legal and regulatory matters		16		-		(33	)	41		873		897
- currency translation on significant items		(7	)	-		3		(2	)	(9	)	(15	)
Adjusted		(3,281	)	(1,572	)	(2,297	)	(359	)	(305	)	(7,814	)
Share of profit in associates and joint ventures
Reported		3		-		-		-		595		598
Currency translation		-		-		-		-		(28	)	(28	)
Adjusted		3		-		-		-		567		570
Profit/(loss) before tax
Reported		1,796		2,110		1,769		70		(990	)	4,755
Currency translation		(23	)	(81	)	(77	)	-		(39	)	(220	)
Significant items		103		1		(52	)	41		1,172		1,265
- revenue		-		-		(29	)	-		171		142
- operating expenses		103		1		(23	)	41		1,001		1,123
Adjusted		1,876		2,030		1,640		111		143		5,800
Loans and advances to customers (net)
Reported		356,733		329,801		248,432		41,071		5,128		981,165
Currency translation		(17,354	)	(14,096	)	(10,215	)	(1,345	)	(381	)	(43,391	)
Adjusted		339,379		315,705		238,217		39,726		4,747		937,774
Customer accounts
Reported		656,759		359,146		290,233		63,069		10,472		1,379,679
Currency translation		(22,823	)	(14,159	)	(14,987	)	(2,534	)	(663	)	(55,166	)
Adjusted		633,936		344,987		275,246		60,535		9,809		1,324,513

For footnotes, see page 41.

Reconciliation of reported and adjusted risk-weighted assets
	At 31 Mar 2019
	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	$bn		$bn		$bn		$bn		$bn		$bn
Risk-weighted assets
Reported	126.5		325.4		285.5		16.8		125.3		879.5
Disposals	-		-		-		-		(0.8	)	(0.8	)
- operations in Brazil	-		-		-		-		(0.8	)	(0.8	)
Adjusted	126.5		325.4		285.5		16.8		124.5		878.7

	At 31 Dec 2018
Risk-weighted assets
Reported	126.9		321.2		281.0		16.8		119.4		865.3
Currency translation	0.4		2.0		0.6		-		0.2		3.2
Disposals	-		-		-		-		(0.8	)	(0.8	)
- operations in Brazil	-		-		-		-		(0.8	)	(0.8	)
Adjusted	127.3		323.2		281.6		16.8		118.8		867.7

	At 31 Mar 2018
Risk-weighted assets
Reported	125.8		314.0		304.3		16.9		133.4		894.4
Currency translation	(4.2	)	(13.9	)	(7.7	)	(0.4	)	(2.6	)	(28.8	)
Disposals	-		-		-		-		(2.6	)	(2.6	)
- operations in Brazil	-		-		-		-		(2.6	)	(2.6	)
Adjusted	121.6		300.1		296.6		16.5		128.2		863.0

Reconciliation of reported and adjusted results - geographical regions
		Quarter ended 31 Mar 2019
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported	4	4,605		7,819		702		1,676		971		14,428
Significant items		(60	)	27		-		4		7		(22	)
- fair value movement on financial instruments	2	(60	)	27		-		4		7		(22	)
Adjusted	4	4,545		7,846		702		1,680		978		14,406
ECL
Reported		(303	)	(158	)	(6	)	(3	)	(115	)	(585	)
Adjusted		(303	)	(158	)	(6	)	(3	)	(115	)	(585	)
Operating expenses
Reported	4	(4,318	)	(3,131	)	(345	)	(1,294	)	(479	)	(8,222	)
Significant items		143		7		1		5		3		159
- costs of structural reform	3	52		1		-		-		-		53
- customer redress programmes		56		-		-		-		-		56
- restructuring and other related costs		35		6		1		5		3		50
Adjusted	4	(4,175	)	(3,124	)	(344	)	(1,289	)	(476	)	(8,063	)
Share of profit in associates and joint ventures
Reported		2		476		114		-		-		592
Adjusted		2		476		114		-		-		592
Profit/(loss) before tax
Reported		(14	)	5,006		465		379		377		6,213
Significant items		83		34		1		9		10		137
- revenue		(60	)	27		-		4		7		(22	)
- operating expenses		143		7		1		5		3		159
Adjusted		69		5,040		466		388		387		6,350
Loans and advances to customers (net)
Reported		384,129		461,508		27,823		109,923		21,896		1,005,279
Adjusted		384,129		461,508		27,823		109,923		21,896		1,005,279
Customer accounts
Reported		507,459		656,566		35,941		129,934		26,611		1,356,511
Adjusted		507,459		656,566		35,941		129,934		26,611		1,356,511

For footnotes, see page 41.

Reconciliation of reported and adjusted results - geographical regions (continued)
		Quarter ended 31 Mar 2019
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	1
Reported		3,501		5,020		806		1,192		657
Significant items		(64	)	22		1		3		5
- fair value movement on financial instruments	2	(64	)	22		1		3		5
Adjusted		3,437		5,042		807		1,195		662
ECL
Reported		(290	)	(100	)	(40	)	(10	)	(98	)
Adjusted		(290	)	(100	)	(40	)	(10	)	(98	)
Operating expenses
Reported		(3,451	)	(1,672	)	(499	)	(1,011	)	(334	)
Significant items		113		7		-		3		2
- costs of structural reform	3	33		1		-		-		-
- customer redress programmes		56		-		-		-		-
- restructuring and other related costs		24		6		-		3		2
Adjusted		(3,338	)	(1,665	)	(499	)	(1,008	)	(332	)
Share of profit in associates and joint ventures
Reported		3		6		461		-		-
Adjusted		3		6		461		-		-
Profit/(loss) before tax
Reported		(237	)	3,254		728		171		225
Significant items		49		29		1		6		7
- revenue		(64	)	22		1		3		5
- operating expenses		113		7		-		3		2
Adjusted		(188	)	3,283		729		177		232
Loans and advances to customers (net)
Reported		296,111		295,322		41,643		65,916		18,832
Adjusted		296,111		295,322		41,643		65,916		18,832
Customer accounts
Reported		403,149		475,763		41,808		78,950		20,831
Adjusted		403,149		475,763		41,808		78,950		20,831

For footnotes, see page 41.

Reconciliation of reported and adjusted results - geographical regions (continued)
		Quarter ended 31 Dec 2018
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported	4	3,996		6,883		668		1,573		943		12,695
Currency translation	4	39		35		4		(3	)	7		75
Significant items		(100	)	(1	)	-		1		(29	)	(129	)
- customer redress programmes		(7	)	-		-		-		-		(7	)
- disposals, acquisitions and investment in new businesses		(5	)	-		-		-		(24	)	(29	)
- fair value movement on financial instruments	2	(90	)	(1	)	-		(1	)	(3	)	(95	)
- currency translation on significant items		2		-		-		2		(2	)	2
Adjusted	4	3,935		6,917		672		1,571		921		12,641
ECL
Reported		(422	)	(197	)	(6	)	(41	)	(187	)	(853	)
Currency translation		(6	)	(3	)	1		-		(2	)	(10	)
Adjusted		(428	)	(200	)	(5	)	(41	)	(189	)	(863	)
Operating expenses
Reported	4	(5,136	)	(3,203	)	(348	)	(1,242	)	(583	)	(9,144	)
Currency translation	4	(31	)	(27	)	(3	)	2		(3	)	(55	)
Significant items		254		7		-		4		-		265
- costs of structural reform	3	57		4		-		-		-		61
- customer redress programmes		(16	)	-		-		-		-		(16	)
- disposals, acquisitions and investment in new businesses		(2	)	-		-		-		-		(2	)
- past service costs of guaranteed minimum pension benefits equalisation		228		-		-		-		-		228
- restructuring and other related costs		6		4		-		5		-		15
- settlements and provisions in connection with legal and regulatory matters		(24	)	-		-		-		-		(24	)
- currency translation on significant items		5		(1	)	-		(1	)	-		3
Adjusted	4	(4,913	)	(3,223	)	(351	)	(1,236	)	(586	)	(8,934	)
Share of profit in associates and joint ventures
Reported		3		468		85		-		2		558
Currency translation		1		12		-		-		-		13
Adjusted		4		480		85		-		2		571
Profit/(loss) before tax
Reported		(1,559	)	3,951		399		290		175		3,256
Currency translation		3		17		2		(1	)	2		23
Significant items		154		6		-		5		(29	)	136
- revenue		(100	)	(1	)	-		1		(29	)	(129	)
- operating expenses		254		7		-		4		-		265
Adjusted		(1,402	)	3,974		401		294		148		3,415
Loans and advances to customers (net)
Reported		373,073		450,545		28,824		108,146		21,108		981,696
Currency translation		4,335		853		(107	)	827		15		5,923
Adjusted		377,408		451,398		28,717		108,973		21,123		987,619
Customer accounts
Reported		503,154		664,824		35,408		133,291		25,966		1,362,643
Currency translation		6,453		581		(105	)	865		(221	)	7,573
Adjusted		509,607		665,405		35,303		134,156		25,745		1,370,216

For footnotes, see page 41.

Reconciliation of reported and adjusted results - geographical regions (continued)
		Quarter ended 31 Dec 2018
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	1
Reported		2,871		4,361		660		1,087		596
Currency translation		39		(8	)	17		1		19
Significant items		(93	)	(6	)	(1	)	2		(4	)
- customer redress programmes		(7	)	-		-		-		-
- fair value movement on financial instruments	2	(86	)	(6	)	1		-		(3	)
- currency translation on significant items		-		-		(2	)	2		(1	)
Adjusted		2,817		4,347		676		1,090		611
ECL
Reported		(404	)	(102	)	(57	)	(21	)	(134	)
Currency translation		(4	)	(1	)	(1	)	(1	)	(4	)
Adjusted		(408	)	(103	)	(58	)	(22	)	(138	)
Operating expenses
Reported		(4,372	)	(1,708	)	(493	)	(968	)	(344	)
Currency translation		(34	)	4		(12	)	(1	)	(11	)
Significant items		251		7		-		4		-
- costs of structural reform	3	41		4		-		-		-
- customer redress programmes		(16	)	-		-		-		-
- past service costs of guaranteed minimum pension benefits equalisation		228		-		-		-		-
- restructuring and other related costs		7		4		-		4		-
- settlements and provisions in connection with legal and regulatory matters		(10	)	-		-		-		-
- currency translation on significant items		1		(1	)	-		-		-
Adjusted		(4,155	)	(1,697	)	(505	)	(965	)	(355	)
Share of profit in associates and joint ventures
Reported		4		10		455		-		-
Currency translation		-		-		12		-		-
Adjusted		4		10		467		-		-
Profit/(loss) before tax
Reported		(1,901	)	2,561		565		98		118
Currency translation		1		(5	)	16		(1	)	4
Significant items		158		1		(1	)	6		(4	)
- revenue		(93	)	(6	)	(1	)	2		(4	)
- operating expenses		251		7		-		4		-
Adjusted		(1,742	)	2,557		580		103		118
Loans and advances to customers (net)
Reported		287,144		290,547		38,979		64,009		17,890
Currency translation		5,940		(657	)	969		-		335
Adjusted		293,084		289,890		39,948		64,009		18,225
Customer accounts
Reported		399,487		484,897		45,712		82,523		19,936
Currency translation		8,260		(1,097	)	1,137		-		374
Adjusted		407,747		483,800		46,849		82,523		20,310

For footnotes, see page 41.

Reconciliation of reported and adjusted results - geographical regions (continued)
		Quarter ended 31 Mar 2018
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1
Reported	4	4,470		7,307		676		1,625		797		13,710
Currency translation	4	(343	)	(161	)	(25	)	(21	)	(126	)	(656	)
Significant items		47		(11	)	-		91		15		142
- disposals, acquisitions and investment in new businesses		-		-		-		95		17		112
- fair value movement on financial instruments	2	46		(12	)	-		(5	)	(1	)	28
- currency translation on significant items		1		1		-		1		(1	)	2
Adjusted	4	4,174		7,135		651		1,695		686		13,196
ECL
Reported		(62	)	(32	)	(4	)	47		(119	)	(170	)
Currency translation		6		2		2		(1	)	9		18
Adjusted		(56	)	(30	)	(2	)	46		(110	)	(152	)
Operating expenses
Reported	4	(4,437	)	(2,986	)	(343	)	(2,268	)	(514	)	(9,383	)
Currency translation	4	263		92		17		9		85		446
Significant items		179		-		-		944		-		1,123
- costs of structural reform	3	125		1		-		-		-		126
- customer redress programmes		93		-		-		-		-		93
- disposals, acquisitions and investment in new business		2		-		-		-		-		2
- restructuring and other related costs		20		-		-		-		-		20
- settlements and provisions in connection with legal and regulatory matters		(46	)	(1	)	-		944		-		897
- currency translation on significant items		(15	)	-		-		-		-		(15	)
Adjusted	4	(3,995	)	(2,894	)	(326	)	(1,315	)	(429	)	(7,814	)
Share of profit in associates and joint ventures
Reported		11		479		108		-		-		598
Currency translation		-		(28	)	-		-		-		(28	)
Adjusted		11		451		108		-		-		570
Profit/(loss) before tax
Reported		(18	)	4,768		437		(596	)	164		4,755
Currency translation		(74	)	(95	)	(6	)	(13	)	(32	)	(220	)
Significant items		226		(11	)	-		1,035		15		1,265
- revenue		47		(11	)	-		91		15		142
- operating expenses		179		-		-		944		-		1,123
Adjusted		134		4,662		431		426		147		5,800
Loans and advances to customers (net)
Reported		389,792		435,935		29,820		104,296		21,322		981,165
Currency translation		(29,449	)	(8,607	)	(1,129	)	(1,292	)	(2,914	)	(43,391	)
Adjusted		360,343		427,328		28,691		103,004		18,408		937,774
Customer accounts
Reported		531,025		652,770		35,471		136,637		23,776		1,379,679
Currency translation		(40,139	)	(9,150	)	(1,045	)	(1,421	)	(3,411	)	(55,166	)
Adjusted		490,886		643,620		34,426		135,216		20,365		1,324,513

For footnotes, see page 41.

Reconciliation of reported and adjusted results - geographical regions (continued)
		Quarter ended 31 Mar 2018
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	1
Reported		3,481		4,667		645		1,136		558
Currency translation		(259	)	(11	)	(38	)	2		(13	)
Significant items		49		1		(1	)	91		(1	)
- disposals, acquisitions and investment in new businesses		-		-		-		95		-
- fair value movement on financial instruments	2	48		1		(1	)	(5	)	(1	)
- currency translation on significant items		1		-		-		1		-
Adjusted		3,271		4,657		606		1,229		544
ECL
Reported		(57	)	(14	)	(8	)	22		(107	)
Currency translation		4		-		-		(1	)	2
Adjusted		(53	)	(14	)	(8	)	21		(105	)
Operating expenses
Reported		(3,446	)	(1,510	)	(454	)	(1,938	)	(324	)
Currency translation		189		6		26		(1	)	7
Significant items		126		-		-		889		-
- costs of structural reform	3	112		(1	)	-		-		-
- customer redress programmes		93		-		-		-		-
- restructuring and other related costs		20		-		-		-		-
- settlements and provisions in connection with legal and regulatory matters		(89	)	(1	)	-		889		-
- currency translation on significant items		(10	)	2		-		-		-
Adjusted		(3,131	)	(1,504	)	(428	)	(1,050	)	(317	)
Share of profit in associates and joint ventures
Reported		11		6		473		-		-
Currency translation		-		-		(27	)	-		-
Adjusted		11		6		446		-		-
Profit/(loss) before tax
Reported		(11	)	3,149		656		(780	)	127
Currency translation		(66	)	(5	)	(39	)	-		(4	)
Significant items		175		1		(1	)	980		(1	)
- revenue		49		1		(1	)	91		(1	)
- operating expenses		126		-		-		889		-
Adjusted		98		3,145		616		200		122
Loans and advances to customers (net)
Reported		302,090		272,621		44,022		62,655		16,595
Currency translation		(21,948	)	(47	)	(2,783	)	-		(900	)
Adjusted		280,142		272,574		41,239		62,655		15,695
Customer accounts
Reported		421,892		471,587		42,572		86,043		17,890
Currency translation		(30,652	)	(81	)	(2,690	)	-		(971	)
Adjusted		391,240		471,506		39,882		86,043		16,919

Footnotes to Appendix - selected information

Net operating income before change in expected credit losses and other credit impairment charges, also referred to as 'revenue'.

Includes fair value movements on non-qualifying hedges and DVA on derivative contracts.

Comprises costs associated with preparations for the UK's exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong.

Amounts are non-additive across geographical regions due to intra-Group transactions.

Reconciliation of capital with and without IFRS 9 transitional arrangements
	At 31 Mar 2019
	CET1		Tier 1		Total own funds
	$bn		$bn		$bn
Reported balance using IFRS 9 transitional arrangements	125.8		151.8		177.8
Expected credit losses reversed under transitional arrangements for IFRS 9	(1.0	)	(1.0	)	(1.0	)
- standardised approach	(1.0	)	(1.0	)	(1.0	)
- internal ratings based approach	-		-		-
Tax impacts	0.2		0.2		0.2
Changes in amounts deducted from CET1 for deferred tax assets and significant investments	(0.1	)	(0.1	)	(0.1	)
- amounts deducted from CET1 for deferred tax assets	-		-		-
- amounts deducted from CET1 for significant investments	(0.1	)	(0.1	)	(0.1	)
Reported balance excluding IFRS 9 transitional arrangements	124.9		150.9		176.9

First interim dividend for 2019

On 3 May 2019, the Directors declared a first interim dividend in respect of 2019 of $0.10 per ordinary share. The ordinary shares in London, Hong Kong, Paris and Bermuda, and the American Depositary Shares ('ADSs') in New York, will be quoted ex-dividend on
16 May 2019. The dividend will be payable on 5 July 2019 to holders of record on 17 May 2019.

The dividend will be payable in US dollars, sterling or Hong Kong dollars, or a combination of these currencies, at the forward exchange rates quoted by HSBC Bank plc in London at or about 11.00am on 24 June 2019. A scrip dividend will also be offered. Particulars of these arrangements will be sent to shareholders on or about 30 May 2019 and elections must be received by 20 June 2019.

The dividend will be payable on ordinary shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, on 5 July 2019 to the holders of record on 17 May 2019. The dividend will be payable in US dollars or as a scrip dividend. Particulars of these arrangements will be announced through Euronext Paris on 6 May, 24 May and 8 July 2019.

The dividend will be payable on ADSs, each of which represents five ordinary shares, on 5 July 2019 to holders of record on 17 May 2019. The dividend of $0.50 per ADS will be payable by the depositary in US dollars or as a scrip dividend of new ADSs. Particulars of these arrangements will be sent to holders on or about 30 May 2019 and elections will be required to be made by 13 June 2019. Alternatively, the cash dividend may be invested in additional ADSs by participants in the dividend reinvestment plan operated by the depositary.

To receive the dividend, any person who has acquired ordinary shares registered on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register must lodge the share transfer with the Principal Registrar,
the Hong Kong or Bermuda Branch Registrar by 4.00pm local time on 17 May 2019.

Transfers of ADSs must be lodged with the depositary by 11.00am local time on 17 May 2019 in order to receive the dividend.

Dividend on preference shares

A quarterly dividend of $15.50 per 6.20% non-cumulative US dollar preference share, Series A ('Series A dollar preference share'), (equivalent to a dividend of $0.3875 per Series A American Depositary Share ('ADS'), each of which represents one-fortieth of a Series A dollar preference share), and £0.01 per Series A sterling preference share is payable on 15 March, 15 June, 15 September and
15 December 2019 for the quarter then ended at the sole and absolute discretion of the Board of HSBC Holdings plc. Accordingly, the Board of HSBC Holdings plc has declared a quarterly dividend be payable on 17 June 2019 to holders of record on 31 May 2019.

For and on behalf of

HSBC Holdings plc

Richard Gray

Group Company Secretary

The Board of Directors of HSBC Holdings plc as at the date of this announcement are: Mark Tucker*, John Flint, Kathleen Casey^†, Laura Cha^†, Henri de Castries^†, Irene Lee^†, Ewen Stevenson, José Meade^†, Heidi Miller^†, Marc Moses, David Nish^†, Jonathan Symonds^†, Jackson Tai^† and Pauline van der Meer Mohr^†.

* Non-executive Group Chairman

† Independent non-executive Director

Terms and abbreviations

1Q19	First quarter of 2019
1Q18	First quarter of 2018
4Q18	Fourth quarter of 2018
AFS	Available for sale
BoCom	Bank of Communications Co., Limited
Bps	Basis points. One basis point is equal to one-hundredth of a percentage point
BSM	Balance Sheet Management
C&L	Credit and Lending
CET1	Common equity tier 1
CMB	Commercial Banking, a global business
CML	Consumer and Mortgage Lending (US)
CODM	Chief Operating Decision Maker
Corporate Centre	In December 2016, certain functions were combined to create a Corporate Centre. These include Balance Sheet Management, legacy businesses and interests in associates and joint ventures. The Corporate Centre also includes the results of our financing operations, central support costs with associated recoveries and the UK bank levy
CRD IV	Capital Requirements Directive IV
CRR	Customer risk rating
D-SIB	Domestic systemically important bank
DPD	Days past due
DVA	Debit value adjustments
EBA	European Banking Authority
ECL	Expected credit losses. In the income statement, ECL is recorded as a change in expected credit losses and other credit impairment charges. In the balance sheet, ECL is recorded as an allowance for financial instruments to which only the impairment requirements in IFRS 9 are applied
FTEs	Full-time equivalent staff
FVOCI	Fair value through other comprehensive income
GB&M	Global Banking and Markets, a global business
GLCM	Global Liquidity and Cash Management
GMB	Group Management Board
GPB	Global Private Banking, a global business
Group	HSBC Holdings together with its subsidiary undertakings
G-SIB	Global systemically important bank
GTRF	Global Trade and Receivables Finance
Hong Kong	Hong Kong Special Administrative Region of the People's Republic of China
HSBC	HSBC Holdings together with its subsidiary undertakings
HSBC Bank	HSBC Bank plc
HSBC Holdings	HSBC Holdings plc, the parent company of HSBC
HSBC UK	HSBC UK Bank plc
IAS	International Accounting Standards
IFRSs	International Financial Reporting Standards
IMA	Internal models approach
IMM	Internal model method
IRB	Internal ratings based
IRC	Incremental risk charge
Jaws	The difference between the rate of growth of revenue and the rate of growth of costs. Positive jaws is where the revenue growth rate exceeds the cost growth rate. We calculate this on an adjusted basis
JV	Joint venture
LCR	Liquidity coverage ratio
Legacy credit	A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backed securities trading portfolios, credit correlation portfolios and derivative transactions entered into directly with monoline insurers
Mainland China	People's Republic of China excluding Hong Kong
MENA	Middle East and North Africa
NIM	Net interest margin
PBT	Profit before tax
PD	Probability of default
POCI	Purchased or originated credit-impaired
PRA	Prudential Regulation Authority (UK)
RBWM	Retail Banking and Wealth Management, a global business
Revenue	Net operating income before ECL
RMBS	Residential mortgage-backed securities
RoE	Return on average ordinary shareholders' equity
RoTE	Return on average tangible equity
RWAs	Risk-weighted assets
SABB	The Saudi British Bank
ServCo group	Separately incorporated group of service companies set up in response to UK ring-fencing proposals
$m/$bn/$tn	United States dollar millions/billions/trillions. We report in US dollars
VaR	Value at risk

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/9606X_1-2019-5-2.pdf

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

QRFDGGDUIXGBGCD

Company Announcements

HSBC Holdings plc 1Q19 Earnings Release