Half-year Report 2a of 2

Aug 28 2019 18:54 BSTSource: RNS

RNS Number : 4691K

HSBC Holdings PLC

28 August 2019

Financial summary
	Page
Use of non-GAAP financial measures	18
Adjusted performance	18
Significant items	18
Foreign currency translation differences	18
Changes from 1 January 2019	18
Summary consolidated income statement	19
Group performance by income and expense item	19
Net interest income	19
Net fee income	21
Net income from financial instruments measured at fair value through profit and loss	22
Gains less losses from financial investments	23
Net insurance premium income	23
Other operating income	23
Net insurance claims and benefits paid and movement in liabilities to policyholders	24
Change in expected credit losses and other credit impairment charges	24
Operating expenses	26
Share of profit in associates and joint ventures	28
Tax expense	29
Summary consolidated balance sheet	30
Balance sheet commentary compared with 31 December 2018	31

Use of non-GAAP financial measures

Our reported results are prepared in accordance with IFRSs as detailed in the financial statements starting on page

To measure our performance we also use non-GAAP financial measures, including those derived from our reported results that eliminate factors that distort period-on-period comparisons. The 'adjusted performance' measure used throughout this report is described below, and where others are used they are described. All non-GAAP financial measures are reconciled to the closest reported financial measure.

The global business segmental results on pages 29 to 32 are presented on an adjusted basis in accordance with IFRS 8 'Operating Segments' as detailed in 'Basis of preparation' on
page 29.

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 provides 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.

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 32 to 34 and pages 40 to 45 detail the effects of significant items on each of our global business segments, geographical regions and selected countries/territories in 1H19, and 1H18 and 2H18.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies during 2019.

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 to understand better the underlying trends in the business.

Foreign currency translation differences

Foreign currency translation differences for the half-year to 30 June 2019 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

• the income statements for the half-years to 30 June 2018 and 31 December 2018 at the average rates of exchange for the half-year to 30 June 2019; and

• the balance sheets at 30 June 2018 and 31 December 2018 at the prevailing rates of exchange on 30 June 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 Argentina 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.

Changes from 1 January 2019

IFRS 16 'Leases'

On 1 January 2019, HSBC adopted the requirements of IFRS 16 'Leases' retrospectively, with the cumulative effect of initially applying the standard recognised as an adjustment to the opening balance of retained earnings at that date. Comparatives were not restated. The adoption of the standard increased assets by $5bn and increased financial liabilities by the same amount with no effect on net assets or retained earnings.

IAS 12 'Income Taxes'

An amendment to IAS 12 'Income Taxes' was issued in December 2017 as part of the annual improvement cycle. The amendment clarifies that an entity should recognise the tax consequences of dividends where the transactions or events that generated the distributable profits are recognised. This amendment was applied on 1 January 2019, and had no material impact. Comparatives have not been restated.

Summary consolidated income statement

		Half-year to
		30 Jun		30 Jun		31 Dec
		2019		2018		2018
	Footnotes	$m		$m		$m
Net interest income		15,240		15,100		15,389
Net fee income		6,124		6,767		5,853
Net income from financial instruments held for trading or managed on a fair value basis		5,331		4,883		4,648
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		2,196		(222	)	(1,266	)
Changes in fair value of long-term debt and related derivatives		88		(126	)	29
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		457		345		350
Gains less losses from financial investments		201		124		94
Dividend income		38		41		34
Net insurance premium income		6,323		5,776		4,883
Other operating income		2,034		359		526
Total operating income		38,032		33,047		30,540
Net insurance claims and benefits paid and movement in liabilities to policyholders		(8,660	)	(5,760	)	(4,047	)
Net operating income before change in expected credit losses and other credit impairment charges	12	29,372		27,287		26,493
Change in expected credit losses and other credit impairment charges		(1,140	)	(407	)	(1,360	)
Net operating income		28,232		26,880		25,133
Total operating expenses		(17,149	)	(17,549	)	(17,110	)
Operating profit		11,083		9,331		8,023
Share of profit in associates and joint ventures		1,324		1,381		1,155
Profit before tax		12,407		10,712		9,178
Tax expense		(2,470	)	(2,296	)	(2,569	)
Profit for the period		9,937		8,416		6,609
Attributable to:
- ordinary shareholders of the parent company		8,507		7,173		5,435
- preference shareholders of the parent company		45		45		45
- other equity holders		664		530		499
- non-controlling interests		721		668		630
Profit for the period		9,937		8,416		6,609
		$		$		$
Basic earnings per share		0.42		0.36		0.27
Diluted earnings per share		0.42		0.36		0.27
Dividend per ordinary share (declared in the period)		0.31		0.31		0.20
		%		%		%
Post-tax return on average total assets (annualised)		0.7		0.6		0.5
Return on average ordinary shareholders' equity (annualised)		10.4		8.7		6.7
Return on average tangible equity (annualised)	16	11.2		9.7		8.6

For footnotes, see page 48.

Group performance by income and expense item

For further financial performance data of our global business segments, see pages 31 to 37. For further financial performance data by geographical regions and selected countries/territories, see pages 38 to 45.

Net interest income

		Half-year to				Full-year to
		30 Jun		30 Jun		31 Dec
		2019		2018		2018
	Footnotes	$m		$m		$m
Interest income		27,750		23,422		49,609
Interest expense		(12,510	)	(8,322	)	(19,120	)
Net interest income	17	15,240		15,100		30,489
Average interest-earning assets		1,912,708		1,839,603		1,839,346
		%		%		%
Gross interest yield	18	2.93		2.57		2.70
Less: cost of funds	18	(1.55	)	(1.07	)	(1.21	)
Net interest spread	19	1.38		1.50		1.49
Net interest margin	20	1.61		1.66		1.66

For footnotes, see page 48.

Summary of interest income by type of asset
		Half-year to								Full-year to
		30 Jun 2019				30 Jun 2018				31 Dec 2018
		Average balance		Interest income	Yield	Average balance		Interest income	Yield	Average balance		Interest income	Yield
	Footnotes	$m		$m	%	$m		$m	%	$m		$m	%
Short-term funds and loans and advances to banks		217,474		1,285	1.19	240,804		1,116	0.93	233,637		2,475	1.06
Loans and advances to customers		1,011,928		17,833	3.55	966,481		16,036	3.35	972,963		33,285	3.42
Reverse repurchase agreements - non-trading		231,308		2,635	2.30	198,154		1,589	1.62	205,427		3,739	1.82
Financial investments		408,673		5,380	2.65	385,907		4,220	2.21	386,230		9,166	2.37
Other interest-earning assets		43,325		617	2.87	48,257		461	1.93	41,089		944	2.30
Total interest-earning assets		1,912,708		27,750	2.93	1,839,603		23,422	2.57	1,839,346		49,609	2.70
Trading assets and financial assets designated or mandatorily measured at fair value	21, 22	213,627		2,751	2.60	201,696		2,775	2.77	195,922		5,215	2.66
Expected credit losses provision		(8,502	)			(7,739	)			(7,816	)
Non-interest-earning assets		555,264				617,148				584,524
Total		2,673,097		30,501	2.30	2,650,708		26,197	1.99	2,611,976		54,824	2.10

For footnotes, see page 48.

Summary of interest expense by type of liability and equity
		Half-year to						Full-year to
		30 Jun 2019			30 Jun 2018			31 Dec 2018
		Average balance	Interest expense	Cost	Average balance	Interest expense	Cost	Average balance	Interest expense	Cost
	Footnotes	$m	$m	%	$m	$m	%	$m	$m	%
Deposits by banks		51,199	370	1.46	45,142	226	1.01	44,530	506	1.14
Customer accounts		1,138,196	5,637	1.00	1,138,617	3,463	0.61	1,138,620	8,287	0.73
Repurchase agreements - non-trading		170,342	2,320	2.75	159,293	1,488	1.88	161,204	3,409	2.11
Debt securities in issue - non-trading	23	205,192	3,361	3.30	179,903	2,654	2.97	183,434	5,675	3.09
Other interest-bearing liabilities		59,266	822	2.80	48,649	491	2.04	53,731	1,243	2.31
Total interest-bearing liabilities		1,624,195	12,510	1.55	1,571,604	8,322	1.07	1,581,519	19,120	1.21
Trading liabilities and financial liabilities designated at fair value (excluding own debt issued)	23, 24	149,814	1,872	2.52	140,485	1,804	2.59	142,184	3,524	2.48
Non-interest-bearing current accounts		228,524			211,839			211,815
Total equity and other non-interest-bearing liabilities		670,564			726,780			676,458
Total		2,673,097	14,382	1.08	2,650,708	10,126	0.77	2,611,976	22,644	0.87

For footnotes, see page 48.

Significant items and currency translation
	Half-year to			Full-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$m	$m		$m
Significant items	-	43		50
- customer redress programmes	-	46		53
- currency translation on significant items		(3	)	(3	)
Currency translation		581		631
Total	-	624		681

Reported net interest income ('NII') for 1H19 was $15.2bn, an increase of $0.1bn or 1% compared with 1H18. This reflected an increase in average interest-earning assets ('AIEA') of 4%, largely offset by a decline in net interest margin ('NIM') of 5 basis points ('bps').

The increase in NII in 1H19 included $0.6bn relating to the adverse effects of foreign currency translation differences. In 1H18, there was a $43m release related to customer redress programmes. Excluding the effects of significant items and foreign currency translation differences, net interest income increased by $0.8bn or 5%.

Interest income

Interest income increased by $4.3bn compared with 1H18, reflecting rising interest rates, with the yield on AIEA increasing by 36bps. This increase included $1.0bn related to the adverse effects of foreign currency translation differences in 1H19 and the favourable effects of customer redress programmes in 1H18. Excluding the effects of significant items and foreign currency translation differences, interest income increased by $5.3bn, driven by higher income from loans and advances to customers, surplus liquidity and reverse repurchase agreements.

Interest income on loans and advances to customers was $1.8bn higher, mainly from rising interest rates with the yield on AIEA increasing by 20bps, and volume growth of 5% in AIEA. These were mainly in Asia, notably in term lending and mortgages in Hong Kong.

Interest income on surplus liquidity rose by $1.3bn, primarily in Asia following interest rate increases. It was also higher in Europe, driven by a build-up of liquidity due to the formation of the non-ring-fenced bank in 2H18.

Interest income on reverse repurchase agreements was $1.0bn higher, driven by rising interest rates in North America and Europe.

Interest expense

Reported interest expense increased by $4.2bn compared with 1H18, including $0.3bn from the favourable effects of foreign currency translation differences. Excluding the effect of foreign currency translation differences, interest expense increased by $4.5bn. This reflected the impact of rising interest rates across average interest-bearing liabilities ('AIBL'), which increased cost by 48bps, predominantly in customer accounts.

Interest expense on customer accounts increased by $2.2bn, mainly in Asia, reflecting the effect of rate rises and a shift in funding mix from current accounts towards term deposits. This was partly offset by growth in non-interest-bearing current accounts, mainly in Europe.

Interest expense on repurchase agreements rose by $0.8bn, reflecting rising interest rates in North America and Europe.

Interest expense on debt issued rose by $0.7bn. This was mainly as a result of debt issuances by HSBC Holdings to meet regulatory requirements, which contributed $0.4bn towards the increase.

Net interest margin

Net interest margin of 1.61% decreased by 5bps compared with 2018. The higher yield on AIEA (up 23bps), was more than offset by the rise in funding costs of AIBL (up 34bps).

The decrease in 1H19 included the adverse effects of foreign currency translation differences, which contributed to a decrease of 1bp. Net interest margin, excluding the effects of significant items and foreign currency translation differences, decreased by 4bps.

Net fee income

	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Funds under management	1,067		1,149		1,072
Account services	1,034		1,156		1,021
Cards	968		965		991
Credit facilities	805		897		826
Unit trusts	546		613		425
Broking income	544		710		500
Underwriting	446		431		292
Remittances	373		361		417
Global custody	342		378		358
Imports/exports	338		362		347
Insurance agency commission	200		233		171
Other	1,141		1,214		1,155
Fee income	7,804		8,469		7,575
Less: fee expense	(1,680	)	(1,702	)	(1,722	)
Net fee income	6,124		6,767		5,853

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Significant items	-	-	-
Currency translation		229	27
Total	-	229	27

Net fee income of $6.1bn was $0.6bn lower compared with 1H18. This included adverse foreign currency translation differences of $0.2bn. This decrease reflected the effects of weaker market sentiment on investment-related income, mainly in Hong Kong, as well as lower event-driven activity in our investment banking business.

Fee income from broking and unit trusts decreased by $0.2bn, primarily in RBWM in Hong Kong from lower volumes, due to the non-recurrence in 1H19 of exceptional market conditions in the prior year. In addition, fee income from funds under management fell by $0.1bn, mainly in RBWM in Hong Kong, driven by a change in the product mix towards lower margin fixed income products.

Corporate Finance fee income (disclosed within 'other') decreased by $0.1bn. This was primarily in GB&M in our Global Banking business in Europe, reflecting lower event-driven activity.

Account services fee income fell by $0.1bn compared with 1H18. This reduction was mainly in the US due to a reclassification of wire transfer fees from 'account services' to 'remittances' from the fourth quarter of 2018.

Net income from financial instruments measured at fair value through profit and loss

		Half-year to
		30 Jun		30 Jun		31 Dec
		2019		2018		2018
	Footnotes	$m		$m		$m
Trading activities		9,226		5,190		2,044
Other trading income - hedge ineffectiveness		23		(17	)	(28	)
- on cash flow hedges		2		(8	)	-
- on fair value hedges		21		(9	)	(28	)
Fair value movement on non-qualifying hedges	25	93		(210	)	3
Other instruments designated and managed on a fair value basis and related derivatives		(4,011	)	(80	)	2,629
Net income from financial instruments held for trading or managed on a fair value basis		5,331		4,883		4,648
Financial assets held to meet liabilities under insurance and investment contracts		2,438		(240	)	(1,345	)
Liabilities to customers under investment contracts		(242	)	18		79
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		2,196		(222	)	(1,266	)
Changes in fair value of long-term debt and related derivatives		88		(126	)	29
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		457		345		350
Net income from financial instruments measured at fair value through profit or loss		8,072		4,880		3,761

For footnotes, see page 48.

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$m	$m		$m
Significant items	50	(163	)	52
- disposals, acquisitions and investment in new businesses	-	(8	)	-
- fair value movement on financial instruments	50	(152	)	52
- currency translation on significant items		(3	)	-
Currency translation		301		57
Total	50	138		109

Net income from financial instruments measured at fair value through profit and loss of $8.1bn was $3.2bn higher than in 1H18. It included adverse foreign currency translation differences of $0.3bn and net favourable movements in significant items of $0.2bn, mainly reflecting net favourable fair value movements on financial instruments, including non-qualifying hedges and debit valuation adjustments.

The increase in reported net income from financial instruments measured at fair value reflected the following:

'Net income from financial instruments held for trading or managed on a fair value basis' increased by $0.4bn and included a favourable fair value movement on non-qualifying hedges of $0.1bn in 1H19, compared with an adverse movement of $0.2bn in 1H18.

Income from trading activities was $4.0bn higher, mainly reflecting favourable movements on derivatives held as hedges against structured notes. This increase was broadly offset in 'Other instruments designated and managed on a fair value basis and related derivatives' (down $3.9bn), as the structured notes and the related hedges are closely matched.

Income from trading activities also increased in Asia, primarily from revaluation gains on funding swaps due to favourable movements on yield curves.

These increases were partly offset by lower trading income in Global Markets, notably in Europe.

'Financial assets held to meet liabilities under insurance and investment contracts' increased by $2.7bn as favourable fair value movements of $2.4bn in 1H19 compared with adverse movements of $0.2bn in 1H18. This increase was primarily in Hong Kong, France and Singapore, as improved equity market performance in 1H19 compared with 1H18 led to revaluation gains on equity portfolios and funds supporting insurance and investment contracts. Offsetting movements were recorded in liabilities to customers, reflecting the extent to which they participate in the investment performance of these assets. These offsetting movements can be seen in 'Net income/(expense) arising from liabilities to customers under investment contracts' and 'Net insurance claims and benefits paid and movement in liabilities to policyholders'.

'Changes in fair value of long-term debt and related derivatives' reflected a favourable movement of $0.1bn in 1H19, compared with an adverse movement of $0.1bn in 1H18.

These movements were driven by changes in interest rates between the periods, notably in US dollars, euros and pounds sterling.

The majority of our financial liabilities designated at fair value are fixed-rate, long-term debt issuances, and are managed in conjunction with interest rate swaps as part of our interest rate management strategy. These liabilities are discussed further on page 28.

Gains less losses from financial investments

	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Net gains from disposal	201	124	94
- debt securities	197	114	106
- other financial investments	4	10	(12	)
Gains less losses from financial investments	201	124	94

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Significant items	-	-	-
- disposals, acquisitions and investment in new businesses	-	-	-
- currency translation on significant items		-	-
Currency translation		3	1
Total	-	3	1

Gains less losses from financial investments of $201m increased by $77m compared with 1H18, reflecting higher gains from the disposal of debt securities.

The increase was mainly in Corporate Centre, notably in the UK, from net gains on the sale of debt securities in legacy credit in

1H19 compared with net losses in 1H18. In addition, we recorded higher gains in Australia and the US.

This was partly offset in RBWM from the non-recurrence of a 1H18 gain following the restructuring of the annuities portfolio in Mexico.

Net insurance premium income

	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Gross insurance premium income	6,683		6,078		5,260
Reinsurance premiums	(360	)	(302	)	(377	)
Net insurance premium income	6,323		5,776		4,883

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Significant items	-	-	-
Currency translation		136	26
Total	-	136	26

Net insurance premium income of $6.3bn was $0.5bn higher compared with 1H18, and included adverse foreign currency translation differences.

This was driven by higher new business volumes, particularly in Hong Kong and France, partly offset by higher reinsurance ceded in Hong Kong.

Other operating income

	Half-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$m	$m		$m
Rent received	78	84		68
Gains/(losses) recognised on assets held for sale	51	(30	)	42
Gains on investment properties	41	23		59
Gains on disposal of property, plant and equipment, intangible assets and non-financial investments	926	6		27
Change in present value of in-force long-term insurance business	912	363		318
Other	26	(87	)	12
Other operating income	2,034	359		526

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$m	$m		$m
Significant items	827	(134	)	27
- disposals, acquisitions and investment in new businesses	827	(134	)	27
- currency translation on significant items		-		-
Currency translation		99		(36	)
Total	827	(35	)	(9	)

Other operating income of $2.0bn increased by $1.7bn compared with 1H18. The increase included a 1H19 dilution gain of $0.8bn, recognised on the completion of the merger of our associate The Saudi British Bank ('SABB') with Alawwal bank in Saudi Arabia, presented within 'Gains on disposal of property, plant and equipment, intangible assets and non-financial investments' in the table above. The increase also included a $0.5bn increase in favourable movements in the present value of in-force long-term insurance business ('PVIF').

The favourable change in PVIF reflected a $0.5bn increase in 'assumption changes and experience variances', mainly in Hong Kong from the effect of interest rate changes on the valuation of the liabilities under insurance contracts, and a $0.1bn increase of the value of new business written in 1H19 compared with 1H18.

We recorded net gains on assets held for sale in 1H19, compared with net losses in 1H18. The movement largely related to 1H19 gains in Argentina following the sale of a stake in the payment processing company Prisma Medios de Pago SA.

In 'Other', in 1H19 we recorded a gain in Mexico associated with the launch of a merchant acquiring services joint venture with Global Payments Inc. This gain was partly offset by the adverse effects of hyperinflation accounting in Argentina. By contrast, in 1H18 we recorded a loss of $95m on the early redemption of subordinated debt linked to the US run-off portfolio.

Net insurance claims and benefits paid and movement in liabilities to policyholders

	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Gross	9,032		5,879		4,342
Less reinsurers' share	(372	)	(119	)	(295	)
Net insurance claims and benefits paid and movement in liabilities to policyholders	8,660		5,760		4,047

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Significant items	-	-	-
Currency translation		195	48
Total	-	195	48

'Net insurance claims and benefits paid and movement in liabilities to policyholders' of $8.7bn were $2.9bn higher than in 1H18, and included adverse foreign currency translation differences.

This was primarily due to higher returns on the financial assets supporting policyholders where the policyholder is subject to part or all of the investment risk. This reflected favourable equity market performances in Hong Kong, France and Singapore compared with 1H18.

The gains or losses recognised on the financial assets measured at fair value that are held to support these insurance contract liabilities are reported in 'Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss' on page 22.

The increase also reflected the impact of higher new business volumes in Hong Kong, France and Singapore, partly offset by higher reinsurance ceded in Hong Kong.

Change in expected credit losses and other credit impairment charges

	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Loans and advances to banks and customers	1,180		508		1,388
- new allowances net of allowance releases	1,381		769		1,535
- recoveries of amounts previously written off	(201	)	(261	)	(147	)
Loan commitments and guarantees	(44	)	(7	)	4
Other financial assets	9		(5	)	(16	)
Debt instruments measured at fair value through other comprehensive income	(5	)	(89	)	(16	)
Change in expected credit losses and other credit impairment charges	1,140		407		1,360

Significant items and currency translation
	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Significant items	-	-	-
Currency translation		50	4
Total	-	50	4

Changes in expected credit losses and other credit impairment charges ('ECL') of $1.1bn in 1H19 comprised 'new allowances net of allowance releases' of $1.4bn, partly offset by $0.2bn of 'recoveries of amounts previously written off'. 'New allowances net of allowance releases' included changes in risk parameters of $1.7bn and new financial assets originated or purchased of $0.4bn, which were partly offset by assets derecognised of $0.8bn.

ECL in 1H19 of $1.1bn were $0.7bn higher compared with 1H18, primarily driven by higher charges in CMB and GB&M. The effects of foreign currency translation differences between the periods were minimal.

• In CMB, ECL charges of $0.5bn were $0.4bn higher due to an increase in charges in Europe, Asia and North America. In Europe, ECL charges were mainly in HSBC UK relating to a small number of exposures. In addition, there were ECL charges in 1H19 compared with net releases in 1H18, in both Asia and North America.

• In GB&M, we recorded net ECL charges of $0.1bn, notably relating to specific corporate exposures in Europe. In 1H18, there were net releases of $0.1bn largely related to a small number of clients in the US, notably within the oil and gas sector, partly offset by charges in the UK against exposures in the retail and construction sectors.

• In Corporate Centre, we recorded a lower net ECL release, primarily related to our legacy portfolios in the UK.

On a constant currency basis, ECL as a percentage of average gross loans and advances to customers was 0.23%, compared with 0.08% at 1H18.

Operating expenses

Operating expenses
		Half-year to
		30 Jun	30 Jun	31 Dec
		2019	2018	2018
	Footnotes	$m	$m	$m
By expense category
Employee compensation and benefits		9,255	8,836	8,537
Premises and equipment (excluding depreciation and impairment)		1,240	1,733	1,689
General and administrative expenses		5,132	6,034	5,897
Administrative expenses		15,627	16,603	16,123
Depreciation and impairment of property, plant and equipment and right-of-use assets	26	1,010	568	551
Amortisation and impairment of intangible assets		512	378	436
Operating expenses		17,149	17,549	17,110

For footnotes, see page 48.

Staff numbers (full-time equivalents)
	At
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
Global businesses
Retail Banking and Wealth Management	135,768	129,999	133,644
Commercial Banking	45,010	43,529	44,805
Global Banking and Markets	48,673	47,298	48,500
Global Private Banking	6,921	6,922	6,819
Corporate Centre	1,313	1,447	1,449
Total staff numbers	237,685	229,195	235,217

Significant items and currency translation
	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Significant items	986		1,164		488
- costs of structural reform	91		211		150
- customer redress programmes	610		100		46
- disposals, acquisitions and investment in new businesses	-		3		49
- past service costs of guaranteed minimum pension benefits equalisation	-		-		228
- restructuring and other related costs	287		24		42
- settlements and provisions in connection with legal and regulatory matters	(2	)	841		(25	)
- currency translation on significant items			(15	)	(2	)
Currency translation			770		72
Total	986		1,934		560

Reported operating expenses of $17.1bn were $0.4bn or 2% lower than in 1H18 and included favourable foreign currency translation differences of $0.8bn and a net favourable movement in significant items of $0.2bn.

Significant items included:

• the non-recurrence of settlements and provisions in connection with legal and regulatory matters of $0.8bn in 1H18; and

• structural reform costs of $0.1bn in 1H19, which included costs associated with the UK's withdrawal from the European Union. This compared with structural reform costs of $0.2bn in 1H18.

These were partly offset by:

• customer redress programme costs in respect of the mis-selling of payment protection insurance ('PPI') of $0.6bn in 1H19, compared with $0.1bn in 1H18. For further details, see Note 10 on the financial statements; and

• restructuring and other related costs of $0.3bn in 1H19, primarily reflecting $248m of severance costs arising from cost efficiency measures across our global businesses and functions. We expect total severance costs in 2H19 to be moderately higher than the year-to-date cost, and we expect total cost savings in 2020 from these measures to be approximately equal to 2019 severance costs.

Excluding significant items and foreign currency translation differences, operating expenses of $16.2bn were $0.5bn or 4% higher than in 1H18. The increase primarily reflected investments to grow the business (up $0.3bn), notably in RBWM and CMB, as well as continued investment in digital capabilities across all of our global businesses.

Performance-related pay was higher by $0.1bn and volume-related growth increased by $0.1bn. The impact of our cost-saving efficiencies broadly offset inflation.

The effect of hyperinflation accounting in Argentina increased adjusted operating expenses in 1H19 by $19m.

In 1H19, we maintained our momentum to grow the business.

• In RBWM, we continued to invest in key strategic initiatives, including enhancing our digital capabilities, growing our Wealth Management business in Asia, and driving growth in key markets, notably in Hong Kong, the UK, the US and Mexico, through lending products.

• In CMB, we introduced enhanced features for our Digital Business Bank UK mobile app, including biometrics. In GTRF, we made progress in our investment programme, as we improved capabilities in structured trade and increased automation.

The number of employees expressed in full-time equivalent staff ('FTEs') at 30 June 2019 was 237,685, an increase of 2,468 from 31 December 2018. This was mainly driven by investments in business growth programmes across RBWM and CMB, and continued investment in digital across all global businesses. Additionally, the number of contractors at 30 June 2019 was 9,647, a decrease of 1,207 from 31 December 2018.

Share of profit in associates and joint ventures

	Half-year to
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$m	$m	$m
Share of profit in associates	1,306	1,371	1,148
Share of profit in joint ventures	18	10	7
Share of profit in associates and joint ventures	1,324	1,381	1,155

Our share of profit in associates and joint ventures was $1.3bn in 1H19, a decrease of $57m or 4%. This reduction primarily reflected adverse foreign currency translation differences of $67m. Excluding foreign currency translation differences, our share of profit in associates and joint ventures increased by $10m.

At 30 June 2019, we performed an impairment review of our investment in Bank of Communications Co., Limited ('BoCom') and concluded that it was not impaired, based on our value-in-use ('VIU') calculation. For more information on the key assumptions in our VIU calculation, including the sensitivity of the VIU to each key assumption, see Note 9 on the financial statements.

As discussed in Note 9 on the financial statements, in future periods the VIU may increase or decrease depending on the effect of changes to model inputs. It is expected that the carrying amount will increase due to retained profits earned by BoCom. At the point where the carrying amount exceeds the VIU, impairment would be recognised. We would continue to recognise our share of BoCom's profit or loss, but the carrying amount would be reduced to equal the VIU, with a corresponding reduction in income. An impairment review would continue to be performed at each subsequent reporting period, with the carrying amount and income adjusted accordingly.

Tax expense

	Half-year to
	30 Jun		30 Jun		31 Dec
	2019		2018		2018
	$m		$m		$m
Profit before tax	12,407		10,712		9,178
Tax expense	(2,470	)	(2,296	)	(2,569	)
Profit after tax	9,937		8,416		6,609
Effective tax rate	19.9%		21.4%		28.0%

The effective tax rate for 1H19 of 19.9% was lower than the 21.4% for 1H18, principally due to the non-taxable dilution gain in 1H19. The effective tax rate for 2H18 of 28.0% was higher than for 1H19 and 1H18, principally due to the non-recognition of deferred tax assets and the bank levy charge in 2H18.

Summary consolidated balance sheet
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Assets
Cash and balances at central banks	171,090	162,843
Trading assets	271,424	238,130
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	41,043	41,111
Derivatives	233,621	207,825
Loans and advances to banks	82,397	72,167
Loans and advances to customers	1,021,632	981,696
Reverse repurchase agreements - non-trading	233,079	242,804
Financial investments	428,101	407,433
Other assets	268,886	204,115
Total assets	2,751,273	2,558,124
Liabilities and equity
Liabilities
Deposits by banks	71,051	56,331
Customer accounts	1,380,124	1,362,643
Repurchase agreements - non-trading	184,497	165,884
Trading liabilities	94,149	84,431
Financial liabilities designated at fair value	165,104	148,505
Derivatives	229,903	205,835
Debt securities in issue	103,663	85,342
Liabilities under insurance contracts	93,794	87,330
Other liabilities	228,114	167,574
Total liabilities	2,550,399	2,363,875
Equity
Total shareholders' equity	192,676	186,253
Non-controlling interests	8,198	7,996
Total equity	200,874	194,249
Total liabilities and equity	2,751,273	2,558,124

Selected financial information
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Called up share capital	10,281	10,180
Capital resources	178,259	173,238
Undated subordinated loan capital	1,968	1,969
Preferred securities and dated subordinated loan capital	32,569	35,014
Risk-weighted assets	885,971	865,318
Total shareholders' equity	192,676	186,253
Less: preference shares and other equity instruments	(23,772)	(23,772)
Total ordinary shareholders' equity	168,904	162,481
Less: goodwill and intangible assets (net of tax)	(23,463)	(22,425)
Tangible ordinary shareholders' equity	145,441	140,056
Financial statistics
Loans and advances to customers as a percentage of customer accounts	74.0%	72.0%
Average total shareholders' equity to average total assets	7.07%	7.16%
Net asset value per ordinary share at period end ($)	8.35	8.13
Tangible net asset value per ordinary share at period end ($)	7.19	7.01
Tangible net asset value per fully diluted ordinary share at period end ($)	7.17	6.98
Basic number of $0.50 ordinary shares outstanding (millions)	20,221	19,981
Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	20,286	20,059
Closing foreign exchange translation rates to $:
$1: £	0.786	0.783
$1: €	0.878	0.873

A more detailed consolidated balance sheet is contained in the financial statements on page 84.

Balance sheet commentary compared with 31 December 2018

At 30 June 2019, our total assets were $2.8tn, an increase of $193bn or 8% on a reported basis, and $192bn or 7% on a constant currency basis.

We increased our balance sheet by targeted lending growth, notably in Asia, which grew by $23bn or 5% on a reported basis, and $22bn or 5% on a constant currency basis, reflecting the strategic importance of the region.

On a reported basis, loans and advances to customers increased by $40bn, and customer accounts increased by $17bn. Excluding foreign currency translation differences, loans and advances to customers increased by $39bn or 4%, and customer accounts increased by $16bn or 1%.

Our ratio of customer advances to customer accounts was 74%, up from 72% at 31 December 2018.

Assets

Trading assets increased by $33bn or 14%, notably from an increase in debt securities held, mainly in the UK, the US and France. In addition, trading assets increased in Asia, reflecting higher equity security holdings in Hong Kong.

Derivative assets increased by $26bn or 12%, primarily in France and the UK, reflecting revaluation movements on interest rate contracts. This was partly offset by a reduction in foreign exchange contracts in the UK, reflecting lower client activity. The increase in derivative assets was consistent with an increase in derivative liabilities, since the underlying risk is broadly matched.

Financial investments increased by $21bn or 5%, mainly due to an increase in debt securities in the UK. This was partly offset by a decrease in investments in government bonds in Hong Kong.

Other assets grew by $65bn or 32%, primarily due to an increase in settlement accounts in the US, the UK and Hong Kong from higher trading activity, compared with the seasonal reduction in December 2018.

Loans and advances to customers

Loans and advances to customers increased by $40bn on a reported basis compared with 31 December 2018. This included favourable foreign currency translation differences of $1bn. Excluding the effects of foreign currency translation differences, loans and advances to customers increased by $39bn or 4%.

The commentary below is on a constant currency basis.

Customer lending growth was primarily in Asia (up $22bn). The growth was notably in RBWM (up $8bn), primarily in Hong Kong (up $6bn) as we maintained our leading position in mortgages, and in Australia (up $2bn), as we continued to increase mortgage lending, in part due to a successful marketing campaign in 1H19. Customer lending also increased in GPB (up $5bn), mainly in Hong Kong (up $4bn), driven by growth in marketable securities-backed lending transactions. In CMB (up $7bn) and in GB&M (up $2bn), the growth reflected higher term lending from our continued strategic focus on growth throughout the region.

Customer lending increased in Europe by $12bn, notably in HSBC UK (up $7bn), including mortgage growth of $4bn, reflecting our focus on broker-originated mortgages, and in CMB where term lending increased to large corporates, middle market enterprise and commercial real estate customers. In addition, GB&M balances increased in term lending, notably in France.

Liabilities

Repurchase agreements - non-trading increased by $19bn or 11%, primarily in the US, Hong Kong, mainland China and France. This was mainly driven by the increased use of repurchase agreements for funding in our Global Markets business.

Derivative liabilities increased by $24bn or 12%, which is consistent with the increase in derivative assets, since the underlying risk is broadly matched.

Debt securities in issue increased by $18bn or 21%, reflecting an increase in certificates of deposit, primarily in North America, Europe and Asia, and higher commercial paper issuance in the UK.

Financial liabilities designated at fair value increased by $17bn or 11%, driven by further issuances of MREL-eligible senior debt during 1H19 and the mark-to-market increase in value of structured notes.

Other liabilities increased by $61bn or 36%, mainly from an increase in settlement accounts in the UK and the US, from higher seasonal trading activity compared with December 2018.

Customer accounts

Customer accounts increased by $17bn on a reported basis, and included favourable foreign currency translation differences of $2bn. Excluding this, customer accounts increased by $16bn or 1%.

The commentary below is on a constant currency basis.

In Asia, we grew customer accounts by $11bn, notably in RBWM (up $9bn) and also in GB&M (up $5bn). These were primarily business-driven increases in Singapore of $4bn, Australia of $2bn and Hong Kong of $2bn.

Customer accounts increased in Europe by $3bn. This was driven by an increase in RBWM balances, notably in HSBC UK (up $4bn) within current accounts and savings, partly offset by a decrease in GB&M balances mainly in the UK.

Equity

Total shareholders' equity increased by $6bn or 3% compared with 31 December 2018. The effects of profits generated in the period and fair value gains on debt and equity instruments were partly offset by dividends paid to shareholders and adverse changes in fair value attributable to changes in own credit risk.

Customer accounts by country/territory
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Europe	504,386	503,154
- UK	398,857	399,487
- France	47,978	45,169
- Germany	19,798	16,713
- Switzerland	5,423	6,315
- other	32,330	35,470
Asia	677,289	664,824
- Hong Kong	487,948	484,897
- Singapore	46,229	42,323
- mainland China	45,409	45,712
- Australia	22,157	20,649
- India	15,660	14,210
- Malaysia	13,984	13,904
- Taiwan	13,677	13,602
- Indonesia	4,476	3,810
- other	27,749	25,717
Middle East and North Africa (excluding Saudi Arabia)	36,593	35,408
- United Arab Emirates	17,281	16,583
- Egypt	4,711	4,493
- Turkey	3,598	4,169
- other	11,003	10,163
North America	135,400	133,291
- US	82,260	82,523
- Canada	46,189	43,898
- other	6,951	6,870
Latin America	26,456	25,966
- Mexico	20,437	19,936
- other	6,019	6,030
At end of period	1,380,124	1,362,643

Risk-weighted assets

Risk-weighted assets ('RWAs') totalled $886.0bn at 30 June 2019, a $20.7bn increase in the first half of the year, which included an increase of $1.1bn due to foreign currency translation differences. Excluding foreign currency translation differences, RWAs rose by $19.6bn. This mainly comprised growth of $27.8bn from asset size and $1.4bn from changes in asset quality. This was partly offset by reductions of $9.6bn from methodology and policy changes.

Asset size increases included lending growth of $16.6bn across most businesses and regions. Corporate Centre RWAs rose by $4.8bn, largely in Asia. GB&M counterparty credit risk RWAs increased by $4.6bn, mostly in Europe, largely due to mark-to-market movements, increased volumes of securities financing transactions and new derivative trades.

Global businesses
	Page
Summary	32
Basis of preparation	32
Analysis of adjusted results by global business	33
Reconciliation of reported and adjusted items	34
Reconciliation of reported and adjusted items - global businesses	35
Reconciliation of reported and adjusted items - risk-weighted assets	38
Supplementary tables for RBWM and GPB	38

Summary

The Group Chief Executive and the rest of the Group Management Board ('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'.

Basis of preparation
The Group Chief Executive, supported by the rest of the GMB, is considered the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's reportable 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. 1H18 and 2H18 adjusted performance information is presented on a constant currency basis as described on page 18.
As required by IFRS 8, reconciliations of the total adjusted global business results to the Group's reported results are presented on page 31.
Supplementary reconciliations from reported to adjusted results by global business are presented on pages 32 to 34 for information purposes.
Global business performance is also assessed using return on tangible equity ('RoTE'), excluding significant items and the UK bank levy. A reconciliation of global business RoTE, excluding significant items and the UK bank levy, to the Group's RoTE is provided in the Reconciliations of Non-GAAP Financial Measures 30 June 2019.
Our operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and expense. These allocations include the costs of certain support services and global functions to the extent that they can be meaningfully attributed to global businesses and geographical regions. While such allocations have been made on a systematic and consistent basis, they necessarily involve a degree of subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.
Where relevant, income and expense amounts presented include the results of inter-segment funding along with inter-company and inter-business line transactions. All such transactions are undertaken on arm's length terms. The intra-Group elimination items for the global businesses are presented in Corporate Centre.
The expense of the UK bank levy is included in the Europe geographical region as HSBC regards the levy as a cost of being headquartered in the UK. For the purposes of the presentation by global business, the cost of the levy is included in Corporate Centre.
The results of geographical regions are presented on a reported basis.
Geographical information is classified by the location of the principal operations of the subsidiary or, for The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank plc, HSBC UK Bank plc, HSBC Bank Middle East Limited and HSBC Bank USA, by the location of the branch responsible for reporting the results or providing funding.

A description of the global businesses is provided in the Overview section, pages 10 to 14.

Analysis of adjusted results by global business

HSBC adjusted profit before tax and balance sheet data
		Half-year to 30 Jun 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
Net operating income/(expense) before change in expected credit losses and other credit impairment charges	12	11,919		7,816		7,706		924		130		28,495
- external		8,789		7,545		9,493		675		1,993		28,495
- inter-segment		3,130		271		(1,787	)	249		(1,863	)	-
of which: net interest income/(expense)		8,155		5,653		2,861		441		(1,870	)	15,240
Change in expected credit losses and other credit impairment (charges)/recoveries		(540	)	(494	)	(95	)	(19	)	8		(1,140	)
Net operating income		11,379		7,322		7,611		905		138		27,355
Total operating expenses		(6,981	)	(3,297	)	(4,787	)	(709	)	(389	)	(16,163	)
Operating profit/(loss)		4,398		4,025		2,824		196		(251	)	11,192
Share of profit in associates and joint ventures		43		-		-		-		1,281		1,324
Adjusted profit before tax		4,441		4,025		2,824		196		1,030		12,516
		%		%		%		%		%		%
Share of HSBC's adjusted profit before tax		35.5		32.1		22.6		1.6		8.2		100.0
Adjusted cost efficiency ratio		58.6		42.2		62.1		76.7		299.2		56.7
Adjusted balance sheet data		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		376,126		347,387		250,790		45,806		1,523		1,021,632
Interests in associates and joint ventures		456		-		-		-		23,436		23,892
Total external assets		498,045		377,142		1,120,235		50,757		705,094		2,751,273
Customer accounts		660,588		358,735		289,950		62,235		8,616		1,380,124
Adjusted risk-weighted assets		128,957		327,553		284,509		16,531		127,607		885,157

		Half-year to 30 Jun 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
Net operating income/(expense) before change in expected credit losses and other credit impairment charges	12	10,668		7,140		7,916		907		(250	)	26,381
- external		8,741		7,001		9,181		782		676		26,381
- inter-segment		1,927		139		(1,265	)	125		(926	)	-
of which: net interest income/(expense)		7,389		4,985		2,385		436		(720	)	14,475
Change in expected credit losses and other credit impairment (charges)/recoveries		(514	)	(37	)	103		4		87		(357	)
Net operating income/(expense)		10,154		7,103		8,019		911		(163	)	26,024
Total operating expenses		(6,583	)	(3,128	)	(4,588	)	(724	)	(592	)	(15,615	)
Operating profit/(loss)		3,571		3,975		3,431		187		(755	)	10,409
Share of profit in associates and joint ventures		17		-		-		-		1,297		1,314
Adjusted profit before tax		3,588		3,975		3,431		187		542		11,723
		%		%		%		%		%		%
Share of HSBC's adjusted profit before tax		30.6		33.9		29.3		1.6		4.6		100.0
Adjusted cost efficiency ratio		61.7		43.8		58.0		79.8		(236.8	)	59.2
Adjusted balance sheet data		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		345,029		324,717		246,900		40,809		2,012		959,467
Interests in associates and joint ventures		393		-		-		-		21,744		22,137
Total external assets		467,809		359,329		1,036,945		47,311		659,756		2,571,150
Customer accounts		628,536		351,422		286,690		63,164		9,675		1,339,487
Adjusted risk-weighted assets		122,679		310,278		282,439		16,881		121,666		853,943

For footnotes, see page 48.

HSBC adjusted profit before tax and balance sheet data (continued)
		Half-year to 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
Net operating income/(expense) before change in expected credit losses and other credit impairment charges	12	10,834		7,420		7,230		854		(5	)	26,333
- external		8,155		7,313		8,483		694		1,688		26,333
- inter-segment		2,679		107		(1,253	)	160		(1,693	)	-
of which: net interest income/(expense)		8,135		5,461		2,768		440		(1,472	)	15,332
Change in expected credit losses and other credit impairment (charges)/recoveries		(634	)	(684	)	(70	)	3		28		(1,357	)
Net operating income		10,200		6,736		7,160		857		23		24,976
Total operating expenses		(6,772	)	(3,191	)	(4,653	)	(702	)	(1,232	)	(16,550	)
Operating profit/(loss)		3,428		3,545		2,507		155		(1,209	)	8,426
Share of profit in associates and joint ventures		17		-		-		-		1,150		1,167
Adjusted profit/(loss) before tax		3,445		3,545		2,507		155		(59	)	9,593
		%		%		%		%		%		%
Share of HSBC's adjusted profit before tax		35.9		37.0		26.1		1.6		(0.6	)	100.0
Adjusted cost efficiency ratio		62.5		43.0		64.4		82.2		(24,640.0	)	62.8
Adjusted balance sheet data		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		362,262		333,854		245,261		39,265		2,459		983,101
Interests in associates and joint ventures		399		-		-		-		22,043		22,442
Total external assets		477,618		361,369		1,011,691		45,140		663,540		2,559,358
Customer accounts		641,833		358,201		290,964		64,660		8,679		1,364,337
Adjusted risk-weighted assets		126,929		321,717		281,338		16,811		118,826		865,621

For footnotes, see page 48.

Reconciliation of reported and adjusted items

Adjusted results reconciliation
		Half-year to
		30 Jun 2019						30 Jun 2018								31 Dec 2018
		Adjusted		Significant items		Reported		Adjusted		Currency translation		Significant items		Reported		Adjusted		Currency translation		Significant items		Reported
	Footnotes	$m		$m		$m		$m		$m		$m		$m		$m		$m		$m		$m
Revenue	12	28,495		877		29,372		26,381		1,160		(254	)	27,287		26,333		75		85		26,493
ECL		(1,140	)	-		(1,140	)	(357	)	(50	)	-		(407	)	(1,357	)	(3	)	-		(1,360	)
Operating expenses		(16,163	)	(986	)	(17,149	)	(15,615	)	(770	)	(1,164	)	(17,549	)	(16,550	)	(72	)	(488	)	(17,110	)
Share of profit in associates and joint ventures		1,324		-		1,324		1,314		67		-		1,381		1,167		(12	)	-		1,155
Profit before tax		12,516		(109	)	12,407		11,723		407		(1,418	)	10,712		9,593		(12	)	(403	)	9,178

For footnotes, see page 48.

Adjusted balance sheet reconciliation
	At
	30 Jun 2019	31 Dec 2018
	Reported and adjusted	Adjusted	Currency translation		Reported
	$m	$m	$m		$m
Loans and advances to customers (net)	1,021,632	983,101	(1,405	)	981,696
Interests in associates and joint ventures	23,892	22,442	(35	)	22,407
Total external assets	2,751,273	2,559,358	(1,234	)	2,558,124
Customer accounts	1,380,124	1,364,337	(1,694	)	1,362,643

Adjusted profit reconciliation
		Half-year to
		30 Jun		30 Jun		31 Dec
		2019		2018		2018
	Footnotes	$m		$m		$m
Adjusted profit before tax		12,516		11,723		9,593
Significant items		(109	)	(1,418	)	(403	)
- customer redress programmes		(610	)	(54	)	(39	)
- disposals, acquisitions and investment in new businesses		827		(145	)	(20	)
- fair value movements on financial instruments	27	50		(152	)	52
- costs of structural reform	28	(91	)	(211	)	(150	)
- restructuring and other related costs		(287	)	(24	)	(42	)
- past service costs of guaranteed minimum pension benefits equalisation		-		-		(228	)
- settlements and provisions in connection with legal and regulatory matters		2		(841	)	25
- currency translation on significant items				9		(1	)
Currency translation				407		(12	)
Reported profit before tax		12,407		10,712		9,178

For footnotes, see page 48.

Reconciliation of reported and adjusted items - global businesses

Supplementary analysis of significant items by global business is presented below.

		Half-year to 30 Jun 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	12
Reported		11,919		7,816		7,636		924		1,077		29,372
Significant items		-		-		70		-		(947	)	(877	)
- disposals, acquisitions and investment in new businesses		-		-		-		-		(827	)	(827	)
- fair value movements on financial instruments	27	-		-		70		-		(120	)	(50	)
Adjusted		11,919		7,816		7,706		924		130		28,495
ECL
Reported		(540	)	(494	)	(95	)	(19	)	8		(1,140	)
Adjusted		(540	)	(494	)	(95	)	(19	)	8		(1,140	)
Operating expenses
Reported		(7,639	)	(3,324	)	(4,907	)	(722	)	(557	)	(17,149	)
Significant items		658		27		120		13		168		986
- costs of structural reform	28	-		4		29		-		58		91
- customer redress programmes		615		(1	)	(4	)	-		-		610
- restructuring and other related costs		43		24		95		14		111		287
- settlements and provisions in connection with legal and regulatory matters		-		-		-		(1	)	(1	)	(2	)
Adjusted		(6,981	)	(3,297	)	(4,787	)	(709	)	(389	)	(16,163	)
Share of profit in associates and joint ventures
Reported		43		-		-		-		1,281		1,324
Adjusted		43		-		-		-		1,281		1,324
Profit before tax
Reported		3,783		3,998		2,634		183		1,809		12,407
Significant items		658		27		190		13		(779	)	109
- revenue		-		-		70		-		(947	)	(877	)
- operating expenses		658		27		120		13		168		986
Adjusted		4,441		4,025		2,824		196		1,030		12,516
Loans and advances to customers (net)
Reported		376,126		347,387		250,790		45,806		1,523		1,021,632
Adjusted		376,126		347,387		250,790		45,806		1,523		1,021,632
Customer accounts
Reported		660,588		358,735		289,950		62,235		8,616		1,380,124
Adjusted		660,588		358,735		289,950		62,235		8,616		1,380,124

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - global businesses (continued)
		Half-year to 30 Jun 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	12
Reported		11,058		7,485		8,330		929		(515	)	27,287
Currency translation		(397	)	(301	)	(352	)	(22	)	(88	)	(1,160	)
Significant items		7		(44	)	(62	)	-		353		254
- customer redress programmes		-		(46	)	-		-		-		(46	)
- disposals, acquisitions and investment in new businesses		7		-		-		-		135		142
- fair value movements on financial instruments	27	-		-		(65	)	-		217		152
- currency translation on significant items		-		2		3		-		1		6
Adjusted		10,668		7,140		7,916		907		(250	)	26,381
ECL
Reported		(543	)	(55	)	97		4		90		(407	)
Currency translation		29		18		6		-		(3	)	50
Adjusted		(514	)	(37	)	103		4		87		(357	)
Operating expenses
Reported		(7,020	)	(3,281	)	(4,702	)	(787	)	(1,759	)	(17,549	)
Currency translation		332		145		202		21		70		770
Significant items		105		8		(88	)	42		1,097		1,164
- costs of structural reform	28	1		2		16		-		192		211
- customer redress programmes		94		6		-		-		-		100
- disposals, acquisitions and investment in new businesses		-		-		-		3		-		3
- restructuring and other related costs		-		-		-		-		24		24
- settlements and provisions in connection with legal and regulatory matters		16		-		(108	)	41		892		841
- currency translation on significant items		(6	)	-		4		(2	)	(11	)	(15	)
Adjusted		(6,583	)	(3,128	)	(4,588	)	(724	)	(592	)	(15,615	)
Share of profit in associates and joint ventures
Reported		17		-		-		-		1,364		1,381
Currency translation		-		-		-		-		(67	)	(67	)
Adjusted		17		-		-		-		1,297		1,314
Profit before tax
Reported		3,512		4,149		3,725		146		(820	)	10,712
Currency translation		(36	)	(138	)	(144	)	(1	)	(88	)	(407	)
Significant items		112		(36	)	(150	)	42		1,450		1,418
- revenue		7		(44	)	(62	)	-		353		254
- operating expenses		105		8		(88	)	42		1,097		1,164
Adjusted		3,588		3,975		3,431		187		542		11,723
Loans and advances to customers (net)
Reported		351,114		329,300		250,058		40,902		2,069		973,443
Currency translation		(6,085	)	(4,583	)	(3,158	)	(93	)	(57	)	(13,976	)
Adjusted		345,029		324,717		246,900		40,809		2,012		959,467
Customer accounts
Reported		635,598		355,650		291,711		63,593		9,755		1,356,307
Currency translation		(7,062	)	(4,228	)	(5,021	)	(429	)	(80	)	(16,820	)
Adjusted		628,536		351,422		286,690		63,164		9,675		1,339,487

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - global businesses (continued)
		Half-year to 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	12
Reported		10,870		7,453		7,304		861		5		26,493
Currency translation		(38	)	(27	)	(16	)	(2	)	8		(75	)
Significant items		2		(6	)	(58	)	(5	)	(18	)	(85	)
- customer redress programmes		-		(7	)	-		-		-		(7	)
- disposals, acquisitions and investment in new businesses		-		-		-		(5	)	(24	)	(29	)
- fair value movements on financial instruments	27	-		-		(57	)	-		5		(52	)
- currency translation on significant items		2		1		(1	)	-		1		3
Adjusted		10,834		7,420		7,230		854		(5	)	26,333
ECL
Reported		(634	)	(684	)	(71	)	4		25		(1,360	)
Currency translation		-		-		1		(1	)	3		3
Adjusted		(634	)	(684	)	(70	)	3		28		(1,357	)
Operating expenses
Reported		(6,882	)	(3,199	)	(4,646	)	(763	)	(1,620	)	(17,110	)
Currency translation		31		14		14		4		9		72
Significant items		79		(6	)	(21	)	57		379		488
- costs of structural reform	28	1		6		25		-		118		150
- customer redress programmes		79		(11	)	(22	)	-		-		46
- disposals, acquisitions and investment in new businesses		-		-		-		49		-		49
- past service costs of guaranteed minimum pension benefits equalisation		-		-		-		-		228		228
- restructuring and other related costs		-		-		-		7		35		42
- settlements and provisions in connection with legal and regulatory matters		-		-		(23	)	1		(3	)	(25	)
- currency translation on significant items		(1	)	(1	)	(1	)	-		1		(2	)
Adjusted		(6,772	)	(3,191	)	(4,653	)	(702	)	(1,232	)	(16,550	)
Share of profit in associates and joint ventures
Reported		16		-		-		-		1,139		1,155
Currency translation		1		-		-		-		11		12
Adjusted		17		-		-		-		1,150		1,167
Profit before tax
Reported		3,370		3,570		2,587		102		(451	)	9,178
Currency translation		(6	)	(13	)	(1	)	1		31		12
Significant items		81		(12	)	(79	)	52		361		403
- revenue		2		(6	)	(58	)	(5	)	(18	)	(85	)
- operating expenses		79		(6	)	(21	)	57		379		488
Adjusted		3,445		3,545		2,507		155		(59	)	9,593
Loans and advances to customers (net)
Reported		361,872		333,162		244,978		39,217		2,467		981,696
Currency translation		390		692		283		48		(8	)	1,405
Adjusted		362,262		333,854		245,261		39,265		2,459		983,101
Customer accounts
Reported		640,924		357,596		290,914		64,658		8,551		1,362,643
Currency translation		909		605		50		2		128		1,694
Adjusted		641,833		358,201		290,964		64,660		8,679		1,364,337

For footnotes, see page 48.

Reconciliation of reported and adjusted risk-weighted assets

	At 30 Jun 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	129.0		327.6		284.5		16.5		128.4		886.0
Disposals	-		-		-		-		(0.8	)	(0.8	)
- operations in Brazil	-		-		-		-		(0.8	)	(0.8	)
Adjusted	129.0		327.6		284.5		16.5		127.6		885.2

	At 30 Jun 2018
Risk-weighted assets
Reported	124.1		315.1		284.5		17.0		124.8		865.5
Currency translation	(1.4	)	(4.8	)	(2.1	)	(0.1	)	(0.5	)	(8.9	)
Disposals	-		-		-		-		(2.7	)	(2.7	)
- operations in Brazil	-		-		-		-		(2.7	)	(2.7	)
Adjusted	122.7		310.3		282.4		16.9		121.6		853.9

	At 31 Dec 2018
Risk-weighted assets
Reported	126.9	321.2	281.0	16.8	119.4		865.3
Currency translation	-	0.5	0.3	-	0.3		1.1
Disposals	-	-	-	-	(0.8	)	(0.8	)
- operations in Brazil	-	-	-	-	(0.8	)	(0.8	)
Adjusted	126.9	321.7	281.3	16.8	118.9		865.6

Supplementary tables for RBWM and GPB

RBWM adjusted performance by business unit

A breakdown of RBWM by business unit is presented below to reflect the basis of how the revenue performance of the business units is assessed and managed.

RBWM - summary (adjusted basis)
		Consists of
		Total RBWM		Banking operations		Insurance manufacturing		Asset management
	Footnotes	$m		$m		$m		$m
Half-year to 30 Jun 2019
Net operating income before change in expected credit losses and other credit impairment charges	12	11,919		9,939		1,459		521
- net interest income		8,155		7,118		1,042		(5	)
- net fee income/(expense)		2,498		2,390		(376	)	484
- other income		1,266		431		793		42
ECL		(540	)	(538	)	(2	)	-
Net operating income		11,379		9,401		1,457		521
Total operating expenses		(6,981	)	(6,356	)	(246	)	(379	)
Operating profit		4,398		3,045		1,211		142
Share of profit in associates and joint ventures		43		7		36		-
Profit before tax		4,441		3,052		1,247		142

Half-year to 30 Jun 2018
Net operating income before loan impairment charges and other credit risk provisions	12	10,668		9,170		964		534
- net interest income		7,389		6,408		983		(2	)
- net fee income/(expense)		2,703		2,469		(300	)	534
- other income		576		293		281		2
ECL		(514	)	(515	)	1		-
Net operating income		10,154		8,655		965		534
Total operating expenses		(6,583	)	(6,027	)	(208	)	(348	)
Operating profit		3,571		2,628		757		186
Share of profit in associates and joint ventures		17		-		17		-
Profit before tax		3,588		2,628		774		186

RBWM - summary (adjusted basis) (continued)
		Consists of
		Total RBWM		Banking operations		Insurance manufacturing		Asset management
	Footnotes	$m		$m		$m		$m
Half-year to 31 Dec 2018
Net operating income before loan impairment charges and other credit risk provisions	12	10,834		9,502		824		508
- net interest income		8,135		7,087		1,050		(2	)
- net fee income/(expense)		2,396		2,169		(271	)	498
- other income		303		246		45		12
ECL		(634	)	(631	)	(3	)	-
Net operating income		10,200		8,871		821		508
Total operating expenses		(6,772	)	(6,163	)	(252	)	(357	)
Operating profit		3,428		2,708		569		151
Share of profit in associates and joint ventures		17		2		15		-
Profit before tax		3,445		2,710		584		151

For footnotes, see page 48.

RBWM insurance manufacturing adjusted revenue of $1,459m (1H18: $964m, 2H18: $824m) was disclosed within the management view of adjusted revenue on page 11, as follows: Wealth Management $1,383m (1H18: $899m, 2H18: $732m) and Other $76m (1H18: $65m, 2H18 $92m).

RBWM Insurance manufacturing adjusted results

The following table shows the results of our insurance manufacturing operations by income statement line item. It shows

the results of insurance manufacturing operations for RBWM and for all global business segments in aggregate, and separately the insurance distribution income earned by HSBC bank channels.

Adjusted results of insurance manufacturing operations and insurance distribution income earned by HSBC bank channels²⁹
		Half-year to
		30 Jun				30 Jun				31 Dec
		2019				2018				2018
		RBWM		All global businesses		RBWM		All global businesses		RBWM		All global businesses
	Footnotes	$m		$m		$m		$m		$m		$m
Net interest income		1,042		1,128		983		1,065		1,050		1,140
Net fee income		(376	)	(415	)	(300	)	(304	)	(271	)	(256	)
- fee income		50		62		95		146		86		128
- fee expense		(426	)	(477	)	(395	)	(450	)	(357	)	(384	)
Net income from financial instruments held for trading or managed on a fair value basis		(68	)	(64	)	(13	)	64		82		128
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		2,244		2,244		(187	)	(265	)	(1,289	)	(1,295	)
Gains less losses from financial investments		1		3		41		40		17		17
Net insurance premium income		5,860		6,355		5,305		5,667		4,777		4,906
Other operating income		921		955		355		402		355		361
Of which: PVIF		876		912		329		361		309		679
Total operating income		9,624		10,206		6,184		6,669		4,721		5,001
Net insurance claims and benefits paid and movement in liabilities to policyholders		(8,165	)	(8,653	)	(5,220	)	(5,551	)	(3,897	)	(4,100	)
Net operating income before change in expected credit losses and other credit impairment charges		1,459		1,553		964		1,118		824		901
Change in expected credit losses and other credit impairment charges		(2	)	(2	)	1		1		(3	)	(3	)
Net operating income		1,457		1,551		965		1,119		821		898
Total operating expenses		(246	)	(241	)	(208	)	(219	)	(252	)	(264	)
Operating profit		1,211		1,310		757		900		569		634
Share of profit in associates and joint ventures		36		27		17		17		15		15
Profit before tax of insurance manufacturing operations	30	1,247		1,337		774		917		584		649
Annualised new business premiums of insurance manufacturing operations		1,931		2,000		1,751		1,812		1,406		1,423
Insurance distribution income earned by HSBC bank channels		505		581		501		577		424		464

For footnotes, see page 48.

Insurance manufacturing

The following commentary, unless otherwise specified, relates to the 'All global businesses' results.

HSBC recognises the present value of long-term in-force insurance contracts and investment contracts with discretionary participation features ('PVIF') as an asset on the balance sheet. The overall balance sheet equity, including PVIF, is therefore a measure of the embedded value in the insurance manufacturing entities, and the movement in this embedded value in the period drives the overall income statement result.

Adjusted profit before tax of $1.3bn increased by $0.4bn or 46% compared with 1H18.

Adjusted revenue was $0.4bn or 39% higher than in 1H18. This reflected the following:

• 'Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss' of $2.2bn in 1H19 compared with a net expense of $0.3bn in 1H18, primarily due to favourable equity market performances in Hong Kong, France and Singapore. This positive movement resulted in a corresponding movement in liabilities to policyholders and PVIF (see 'Other operating income' below), reflecting the extent to which policyholders participate in the investment performance of the associated asset portfolios.

• Net insurance premium income of $6.4bn was $0.7bn higher compared with 1H18. This was driven by higher new business volumes, particularly in Hong Kong and France, partly offset by higher reinsurance premiums ceded in Hong Kong.

• Other operating income of $1.0bn increased by $0.6bn compared with 1H18, mainly from favourable movements in PVIF. This reflected an increase in assumption changes and experience variances of $0.5bn, primarily in Hong Kong due to the effect of interest rate changes on the valuation of the liabilities under insurance contracts, and a $0.1bn increase of the value of new business written in 1H19 compared with 1H18.

• Net insurance claims and benefits paid and movement in liabilities to policyholders of $8.7bn were $3.1bn higher than 1H18. This was primarily due to higher returns on financial assets supporting contracts where the policyholder is subject to part or all of the investment risk. The increase also reflected the impact of higher new business volumes in Hong Kong and France, partly offset by higher reinsurance ceded in Hong Kong.

Adjusted operating expenses of $0.2bn increased by $22m or 10% compared with 1H18, reflecting investment in core insurance functions and capabilities, including preparation for the implementation of IFRS 17 'Insurance Contracts'.

Annualised new business premiums ('ANP') is used to assess new insurance premium generation by the business. It is calculated as 100% of annualised first year regular premiums and 10% of single premiums, before reinsurance ceded. Growth in ANP during the period reflected new business growth, mainly in Hong Kong and France.

Insurance distribution income from HSBC channels included $382m (1H18: $365m; 2H18: $288m) on HSBC manufactured products, for which a corresponding fee expense is recognised within insurance manufacturing, and $199m (1H18: $212m; 2H18: $177m) on products manufactured by third-party providers. The RBWM component of this distribution income was $329m (1H18: $314m; 2H18: $268m) from HSBC manufactured products and $176m (1H18: $187m; 2H18: $156m) from third-party products.

Asset Management: Funds under management

The following table shows the funds under management of our Asset Management business. Funds under management represents assets managed either actively or passively, on behalf of our customers.

Asset Management - reported funds under management
	Half-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$bn	$bn		$bn
Opening balance	444	462		456
Net new money	31	4		4
Value change	20	(4	)	(10	)
Exchange and other	-	(6	)	(6	)
Closing balance	495	456		444

Asset Management - reported funds under management by geography
	At
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$bn	$bn		$bn
Europe	271	246		235
Asia	178	167		164
MENA	2	2		2
North America	37	34		36
Latin America	7	7		7
Closing balance	495	456		444

GPB client assets

For GPB, a key measure of business performance is client assets, which is presented below.

GPB - reported client assets
	Half-year to
	30 Jun	30 Jun		31 Dec
	2019	2018		2018
	$bn	$bn		$bn
Opening balance	309	330		330
Net new money	14	6		3
Value change	15	(3	)	(14	)
Exchange and other	3	(3	)	-
Closing balance	341	330		309

GPB - reported client assets by geography
	At
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$bn	$bn	$bn
Europe	160	161	149
Asia	143	131	124
North America	38	38	36
Closing balance	341	330	309

Geographical regions
	Page
Analysis of reported results by geographical regions	42
Reconciliation of reported and adjusted items - geographical regions	44
Analysis by country	50

Analysis of reported results by geographical regions

HSBC reported profit/(loss) before tax and balance sheet data
		Half-year to 30 Jun 2019
		Europe		Asia		MENA		North America		Latin America		Intra-HSBC items		Total
	Footnotes	$m		$m		$m		$m		$m		$m		$m
Net interest income		3,309		8,182		897		1,685		1,076		91		15,240
Net fee income		1,869		2,765		326		903		261		-		6,124
Net income from financial instruments held for trading or managed on a fair value basis		1,837		2,352		175		412		403		152		5,331
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		1,056		1,117		-		-		23		-		2,196
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		596		14		1		15		75		(244	)	457
Other income	31	585		1,029		844		350		62		(2,846	)	24
Net operating income before change in expected credit losses and other credit impairment charges	12	9,252		15,459		2,243		3,365		1,900		(2,847	)	29,372
Change in expected credit losses and other credit impairment charges		(536	)	(260	)	(49	)	(60	)	(235	)	-		(1,140	)
Net operating income		8,716		15,199		2,194		3,305		1,665		(2,847	)	28,232
Total operating expenses		(9,244	)	(6,490	)	(694	)	(2,559	)	(1,009	)	2,847		(17,149	)
Operating profit/(loss)		(528	)	8,709		1,500		746		656		-		11,083
Share of profit in associates and joint ventures		8		1,071		236		-		9		-		1,324
Profit/(loss) before tax		(520	)	9,780		1,736		746		665		-		12,407
		%		%		%		%		%				%
Share of HSBC's profit before tax		(4.2	)	78.8		14.0		6.0		5.4				100.0
Cost efficiency ratio		99.9		42.0		30.9		76.0		53.1				58.4
Balance sheet data		$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		383,363		473,627		28,509		112,693		23,440		-		1,021,632
Total assets		1,235,615		1,101,387		61,771		436,742		53,919		(138,161	)	2,751,273
Customer accounts		504,386		677,289		36,593		135,400		26,456		-		1,380,124
Risk-weighted assets	32	309,378		371,747		57,530		133,448		40,254				885,971

		Half-year to 30 Jun 2018
Net interest income		3,527		7,821		864		1,747		1,039		102		15,100
Net fee income		2,110		3,139		320		930		268		-		6,767
Net income from financial instruments held for trading or managed on a fair value basis		1,926		1,981		147		456		384		(11	)	4,883
Net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		(141	)	(79	)	-		-		(2	)	-		(222	)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		424		(16	)	(1	)	19		10		(91	)	345
Other income/(expense)	31	1,025		1,666		26		260		(103	)	(2,460	)	414
Net operating income before change in expected credit losses and other credit impairment charges	12	8,871		14,512		1,356		3,412		1,596		(2,460	)	27,287
Change in expected credit losses and other credit impairment charges/(recoveries)		(187	)	(116	)	(103	)	234		(235	)	-		(407	)
Net operating income		8,684		14,396		1,253		3,646		1,361		(2,460	)	26,880
Total operating expenses		(8,592	)	(6,110	)	(686	)	(3,604	)	(1,017	)	2,460		(17,549	)
Operating profit		92		8,286		567		42		344		-		9,331
Share of profit in associates and joint ventures		18		1,094		269		-		-		-		1,381
Profit before tax		110		9,380		836		42		344		-		10,712
		%		%		%		%		%				%
Share of HSBC's profit before tax		1.0		87.6		7.8		0.4		3.2				100.0
Cost efficiency ratio		96.9		42.1		50.6		105.6		63.7				64.3
Balance sheet data		$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		374,264		445,692		29,106		104,361		20,020		-		973,443
Total assets		1,198,988		1,042,326		57,336		417,317		48,201		(156,854	)	2,607,314
Customer accounts		507,066		656,620		34,207		135,736		22,678		-		1,356,307
Risk-weighted assets	32	301,253		363,977		58,043		132,970		36,991		-		865,467

HSBC reported profit/(loss) before tax and balance sheet data (continued)
		Half-year to 31 Dec 2018
		Europe		Asia		MENA		North America		Latin America		Intra-HSBC items		Total
	Footnotes	$m		$m		$m		$m		$m		$m		$m
Net interest income		3,314		8,287		899		1,774		981		134		15,389
Net fee income		1,886		2,537		287		924		230		(11	)	5,853
Net income from financial instruments held for trading or managed on a fair value basis		2,016		2,153		138		272		352		(283	)	4,648
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss		(648	)	(638	)	-		-		20		-		(1,266	)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		177		(10	)	-		17		17		149		350
Other income/(expense)	31	2,088		1,943		7		326		(134	)	(2,711	)	1,519
Net operating income before change in the expected credit losses and other credit impairment charges	12	8,833		14,272		1,331		3,313		1,466		(2,722	)	26,493
Change in expected credit losses and other credit impairment charges		(422	)	(486	)	(106	)	(11	)	(335	)	-		(1,360	)
Net operating income		8,411		13,786		1,225		3,302		1,131		(2,722	)	25,133
Total operating expenses		(9,342	)	(6,356	)	(671	)	(2,545	)	(918	)	2,722		(17,110	)
Operating profit/(loss)		(931	)	7,430		554		757		213		-		8,023
Share of profit in associates and joint ventures		6		980		167		-		2		-		1,155
Profit/(loss) before tax		(925	)	8,410		721		757		215		-		9,178
		%		%		%		%		%				%
Share of HSBC's profit before tax		(10.1	)	91.7		7.9		8.2		2.3				100.0
Cost efficiency ratio		105.8		44.5		50.4		76.8		62.6				64.6
Balance sheet data		$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)		373,073		450,545		28,824		108,146		21,108		-		981,696
Total assets		1,150,235		1,047,636		57,455		390,410		51,923		(139,535	)	2,558,124
Customer accounts		503,154		664,824		35,408		133,291		25,966		-		1,362,643
Risk-weighted assets	32	298,056		363,894		56,689		131,582		38,341		-		865,318

For footnotes, see page 48.

Reconciliation of reported and adjusted items - geographical regions

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories
		Half-year to 30 Jun 2019
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	12
Reported	33	9,252		15,459		2,243		3,365		1,900		29,372
Significant items		(107	)	40		(828	)	8		10		(877	)
- disposals, acquisitions and investment in new businesses		-		-		(828	)	-		1		(827	)
- fair value movements on financial instruments	27	(107	)	40		-		8		9		(50	)
Adjusted	33	9,145		15,499		1,415		3,373		1,910		28,495
ECL
Reported		(536	)	(260	)	(49	)	(60	)	(235	)	(1,140	)
Adjusted		(536	)	(260	)	(49	)	(60	)	(235	)	(1,140	)
Operating expenses
Reported	33	(9,244	)	(6,490	)	(694	)	(2,559	)	(1,009	)	(17,149	)
Significant items		888		47		5		34		12		986
- costs of structural reform	28	90		1		-		-		-		91
- customer redress programmes		610		-		-		-		-		610
- restructuring and other related costs		189		47		5		34		12		287
- settlements and provisions in connection with legal and regulatory matters		(1	)	(1	)	-		-		-		(2	)
Adjusted	33	(8,356	)	(6,443	)	(689	)	(2,525	)	(997	)	(16,163	)
Share of profit in associates and joint ventures
Reported		8		1,071		236		-		9		1,324
Adjusted		8		1,071		236		-		9		1,324
Profit/(loss) before tax
Reported		(520	)	9,780		1,736		746		665		12,407
Significant items		781		87		(823	)	42		22		109
- revenue		(107	)	40		(828	)	8		10		(877	)
- operating expenses		888		47		5		34		12		986
Adjusted		261		9,867		913		788		687		12,516
Loans and advances to customers (net)
Reported		383,363		473,627		28,509		112,693		23,440		1,021,632
Adjusted		383,363		473,627		28,509		112,693		23,440		1,021,632
Customer accounts
Reported		504,386		677,289		36,593		135,400		26,456		1,380,124
Adjusted		504,386		677,289		36,593		135,400		26,456		1,380,124

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories (continued)
		Half-year to 30 Jun 2019
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	12
Reported		6,758		9,935		1,598		2,398		1,271
Significant items		(110	)	29		1		7		7
- fair value movement on financial instruments	27	(110	)	29		1		7		7
Adjusted		6,648		9,964		1,599		2,405		1,278
ECL
Reported		(429	)	(134	)	(67	)	(36	)	(198	)
Adjusted		(429	)	(134	)	(67	)	(36	)	(198	)
Operating expenses
Reported		(7,590	)	(3,405	)	(1,038	)	(1,989	)	(686	)
Significant items		810		21		2		26		5
- costs of structural reform	28	59		1		-		-		-
- customer redress programmes		610		-		-		-		-
- restructuring and other related costs		142		21		2		26		5
- settlements and provisions in connection with legal and regulatory matters		(1	)	(1	)	-		-		-
Adjusted		(6,780	)	(3,384	)	(1,036	)	(1,963	)	(681	)
Share of profit in associates and joint ventures
Reported		8		23		1,031		-		9
Adjusted		8		23		1,031		-		9
Profit/(loss) before tax
Reported		(1,253	)	6,419		1,524		373		396
Significant items		700		50		3		33		12
- revenue		(110	)	29		1		7		7
- operating expenses		810		21		2		26		5
Adjusted		(553	)	6,469		1,527		406		408
Loans and advances to customers (net)
Reported		291,955		304,431		42,657		67,039		20,135
Adjusted		291,955		304,431		42,657		67,039		20,135
Customer accounts
Reported		398,857		487,948		45,409		82,260		20,437
Adjusted		398,857		487,948		45,409		82,260		20,437

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories (continued)
		Half-year to 30 Jun 2018
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	12
Reported	33	8,871		14,512		1,356		3,412		1,596		27,287
Currency translation	33	(618	)	(280	)	(38	)	(35	)	(234	)	(1,160	)
Significant items		145		(19	)	(1	)	96		33		254
- customer redress programmes		(46	)	-		-		-		-		(46	)
- disposals, acquisitions and investment in new businesses		-		-		-		103		39		142
- fair value movements on financial instruments	27	187		(20	)	(2	)	(7	)	(6	)	152
- currency translation on significant items		4		1		1		-		-		6
Adjusted	33	8,398		14,213		1,317		3,473		1,395		26,381
ECL
Reported		(187	)	(116	)	(103	)	234		(235	)	(407	)
Currency translation		13		6		12		(2	)	21		50
Adjusted		(174	)	(110	)	(91	)	232		(214	)	(357	)
Operating expenses
Reported	33	(8,592	)	(6,110	)	(686	)	(3,604	)	(1,017	)	(17,549	)
Currency translation	33	458		155		27		21		154		770
Significant items		197		1		-		966		-		1,164
- costs of structural reform	28	209		2		-		-		-		211
- customer redress programmes		100		-		-		-		-		100
- disposals, acquisitions and investment in new businesses		3		-		-		-		-		3
- restructuring and other related costs		21		-		-		3		-		24
- settlement and provisions in connection with legal and regulatory matters		(120	)	(2	)	-		963		-		841
- currency translation on significant items		(16	)	1		-		-		-		(15	)
Adjusted	33	(7,937	)	(5,954	)	(659	)	(2,617	)	(863	)	(15,615	)
Share of profit in associates and joint ventures
Reported		18		1,094		269		-		-		1,381
Currency translation		(1	)	(66	)	-		-		-		(67	)
Adjusted		17		1,028		269		-		-		1,314
Profit before tax
Reported		110		9,380		836		42		344		10,712
Currency translation		(148	)	(185	)	1		(16	)	(59	)	(407	)
Significant items		342		(18	)	(1	)	1,062		33		1,418
- revenue		145		(19	)	(1	)	96		33		254
- operating expenses		197		1		-		966		-		1,164
Adjusted		304		9,177		836		1,088		318		11,723
Loans and advances to customers (net)
Reported		374,264		445,692		29,106		104,361		20,020		973,443
Currency translation		(11,126	)	(1,940	)	(575	)	267		(602	)	(13,976	)
Adjusted		363,138		443,752		28,531		104,628		19,418		959,467
Customer accounts
Reported		507,066		656,620		34,207		135,736		22,678		1,356,307
Currency translation		(15,228	)	(652	)	(440	)	287		(787	)	(16,820	)
Adjusted		491,838		655,968		33,767		136,023		21,891		1,339,487

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories (continued)
		Half-year to 30 Jun 2018
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	12
Reported		6,813		9,155		1,458		2,422		1,109
Currency translation		(476	)	(6	)	(89	)	-		(5	)
Significant items		147		7		-		97		(4	)
- customer redress programmes		(46	)	-		-		-		-
- disposals, acquisitions and investment in new businesses		-		-		-		103		-
- fair value movements on financial instruments	27	189		7		-		(6	)	(4	)
- currency translation on significant items		4		-		-		-		-
Adjusted		6,484		9,156		1,369		2,519		1,100
ECL
Reported		(156	)	(20	)	(35	)	196		(195	)
Currency translation		11		-		3		-		1
Adjusted		(145	)	(20	)	(32	)	196		(194	)
Operating expenses
Reported		(6,768	)	(3,179	)	(948	)	(2,989	)	(645	)
Currency translation		340		2		59		-		2
Significant items		125		1		-		911		-
- costs of structural reform	28	178		2		-		-		-
- customer redress programmes		100		-		-		-		-
- restructuring and other related costs		21		-		-		3		-
- settlements and provisions in connection with legal and regulatory matters		(164	)	(1	)	-		908		-
- currency translation on significant items		(10	)	-		-		-		-
Adjusted		(6,303	)	(3,176	)	(889	)	(2,078	)	(643	)
Share of profit in associates and joint ventures
Reported		18		20		1,073		-		-
Currency translation		(1	)	-		(67	)	-		-
Adjusted		17		20		1,006		-		-
Profit/(loss) before tax
Reported		(93	)	5,976		1,549		(370	)	268
Currency translation		(126	)	(4	)	(94	)	-		(2	)
Significant items		272		8		-		1,008		(4	)
- revenue		147		7		-		97		(4	)
- operating expenses		125		1		-		911		-
Adjusted		53		5,980		1,455		638		262
Loans and advances to customers (net)
Reported		290,469		283,265		41,128		62,057		16,134
Currency translation		(9,668	)	1,346		(1,485	)	-		417
Adjusted		280,801		284,611		39,643		62,057		16,551
Customer accounts
Reported		404,129		477,728		42,100		84,541		17,784
Currency translation		(13,451	)	2,270		(1,521	)	-		460
Adjusted		390,678		479,998		40,579		84,541		18,244

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories (continued)
		Half-year to 31 Dec 2018
		Europe		Asia		MENA		North America		Latin America		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	12
Reported	33	8,833		14,272		1,331		3,313		1,466		26,493
Currency translation	33	(44	)	28		8		(13	)	(54	)	(75	)
Significant items		(41	)	(17	)	-		1		(28	)	(85	)
- customer redress programmes		(7	)	-		-		-		-		(7	)
- disposals, acquisitions and investment in new businesses		(5	)	-		-		-		(24	)	(29	)
- fair value movements on financial instruments	27	(31	)	(18	)	1		(1	)	(3	)	(52	)
- currency translation on significant items		2		1		(1	)	2		(1	)	3
Adjusted	33	8,748		14,283		1,339		3,301		1,384		26,333
ECL
Reported		(422	)	(486	)	(106	)	(11	)	(335	)	(1,360	)
Currency translation		(1	)	(4	)	(5	)	1		12		3
Adjusted		(423	)	(490	)	(111	)	(10	)	(323	)	(1,357	)
Operating expenses
Reported	33	(9,342	)	(6,356	)	(671	)	(2,545	)	(918	)	(17,110	)
Currency translation	33	41		(24	)	(1	)	6		50		72
Significant items		465		14		-		9		-		488
- costs of structural reform	28	143		7		-		-		-		150
- customer redress programmes		46		-		-		-		-		46
- disposals, acquisitions and investment in new businesses		49		-		-		-		-		49
- past service costs of guaranteed minimum pension benefits equalisation		228		-		-		-		-		228
- restructuring and other related costs		25		7		-		10		-		42
- settlements and provisions in connection with legal and regulatory matters		(27	)	2		-		-		-		(25	)
- currency translation on significant items		1		(2	)	-		(1	)	-		(2	)
Adjusted	33	(8,836	)	(6,366	)	(672	)	(2,530	)	(868	)	(16,550	)
Share of profit in associates and joint ventures
Reported		6		980		167		-		2		1,155
Currency translation		1		11		-		-		-		12
Adjusted		7		991		167		-		2		1,167
Profit/(loss) before tax
Reported		(925	)	8,410		721		757		215		9,178
Currency translation		(3	)	11		2		(6	)	8		12
Significant items		424		(3	)	-		10		(28	)	403
- revenue		(41	)	(17	)	-		1		(28	)	(85	)
- operating expenses		465		14		-		9		-		488
Adjusted		(504	)	8,418		723		761		195		9,593
Loans and advances to customers (net)
Reported		373,073		450,545		28,824		108,146		21,108		981,696
Currency translation		(1,374	)	1,048		(86	)	1,676		141		1,405
Adjusted		371,699		451,593		28,738		109,822		21,249		983,101
Customer accounts
Reported		503,154		664,824		35,408		133,291		25,966		1,362,643
Currency translation		(1,716	)	1,717		(25	)	1,754		(36	)	1,694
Adjusted		501,438		666,541		35,383		135,045		25,930		1,364,337

For footnotes, see page 48.

Reconciliation of reported results to adjusted results - geographical regions and selected countries/territories (continued)
		Half-year to 31 Dec 2018
		UK		Hong Kong		Mainland China		US		Mexico
	Footnotes	$m		$m		$m		$m		$m
Revenue	12
Reported		6,784		9,076		1,430		2,319		1,185
Currency translation		(12	)	(6	)	15		-		15
Significant items		(35	)	(2	)	(1	)	-		(2	)
- customer redress programmes		(7	)	-		-		-		-
- disposals, acquisitions and investment in new businesses		-		-		-		-		-
- fair value movement on financial instruments	27	(27	)	(2	)	(1	)	-		(3	)
- currency translation on significant items		(1	)	-		-		-		1
Adjusted		6,737		9,068		1,444		2,319		1,198
ECL
Reported		(360	)	(194	)	(108	)	3		(268	)
Currency translation		1		-		(2	)	-		(4	)
Adjusted		(359	)	(194	)	(110	)	3		(272	)
Operating expenses
Reported		(7,734	)	(3,360	)	(972	)	(1,998	)	(658	)
Currency translation		9		2		(11	)	-		(8	)
Significant items		392		14		-		8		-
- costs of structural reform	28	116		7		-		-		-
- customer redress programmes		46		-		-		-		-
- disposals, acquisitions and investment in new businesses		-		-		-		-		-
- past service costs of guaranteed minimum pension benefits equalisation		228		-		-		-		-
- restructuring and other related costs		18		7		-		8		-
- settlements and provisions in connection with legal and regulatory matters		(12	)	1		-		-		-
- currency translation on significant items		(4	)	(1	)	-		-		-
Adjusted		(7,333	)	(3,344	)	(983	)	(1,990	)	(666	)
Share of profit in associates and joint ventures
Reported		7		16		960		-		-
Currency translation		-		(1	)	11		-		-
Adjusted		7		15		971		-		-
Profit/(loss) before tax
Reported		(1,303	)	5,538		1,310		324		259
Currency translation		(2	)	(5	)	13		-		3
Significant items		357		12		(1	)	8		(2	)
- revenue		(35	)	(2	)	(1	)	-		(2	)
- operating expenses		392		14		-		8		-
Adjusted		(948	)	5,545		1,322		332		260
Loans and advances to customers (net)
Reported		287,144		290,547		38,979		64,011		17,895
Currency translation		(1,055	)	865		55		-		438
Adjusted		286,089		291,412		39,034		64,011		18,333
Customer accounts
Reported		399,487		484,897		45,712		82,523		19,936
Currency translation		(1,471	)	1,443		64		-		493
Adjusted		398,016		486,340		45,776		82,523		20,429

For footnotes, see page 48.

Analysis by country

Profit/(loss) before tax by priority growth market within global businesses
		Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Europe		(260	)	909		(172	)	(7	)	(990	)	(520	)
- UK	34	(280	)	742		(220	)	(27	)	(1,468	)	(1,253	)
of which: HSBC Holdings	35	(265	)	(210	)	(219	)	(47	)	263		(478	)
- France		7		88		(67	)	5		(28	)	5
- Germany		6		8		30		2		7		53
- Switzerland		-		2		(1	)	2		8		11
- other		7		69		86		11		491		664
Asia		3,680		2,338		1,921		194		1,647		9,780
- Hong Kong		3,448		1,703		853		186		229		6,419
- Australia		53		49		82		(1	)	20		203
- India		30		98		233		-		151		512
- Indonesia		3		28		65		-		33		129
- mainland China		-		172		226		(3	)	1,129		1,524
- Malaysia		39		37		95		-		10		181
- Singapore		60		54		114		11		29		268
- Taiwan		25		14		47		-		4		90
- other		22		183		206		1		42		454
Middle East and North Africa		112		166		374		2		1,082		1,736
- Egypt		20		32		121		-		32		205
- UAE		78		44		117		2		(37	)	204
- Saudi Arabia		-		-		-		-		1,063		1,063
- other		14		90		136		-		24		264
North America		(63	)	417		314		(6	)	84		746
- US		(107	)	194		244		(6	)	48		373
- Canada		13		205		52		-		30		300
- other		31		18		18		-		6		73
Latin America		314		168		197		-		(14	)	665
- Mexico		174		108		98		-		16		396
- other		140		60		99		-		(30	)	269
Half-year to 30 Jun 2019		3,783		3,998		2,634		183		1,809		12,407

Europe		186		1,261		641		(61	)	(1,917	)	110
- UK	34	185		1,082		473		3		(1,836	)	(93	)
of which: HSBC Holdings	35	(314	)	(193	)	(154	)	(44	)	(1,168	)	(1,873	)
- France		(5	)	77		(15	)	6		(64	)	(1	)
- Germany		8		39		54		5		(5	)	101
- Switzerland		(1	)	2		-		(65	)	18		(46	)
- other		(1	)	61		129		(10	)	(30	)	149
Asia		3,218		2,216		2,018		198		1,730		9,380
- Hong Kong		3,067		1,621		915		177		196		5,976
- Australia		48		56		83		-		31		218
- India		2		77		187		-		169		435
- Indonesia		(1	)	36		43		-		19		97
- mainland China		(68	)	145		299		(2	)	1,175		1,549
- Malaysia		61		39		93		-		20		213
- Singapore		40		47		116		22		52		277
- Taiwan		43		12		71		-		19		145
- other		26		183		211		1		49		470
Middle East and North Africa		71		70		377		4		314		836
- Egypt		11		38		99		-		20		168
- UAE		60		33		159		4		(2	)	254
- Saudi Arabia		-		-		-		-		269		269
- other		-		(1	)	119		-		27		145
North America		(54	)	503		490		5		(902	)	42
- US		(103	)	241		461		6		(975	)	(370	)
- Canada		17		240		67		-		65		389
- other		32		22		(38	)	(1	)	8		23
Latin America		91		99		199		-		(45	)	344
- Mexico		103		56		103		-		6		268
- other		(12	)	43		96		-		(51	)	76
Half-year to 30 Jun 2018		3,512		4,149		3,725		146		(820	)	10,712

For footnotes, see page 48.

Profit/(loss) before tax by priority growth market within global businesses (continued)
		Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
	Footnotes	$m		$m		$m		$m		$m		$m
Europe		254		1,028		49		(61	)	(2,195	)	(925	)
- UK	34	291		819		(64	)	20		(2,369	)	(1,303	)
of which: HSBC Holdings	35	(330	)	(235	)	(240	)	(33	)	280		(558	)
- France		(51	)	93		23		10		(37	)	38
- Germany		6		46		45		3		-		100
- Switzerland		-		3		(1	)	(35	)	2		(31	)
- other		8		67		46		(59	)	209		271
Asia		2,972		1,960		1,755		155		1,568		8,410
- Hong Kong		2,884		1,493		755		156		250		5,538
- Australia		67		64		102		(1	)	13		245
- India		18		66		200		-		106		390
- Indonesia		-		(23	)	48		-		(18	)	7
- mainland China		(132	)	117		267		(2	)	1,059		1,309
- Malaysia		69		43		39		-		10		161
- Singapore		35		51		114		3		11		214
- Taiwan		12		11		46		-		11		80
- other		19		138		184		(1	)	126		466
Middle East and North Africa		111		38		356		3		213		721
- Egypt		23		16		103		-		23		165
- UAE		52		25		137		3		2		219
- Saudi Arabia		-		-		-		-		167		167
- other		36		(3	)	116		-		21		170
North America		(42	)	465		248		6		80		757
- US		(102	)	232		163		17		13		323
- Canada		38		215		72		-		51		376
- other		22		18		13		(11	)	16		58
Latin America		75		79		179		(1	)	(117	)	215
- Mexico		91		58		94		-		17		260
- other		(16	)	21		85		(1	)	(134	)	(45	)
Half-year to 31 Dec 2018		3,370		3,570		2,587		102		(451	)	9,178

For footnotes, see page 48.

Footnotes to pages 5 to 47
1	Scale markets include Hong Kong, the UK, Mexico, the Pearl River Delta, Singapore, Malaysia, UAE and Saudi Arabia.
2	Wealth in Asia includes our asset management business in Asia, our insurance business in Asia, our GPB business in Asia and the wealth portion of our RBWM business in Asia.
3	Market shares for Hong Kong, the UK, Mexico, the Pearl River Delta, Singapore and Malaysia as of May 2019; Saudi Arabia as of April 2019; and UAE as of March 2019.
4	International network revenue includes transaction banking and international client revenue.
5	Transaction banking includes GLCM, GTRF, Securities Services and FX.
6	Customer recommendation provided by Kantar; Saudi Arabia is as of 1Q19; all markets compared with 2017.
7	Engagement in Saudi Arabia primarily through investment in The Saudi British Bank ('SABB'); held as an associate of HSBC.
8	Customer satisfaction provided by RFi Group for Hong Kong, the Pearl River Delta, Singapore, Malaysia, Mexico and UAE; UK provided by Charterhouse Research; Saudi Arabia provided by Kantar; UK is as of 1Q19, Mexico is as of 2018, Saudi Arabia is as of 1Q19; Saudi Arabia compared with 2018, all other markets compared with 2017.
9	ESG rating by Sustainalytics; new ratings methodology will replace its old methodology.
10	'Average performer' rating does not take into account the ESG Update published in April 2019.
11	'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.
12	Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
13	'Markets products, Insurance and Investments and Other' includes revenue from Foreign Exchange, insurance manufacturing and distribution, interest rate management and global banking products.
14	'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 which is not reflected within operating income; for example, 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'.
15	Central Treasury includes revenue relating to BSM of $1.2bn (1H18: $1.2bn; 2H18:$1.2bn), interest expense of $645m (1H18: $588m; 2H18: $679m) and favourable valuation differences on issued long-term debt and associated swaps of $143m (1H18: loss of $365m; 2H18: gains of $51m). Revenue relating to BSM includes other internal allocations, including notional tax credits to reflect the economic benefit generated by certain activities, which are 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.
16	Half-year to 31 December 2018 is calculated on a full-year basis and not a 2H18 basis.
17	Net trading income includes the revenue of internally funded trading assets, while the related costs are reported in net interest income. In our global business results, the total cost of funding trading assets is included within Corporate Centre net trading income as an interest expense. In the statutory presentation, internal interest income and expenses are eliminated.
18	Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA'). Cost of funds is the average annualised interest cost as a percentage on average interest-bearing liabilities.
19	Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds.

20	Net interest margin is net interest income expressed as an annualised percentage of AIEA.
21	Interest income on trading assets is reported as 'Net income/(expense) from financial instruments held for trading or managed on a fair value basis' in the consolidated income statement.
22	Interest income on financial assets designated and otherwise mandatorily measured at fair value is reported as 'Net income/(expense) from financial instruments held for trading or managed on a fair value basis' in the consolidated income statement.
23	'Financial liabilities designated at fair value - own debt issued' and 'Debt securities' lines have been merged into one new line; 'Debt Securities in issue - non-trading'. Interest expense on financial liabilities designated at fair value is reported as 'Net income/(expense) from financial instruments held for trading or managed on a fair value basis' in the consolidated income statement, other than interest on own debt, which is reported in 'Interest expense'.
24	Interest expense on trading liabilities is reported as 'Net income/(expense) from financial instruments held for trading or managed on a fair value basis' in the consolidated income statement.
25	Trading income also includes movements on non-qualifying hedges. These hedges are derivatives entered into as part of a documented interest rate management strategy for which hedge accounting was not, nor could be, applied. They are principally cross-currency and interest rate swaps used to economically hedge fixed-rate debt issued by HSBC Holdings. The size and direction of the changes in the fair value of non-qualifying hedges that are recognised in the income statement can be volatile from year to year, but do not alter the cash flows expected as part of the documented interest rate management strategy for both the instruments and the underlying economically hedged assets and liabilities if the derivative is held to maturity.
26	The 2018 period does not include the impact of right-of-use assets recognised under IFRS 16 beginning in 2019.
27	Fair value movements on financial instruments include non-qualifying hedges and debit value adjustments on derivatives.
28	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.
29	The results presented for insurance manufacturing operations are shown before elimination of inter-company transactions with HSBC non-insurance operations.
30	The effect on the Insurance manufacturing operations of applying hyperinflation accounting in Argentina resulted in a reduction in adjusted revenue in 1H19 of $8m (2H18: $29m) and a reduction in profit before tax ('PBT') in 1H19 of $9m (2H18: $27m). These effects are recorded in 'all global businesses' within Corporate Centre.
31	Other income in this context comprises where applicable net income/expense from other financial instruments designated at fair value, 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.
32	RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
33	Amounts are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.
34	UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies ('ServCo Group').
35	Excludes intra-Group dividend income.

Risk
	Page
Areas of special interest	53
Key developments in the first half of 2019	53
Credit risk profile	53
Liquidity and funding risk profile	75
Market risk profile	78
Operational risk profile	82
Insurance manufacturing operations risk profile	82

A summary of our current policies and practices regarding the management of risk is set out in the 'Risk management' section on pages 73 to 88 of the Annual Report and Accounts 2018.

Areas of special interest

During

1H19

, a number of areas were considered as part of our top and emerging risks because of the effect they have on the Group. We placed particular focus on the UK's withdrawal from the European Union ('EU') in this section.

Process of UK withdrawal from the EU

The UK was due to leave the EU on 29 March 2019, but after agreeing an extension it is now due to leave by 31 October 2019. Before then, a Withdrawal Agreement under Article 50 will need to be approved by the UK and European parliaments. If an agreement is not approved by this date, the default legal position is that the UK will leave the EU without a deal, unless another extension is agreed with the EU. The terms of the UK's departure will be negotiated by new prime minister, Boris Johnson, after Theresa May announced her resignation in May 2019.

Once the UK has formally left the EU, a comprehensive trade deal will take several years to negotiate. A period of transition until
31 December 2020 has been agreed between the UK and the EU, which can be extended by up to two years. However, there will be no legal certainty with respect to the transition period until this is enshrined in the Withdrawal Agreement.

Our programme to manage the impact of the UK leaving the EU was set up in 2017 and has now been broadly completed. It is based on the assumption of a scenario whereby the UK exits the EU without the existing passporting or regulatory equivalence framework that supports cross-border business being in place. Our focus has been on four main components: legal entity restructuring; product offering; customer migrations; and employees.

Legal entity restructuring

Our branches in seven European Economic Area ('EEA') countries (Belgium, the Netherlands, Luxembourg, Spain, Italy, Ireland and Czech Republic) relied on passporting out of the UK. We have worked on the assumption that passporting will no longer be possible following the UK's departure from the EU and therefore transferred our branch business to newly established branches of HSBC France, our primary banking entity authorised in the EU. This was completed in the first quarter of 2019.

Product offering

To accommodate for customer migrations and new business after the UK's departure from the EU, we expanded and enhanced our existing product offering in France, the Netherlands and Ireland.

Customer migrations

The UK's departure from the EU is likely to have an impact on our customers' operating models, including their working capital requirements, investment decisions and financial markets infrastructure access. Our priority is to provide continuity of service, and while our intention is to minimise the level of change for our customers, we will be required to migrate some EEA-incorporated customers from the UK to HSBC France, or another EEA entity. Customer migrations are ongoing and we are working in close collaboration with our customers to make the transition as smooth as possible.

Employees

The migration of EEA-incorporated customers will require us to strengthen our local teams in the EU, and France in particular.

We are also providing support to our UK employees resident in EEA countries and EEA employees resident in the UK, such as on settlement applications.

Across the programme, we have made good progress in terms of ensuring we are prepared for the UK leaving the EU. However, there remain execution risks, many of them linked to the uncertain political environment and customers wanting to wait for as long as possible before they migrate to HSBC France or another EU entity.

Key developments in the first half of 2019

There were no material changes to the policies and practices for the management of risk, as described in the

Annual Report and Accounts

2018

. In

1H19

, we continued to enhance our risk management in the following areas:

• We continued to strengthen the controls that manage our operational risks, as described on page 73 under 'Operational risk profile'.

• We continued to strengthen our management of conduct and embed conduct considerations as a key part of risk management across the Group. For further information on initiatives implemented in 1H19 to raise our standards in relation to the conduct of our business, see page 73 under 'Conduct of business'.

• We continued to implement the final elements of our Global Standards programme to integrate our anti-money laundering and sanctions capabilities into our day-to-day operations.

• We continued to enhance our financial crime risk management capabilities and the effectiveness of our financial crime controls. We are maintaining our investment in the next generation of tools to fight financial crime through the application of advanced analytics and artificial intelligence.

Credit risk profile

	Page
Credit risk in the first half of 2019	54
Summary of credit risk	54
Measurement uncertainty and sensitivity analysis of ECL estimates	57
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers	60
Credit quality of financial instruments	62
Personal lending	66
Wholesale lending	67
Supplementary information	70
Securitisation exposures and other structured products	74

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. Credit risk arises principally from direct lending, trade finance and leasing business, but also from certain other products, such as guarantees and derivatives.

There were no material changes to the policies and practices for the management of credit risk in 1H19.

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.

Credit risk in the first half of 2019

Gross loans and advances to customers of $1,030bn increased from $990bn at 31 December 2018. This increase included favourable foreign exchange movements of $1bn. Loans and advances to banks of $82bn increased from $72bn at 31 December 2018. This included favourable foreign exchange movements of $0.1bn.

The change in expected credit losses and other credit impairment charges ('ECL') in the income statement for the period was $1.1bn. For further details, see the financial summary on page 24.

Summary of credit risk

The following disclosure presents the gross carrying/nominal amount of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL. The following tables analyse loans by industry sector and represent the concentration of exposures on which credit risk is managed.

The allowance for ECL decreased from $9.2bn at 31 December 2018 to $9.1bn at 30 June 2019.

The allowance for ECL at 30 June 2019 comprised $8.6bn in respect of assets held at amortised cost, $0.4bn in respect of loan commitments and financial guarantees, and $0.07bn in respect of debt instruments measured at fair value through other comprehensive income ('FVOCI').

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
		At 30 Jun 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		1,030,152	(8,520	)	990,321	(8,625	)
- personal		414,351	(2,972	)	394,337	(2,947	)
- corporate and commercial		546,427	(5,381	)	534,577	(5,552	)
- non-bank financial institutions		69,374	(167	)	61,407	(126	)
Loans and advances to banks at amortised cost		82,413	(16	)	72,180	(13	)
Other financial assets measured at amortised cost		653,554	(85	)	582,917	(55	)
- cash and balances at central banks		171,091	(1	)	162,845	(2	)
- items in the course of collection from other banks		8,673	-		5,787	-
- Hong Kong Government certificates of indebtedness		36,492	-		35,859	-
- reverse repurchase agreements - non-trading		233,079	-		242,804	-
- financial investments		81,234	(20	)	62,684	(18	)
- prepayments, accrued income and other assets	2	122,985	(64	)	72,938	(35	)
Total gross carrying amount on-balance sheet		1,766,119	(8,621	)	1,645,418	(8,693	)
Loans and other credit related commitments		629,891	(301	)	592,008	(325	)
- personal		217,047	(16	)	207,351	(13	)
- corporate and commercial		268,057	(277	)	271,022	(305	)
- financial		144,787	(8	)	113,635	(7	)
Financial guarantees		21,290	(55	)	23,518	(93	)
- personal		906	(1	)	927	(1	)
- corporate and commercial		15,496	(51	)	17,355	(85	)
- financial		4,888	(3	)	5,236	(7	)
Total nominal amount off-balance sheet	3	651,181	(356	)	615,526	(418	)
		2,417,300	(8,977	)	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		345,035	(74	)	343,110	(84	)

For footnotes, see page 75.

The following table provides an overview of the Group's credit risk by stage and industry, and the associated ECL coverage. The financial assets recorded in each stage have the following characteristics:

• Stage 1: These financial assets are unimpaired and without a significant increase in credit risk for which a 12-month allowance for ECL is recognised.

• Stage 2: A significant increase in credit risk has been experienced on these financial assets since initial recognition for which a lifetime ECL is recognised.

• Stage 3: There is objective evidence of impairment and the financial assets are therefore considered to be in default or otherwise credit impaired for which a lifetime ECL is recognised.

• POCI: Financial assets that are purchased or originated at a deep discount are seen to reflect the incurred credit losses on which a lifetime ECL is recognised.

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 30 June 2019
	Gross carrying/nominal amount³					Allowance for ECL										ECL coverage %
	Stage 1	Stage 2	Stage 3	POCI⁵	Total	Stage 1		Stage 2		Stage 3		POCI⁵		Total		Stage 1	Stage 2	Stage 3	POCI⁵	Total
	$m	$m	$m	$m	$m	$m		$m		$m		$m		$m		%	%	%	%	%
Loans and advances to customers at amortised cost	955,520	61,297	13,010	325	1,030,152	(1,329	)	(2,062	)	(4,969	)	(160	)	(8,520	)	0.1	3.4	38.2	49.2	0.8
- personal	394,533	15,114	4,704	-	414,351	(563	)	(1,242	)	(1,167	)	-		(2,972	)	0.1	8.2	24.8	-	0.7
- corporate and commercial	493,523	44,560	8,019	325	546,427	(707	)	(802	)	(3,712	)	(160	)	(5,381	)	0.1	1.8	46.3	49.2	1.0
- non-bank financial institutions	67,464	1,623	287	-	69,374	(59	)	(18	)	(90	)	-		(167	)	0.1	1.1	31.4	-	0.2
Loans and advances to banks at amortised cost	81,957	456	-	-	82,413	(14	)	(2	)	-		-		(16	)	-	0.4	-	-	-
Other financial assets measured at amortised cost	651,513	1,890	149	2	653,554	(32	)	(10	)	(43	)	-		(85	)	-	0.5	28.9	-	-
Loans and other credit-related commitments	607,086	21,982	818	5	629,891	(141	)	(112	)	(48	)	-		(301	)	-	0.5	5.9	-	-
- personal	214,400	2,283	364	-	217,047	(14	)	(2	)	-		-		(16	)	-	0.1	-	-	-
- corporate and commercial	249,318	18,282	452	5	268,057	(121	)	(108	)	(48	)	-		(277	)	-	0.6	10.6	-	0.1
- financial	143,368	1,417	2	-	144,787	(6	)	(2	)	-		-		(8	)	-	0.1	-	-	-
Financial guarantees	18,676	2,423	188	3	21,290	(20	)	(25	)	(10	)	-		(55	)	0.1	1.0	5.3	-	0.3
- personal	901	4	1	-	906	(1	)	-		-		-		(1	)	0.1	-	-	-	0.1
- corporate and commercial	13,155	2,155	183	3	15,496	(18	)	(24	)	(9	)	-		(51	)	0.1	1.1	4.9	-	0.3
- financial	4,620	264	4	-	4,888	(1	)	(1	)	(1	)	-		(3	)	-	0.4	25.0	-	0.1
At 30 Jun 2019	2,314,752	88,048	14,165	335	2,417,300	(1,536	)	(2,211	)	(5,070	)	(160	)	(8,977	)	0.1	2.5	35.8	47.8	0.4

Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due ('DPD') and are transferred from stage 1 to stage 2. The following disclosure presents the ageing of stage 2 financial assets by those less than 30 and greater than 30 DPD and therefore presents those financial assets classified as stage 2 due to ageing (30 DPD) and those identified at an earlier stage (less than 30 DPD).

Stage 2 days past due analysis at 30 June 2019
	Gross carrying amount			Allowance for ECL						ECL coverage %
		Of which:	Of which:			Of which:		Of which:			Of which:	Of which:
	Stage 2	1 to 29 DPD⁶	30 and > DPD⁶	Stage 2		1 to 29 DPD⁶		30 and > DPD⁶		Stage 2	1 to 29 DPD⁶	30 and > DPD⁶
	$m	$m	$m	$m		$m		$m		%	%	%
Loans and advances to customers at amortised cost	61,297	2,572	1,584	(2,062	)	(195	)	(218	)	3.4	7.6	13.8
- personal	15,114	1,798	1,160	(1,242	)	(168	)	(197	)	8.2	9.3	17.0
- corporate and commercial	44,560	773	417	(802	)	(27	)	(21	)	1.8	3.5	5.0
- non-bank financial institutions	1,623	1	7	(18	)	-		-		1.1	-	-
Loans and advances to banks at amortised cost	456	-	-	(2	)	-		-		0.4	-	-
Other financial assets measured at amortised cost	1,890	12	34	(10	)	-		-		0.5	-	-

For footnotes, see page 75.

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 amount³					Allowance for ECL										ECL coverage %
	Stage 1	Stage 2	Stage 3	POCI⁵	Total	Stage 1		Stage 2		Stage 3		POCI⁵		Total		Stage 1	Stage 2	Stage 3	POCI⁵	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	-	-
Loans 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 amount			Allowance for ECL						ECL coverage %
	Stage 2	Of which:	Of which:	Stage 2		Of which:		Of which:		Stage 2	Of which:	Of which:
		1 to 29 DPD⁶	30 and > DPD⁶			1 to 29 DPD⁶		30 and > DPD⁶			1 to 29 DPD⁶	30 and > DPD⁶
	$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	-	-

For footnotes, see page 75.

Measurement uncertainty and sensitivity analysis of ECL estimates

Expected credit loss ('ECL') impairment allowances recognised in the financial statements reflect the effect of a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic scenarios described below. The recognition and measurement of ECL involves the use of significant judgement and estimation. It is necessary to formulate multiple forward-looking economic forecasts and incorporate them into the ECL estimates. We use a standard framework to form economic scenarios to reflect assumptions about future economic conditions, supplemented with the use of management judgement, which may result in using alternative or additional economic scenarios and/or management adjustments.

Methodology

Our methodology in relation to the adoption and generation of economic scenarios is described on pages 94 and 95 of the Annual Report and Accounts 2018. There have been no significant changes during the 1H19 period.

Description of consensus economic scenario

The economic assumptions presented in this section have been formed internally specifically for the purpose of calculating ECL.

The consensus Central scenario

Our Central scenario is of moderate growth over the forecast 3Q19-2Q24 period. Global GDP growth is expected to be 2.8% on average over the period, which is lower than the 4Q18 forecast. Global GDP growth is forecast at 2.6% in 2019, after which growth increases to reach 2.8% by 2020. Across our key markets, we note:

• Average forecast rates of GDP growth over the 2019-2024 period are lower than those experienced in the recent past for all key economies except France. For the UK, this reflects expectations that the long-term impact of current economic uncertainty will be moderately adverse, while for China, it is consistent with the theme of ongoing rebalancing from an export-oriented economy to one with deeper domestic consumption.

• The average unemployment rate over the projection horizon is expected to remain at or below the averages observed in the 2013-2017 period across all of our major markets.

• Consumer price inflation is expected to be lower in 2019 across most of our key markets compared with 2018, and remains broadly consistent with central bank inflation targets over the projection period in these countries.

• Major central banks are expected to adopt a cautious approach to adjusting their policy interest rates. Policy interest rates in advanced economies are expected to remain below their historical long-term averages over the five-year forecast horizon and the US Federal Reserve Board ('FRB') is expected to continue to reduce the size of its balance sheet. The Chinese central bank is expected to continue to rely on its toolkit of measures to control capital flows and manage domestic credit growth.

• The West Texas Intermediate oil price is forecast to average $63 per barrel over the projection period.

The following tables describe key macroeconomic variables and the probabilities assigned in the consensus Central scenario at
30 June 2019 and 31 December 2018.

Central scenario (average 3Q19-2Q24)
	UK	France		Hong Kong	Mainland China	UAE		US	Canada	Mexico
GDP growth rate (%)	1.6	1.4		2.3	5.8	3.2		2.0	1.8	2.2
Inflation (%)	2.0	1.7		2.3	2.4	2.3		2.1	2.0	3.6
Unemployment (%)	4.5	7.7		3.0	4.0	2.1		4.1	6.1	3.7
Short-term interest rate (%)	1.0	(0.1	)	2.0	3.7	2.9		2.2	1.8	7.7
10-year Treasury bond yields (%)	2.5	1.7		3.1	N/A	N/A		3.0	2.4	7.7
House price growth (%)	2.9	1.7		3.7	5.5	(2.1	)	2.8	3.3	5.2
Equity price growth (%)	2.7	3.8		7.1	11.5	N/A		2.9	3.5	6.3
Probability (%)	50.0	80.0		80.0	80.0	80.0		80.0	80.0	80.0

Central scenario (average 2019-2023)
	UK	France	Hong Kong	Mainland China	UAE	US	Canada	Mexico
GDP growth rate (%)	1.7	1.5	2.6	5.9	3.4	2.0	1.8	2.4
Inflation (%)	2.1	1.7	2.3	2.5	2.5	2.1	2.0	3.6
Unemployment (%)	4.5	7.8	3.1	4.0	2.1	4.0	6.1	3.7
Short-term interest rate (%)	1.2	0.2	2.6	4.0	3.2	2.8	2.5	8.0
10-year Treasury bond yields (%)	2.6	2.0	3.1	N/A	N/A	3.5	3.3	7.2
House price growth (%)	2.9	1.7	1.0	5.8	3.0	3.4	2.7	5.1
Equity price growth (%)	3.2	3.1	3.8	9.6	N/A	4.5	3.5	7.1
Probability (%)	50.0	80.0	80.0	80.0	80.0	80.0	80.0	80.0

Upside and Downside scenarios

The Upside and Downside scenarios are generated at the year-end and are only updated during the year if economic conditions change significantly. Our Upside and Downside scenarios are described on pages 95 and 96 of the Annual Report and Accounts 2018. There have been no significant changes to the scenarios over the first half of 2019. The probabilities attached to the Upside and Downside scenarios remain as in the Annual Report and Accounts 2018 with the exception of Hong Kong and mainland China where the consensus Downside scenario has been assigned a zero probability and the global trade Downside scenario has been assigned a probability of 10%. This scenario was re-calibrated in 2019.

Alternative Downside scenarios for the UK

A number of events occurred over the course of 2018 and the first half of 2019 that led management to re-evaluate the shape of the consensus distribution for the UK. Given the challenges facing economic forecasters in this environment, management was concerned that this distribution did not adequately represent downside risks for the UK. The high level of economic uncertainty that prevailed at the end of the first half of 2019, including the lack of progress in agreeing a clear plan for an exit from the EU and the uncertain performance of the UK economy after an exit, was a key factor in this consideration. In management's view, the extent of this uncertainty justifies the use of the following Alternative Downside scenarios, used in place of the consensus Downside, with the assigned probabilities:

Alternative Downside scenario 1 ('AD1'): Economic uncertainty could have a large impact on the UK economy, resulting in a long-lasting recession with a weak recovery. This scenario reflects the consequences of such a recession with an initial risk-premium shock and weaker long-run productivity growth. This scenario has been used with a 30% weighting.

Alternative Downside scenario 2 ('AD2'): This scenario reflects the possibility that economic uncertainty could result in a deep cyclical shock, triggering a steep depreciation in sterling, a sharp increase in inflation and an associated monetary policy response. This represents a tail risk and has been assigned a 5% weighting.

Alternative Downside scenario 3 ('AD3'): This scenario reflects the possibility that the adverse impact associated with economic uncertainty currently in the UK could manifest over a far longer period of time with the worst effects occurring later than in the above two scenarios. This scenario is also considered a tail risk and has been assigned a 5% weighting.

The table below describes key macroeconomic variables and the probabilities for each of the Alternative Downside scenarios at
30 June 2019 and 31 December 2018:

Average 3Q19-2Q24
	Alternative Downside scenario 1		Alternative Downside scenario 2		Alternative Downside scenario 3
GDP growth rate (%)	0.5		(0.1	)	(0.7	)
Inflation (%)	2.2		2.4		2.7
Unemployment (%)	6.5		8.0		7.7
Short-term interest rate (%)	0.4		2.5		2.5
10-year Treasury bond yields (%)	1.9		4.0		4.0
House price growth (%)	(1.7	)	(3.4	)	(5.0	)
Equity price growth (%)	(1.2	)	(2.6	)	(7.8	)
Probability (%)	30.0		5.0		5.0

Average 2019-2023
	Alternative Downside scenario 1		Alternative Downside scenario 2		Alternative Downside scenario 3
GDP growth rate (%)	0.5		(0.1	)	(0.7	)
Inflation (%)	2.2		2.4		2.7
Unemployment (%)	6.5		8.0		7.7
Short-term interest rate (%)	0.4		2.5		2.5
10-year Treasury bond yields (%)	1.8		4.0		4.0
House price growth (%)	(1.5	)	(3.3	)	(4.8	)
Equity price growth (%)	(0.9	)	(2.3	)	(7.5	)
Probability (%)	30.0		5.0		5.0

Global trade Downside scenario

Continued escalation of trade- and tariff-related tensions throughout 2018 and the first half of 2019 resulted in management modelling deeper effects of trade tensions than currently captured by the consensus Downside scenario for key Asia-Pacific economies. This alternative trade Downside scenario models a significant escalation in global tensions stemming from trade disputes. This escalation goes beyond increases in tariffs, and affects non-tariff barriers, cross-border investment flows and threats to the international trade architecture. This scenario assumes actions that lie beyond currently enacted and proposed tariffs and has been modelled as an alternative to the Downside scenario for these markets. This scenario has been assigned a 10% weight and has been used instead of the consensus Downside scenarios for eight Asia-Pacific markets, including our major markets of Hong Kong and mainland China. In management's judgement, the impact on the US and other countries is largely captured by the consensus Downside scenario.

The following tables describe key macroeconomic variables and the probability assigned to the alternative trade Downside scenario at 30 June 2019 and 31 December 2018.

Average 3Q19-2Q24
	Hong Kong		Mainland China
GDP growth rate (%)	1.3		5.3
Inflation (%)	1.6		2.0
Unemployment (%)	4.7		4.3
Short-term interest rate (%)	1.0		2.9
10-year Treasury bond yields (%)	2.0		N/A
House price growth (%)	(3.0	)	2.9
Equity price growth (%)	(1.8	)	2.1
Probability (%)	10.0		10.0

Average 2019-2023
	Hong Kong		Mainland China
GDP growth rate (%)	1.5		5.4
Inflation (%)	1.6		2.1
Unemployment (%)	4.7		4.3
Short-term interest rate (%)	1.0		3.1
10-year Treasury bond yields (%)	2.0		N/A
House price growth (%)	(2.0	)	2.9
Equity price growth (%)	(3.5	)	1.1
Probability (%)	5.0		5.0

How economic scenarios are reflected in the wholesale and retail calculation of ECL

Our methodology in relation to the adoption and generation of economic scenarios is described on page 97 of the Annual Report and Accounts 2018. There have been no significant changes during the 1H19 period.

Effect of multiple economic scenarios on ECL

The ECL recognised in the financial statements reflect the combined effects of a range of probability-weighted outcomes calculated using economic scenarios mentioned above and management adjustments where required. The probability-weighted amount is typically a higher number than would result from using only the Central (most likely) economic scenario. Expected losses typically have a non-linear relationship to the many factors that influence credit losses, such that more favourable macroeconomic factors do not reduce defaults as much as less favourable macroeconomic factors increase defaults.

UK economic uncertainty

At 31 December 2018, three additional Downside scenarios were used in place of the UK consensus Downside scenario in order to adequately reflect downside risks in the UK. This resulted in the recognition of additional impairment allowances of $410m, comprising $160m for the retail portfolio and $250m for the wholesale portfolio, compared with those implied by consensus forecasts. This was an increase of $165m in the adjustment to the consensus position compared with 1 January 2018, reflecting the increased level of economic uncertainty in the UK.

Given ongoing political developments, there has been no further clarity on the terms or timelines of the UK's exit from the EU during the first half of 2019.

At 30 June 2019, the total amount of additional impairment allowances was $442m, comprising $161m for retail and $281m for wholesale, reflecting a $32m increase since the end of 2018.

Global trade tensions

At 31 December 2018, the Global trade Downside scenario for key Asia-Pacific economies was used in relation to global trade tensions. This resulted in an additional $40m of impairment allowances, comprising $10m in retail and $30m in wholesale.

Given continued escalation of the trade- and tariff-related tensions throughout the 1H19 period, management continued to incorporate a Global trade Downside scenario and increased the probability weighting to 10% (31 December 2018: 5% probability weighting). This resulted in additional impairment allowances of $85m as at 30 June 2019, comprising $18 million in retail and $67m in wholesale, an increase of $45m from 31 December 2018.

Economic scenarios sensitivity analysis of ECL estimates

Management assessed and considered the sensitivity estimate outcomes for both the retail and wholesale businesses as at
30 June 2019 and determined that there was no material change from 31 December 2018, as presented on pages 98 and 99 of the Annual Report and Accounts 2018.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers

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. Movements are calculated on a quarterly basis and therefore fully capture stage movements between quarters. If movements were calculated on a year-to-date basis they would only reflect the opening and closing position of the financial instrument.

The transfers of financial instruments represent 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.

Changes in 'New financial assets originated or purchased', 'assets derecognised (including final repayments)' and 'changes to risk parameters - further lending/repayments' represent the 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:	(11,425	)	(323	)	8,987		612		2,438		(289	)	-		-		-		-
- transfers from stage 1 to stage 2	(47,211	)	204		47,211		(204	)	-		-		-		-		-		-
- transfers from stage 2 to stage 1	36,137		(529	)	(36,137	)	529		-		-		-		-		-		-
- transfers to stage 3	(574	)	21		(2,542	)	335		3,116		(356	)	-		-		-		-
- transfers from stage 3	223		(19	)	455		(48	)	(678	)	67		-		-		-		-
Net remeasurement of ECL arising from transfer of stage	-		346		-		(352	)	-		(26	)	-		-		-		(32	)
New financial assets originated or purchased	250,306		(332	)	-		-		-		-		100		(22	)	250,406		(354	)
Asset derecognised (including final repayments)	(164,666	)	62		(9,844	)	226		(1,552	)	466		(19	)	9		(176,081	)	763
Changes to risk parameters - further lending/repayments	(23,759	)	137		(74	)	87		359		(192	)	(27	)	4		(23,501	)	36
Change in risk parameters - credit quality	-		42		-		(528	)	-		(1,259	)	-		(12	)	-		(1,757	)
Changes to models used for ECL calculation	-		4		-		31		-		3		-		-		-		38
Assets written off	-		-		-		-		(1,276	)	1,276		(54	)	54		(1,330	)	1,330
Credit-related modifications that resulted in derecognition	-		-		-		-		(211	)	111		-		-		(211	)	111
Foreign exchange	2,451		1		98		(1	)	(10	)	6		(2	)	1		2,537		7
Other	1,461		8		660		2		36		12		1		-		2,158		22
At 30 Jun 2019	1,566,207		(1,504	)	86,068		(2,201	)	14,016		(5,027	)	333		(160	)	1,666,624		(8,892	)
ECL income statement change for the period			259				(536	)			(1,008	)			(21	)			(1,306	)
Recoveries																			201
Other																			(31	)
Total ECL income statement change for the period																			(1,136	)

	At 30 Jun 2019			6 months ended 30 Jun 2019
	Gross carrying/nominal amount	Allowance for ECL		ECL charge
	$m	$m		$m
As above	1,666,624	(8,892	)	(1,136	)
Other financial assets measured at amortised cost	653,554	(85	)	(9	)
Non-trading reverse purchase agreement commitments	97,122	-		-
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement	2,417,300	(8,977	)	(1,145	)
Debt instruments measured at FVOCI	345,035	(74	)	5
Total allowance for ECL/total income statement ECL charge for the period	n/a	(9,051	)	(1,140	)

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 $164m during the period, from $9,056m at 31 December 2018 to $8,892m at 30 June 2019.

This decrease was primarily driven by:

• $445m relating to volume movements, which included the ECL allowance associated with new originations, assets derecognised and further lending/repayments;

• $1,330m of assets written off; and

• foreign exchange and all other movements of $178m.

These decreases were partly offset by increases of:

• $1,757m relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages; and

• $32m relating to the net remeasurement impact of stage transfers.

The ECL charge for the period of $1,306m presented in the above table consisted of $1,757m relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stage and $32m relating to the net remeasurement impact of stage transfers. This was partly offset by $445m relating to underlying net book volume movements and $38m in changes to models used for ECL calculation.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees⁷
	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 2018	1,446,857		(1,469	)	102,032		(2,406	)	15,083		(5,722	)	1,042		(242	)	1,565,014		(9,839	)
Transfers of financial instruments:	(8,747	)	(685	)	3,582		1,185		5,165		(500	)	-		-		-		-
- transfers from stage 1 to stage 2	(84,181	)	319		84,181		(319	)	-		-		-		-		-		-
- transfers from stage 2 to stage 1	77,325		(999	)	(77,325	)	999		-		-		-		-		-		-
- transfers to stage 3	(2,250	)	35		(4,439	)	607		6,689		(642	)	-		-		-		-
- transfers from stage 3	359		(40	)	1,165		(102	)	(1,524	)	142		-		-		-		-
Net remeasurement of ECL arising from transfer of stage	-		620		-		(605	)	-		(103	)	-		-		-		(88	)
Net new lending and further lending/repayments	126,868		(512	)	(16,162	)	564		(2,902	)	733		(587	)	42		107,217		827
Changes in risk parameters - credit quality	-		423		-		(1,087	)	-		(2,238	)	-		(51	)	-		(2,953	)
Changes to models used for ECL calculation	-		-		-		-		-		-		-		-		-		-
Assets written off	-		-		-		-		(2,568	)	2,552		(1	)	1		(2,569	)	2,553
Foreign exchange	(52,983	)	76		(2,863	)	99		(636	)	232		(26	)	6		(56,508	)	413
Other	(156	)	98		(348	)	(28	)	90		(89	)	(94	)	50		(508	)	31
At 31 Dec 2018	1,511,839		(1,449	)	86,241		(2,278	)	14,232		(5,135	)	334		(194	)	1,612,646		(9,056	)
ECL income statement change for the period			531				(1,128	)			(1,608	)			(9	)			(2,214	)
Recoveries																			408
Others																			(87	)
Total ECL income statement change for the period																			(1,893	)

	At 31 Dec 2018			12 months ended 31 Dec 2018
	Gross carrying/nominal amount	Allowance for ECL		ECL charge
	$m	$m		$m
As above	1,612,646	(9,056	)	(1,893	)
Other financial assets measured at amortised cost	582,917	(55	)	21
Non-trading reverse purchase agreement commitments	65,381	-		-
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement	2,260,944	(9,111	)	(1,872	)
Debt instruments measured at FVOCI	343,110	(84	)	105
Total allowance for ECL/total income statement ECL charge for the period	n/a	(9,195	)	(1,767	)

For footnotes, see page 75.

Credit quality of financial instruments

We assess the credit quality of all financial instruments that are subject to credit risk. The credit quality of financial instruments is a point-in-time assessment of the probability of default ('PD'), whereas stages 1 and 2 are determined based on relative deterioration of credit quality since initial recognition. Accordingly, for non-credit-impaired financial instruments, there is no direct relationship between the credit quality assessment and stages 1 and 2, though typically the lower credit quality bands exhibit a higher proportion in stage 2.

The five credit quality classifications each encompass a range of granular internal credit rating grades assigned to wholesale and personal lending businesses and the external ratings attributed by external agencies to debt securities, as shown in the following table. Personal lending credit quality is disclosed based on a 12-month point-in-time PD adjusted for multiple economic scenarios. The credit quality classifications for wholesale lending are unchanged and are based on internal credit risk ratings.

Credit quality classification
	Debt securities and other bills	Wholesale lending		Retail lending
	External credit rating	Internal credit rating	12-month Basel probability of default %	Internal credit rating	12-month probability- weighted PD %
Quality classification
Strong	A- and above	CRR1 to CRR2	0.000-0.169	Band 1 and 2	0.000-0.500
Good	BBB+ to BBB-	CRR3	0.170-0.740	Band 3	0.501-1.500
Satisfactory	BB+ to B and unrated	CRR4 to CRR5	0.741-4.914	Band 4 and 5	1.501-20.000
Sub-standard	B- to C	CRR6 to CRR8	4.915-99.999	Band 6	20.001-99.999
Credit impaired	Default	CRR9 to CRR10	100.000	Band 7	100.000

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
		Gross carrying/nominal amount						Allowance for ECL		Net
		Strong	Good	Satisfactory	Sub- standard	Credit impaired	Total	Allowance for ECL		Net
	Footnotes	$m	$m	$m	$m	$m	$m	$m		$m
Loans and advances to customers at amortised cost		508,002	254,635	236,389	17,811	13,315	1,030,152	(8,520	)	1,021,632
- stage 1		506,440	244,016	199,663	5,401	-	955,520	(1,329	)	954,191
- stage 2		1,562	10,619	36,726	12,390	-	61,297	(2,062	)	59,235
- stage 3		-	-	-	-	13,010	13,010	(4,969	)	8,041
- POCI		-	-	-	20	305	325	(160	)	165
Loans and advances to banks at amortised cost		72,050	5,970	4,379	14	-	82,413	(16	)	82,397
- stage 1		71,984	5,959	4,002	12	-	81,957	(14	)	81,943
- stage 2		66	11	377	2	-	456	(2	)	454
- stage 3		-	-	-	-	-	-	-		-
- POCI		-	-	-	-	-	-	-		-
Other financial assets measured at amortised cost		580,508	47,817	24,785	293	151	653,554	(85	)	653,469
- stage 1		580,215	47,266	23,901	131	-	651,513	(32	)	651,481
- stage 2		293	551	884	162	-	1,890	(10	)	1,880
- stage 3		-	-	-	-	149	149	(43	)	106
- POCI		-	-	-	-	2	2	-		2
Loan and other credit-related commitments		399,958	139,417	85,060	4,633	823	629,891	(301	)	629,590
- stage 1		399,099	133,703	73,099	1,185	-	607,086	(141	)	606,945
- stage 2		859	5,714	11,961	3,448	-	21,982	(112	)	21,870
- stage 3		-	-	-	-	818	818	(48	)	770
- POCI		-	-	-	-	5	5	-		5
Financial guarantees		7,967	6,524	5,872	736	191	21,290	(55	)	21,235
- stage 1		7,919	6,128	4,382	247	-	18,676	(20	)	18,656
- stage 2		48	396	1,490	489	-	2,423	(25	)	2,398
- stage 3		-	-	-	-	188	188	(10	)	178
- POCI		-	-	-	-	3	3	-		3
At 30 Jun 2019		1,568,485	454,363	356,485	23,487	14,480	2,417,300	(8,977	)	2,408,323
Debt instruments at FVOCI	8
- stage 1		314,678	13,140	10,821	-	-	338,639	(40	)	338,599
- stage 2		93	333	319	273	-	1,018	(34	)	984
- stage 3		-	-	-	-	184	184	-		184
- POCI		-	-	-	-	1	1	-		1
At 30 Jun 2019		314,771	13,473	11,140	273	185	339,842	(74	)	339,768

For footnotes, see page 75.

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation (continued)
		Gross carrying/notional amount
		Strong	Good	Satisfactory	Sub-standard	Credit impaired	Total	Allowance for ECL		Net
	Footnotes	$m	$m	$m	$m	$m	$m	$m		$m
Loans and advances to customers at amortised cost		485,451	244,199	230,357	16,993	13,321	990,321	(8,625	)	981,696
- stage 1		483,907	233,843	191,851	5,587	-	915,188	(1,276	)	913,912
- stage 2		1,544	10,356	38,506	11,380	-	61,786	(2,108	)	59,678
- stage 3		-	-	-	-	13,023	13,023	(5,047	)	7,976
- POCI		-	-	-	26	298	324	(194	)	130
Loans and advances to banks at amortised cost		60,249	7,371	4,549	11	-	72,180	(13	)	72,167
- stage 1		60,199	7,250	4,413	11	-	71,873	(11	)	71,862
- stage 2		50	121	136	-	-	307	(2	)	305
- stage 3		-	-	-	-	-	-	-		-
- POCI		-	-	-	-	-	-	-		-
Other financial assets measured at amortised cost		514,848	44,724	23,019	200	126	582,917	(55	)	582,862
- stage 1		514,525	44,339	22,184	70	-	581,118	(27	)	581,091
- stage 2		323	385	835	130	-	1,673	(6	)	1,667
- stage 3		-	-	-	-	126	126	(22	)	104
- POCI		-	-	-	-	-	-	-		-
Loan and other credit-related commitments		373,302	137,076	75,478	5,233	919	592,008	(325	)	591,683
- stage 1		372,597	132,220	63,457	976	-	569,250	(143	)	569,107
- stage 2		705	4,856	12,021	4,257	-	21,839	(139	)	21,700
- stage 3		-	-	-	-	912	912	(43	)	869
- POCI		-	-	-	-	7	7	-		7
Financial guarantees		9,716	7,400	5,505	597	300	23,518	(93	)	23,425
- stage 1		9,582	6,879	4,264	159	-	20,884	(19	)	20,865
- stage 2		134	521	1,241	438	-	2,334	(29	)	2,305
- stage 3		-	-	-	-	297	297	(45	)	252
- POCI		-	-	-	-	3	3	-		3
At 31 Dec 2018		1,443,566	440,770	338,908	23,034	14,666	2,260,944	(9,111	)	2,251,833
Debt instruments at FVOCI	8
- stage 1		319,623	12,358	6,856	2,218	-	341,055	(33	)	341,022
- stage 2		9	96	354	340	-	799	(50	)	749
- stage 3		-	-	-	-	8	8	(1	)	7
- POCI		-	-	-	-	4	4	-		4
At 31 Dec 2018		319,632	12,454	7,210	2,558	12	341,866	(84	)	341,782

For footnotes, see page 75.

Renegotiated loans and forbearance

The following table shows the gross carrying amounts of the Group's holdings of renegotiated loans and advances to customers by industry sector and by stages. Wholesale renegotiated loans are classified as stage 3 until there is sufficient evidence to demonstrate a significant reduction in the risk of non-payment of future cash flows, observed over a minimum one-year period, and there are no other indicators of impairment. Personal renegotiated loans are deemed to remain credit impaired until repayment or derecognition.

Renegotiated loans and advances to customers at amortised cost by stage distribution
	Stage 1		Stage 2		Stage 3		POCI		Total
	$m		$m		$m		$m		$m
Gross carrying amount
Personal	-		-		2,203		-		2,203
- first lien residential mortgages	-		-		1,597		-		1,597
- other personal lending	-		-		606		-		606
Wholesale	1,182		1,078		3,595		274		6,129
- corporate and commercial	1,182		1,078		3,525		273		6,058
- non-bank financial institutions	-		-		70		1		71
At 30 Jun 2019	1,182		1,078		5,798		274		8,332
Allowance for ECL
Personal	-		-		(391	)	-		(391	)
- first lien residential mortgages	-		-		(191	)	-		(191	)
- other personal lending	-		-		(200	)	-		(200	)
Wholesale	(19	)	(45	)	(1,283	)	(109	)	(1,456	)
- corporate and commercial	(19	)	(45	)	(1,252	)	(108	)	(1,424	)
- non-bank financial institutions	-		-		(31	)	(1	)	(32	)
At 30 Jun 2019	(19	)	(45	)	(1,674	)	(109	)	(1,847	)

Renegotiated loans and advances to customers at amortised cost by stage distribution (continued)
	Stage 1		Stage 2		Stage 3		POCI		Total
	$m		$m		$m		$m		$m
Gross carrying amount
Personal	-		-		2,248		-		2,248
- first lien residential mortgages	-		-		1,641		-		1,641
- other personal lending	-		-		607		-		607
Wholesale	1,532		1,193		3,845		270		6,840
- corporate and commercial	1,517		1,193		3,789		270		6,769
- non-bank financial institutions	15		-		56		-		71
At 31 Dec 2018	1,532		1,193		6,093		270		9,088
Allowance for ECL
Personal	-		-		(381	)	-		(381	)
- first lien residential mortgages	-		-		(186	)	-		(186	)
- other personal lending	-		-		(195	)	-		(195	)
Wholesale	(29	)	(49	)	(1,461	)	(146	)	(1,685	)
- corporate and commercial	(29	)	(49	)	(1,438	)	(146	)	(1,662	)
- non-bank financial institutions	-		-		(23	)	-		(23	)
At 31 Dec 2018	(29	)	(49	)	(1,842	)	(146	)	(2,066	)

Renegotiated loans and advances to customers at amortised cost by geographical region
	Europe	Asia	MENA	North America	Latin America	Total	UK	Hong Kong
	$m	$m	$m	$m	$m	$m	$m	$m
At 30 Jun 2019	4,010	901	1,950	1,235	236	8,332	3,287	300
At 31 Dec 2018	4,533	864	1,973	1,352	366	9,088	3,609	305

Personal lending

This section provides further detail on the regions, countries and products driving the increase in personal loans and advances to customers. Additionally, Hong Kong and UK mortgage book loan-to-value ('LTV') data is provided.

Further product granularity is also provided by stage, with geographical data presented for loans and advances to customers, loan and other credit-related commitments, and financial guarantee and similar contracts.

At 30 June 2019, total personal lending for loans and advances to customers of $414bn increased by $20bn compared with
31 December 2018. This increase included favourable exchange movements of $0.4bn. Excluding foreign exchange movements, there was growth of $19.6bn, primarily driven by $13.4bn in Asia and $5.4bn in Europe. The allowance for ECL attributable to personal lending, excluding off-balance sheet loan commitments and guarantees, increased by $25m.

Excluding foreign exchange movements, total personal lending was primarily driven by mortgage growth, which grew by $12.6bn. Mortgages grew in Asia by $8bn, notably $5.5bn in Hong Kong and $2bn in Australia, as a result of business growth initiatives. In Europe, mortgages grew by $4.4bn, notably $4.2bn in the UK, driven by stronger acquisition performance, including the expanded use of broker relationships.

The quality of both our Hong Kong and UK mortgage books remained high, with negligible defaults and impairment allowances. The average LTV ratio on new mortgage lending in Hong Kong was 49%, compared with an estimated 38% for the overall mortgage portfolio. The average LTV ratio on new lending in the UK was 68%, compared with an estimated 50% for the overall mortgage portfolio.

Excluding foreign exchange movements, other personal lending balances at 30 June 2019 increased by $7bn compared with
31 December 2018. The increase was attributable to loans and overdrafts, which grew by $4.2bn in Hong Kong and $0.4bn in UK. Credit cards decreased by $0.5bn in Hong Kong.

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	296,998	6,335	3,029	306,362	(45	)	(66	)	(439	)	(550	)
- of which: interest only (including offset)	31,053	1,703	358	33,114	(6	)	(16	)	(89	)	(111	)
- affordability (including US adjustable rate mortgages)	14,387	745	517	15,649	(4	)	(3	)	(8	)	(15	)
Other personal lending	97,535	8,779	1,675	107,989	(518	)	(1,176	)	(728	)	(2,422	)
- other	74,558	4,530	1,140	80,228	(226	)	(459	)	(466	)	(1,151	)
- credit cards	20,686	4,120	471	25,277	(286	)	(704	)	(245	)	(1,235	)
- second lien residential mortgages	800	92	57	949	(1	)	(9	)	(12	)	(22	)
- motor vehicle finance	1,491	37	7	1,535	(5	)	(4	)	(5	)	(14	)
At 30 Jun 2019	394,533	15,114	4,704	414,351	(563	)	(1,242	)	(1,167	)	(2,972	)
By geography
Europe	173,825	6,342	2,087	182,254	(110	)	(481	)	(452	)	(1,043	)
- of which: UK	142,516	4,993	1,346	148,855	(101	)	(452	)	(234	)	(787	)
Asia	169,111	5,588	722	175,421	(206	)	(329	)	(180	)	(715	)
- of which: Hong Kong	114,645	2,976	197	117,818	(72	)	(195	)	(37	)	(304	)
MENA	5,517	280	389	6,186	(58	)	(61	)	(256	)	(375	)
North America	39,463	1,925	1,227	42,615	(31	)	(91	)	(143	)	(265	)
Latin America	6,617	979	279	7,875	(158	)	(280	)	(136	)	(574	)
At 30 Jun 2019	394,533	15,114	4,704	414,351	(563	)	(1,242	)	(1,167	)	(2,972	)

Total personal lending for loans and other credit-related commitments and financial guarantees by stage distribution
	Nominal 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
Europe	53,725	654	293	54,672	(9	)	(1	)	-	(10	)
of which: UK	50,939	554	290	51,783	(9	)	-		-	(9	)
Asia	139,171	1,280	3	140,454	-		-		-	-
of which: Hong Kong	108,303	359	-	108,662	-		-		-	-
MENA	3,260	52	54	3,366	(1	)	-		-	(1	)
North America	14,364	236	11	14,611	(1	)	(1	)	-	(2	)
Latin America	4,781	65	4	4,850	(4	)	-		-	(4	)
At 30 Jun 2019	215,301	2,287	365	217,953	(15	)	(2	)	-	(17	)

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	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	)

Total personal lending for loans and other credit-related commitments and financial guarantees by stage distribution
	Nominal 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
Europe	52,719	291	290	53,300	(7	)	-		-	(7	)
- of which: UK	50,195	224	285	50,704	(5	)	-		-	(5	)
Asia	131,333	1,034	1	132,368	-		-		-	-
- of which: Hong Kong	102,156	366	-	102,522	-		-		-	-
MENA	3,264	67	23	3,354	-		-		-	-
North America	14,469	312	94	14,875	(1	)	(1	)	-	(2	)
Latin America	4,318	59	4	4,381	(5	)	-		-	(5	)
At 31 Dec 2018	206,103	1,763	412	208,278	(13	)	(1	)	-	(14	)

Wholesale lending

This section provides further details on the regions, countries and products driving the increase in wholesale loans and advances to customers and banks, with the impact of foreign exchange separately identified. Product granularity is also provided by stage, with geographical data presented for loans and advances to customers, banks, other credit commitments, financial guarantees and similar contracts.

At 30 June 2019, wholesale lending for loans and advances to banks and customers of $698bn increased by $30bn since
31 December 2018. This included favourable foreign exchange movements of $1bn.

Excluding foreign exchange movements, the total wholesale lending growth was driven by an $11bn increase in corporate and commercial balances and $10bn in loans and advances to banks. The primary drivers of the increase in corporate and commercial balances were $5.1bn in Asia, notably $2.9bn in mainland China and $1.5bn in Singapore. Additionally, corporate and commercial balances in the US grew $3.3bn. The allowance for ECL is attributable to loans and advances to banks and customers of $5.6bn at 30 June 2019 decreased from $5.7bn at 31 December 2018.

Total wholesale lending for loans and advances to banks and customers by stage distribution
	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	493,523	44,560	8,019	325	546,427	(707	)	(802	)	(3,712	)	(160	)	(5,381	)
- agriculture, forestry and fishing	5,811	907	256	1	6,975	(17	)	(42	)	(124	)	-		(183	)
- mining and quarrying	12,251	2,125	241	2	14,619	(25	)	(46	)	(109	)	(2	)	(182	)
- manufacturing	97,484	10,753	1,394	122	109,753	(143	)	(172	)	(721	)	(84	)	(1,120	)
- electricity, gas, steam and air-conditioning supply	12,755	1,454	169	-	14,378	(13	)	(43	)	(20	)	-		(76	)
- water supply, sewerage, waste management and remediation	3,192	175	22	-	3,389	(6	)	(3	)	(19	)	-		(28	)
- construction	12,384	2,199	871	64	15,518	(20	)	(37	)	(456	)	(64	)	(577	)
- wholesale and retail trade, repair of motor vehicles and motorcycles	86,118	11,270	1,731	22	99,141	(113	)	(129	)	(999	)	(7	)	(1,248	)
- transportation and storage	22,490	1,795	506	36	24,827	(42	)	(37	)	(91	)	(1	)	(171	)
- accommodation and food	21,069	1,797	270	1	23,137	(46	)	(34	)	(111	)	(1	)	(192	)
- publishing, audiovisual and broadcasting	20,456	1,291	166	-	21,913	(50	)	(24	)	(38	)	-		(112	)
- real estate	121,684	6,266	1,421	1	129,372	(118	)	(85	)	(542	)	-		(745	)
- professional, scientific and technical activities	22,022	991	328	-	23,341	(28	)	(32	)	(115	)	-		(175	)
- administrative and support services	22,404	1,711	245	74	24,434	(36	)	(40	)	(160	)	(1	)	(237	)
- public administration and defence, compulsory social security	1,196	188	-	-	1,384	(1	)	(6	)	-		-		(7	)
- education	1,650	109	34	-	1,793	(9	)	(4	)	(8	)	-		(21	)
- health and care	3,884	500	110	-	4,494	(11	)	(22	)	(36	)	-		(69	)
- arts, entertainment and recreation	3,437	159	31	1	3,628	(7	)	(10	)	(15	)	-		(32	)
- other services	13,474	587	212	1	14,274	(17	)	(21	)	(142	)	-		(180	)
- activities of households	684	73	-	-	757	-		-		-		-		-
- extra-territorial organisations and bodies activities	45	-	5	-	50	-		-		(1	)	-		(1	)
- government	8,296	196	7	-	8,499	(5	)	(1	)	(5	)	-		(11	)
- asset-backed securities	737	14	-	-	751	-		(14	)	-		-		(14	)
Non-bank financial institutions	67,464	1,623	287	-	69,374	(59	)	(18	)	(90	)	-		(167	)
Loans and advances to banks	81,957	456	-	-	82,413	(14	)	(2	)	-		-		(16	)
At 30 Jun 2019	642,944	46,639	8,306	325	698,214	(780	)	(822	)	(3,802	)	(160	)	(5,564	)
By geography
Europe	197,280	18,926	4,328	100	220,634	(393	)	(518	)	(1,546	)	(74	)	(2,531	)
- of which: UK	135,445	15,230	3,107	37	153,819	(326	)	(464	)	(969	)	(28	)	(1,787	)
Asia	336,810	15,587	1,453	156	354,006	(227	)	(115	)	(969	)	(36	)	(1,347	)
- of which: Hong Kong	205,362	7,182	680	65	213,289	(118	)	(46	)	(461	)	(34	)	(659	)
MENA	26,016	3,095	1,835	54	31,000	(58	)	(72	)	(982	)	(45	)	(1,157	)
North America	63,759	8,194	330	-	72,283	(41	)	(95	)	(106	)	-		(242	)
Latin America	19,079	837	360	15	20,291	(61	)	(22	)	(199	)	(5	)	(287	)
At 30 Jun 2019	642,944	46,639	8,306	325	698,214	(780	)	(822	)	(3,802	)	(160	)	(5,564	)

Total wholesale lending for loans and other credit-related commitments and financial guarantees by stage distribution¹⁰
	Nominal 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	262,473	20,437	635	8	283,553	(139	)	(132	)	(57	)	-	(328	)
Financial	147,988	1,681	6	-	149,675	(7	)	(3	)	(1	)	-	(11	)
At 30 Jun 2019	410,461	22,118	641	8	433,228	(146	)	(135	)	(58	)	-	(339	)
By geography
Europe	222,268	8,827	532	8	231,635	(79	)	(47	)	(38	)	-	(164	)
- of which: UK	78,553	4,930	284	5	83,772	(64	)	(39	)	(28	)	-	(131	)
Asia	65,053	2,561	20	-	67,634	(40	)	(16	)	(11	)	-	(67	)
- of which: Hong Kong	29,748	853	6	-	30,607	(12	)	(3	)	(9	)	-	(24	)
MENA	5,580	703	15	-	6,298	(5	)	(7	)	(3	)	-	(15	)
North America	114,802	9,987	72	-	124,861	(19	)	(65	)	(6	)	-	(90	)
Latin America	2,758	40	2	-	2,800	(3	)	-		-		-	(3	)
At 30 Jun 2019	410,461	22,118	641	8	433,228	(146	)	(135	)	(58	)	-	(339	)

For footnotes, see page 75.

Total wholesale lending for loans and advances to banks and customers by stage distribution
	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	)
- manufacturing	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	)

Total wholesale lending for loans and other credit-related commitments and financial guarantees by stage distribution¹⁰
	Nominal 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	266,489	21,087	791	10	288,377	(142	)	(161	)	(87	)	-	(390	)
Financial	117,542	1,323	6	-	118,871	(7	)	(6	)	(1	)	-	(14	)
At 31 Dec 2018	384,031	22,410	797	10	407,248	(149	)	(167	)	(88	)	-	(404	)
By geography
Europe	203,092	9,726	614	10	213,442	(82	)	(66	)	(53	)	-	(201	)
- of which: UK	82,572	6,378	442	-	89,392	(69	)	(57	)	(39	)	-	(165	)
Asia	61,206	3,076	102	-	64,384	(39	)	(16	)	(28	)	-	(83	)
- of which: Hong Kong	27,022	1,115	89	-	28,226	(12	)	(2	)	(27	)	-	(41	)
MENA	5,304	732	18	-	6,054	(8	)	(10	)	(2	)	-	(20	)
North America	111,494	8,850	62	-	120,406	(17	)	(75	)	(4	)	-	(96	)
Latin America	2,935	26	1	-	2,962	(3	)	-		(1	)	-	(4	)
At 31 Dec 2018	384,031	22,410	797	10	407,248	(149	)	(167	)	(88	)	-	(404	)

For footnotes, see page 75.

Supplementary information

The following disclosure presents the gross carrying/nominal amount of financial instruments to which the impairment requirements in

IFRS 9 are applied by global business and the associated allowance for ECL.

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied - by global business
	Gross carrying/nominal 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
Loans and advances to customers at amortised cost	955,520	61,297	13,010	325	1,030,152	(1,329	)	(2,062	)	(4,969	)	(160	)	(8,520	)
- RBWM	359,885	14,888	4,280	-	379,053	(548	)	(1,209	)	(1,170	)	-		(2,927	)
- CMB	313,262	31,671	6,699	206	351,838	(548	)	(666	)	(3,105	)	(132	)	(4,451	)
- GB&M	237,323	12,953	1,408	119	251,803	(220	)	(162	)	(603	)	(28	)	(1,013	)
- GPB	43,553	1,745	623	-	45,921	(13	)	(11	)	(91	)	-		(115	)
- Corporate Centre	1,497	40	-	-	1,537	-		(14	)	-		-		(14	)
Loans and advances to banks at amortised cost	81,957	456	-	-	82,413	(14	)	(2	)	-		-		(16	)
- RBWM	5,409	26	-	-	5,435	(2	)	-		-		-		(2	)
- CMB	1,446	13	-	-	1,459	(1	)	-		-		-		(1	)
- GB&M	26,370	395	-	-	26,765	(9	)	(2	)	-		-		(11	)
- GPB	25	-	-	-	25	-		-		-		-		-
- Corporate Centre	48,707	22	-	-	48,729	(2	)	-		-		-		(2	)
Other financial assets measured at amortised cost	651,513	1,890	149	2	653,554	(32	)	(10	)	(43	)	-		(85	)
- RBWM	51,767	235	18	-	52,020	(17	)	(2	)	(2	)	-		(21	)
- CMB	17,623	1,051	63	1	18,738	(10	)	(6	)	(24	)	-		(40	)
- GB&M	314,846	581	53	1	315,481	(2	)	(2	)	(15	)	-		(19	)
- GPB	1,388	10	4	-	1,402	-		-		(2	)	-		(2	)
- Corporate Centre	265,889	13	11	-	265,913	(3	)	-		-		-		(3	)
Total gross carrying amount on-balance sheet at 30 Jun 2019	1,688,990	63,643	13,159	327	1,766,119	(1,375	)	(2,074	)	(5,012	)	(160	)	(8,621	)
Loans and other credit-related commitments	607,086	21,982	818	5	629,891	(141	)	(112	)	(48	)	-		(301	)
- RBWM	169,931	2,430	359	-	172,720	(13	)	(3	)	-		-		(16	)
- CMB	115,551	10,876	304	5	126,736	(75	)	(46	)	(43	)	-		(164	)
- GB&M	283,499	8,552	151	-	292,202	(52	)	(63	)	(5	)	-		(120	)
- GPB	36,923	124	4	-	37,051	-		-		-		-		-
- Corporate Centre	1,182	-	-	-	1,182	(1	)	-		-		-		(1	)
Financial guarantees	18,676	2,423	188	3	21,290	(20	)	(25	)	(10	)	-		(55	)
- RBWM	67	2	1	-	70	-		-		-		-		-
- CMB	7,651	1,465	93	3	9,212	(8	)	(16	)	(8	)	-		(32	)
- GB&M	9,917	947	94	-	10,958	(12	)	(9	)	(2	)	-		(23	)
- GPB	1,022	9	-	-	1,031	-		-		-		-		-
- Corporate Centre	19	-	-	-	19	-		-		-		-		-
Total nominal amount off-balance sheet at 30 Jun 2019	625,762	24,405	1,006	8	651,181	(161	)	(137	)	(58	)	-		(356	)
RBWM	14,213	138	-	-	14,351	(4	)	-		-		-		(4	)
CMB	264	-	-	1	265	(3	)	-		-		-		(3	)
GB&M	1,707	-	-	-	1,707	(6	)	-		-		-		(6	)
GPB	-	-	-	-	-	-		-		-		-		-
Corporate Centre	327,891	821	-	-	328,712	(27	)	(34	)	-		-		(61	)
Debt instruments measured at FVOCI at 30 Jun 2019	344,075	959	-	1	345,035	(40	)	(34	)	-		-		(74	)

For footnotes, see page 75.

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied - by global business (continued)
	Gross carrying/nominal 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
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	)
- RBWM	340,606	19,228	4,960	-	364,794	(544	)	(1,250	)	(1,129	)	-		(2,923	)
- CMB	304,103	27,529	5,732	298	337,662	(538	)	(659	)	(3,110	)	(194	)	(4,501	)
- GB&M	230,250	14,112	1,683	25	246,070	(188	)	(182	)	(718	)	-		(1,088	)
- GPB	37,970	724	618	1	39,313	(5	)	(3	)	(89	)	-		(97	)
- Corporate Centre	2,259	193	30	-	2,482	(1	)	(14	)	(1	)	-		(16	)
Loans and advances to banks at amortised cost	71,873	307	-	-	72,180	(11	)	(2	)	-		-		(13	)
- RBWM	5,801	5	-	-	5,806	(1	)	-		-		-		(1	)
- CMB	1,912	15	-	-	1,927	(1	)	-		-		-		(1	)
- GB&M	25,409	212	-	-	25,621	(7	)	(2	)	-		-		(9	)
- GPB	46	-	-	-	46	-		-		-		-		-
- Corporate Centre	38,705	75	-	-	38,780	(2	)	-		-		-		(2	)
Other financial assets measured at amortised cost	581,118	1,673	126	-	582,917	(27	)	(6	)	(22	)	-		(55	)
- RBWM	49,142	184	32	-	49,358	(14	)	(2	)	(1	)	-		(17	)
- CMB	15,082	774	60	-	15,916	(7	)	(3	)	(21	)	-		(31	)
- GB&M	272,028	703	20	-	272,751	(1	)	(1	)	-		-		(2	)
- GPB	924	1	2	-	927	-		-		-		-		-
- Corporate Centre	243,942	11	12	-	243,965	(5	)	-		-		-		(5	)
Total gross carrying amount on-balance sheet at 31 Dec 2018	1,568,179	63,766	13,149	324	1,645,418	(1,314	)	(2,116	)	(5,069	)	(194	)	(8,693	)
Loans and other credit-related commitments	569,250	21,839	912	7	592,008	(143	)	(139	)	(43	)	-		(325	)
- RBWM	164,589	1,792	399	-	166,780	(6	)	(1	)	(1	)	-		(8	)
- CMB	113,753	9,345	308	5	123,411	(72	)	(52	)	(40	)	-		(164	)
- GB&M	252,910	9,658	194	2	262,764	(58	)	(86	)	(2	)	-		(146	)
- GPB	33,885	1,044	11	-	34,940	-		-		-		-		-
- Corporate Centre	4,113	-	-	-	4,113	(7	)	-		-		-		(7	)
Financial guarantees	20,884	2,334	297	3	23,518	(19	)	(29	)	(45	)	-		(93	)
- RBWM	54	3	3	-	60	-		-		-		-		-
- CMB	7,629	1,203	230	3	9,065	(10	)	(11	)	(39	)	-		(60	)
- GB&M	12,093	1,115	63	-	13,271	(8	)	(18	)	(5	)	-		(31	)
- GPB	1,053	13	-	-	1,066	(1	)	-		-		-		(1	)
- Corporate Centre	55	-	1	-	56	-		-		(1	)	-		(1	)
Total nominal amount off-balance sheet at 31 Dec 2018	590,134	24,173	1,209	10	615,526	(162	)	(168	)	(88	)	-		(418	)
RBWM	13,160	153	-	-	13,313	(5	)	-		-		-		(5	)
CMB	226	-	-	1	227	(2	)	-		-		-		(2	)
GB&M	1,994	-	-	-	1,994	(5	)	-		-		-		(5	)
GPB	-	-	-	-	-	-		-		-		-		-
Corporate Centre	326,795	770	7	4	327,576	(21	)	(50	)	(1	)	-		(72	)
Debt instruments measured at FVOCI at 31 Dec 2018	342,175	923	7	5	343,110	(33	)	(50	)	(1	)	-		(84	)

For footnotes, see page 75.

Wholesale lending - loans and advances to customers at amortised cost by country/territory
	Gross carrying amount				Allowance for ECL
	Corporate and commercial	Of which: real estate¹¹	Non-bank financial institutions	Total	Corporate and commercial		Of which: real estate¹¹		Non-bank financial institutions		Total
	$m	$m	$m	$m	$m		$m		$m		$m
Europe	177,866	26,623	26,807	204,673	(2,409	)	(442	)	(112	)	(2,521	)
- UK	126,957	18,492	18,707	145,664	(1,696	)	(389	)	(81	)	(1,777	)
- France	29,038	6,266	5,664	34,702	(419	)	(32	)	(29	)	(448	)
- Germany	10,624	341	1,400	12,024	(64	)	-		(1	)	(65	)
- Switzerland	2,029	533	314	2,343	(2	)	-		-		(2	)
- other	9,218	991	722	9,940	(228	)	(21	)	(1	)	(229	)
Asia	269,382	85,018	30,884	300,266	(1,314	)	(87	)	(31	)	(1,345	)
- Hong Kong	169,700	67,104	17,876	187,576	(639	)	(50	)	(20	)	(659	)
- Australia	11,024	2,140	2,130	13,154	(72	)	(4	)	-		(72	)
- India	6,898	1,534	2,944	9,842	(41	)	(2	)	(1	)	(42	)
- Indonesia	4,465	62	345	4,810	(217	)	-		(2	)	(219	)
- mainland China	27,111	5,031	5,837	32,948	(210	)	(23	)	(7	)	(217	)
- Malaysia	7,598	1,693	236	7,834	(32	)	(3	)	-		(32	)
- Singapore	19,184	5,225	679	19,863	(32	)	(2	)	-		(32	)
- Taiwan	5,317	23	101	5,418	(2	)	-		-		(2	)
- other	18,085	2,206	736	18,821	(69	)	(3	)	(1	)	(70	)
Middle East and North Africa (excluding Saudi Arabia)	23,527	1,982	329	23,856	(1,148	)	(175	)	(10	)	(1,158	)
- Egypt	1,986	45	-	1,986	(134	)	-		-		(134	)
- UAE	13,888	1,837	227	14,115	(744	)	(174	)	(7	)	(751	)
- other	7,653	100	102	7,755	(270	)	(1	)	(3	)	(273	)
North America	61,107	14,072	9,476	70,583	(230	)	(34	)	(10	)	(240	)
- US	39,008	8,723	8,467	47,475	(100	)	(10	)	(3	)	(103	)
- Canada	21,314	4,971	878	22,192	(108	)	(6	)	(2	)	(110	)
- other	785	378	131	916	(22	)	(18	)	(5	)	(27	)
Latin America	14,545	1,677	1,878	16,423	(280	)	(7	)	(4	)	(284	)
- Mexico	11,970	1,675	1,831	13,801	(198	)	(7	)	(3	)	(201	)
- other	2,575	2	47	2,622	(82	)	-		(1	)	(83	)
At 30 Jun 2019	546,427	129,372	69,374	615,801	(5,381	)	(745	)	(167	)	(5,548	)

Europe	176,577	25,715	22,529	199,106	(2,507	)	(481	)	(82	)	(2,589	)
- UK	127,093	18,384	17,703	144,796	(1,701	)	(410	)	(78	)	(1,779	)
- France	28,204	5,890	2,488	30,692	(405	)	(36	)	(1	)	(406	)
- Germany	10,454	246	1,371	11,825	(35	)	-		-		(35	)
- Switzerland	1,674	509	348	2,022	(1	)	-		-		(1	)
- other	9,152	686	619	9,771	(365	)	(35	)	(3	)	(368	)
Asia	263,608	79,941	27,284	290,892	(1,343	)	(67	)	(31	)	(1,374	)
- Hong Kong	168,621	63,287	15,062	183,683	(579	)	(40	)	(20	)	(599	)
- Australia	11,335	2,323	2,115	13,450	(68	)	(3	)	-		(68	)
- India	6,396	1,408	2,846	9,242	(77	)	(4	)	(1	)	(78	)
- Indonesia	4,286	35	354	4,640	(269	)	-		(2	)	(271	)
- mainland China	24,225	4,423	5,146	29,371	(172	)	(15	)	(6	)	(178	)
- Malaysia	7,924	1,649	274	8,198	(77	)	(2	)	-		(77	)
- Singapore	17,564	4,463	431	17,995	(31	)	(2	)	-		(31	)
- Taiwan	6,008	23	156	6,164	(2	)	-		-		(2	)
- other	17,249	2,330	900	18,149	(68	)	(1	)	(2	)	(70	)
Middle East and North Africa (excluding Saudi Arabia)	23,738	2,025	322	24,060	(1,167	)	(178	)	(1	)	(1,168	)
- Egypt	1,746	41	-	1,746	(125	)	-		-		(125	)
- UAE	14,445	1,849	206	14,651	(721	)	(176	)	(1	)	(722	)
- other	7,547	135	116	7,663	(321	)	(2	)	-		(321	)
North America	56,983	14,169	9,647	66,630	(236	)	(37	)	(8	)	(244	)
- US	35,714	8,422	8,777	44,491	(103	)	(8	)	(2	)	(105	)
- Canada	20,493	5,354	770	21,263	(105	)	(5	)	(2	)	(107	)
- other	776	393	100	876	(28	)	(24	)	(4	)	(32	)
Latin America	13,671	1,383	1,625	15,296	(299	)	(8	)	(4	)	(303	)
- Mexico	11,302	1,354	1,567	12,869	(225	)	(8	)	(4	)	(229	)
- other	2,369	29	58	2,427	(74	)	-		-		(74	)
At 31 Dec 2018	534,577	123,233	61,407	595,984	(5,552	)	(771	)	(126	)	(5,678	)

For footnotes, see page 75.

Personal lending - loans and advances to customers at amortised costs by country/territory
	Gross carrying amount				Allowance for ECL
	First lien residential mortgages	Other personal	Of which: credit cards	Total	First lien residential mortgages		Other personal		Of which: credit cards		Total
	$m	$m	$m	$m	$m		$m		$m		$m
Europe	135,416	46,838	9,687	182,254	(258	)	(785	)	(323	)	(1,043	)
- UK	128,068	20,787	9,301	148,855	(149	)	(638	)	(319	)	(787	)
- France	3,541	19,965	330	23,506	(40	)	(105	)	(4	)	(145	)
- Germany	-	303	-	303	-		-		-		-
- Switzerland	1,140	5,394	-	6,534	(3	)	(19	)	-		(22	)
- other	2,667	389	56	3,056	(66	)	(23	)	-		(89	)
Asia	127,885	47,536	11,511	175,421	(48	)	(667	)	(445	)	(715	)
- Hong Kong	84,757	33,061	7,620	117,818	(1	)	(303	)	(202	)	(304	)
- Australia	15,825	727	602	16,552	(8	)	(52	)	(51	)	(60	)
- India	1,067	581	235	1,648	(4	)	(20	)	(14	)	(24	)
- Indonesia	62	326	211	388	-		(31	)	(25	)	(31	)
- mainland China	8,815	1,183	592	9,998	(2	)	(70	)	(63	)	(72	)
- Malaysia	2,832	3,132	884	5,964	(26	)	(69	)	(32	)	(95	)
- Singapore	6,355	6,433	428	12,788	(1	)	(62	)	(21	)	(63	)
- Taiwan	5,093	956	305	6,049	-		(19	)	(4	)	(19	)
- other	3,079	1,137	634	4,216	(6	)	(41	)	(33	)	(47	)
Middle East and North Africa (excluding Saudi Arabia)	2,341	3,845	1,101	6,186	(84	)	(291	)	(144	)	(375	)
- Egypt	-	330	78	330	-		(4	)	(1	)	(4	)
- UAE	1,942	1,479	516	3,421	(81	)	(124	)	(51	)	(205	)
- other	399	2,036	507	2,435	(3	)	(163	)	(92	)	(166	)
North America	37,581	5,034	1,463	42,615	(125	)	(140	)	(85	)	(265	)
- US	17,495	2,295	1,142	19,790	(15	)	(108	)	(79	)	(123	)
- Canada	18,870	2,532	277	21,402	(17	)	(24	)	(5	)	(41	)
- other	1,216	207	44	1,423	(93	)	(8	)	(1	)	(101	)
Latin America	3,139	4,736	1,515	7,875	(35	)	(539	)	(238	)	(574	)
- Mexico	2,986	4,069	1,213	7,055	(29	)	(491	)	(214	)	(520	)
- other	153	667	302	820	(6	)	(48	)	(24	)	(54	)
At 30 Jun 2019	306,362	107,989	25,277	414,351	(550	)	(2,422	)	(1,235	)	(2,972	)

Europe	131,557	46,007	9,790	177,564	(258	)	(750	)	(313	)	(1,008	)
- UK	124,357	20,503	9,356	144,860	(141	)	(592	)	(309	)	(733	)
- France	3,454	19,616	376	23,070	(43	)	(114	)	(4	)	(157	)
- Germany	-	288	-	288	-		-		-		-
- Switzerland	1,120	5,213	-	6,333	(2	)	(19	)	-		(21	)
- other	2,626	387	58	3,013	(72	)	(25	)	-		(97	)
Asia	119,718	42,049	11,900	161,767	(44	)	(696	)	(465	)	(740	)
- Hong Kong	79,059	28,734	8,124	107,793	(1	)	(329	)	(228	)	(330	)
- Australia	13,858	764	626	14,622	(5	)	(55	)	(54	)	(60	)
- India	1,030	608	228	1,638	(5	)	(20	)	(14	)	(25	)
- Indonesia	59	279	206	338	-		(34	)	(27	)	(34	)
- mainland China	8,706	1,139	502	9,845	(2	)	(57	)	(50	)	(59	)
- Malaysia	2,890	3,209	888	6,099	(24	)	(71	)	(33	)	(95	)
- Singapore	5,991	5,353	434	11,344	-		(70	)	(21	)	(70	)
- Taiwan	5,123	860	289	5,983	(1	)	(20	)	(5	)	(21	)
- other	3,002	1,103	603	4,105	(6	)	(40	)	(33	)	(46	)
Middle East and North Africa (excluding Saudi Arabia)	2,393	3,933	1,181	6,326	(88	)	(306	)	(148	)	(394	)
- Egypt	-	309	71	309	-		(5	)	(1	)	(5	)
- UAE	1,974	1,477	538	3,451	(82	)	(126	)	(54	)	(208	)
- other	419	2,147	572	2,566	(6	)	(175	)	(93	)	(181	)
North America	36,964	5,057	1,341	42,021	(122	)	(139	)	(81	)	(261	)
- US	17,464	2,280	1,028	19,744	(13	)	(106	)	(75	)	(119	)
- Canada	18,267	2,562	265	20,829	(16	)	(23	)	(5	)	(39	)
- other	1,233	215	48	1,448	(93	)	(10	)	(1	)	(103	)
Latin America	2,701	3,958	1,432	6,659	(23	)	(521	)	(254	)	(544	)
- Mexico	2,550	3,192	1,121	5,742	(22	)	(465	)	(227	)	(487	)
- other	151	766	311	917	(1	)	(56	)	(27	)	(57	)
At 31 Dec 2018	293,333	101,004	25,644	394,337	(535	)	(2,412	)	(1,261	)	(2,947	)

Loans and advances to customers and banks metrics

Loans and advances to customers and banks
	Gross carrying amount	Of which: stage 3 and POCI	Allowance for ECL		Of which: stage 3 and POCI		Change in ECL		Write-offs		Recoveries
	$m	$m	$m		$m		$m		$m		$m
First lien residential mortgages	306,362	3,029	(550	)	(439	)	(50	)	(59	)	32
Other personal lending	107,989	1,675	(2,422	)	(728	)	(510	)	(645	)	143
Personal lending	414,351	4,704	(2,972	)	(1,167	)	(560	)	(704	)	175
- agriculture, forestry and fishing	6,975	257	(183	)	(124	)	(20	)	-		-
- mining and quarrying	14,619	243	(182	)	(111	)	(6	)	(2	)	-
- manufacturing	109,753	1,516	(1,120	)	(805	)	(108	)	(124	)	6
- electricity, gas, steam and air-conditioning supply	14,378	169	(76	)	(20	)	10		(54	)	2
- water supply, sewerage, waste management and remediation	3,389	22	(28	)	(19	)	(2	)	-		-
- construction	15,518	935	(577	)	(520	)	(105	)	(102	)	5
- wholesale and retail trade, repair of motor vehicles and motorcycles	99,141	1,753	(1,248	)	(1,006	)	(212	)	(183	)	8
- transportation and storage	24,827	542	(171	)	(92	)	(6	)	(16	)	-
- accommodation and food	23,137	271	(192	)	(112	)	(54	)	(65	)	-
- publishing, audiovisual and broadcasting	21,913	166	(112	)	(38	)	(33	)	(27	)	-
- real estate	129,372	1,422	(745	)	(542	)	6		(25	)	3
- professional, scientific and technical activities	23,341	328	(175	)	(115	)	(11	)	(5	)	1
- administrative and support services	24,434	319	(237	)	(161	)	(51	)	(10	)	-
- public administration and defence, compulsory social security	1,384	-	(7	)	-		(3	)	-		-
- education	1,793	34	(21	)	(8	)	7		(1	)	-
- health and care	4,494	110	(69	)	(36	)	(9	)	-		-
- arts, entertainment and recreation	3,628	32	(32	)	(15	)	2		(2	)	-
- other services	14,274	213	(180	)	(142	)	16		(8	)	1
- activities of households	757	-	-		-		(1	)	-		-
- extra-territorial organisations and bodies activities	50	5	(1	)	(1	)	1		-		-
- government	8,499	7	(11	)	(5	)	1		-		-
- asset-backed securities	751	-	(14	)	-		-		-		-
Corporate and commercial	546,427	8,344	(5,381	)	(3,872	)	(578	)	(624	)	26
Non-bank financial institutions	69,374	287	(167	)	(90	)	(38	)	(2	)	-
Wholesale lending	615,801	8,631	(5,548	)	(3,962	)	(616	)	(626	)	26
Loans and advances to customers	1,030,152	13,335	(8,520	)	(5,129	)	(1,176	)	(1,330	)	201
Loans and advances to banks	82,413	-	(16	)	-		(3	)	-		-
At 30 Jun 2019	1,112,565	13,335	(8,536	)	(5,129	)	(1,179	)	(1,330	)	201

Securitisation exposures and other structured products

The following table summarises the carrying amount of our asset-backed securities ('ABSs') exposure by categories of collateral. It includes assets held in the legacy credit portfolio with a carrying value of $5.2bn (31 December 2018: $5.9bn).

At 30 June 2019, the FVOCI reserve in respect of ABSs was a deficit of $175m (31 December 2018: deficit of $179m). For 1H19, the impairment write-back in respect of ABSs was $13m (31 December 2018: $106m).

Carrying amount of HSBC's consolidated holdings of ABSs
		Trading	Financial investments at FVOCI	Held at amortised cost	Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	Total	Of which held through consolidated structured entities
	Footnotes	$m	$m	$m	$m	$m	$m
Mortgage-related assets		1,434	19,710	14,781	48	35,973	111
- sub-prime residential		17	458	-	11	486	3
- US Alt-A residential		-	36	2	-	38	-
- US Government agency and sponsored enterprises: MBSs	9	79	19,106	13,914	-	33,099	-
- UK buy-to-let residential		162	-	-	-	162	-
- other residential		388	9	797	-	1,194	9
- commercial property		788	101	68	37	994	99
Leveraged finance-related assets		283	14	-	208	505	166
Student loan-related assets		126	1,742	-	11	1,879	1,732
Auto finance-related assets		477	-	2,429	-	2,906	-
Other assets		1,327	683	3,323	-	5,333	178
At 30 Jun 2019		3,647	22,149	20,533	267	46,596	2,187

Mortgage-related assets		1,680	15,422	15,498	127	32,727	208
- sub-prime residential		17	587	-	-	604	50
- US Alt-A residential		-	87	2	94	183	42
- US Government agency and sponsored enterprises: MBSs	9	153	14,627	14,657	-	29,437	-
- UK buy-to-let residential		-	-	-	-	-	-
- other residential		924	15	780	-	1,719	10
- commercial property		586	106	59	33	784	106
Leveraged finance-related assets		306	40	-	21	367	200
Student loan-related assets		149	1,815	-	1	1,965	1,800
Auto finance-related assets		282	-	2,577	-	2,859	-
Other assets		1,136	718	2,323	7	4,184	204
At 31 Dec 2018		3,553	17,995	20,398	156	42,102	2,412

For footnotes, see page 75.

Liquidity and funding risk profile

Liquidity risk is the risk that we do not have sufficient financial resources to meet our obligations as they fall due. Liquidity risk arises from mismatches in the timing of cash flows.

Funding risk is the risk that we can only fund our assets at excessive cost.

There were no material changes to the policies and practices for the management of liquidity and funding risk in 1H19.

A summary of our current policies and practices regarding the management of liquidity and funding risk is set out on pages 80 and 81 of the Annual Report and Accounts 2018.

Liquidity and funding in the first half of 2019

We require all operating entities to comply with our liquidity and funding risk management framework ('LFRF') on a stand-alone basis and to meet regulatory and internal minimums at all times. The liquidity coverage ratio ('LCR') and net stable funding ratio ('NSFR') are key components of the LFRF.

The Group's liquidity and funding position in 1H19 is analysed in the following sections.

Management of liquidity and funding risk

Liquidity coverage ratio

We manage actively the liquidity position of each of our principal operating entities.

At 30 June 2019, all the Group's principal operating entities were well above regulatory minimums and above the internally expected levels established by the Board.

The following table displays the individual LCR levels for our principal operating entities on a European Commission LCR basis. This basis may vary from local LCR measures due to differences in the way non-EU regulators have implemented the Basel III recommendations.

Principal operating entities' LCRs
		At
		30 Jun	30 Jun	31 Dec
		2019	2018	2018
	Footnotes	%	%	%
HSBC UK Bank plc (ring-fenced bank)		155	-	143
HSBC Bank plc (non-ring-fenced bank)		140	-	147
The Hongkong and Shanghai Banking Corporation - Hong Kong branch	12	151	154	161
The Hongkong and Shanghai Banking Corporation - Singapore branch	12, 14	258	153	149
HSBC Bank China		169	160	153
Hang Seng Bank		194	196	202
HSBC Bank USA		120	126	121
HSBC France		123	169	128
HSBC Bank Canada		120	110	115
HSBC Bank Middle East - UAE branch		193	165	182
HSBC Mexico		165	154	153
HSBC Private Bank		270	292	273

For footnotes, see page 75.

The preceding table also reflects the following movements in 1H19:

• In the UK, our respective ring-fenced and non-ring-fenced banks, HSBC UK Bank plc and HSBC Bank plc, positioned themselves to deal with future uncertainties, including the UK's departure from the European Union.

• In Hong Kong, The Hongkong and Shanghai Banking Corporation - Hong Kong branch, and Hang Seng Bank remained highly liquid, reflecting their strong deposit base.

• In Singapore, the LCR in The Hongkong and Shanghai Banking Corporation - Singapore branch improved, mainly due to increased deposits.

• In China, HSBC Bank China improved its liquidity and funding position to 169% at 30 June 2019 (31 December 2018: 153%) in line with its growth targets.

• In France, the liquidity position of HSBC France remained strong, with the transfer of European branches adding additional assets and liabilities, supported by $8bn of additional high-quality liquid assets.

• In the UAE, deposit growth to support the business strategy improved the liquidity position of our branch.

• In Mexico, debt issuance increased, improving the LCR position of HSBC Mexico.

• In North America, the liquidity positions of HSBC Bank USA and Canada operating entities remained stable.

Liquid assets of principal operating entities

The following table shows the liquidity value of the unencumbered liquid assets of our principal operating entities at the period end as a six-monthly average.

Liquid assets of HSBC's principal entities
		Recognised at 30 Jun 2019	1H19 average	Recognised at 30 Jun 2018	1H18 average	Recognised at 31 Dec 2018	2H18 average
	Footnotes	$m	$m	$m	$m	$m	$m
HSBC UK Bank plc (ring-fenced bank)
Level 1		63,665	61,063			57,862	59,474
Level 2a		1,431	1,587			1,561	1,383
Level 2b		-	-
HSBC Bank plc (non-ring-fenced bank)
Level 1		107,820	98,939			107,488	106,929
Level 2a		7,994	8,686			5,417	8,484
Level 2b		7,820	9,758			9,913	16,875
The Hongkong and Shanghai Banking Corporation - Hong Kong branch	12
Level 1		67,085	80,649	75,436	78,496	99,634	84,595
Level 2a		31,452	33,674	28,656	24,991	28,495	28,277
Level 2b		1,658	1,537	1,153	1,988	1,578	1,317
Hang Seng Bank
Level 1		35,113	33,100	32,551	30,531	33,009	30,519
Level 2a		6,006	5,773	2,739	3,151	5,458	3,995
Level 2b		142	142	142	146	141	141
HSBC Bank USA
Level 1		51,859	50,280	57,413	53,383	53,659	49,481
Level 2a		21,529	21,715	15,612	14,869	19,062	17,971
Level 2b		1,781	298	-	13	-	1
Total of HSBC's other principal entities	13
Level 1		93,841	94,750	80,566	84,508	90,023	89,410
Level 2a		7,986	7,867	8,003	8,447	7,044	7,397
Level 2b		643	498	407	691	383	458

For footnotes, see page 75.

Consolidated liquidity coverage ratio

The Group consolidated liquidity coverage ratio ('LCR') was 136% at 1H19 (31 December 2018: 154%), reflecting the strong liquidity position of the Group's main entities. The Group LCR is well above the regulatory minimum, as are the ratios of the Group's main entities as shown in the table above.

During 1H19, the Holdings capital buffer was moved from Hongkong and Shanghai Banking Corporation to HSBC Holdings, which reduced the European LCR. This reduced the Group consolidated LCR by 10% as the methodology caps the Group consolidated LCR at the European LCR. The methodology used to calculate the Group consolidated LCR is currently under review given that the Group's liquidity profile is set and managed based on factors relevant to the operating entities on a stand-alone basis.

	At
	30 Jun	30 Jun	31 Dec
	2019	2018	2018
	$bn	$bn	$bn
High-quality liquid assets (liquidity value)	533	540	567
Net outflows	391	342	369
Liquidity coverage ratio	136%	158%	154	%

Net stable funding ratio

We are required to maintain sufficient stable funding. The NSFR measures stable funding relative to required stable funding, and reflects a bank's funding profile, which is defined as funding with a term of more than a year.

The following table displays the NSFR levels for our principal operating entities.

Principal operating entities' NSFRs
		At
		30 Jun	30 Jun	31 Dec
		2019	2018	2018
	Footnotes	%	%	%
HSBC UK Bank plc (ring-fenced bank)		147		144
HSBC Bank plc (non-ring-fenced bank)		110		113
The Hongkong and Shanghai Banking Corporation - Hong Kong branch	12	128	130	132
The Hongkong and Shanghai Banking Corporation - Singapore branch	12	120	117	123
HSBC Bank China		149	149	153
Hang Seng Bank		153	154	152
HSBC Bank USA		118	122	131
HSBC France		111	112	113
HSBC Bank Canada		125	125	126
HSBC Bank Middle East - UAE branch		139	142	132
HSBC Mexico		116	121	123
HSBC Private Bank		150	176	203

For footnotes, see page 75.

Depositor concentration and term funding maturity concentration

The LCR and NSFR metrics assume a scenario where there is a stressed outflow of deposits from a portfolio of depositors within retail, corporate and financial deposit segments. The validity of these assumptions is challenged if the portfolio of depositors is not large enough to avoid depositor concentration.

Operating entities are exposed to term refinancing concentration risk if the current maturity profile results in future maturities being overly concentrated in any defined period.

At 30 June 2019, all principal operating entities were within the risk tolerance levels set for depositor concentration and term funding maturity concentration. These risk tolerances were established by the Board and are applicable under the LFRF.

Sources of funding

Our primary sources of funding are customer current accounts and savings deposits payable on demand or at short notice. We issue secured and unsecured wholesale securities to supplement customer deposits, meet regulatory obligations and to change the currency mix, maturity profile or location of our liabilities.

The following 'Funding sources' and 'Funding uses' tables provide a view of how our consolidated balance sheet is funded. In practice, all the principal operating entities are required to manage liquidity and funding risk on a stand-alone basis.

The tables analyse our consolidated balance sheet according to the assets that primarily arise from operating activities and the sources of funding primarily supporting these activities. Assets and liabilities that do not arise from operating activities are presented as a net balancing source or deployment of funds.

In 1H19, the level of customer accounts continued to exceed the level of loans and advances to customers. The positive funding gap was predominantly deployed in liquid assets.

Loans and advances to banks continued to exceed deposits by banks, meaning we remained a net unsecured lender to the banking sector.

Funding sources
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Customer accounts	1,380,124	1,362,643
Deposits by banks	71,051	56,331
Repurchase agreements - non-trading	184,497	165,884
Debt securities in issue	103,663	85,342
Cash collateral, margin and settlement accounts	102,544	54,066
Liabilities of disposal groups held for sale	-	313
Subordinated liabilities	22,894	22,437
Financial liabilities designated at fair value	165,104	148,505
Liabilities under insurance contracts	93,794	87,330
Trading liabilities	94,149	84,431
- repos	935	1,495
- stock lending	13,536	10,998
- other trading liabilities	79,678	71,938
Total equity	200,874	194,249
Other balance sheet liabilities	332,579	296,593
	2,751,273	2,558,124

Funding uses
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Loans and advances to customers	1,021,632	981,696
Loans and advances to banks	82,397	72,167
Reverse repurchase agreements - non-trading	233,079	242,804
Cash collateral, margin and settlement accounts	91,813	47,159
Assets held for sale	103	735
Trading assets	271,424	238,130
- reverse repos	12,773	9,893
- stock borrowing	9,165	8,387
- other trading assets	249,486	219,850
Financial investments	428,101	407,433
Cash and balances with central banks	171,090	162,843
Other balance sheet assets	451,634	405,157
	2,751,273	2,558,124

Market risk profile

Market risk is the risk that movements in market factors, such as foreign exchange rates, interest rates, credit spreads, equity prices and commodity prices, will reduce our income or the value of our portfolios.

There were no material changes to the policies and practices for the management of market risk in 1H19.

A summary of our current policies and practices for the management of market risk is set out in 'Market risk management' on page 81 of the Annual Report and Accounts 2018.

Market risk in the first half of 2019

Major central banks adopted a more dovish policy stance during early 2019. Interest rates moved downwards, providing the backdrop for a rebound in global financial markets. Stock markets recouped most of the losses experienced in late 2018 while volatility remained low. During the second quarter, continued trade tensions and escalating geopolitical risks dampened growth in risky assets. Alongside lower expected policy rates, the search for safe assets contributed to further flattening of sovereign yield curves in major economies and more negative interest rates in Europe and Japan. In credit markets, investment grade corporate spreads narrowed closer to pre-financial crisis levels.

The overall risk profile remained relatively stable in 2019. The fixed income business continued to be the key driver of trading value at risk ('VaR'). Interest rate and credit asset classes provided similar contributions to trading VaR. The effect of a limited increase in credit spread risks was offset by lower contributions from interest rate exposures in major currencies. The equity and foreign exchange components provided marginal contributions to overall market risk in the trading book.

Trading portfolios

Value at risk of the trading portfolios

Trading VaR was predominantly generated by Global Markets. The VaR for trading activity at 30 June 2019 was lower than at 31 December 2018. The decrease in trading VaR was attributable primarily to lower contributions from equity correlation and dividend risks captured in the risk not in VaR ('RNIV') framework (see below). An increase in the credit spread trading VaR component was offset by lower contributions from interest rate risks.

The Group trading VaR for the half-year is shown in the table below.

Trading VaR, 99% 1 day
	Foreign exchange and commodity	Interest rate	Equity	Credit spread	Portfolio diversification¹⁵		Total
	$m	$m	$m	$m	$m		$m
Half-year to 30 Jun 2019	6.6	29.9	17.4	31.2	(34.8	)	50.3
Average	7.1	30.9	16.6	24.8	(29.3	)	50.1
Maximum	13.5	36.5	22.2	33.2			59.3
Minimum	4.1	26.1	12.4	18.4			42.8

Half-year to 30 Jun 2018	9.9	39.2	17.0	18.1	(34.2	)	50.0
Average	10.4	36.9	25.9	23.5	(37.5	)	59.2
Maximum	21.8	48.2	33.8	35.2			71.2
Minimum	5.6	28.9	16.8	12.2			43.9

Half-year to 31 Dec 2018	12.6	33.9	22.6	25.9	(37.9	)	57.1
Average	8.7	36.0	19.1	18.0	(31.1	)	50.6
Maximum	14.9	49.9	24.0	26.7			57.1
Minimum	5.5	27.0	13.5	14.1			45.1

For footnotes, see page 75.

The RNIV framework covers risks from exposures in our trading book that are not fully captured by the VaR model. The VaR-based RNIVs are included within the metrics for each asset class.

Back-testing

In 1H19, the Group experienced three profit and one loss back-testing exceptions against actual profit and loss. These comprised:

• a profit exception in early January 2019, driven by gains across most asset classes, as interest rates rose and equity markets rebounded;

• a profit exception in late January 2019, due mainly to gains from new transactions in the Rates business and lower volatility in equities markets;

• a profit exception in March 2019, driven by increased volatility in some emerging markets currencies and interest rates; and

• a loss exception in March 2019, attributable to month-end valuation adjustments driven by portfolio and spread changes.

In 1H19, the Group did not experience any back-testing exceptions against hypothetical profit and loss.

Non-trading portfolios

Value at risk of the non-trading portfolios

Non-trading VaR of the Group includes contributions from all global businesses. There is no commodity risk in the non-trading portfolios. The VaR for non-trading activity at 30 June 2019 was higher than at 31 December 2018. The increase arose primarily from a lower diversification benefit across asset classes and an uplift in contributions from interest rate exposures in the banking book.

Non-trading VaR also includes the interest rate risk of non-trading financial instruments held in portfolios managed by Balance Sheet Management ('BSM'). The management of interest rate risk in the banking book is described further in 'Net interest income sensitivity' on page 139 of the Annual Report and Accounts 2018.

The Group non-trading VaR for the half-year is shown in the following table.

Non-trading VaR, 99% 1 day
	Interest rate	Credit spread	Portfolio diversification¹⁵		Total
	$m	$m	$m		$m
Half-year to 30 Jun 2019	68.5	36.6	(22.0	)	83.1
Average	57.1	30.5	(16.6	)	71.0
Maximum	74.3	36.6			85.2
Minimum	49.2	26.6			60.9

Half-year to 30 Jun 2018	94.6	35.3	(24.9	)	105.0
Average	102.2	56.7	(32.8	)	126.1
Maximum	129.3	96.0			154.1
Minimum	85.5	27.6			96.5

Half-year to 31 Dec 2018	61.4	37.2	(30.6	)	68.0
Average	91.5	40.2	(25.4	)	106.2
Maximum	109.3	60.6			150.4
Minimum	59.9	30.1			68.0

For footnotes, see page 75.

Non-trading VaR excludes equity risk on securities held at fair value, structural foreign exchange risk and interest rate risk on fixed-rate securities issued by HSBC Holdings. The following sections describe the scope of HSBC's management of market risks in non-trading books.

Third-party assets in Balance Sheet Management

Third-party assets in Balance Sheet Management ('BSM') increased by 3% during 2019. 'Cash and balances at central banks' increased by $8bn, predominantly in Europe, reflecting an increase in the use of secured funding for trading assets compared with 31 December 2018. 'Loans and advances to banks' increased by $9bn, largely driven by short-term money market operations in Asia. 'Reverse repurchase agreements' decreased by $6bn, reflecting in part the management of commercial surplus in North America. 'Financial investments' increased by $7bn, driven by an increase in investments across most regions, partly offset by a decrease in Asia.

Third-party assets in Balance Sheet Management
	At
	30 Jun	31 Dec
	2019	2018
	$m	$m
Cash and balances at central banks	152,666	144,802
Trading assets	290	601
Loans and advances:
- to banks	34,002	25,257
- to customers	312	964
Reverse repurchase agreements	16,490	22,899
Financial investments	340,795	333,622
Other	8,543	6,880
	553,098	535,025

Interest rate risk in the banking book

Interest rate risk in the banking book is the risk of capital or earnings volatility due to changes in market interest rates.

Our policies regarding the funds transfer pricing process and the management of interest rate risk in the banking book are described on pages 80 and 83, respectively, of the Annual Report and Accounts 2018.

The Group utilises sensitivity of net interest income to assess the overall level of interest rate risk in the banking book. This measure reflects all interest rate risk in the banking book, including that transferred to BSM.

Sensitivity of net interest income

The following tables set out the assessed impact to a hypothetical base case projection of our net interest income ('NII'), excluding insurance, under the following scenarios:

• an immediate shock of 25 basis points ('bps') to the current market-implied path of interest rates across all currencies on 1 July 2019 (effects over one year and five years); and

• an immediate shock of 100bps to the current market-implied path of interest rates across all currencies on 1 July 2019 (effects over one year and five years).

The sensitivities shown represent our assessment of the change to a hypothetical base case NII, assuming a static balance sheet and no management actions from BSM. They incorporate the effect of interest rate behaviouralisation, managed rate product pricing assumptions and customer behaviour, including the prepayment of mortgages or customer migration from non-interest-bearing to interest-bearing deposit accounts. The scenarios represent interest rate shocks to the current market implied path of rates.

The NII sensitivities shown are indicative and based on simplified scenarios. Immediate interest rate rises of 25bps and 100bps would increase projected NII for the 12 months to 30 June 2020 by $842m and $2,991m, respectively. Conversely, falls of 25bps and 100bps would decrease projected NII for the 12 months to
30 June 2020 by $848m and $3,563m, respectively.

The sensitivity of NII for 12 months has increased by $213m and $111m comparing June 2019 with December 2018 in the plus and minus 100bps parallel shocks, respectively.

The increase in the sensitivity of NII for 12 months in the plus 100bps parallel shock was mainly driven by sterling-linked amounts due to changes in balance sheet composition, primarily in the UK ring-fenced bank and the non-ring-fenced bank.

The increase in the sensitivity of NII for 12 months in the minus 100bps parallel shock was mainly driven by US dollar-linked amounts due to changes in balance sheet composition and migration of managed rate deposits into term deposits in anticipation of the US Federal Reserve cutting interest rates.

The change in NII sensitivity for five years is also driven by the factors above.

The structural sensitivity of NII arising within the four global businesses, excluding Global Markets, is positive in a rising rate environment and negative in a falling rate environment. Both BSM and Global Markets have NII sensitivity profiles that offset this to some degree. The tables do not include BSM management actions or changes in Global Markets' net trading income that may further limit the offset.

The NII sensitivity results should not be interpreted as predictive of future performance. The limitations of this analysis are discussed within the 'Risk management' section on page 73 of the Annual Report and Accounts 2018.

NII sensitivity to an instantaneous change in yield curves (12 months)
	US dollar		HK dollar		Sterling		Euro		Other		Total
	$m		$m		$m		$m		$m		$m
Change in Jul 2019 to Jun 2020 (based on balance sheet at 30 June 2019)
+25bps	56		245		245		98		198		842
-25bps	(129	)	(265	)	(286	)	1		(169	)	(848	)
+100bps	164		756		967		399		705		2,991
-100bps	(678	)	(1,061	)	(1,086	)	(14	)	(724	)	(3,563	)
Change in Jan 2019 to Dec 2019 (based on balance sheet at 31 Dec 2018)
+25bps	70		232		198		115		213		828
-25bps	(160	)	(301	)	(244	)	8		(187	)	(884	)
+100bps	147		773		777		408		673		2,778
-100bps	(523	)	(1,046	)	(1,122	)	9		(772	)	(3,454	)

NII sensitivity to an instantaneous change in yield curves (5 years)
	Year 1		Year 2		Year 3		Year 4		Year 5		Total
	$m		$m		$m		$m		$m		$m
Change in July 2019 to Jun 2020 (based on balance sheet at 30 June 2019)
+25bps	842		1,198		1,279		1,360		1,423		6,102
-25bps	(848	)	(1,339	)	(1,379	)	(1,456	)	(1,562	)	(6,584	)
+100bps	2,991		4,269		4,762		5,103		5,290		22,415
-100bps	(3,563	)	(5,026	)	(5,453	)	(5,873	)	(6,262	)	(26,177	)
Change in Jan 2019 to Dec 2019 (based on balance sheet at 31 Dec 2018)
+25bps	828		1,155		1,416		1,529		1,428		6,356
-25bps	(884	)	(1,127	)	(1,206	)	(1,296	)	(1,597	)	(6,110	)
+100bps	2,778		3,863		4,542		4,968		5,096		21,247
-100bps	(3,454	)	(4,632	)	(5,276	)	(5,691	)	(6,187	)	(25,240	)

Operational risk profile

Operational risk is the risk to achieving our strategy or objectives as a result of inadequate or failed internal processes, people, systems, or from external events.

During 1H19, we continued to strengthen our approach to managing operational risk, as set out in the operational risk management framework ('ORMF'). The framework sets out our governance and appetite. It provides a single view of non-financial risks that matter the most and associated controls. It incorporates a risk management system to enable active risk management.

Responsibility for minimising operational risk lies with our people. They are required to manage the operational risks of the business and operational activities for which they are responsible.

A summary of our current policies and practices for the management of operational risk is set out in 'Operational risk management' on page 84 of the Annual Report and Accounts 2018.

Operational risk exposures in the first half of 2019

In 1H19, we continued to strengthen the controls that manage our most material risks. Our measures included:

• We further enhanced our controls to help ensure that we know our customers, ask the right questions, monitor transactions and escalate concerns to detect, prevent and deter financial crime risk.

• We implemented a number of initiatives to raise our standards in relation to the conduct of our business as described below in 'Conduct of business'.

• We increased monitoring and enhanced detective controls to manage fraud risks that arise from new technologies and new ways of banking.

• We strengthened security controls to help prevent cyber-attacks.

• We improved controls and security to protect customers when using digital channels.

• We continued to enhance our third-party risk management capability to help enable the consistent risk assessment of any third-party service and to ensure the continuity of our business operations.

Conduct of business

In the first half of 2019, we continued to promote and encourage good conduct through our people's behaviour and decision making to deliver fair outcomes for customers and preserve market integrity.

Our 1H19 initiatives included:

• We developed data and artificial intelligence ethics principles to help ensure we use customer data appropriately, for example in support of digital products and services.

• In specific markets, we continued to support customers in vulnerable or potentially vulnerable circumstances. This

included awareness and training initiatives for our people, and deployment of those with specialist knowledge of conditions such as dementia. Financial inclusion initiatives included activities to combat financial abuse and focus on development of financial education schemes for older customers.

• We prepared our fifth annual global mandatory training course on conduct for all our people. This training continues to be complemented by multi-channel internal conduct-related communications, with emphasis on sharing examples of good conduct.

• We expanded recognition programmes across business areas for our people when they deliver exceptional service when working directly with customers or in supporting roles.

Insurance manufacturing operations

risk profile

The majority of the risk in our insurance business derives from manufacturing activities and can be categorised as financial risk and insurance risk. Financial risks include market risk, credit risk and liquidity risk. Insurance risk is the risk, other than financial risk, of loss transferred from the holder of the insurance contract to HSBC, the issuer.

A summary of our policies and practices regarding the risk management of insurance operations, our insurance model and the main contracts we manufacture are provided on page 86 of the Annual Report and Accounts 2018.

There have been no material changes to the policies and practices for the management of risks arising in our insurance operations described in the Annual Report and Accounts 2018.

Insurance manufacturing operations risk profile in the first half of 2019

The risk profile of our insurance manufacturing businesses is measured using an economic capital approach. Assets and liabilities are measured on a market value basis, and a capital requirement is defined to ensure that there is a less than one in 200 chance of insolvency over a one-year time horizon, given the risks to which the businesses are exposed. The methodology for the economic capital calculation is largely aligned to the pan-European Solvency II insurance capital regulations. A key risk appetite metric is the economic coverage ratio, which is calculated by dividing the economic net asset value by the economic capital requirement. The business has a current appetite to remain globally above 140% with a tolerance to 110%. In addition to economic capital, the regulatory solvency ratio is also a metric used to manage risk appetite on an entity basis.

The risk profile of our remaining life insurance manufacturing businesses did not change materially during 1H19. The increase in policyholder liabilities during the period to $93.8bn
(31 December 2018: $87.3bn) was primarily a result of increased net premium income and investment returns recognised in policyholder liabilities.

The following table shows the composition of assets and liabilities by contract type.

Balance sheet of insurance manufacturing subsidiaries by type of contract¹⁶
		With DPF	Unit- linked	Other contracts¹⁷	Shareholder assets and liabilities	Total
	Footnotes	$m	$m	$m	$m	$m
Financial assets		71,737	8,052	16,455	7,817	104,061
- trading assets		-	-	-	-	-
- financial assets designated and otherwise mandatorily measured at fair value through profit or loss		20,349	7,736	3,000	1,610	32,695
- derivatives		163	-	22	3	188
- financial investments at amortised cost		34,754	22	12,462	3,994	51,232
- financial investments at fair value through other comprehensive income		12,249	-	456	1,448	14,153
- other financial assets	18	4,222	294	515	762	5,793
Reinsurance assets		1,325	72	1,445	2	2,844
PVIF	19	-	-	-	8,083	8,083
Other assets and investment properties		2,345	5	190	538	3,078
Total assets at 30 Jun 2019		75,407	8,129	18,090	16,440	118,066
Liabilities under investment contracts designated at fair value		-	1,810	3,935	-	5,745
Liabilities under insurance contracts		74,181	6,183	13,430	-	93,794
Deferred tax	20	192	22	46	1,161	1,421
Other liabilities		-	-	-	3,776	3,776
Total liabilities		74,373	8,015	17,411	4,937	104,736
Total equity		-	-	-	13,330	13,330
Total equity and liabilities at 30 Jun 2019		74,373	8,015	17,411	18,267	118,066

Financial assets		66,735	7,337	15,552	7,120	96,744
- trading assets		-	-	-	-	-
- financial assets designated and otherwise mandatorily measured at fair value through profit or loss		17,855	7,099	3,024	1,264	29,242
- derivatives		200	-	33	4	237
- financial investments at amortised cost		33,575	70	11,597	4,171	49,413
- financial investments at fair value through other comprehensive income		11,499	-	450	1,385	13,334
- other financial assets	18	3,606	168	448	296	4,518
Reinsurance assets		1,255	69	1,368	-	2,692
PVIF	19	-	-	-	7,149	7,149
Other assets and investment properties		2,670	2	235	453	3,360
Total assets at 31 Dec 2018		70,660	7,408	17,155	14,722	109,945
Liabilities under investment contracts designated at fair value		-	1,574	3,884	-	5,458
Liabilities under insurance contracts		69,269	5,789	12,272	-	87,330
Deferred tax	20	179	21	15	1,051	1,266
Other liabilities		-	-	-	3,659	3,659
Total liabilities		69,448	7,384	16,171	4,710	97,713
Total equity		-	-	-	12,232	12,232
Total equity and liabilities at 31 Dec 2018		69,448	7,384	16,171	16,942	109,945

For footnotes, see page 75.

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