Interim Report - 1 of 28

Profit before taxation
(Reported basis)
(US$bn)

Underlying profit
before taxation
(US$bn)

Profit attributable to the ordinary shareholders of
the parent company
(US$bn)

Earnings per share
(US$)

Dividends per ordinary share
(in respect of period)¹
(US$)

Dividend payout ratio
(%)

Cost efficiency ratio²
(%)

Loan impairment charges to
total operating income
(%)

RNS Number : 1829P

HSBC Holdings PLC

15 August 2014

The Interim Report 2014 of HSBC Holdings has been prepared in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for this report is solely to HSBC Holdings. Certain defined terms Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together with its subsidiaries. Within this document, the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares classified as equity. The abbreviations 'US$m' and 'US$bn' represent millions and billions (thousands of millions) of US dollars, respectively. Interim financial statements and notes HSBC's Interim Consolidated Financial Statements and Notes thereon, as set out on pages 206 to 268, have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Conduct Authority and International Accounting Standard ('IAS') 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union ('EU'). The consolidated financial statements of HSBC at 31 December 2013 were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB, and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2013, there were no unendorsed standards effective for the year ended 31 December 2013 affecting the consolidated financial statements at that date, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2013 were prepared in accordance with IFRSs as issued by the IASB. At 30 June 2014, there were no unendorsed standards effective for the period ended 30 June 2014 affecting these interim consolidated financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts and funds its business. Unless otherwise stated, the information presented in this document has been measured in accordance with IFRSs. When reference to 'underlying' is made in tables or commentaries, the comparative information has been expressed at constant currency (see page 19), the impact of fair value movements in respect of credit spread changes on HSBC's own debt has been eliminated and the effects of acquisitions, disposals and dilutions have been adjusted as reconciled on page 22. Underlying return on risk-weighted assets ('RoRWA') is defined and reconciled on page 43.	Contents

	Overview
	Who we are .................................................................	1
	Our purpose ................................................................	1
	Highlights ...................................................................	2
	Group Chairman's Statement ......................................	4
	Group Chief Executive's Business Review ....................	6
	Value creation and long-term sustainability .................	8
	Our strategy ................................................................	9
	Business and operating models .....................................	11
	Global Standards ..........................................................	14
	Risk ............................................................................	16

	Interim Management Report
	Financial summary¹ .....................................................	19
	Global businesses¹ ........................................................	45
	Geographical regions¹ ..................................................	61
	Other information ......................................................	95
	Risk¹ ...........................................................................	99
	Capital¹ .......................................................................	175

	Board of Directors and Senior Management	199

	Financial Statements
	Financial statements ...................................................	206
	Notes on the financial statements¹ ..............................	214
	Directors' Responsibility Statement ............................	269
	Independent Review Report by KPMG Audit Plc to HSBC Holdings plc ..................................................	270

	Additional Information
	Shareholder information¹ ............................................	271
	Cautionary statement regarding forward-looking statements ..................................................................	280
	Abbreviations ..............................................................	281
	Glossary ......................................................................	284
	Index ..........................................................................	293

	1. Detailed contents are provided on the referenced pages.








	Cover images: internationalisation of the renminbi The images show the views from HSBC's head offices in Shanghai, Hong Kong and London - the three cities that are key to the development of China's currency, the renminbi ('RMB'). The growth of the RMB is set to be a defining theme of the 21st century. HSBC has RMB capabilities in over 50 countries and territories worldwide, where our customers can count on an expert service.

Who we are

HSBC is one of the largest banking and financial services organisations in the world.

Customers:

52 million

Served by:

256,000 employees

Through four global businesses:

Retail Banking and Wealth Management

Commercial Banking

Global Banking and Markets

Global Private Banking

Located in:

74 countries and territories

Across five geographical regions:

Europe

Asia

Middle East and North Africa

North America

Latin America

Offices:

Over 6,200

Global headquarters:

London

Market capitalisation:

US$193 billion

Listed on stock exchanges in:

London

Hong Kong

New York

Paris

Bermuda

Shareholders:

216,000 in 129 countries and territories

Our purpose

Our purpose is to be where the growth is, connecting customers to opportunities, enabling businesses to thrive and economies to prosper, and ultimately helping people to fulfil their hopes and realise their ambitions.

Our strategic priorities

We aim to be the world's leading and most respected international bank. We will achieve this by focusing on the needs of our customers and the societies we serve, thereby delivering long-term sustainable value to all our stakeholders.

We have established three interconnected and equally weighted priorities for 2014 to 2016 to help us deliver our strategy:

· grow the business and dividends;

· implement Global Standards; and

· streamline processes and procedures.

Each priority is interrelated, complementary and underpinned by initiatives within our day-to-day business. Together they create value for our customers and shareholders, and contribute to the long-term sustainability of HSBC.

How we measure performance

We track our progress in implementing our strategy with a range of financial and non-financial objectives which are set within the context of the risk appetite and strategic direction agreed by the Board. Specific targets have been set for the period 2014 to 2016 at both a Group level and for each of our global businesses and regions.

Rewarding performance

The remuneration of all staff within the Group, including executive Directors, is based on the achievement of financial and non-financial objectives, which are aligned with the Group's strategy. To be considered for a variable pay award, an individual must have fully complied with HSBC Values.

Highlights

Ø Profit before tax was down 12% at US$12.3bn on a reported basis. Underlying profit before tax was down 4% at US$12.6bn.

Ø We continued to implement our three strategic priorities to grow the business and dividends, implement our Global Standards programme, and streamline our processes and procedures.

Ø CRD IV end point basis common equity tier 1 ratio was 11.3%, 0.4% higher than at the end of 2013.

For the half-year to 30 June 2014

At 30 June 2014

Total equity (US$bn)		Total assets (US$bn)		Loans and advances to customers³ (US$bn)		Customer accounts³ (US$bn)

For footnotes, see page 96.

Annualised return on average ordinary shareholders' equity⁴(%) Half-year to:		Post-tax return on average total assets (%) Half-year to:		Ratio of customer advances to customer accounts³ (%)

Capital, leverage and return ratios

	Common equity tier 1 ratio (end point) (%)	Common equity tier 1 ratio(year 1 transition) (%)	Total capital ratio (year 1 transition) (%)	Risk-weighted assets (US$bn)
CRD IV⁵
	Core tier 1 ratio (%)	Total capital ratio(%)	Risk-weighted assets (US$bn)
Basel 2.5⁵
	Pre-tax return on average RWAs⁶ (%) Half-year to:	Estimated leverage ratio⁷ (%)

Share information at 30 June 2014

		Closing market price
US$0.50 ordinary shares in issue 19,071m 30 Jun 2013: 18,627m 31 Dec 2013: 18,830m	Market capitalisation US$193bn 30 Jun 2013: US$196bn 31 Dec 2013: US$207bn	London £5.93 30 Jun 2013: £6.82 31 Dec 2013: £6.62	Hong Kong HK$78.60 30 Jun 2013: HK$81.25 31 Dec 2013: HK$84.15	American Depositary Share⁸ US$50.80 30 Jun 2013: US$51.90 31 Dec 2013: US$55.13

		Total shareholder return⁹
		Over 1 year	Over 3 years	Over 5 years

To 30 June 2014 ..............................................		92	112	149
Benchmark:
- MSCI Banks¹⁰ .................................................		110	126	164