#1Investor Presentation HSBC Mexico November 2018 HSBC#2Important notice and forward-looking statements This presentation and the information contained herein and the subsequent discussions do not constitute a public offer for the purposes of any applicable law or a recommendation, advice offer or solicitation to buy purchase or sell any security, commodity, currency or other financial instrument. This presentation and the information contained herein and the subsequent discussions, do not purport to be comprehensive nor render any form of financial or other advice, and have been provided by HSBC Mexico, solely for information purposes, and have not been independently verified by any person. No responsibility, liability or obligation (whether in tort, contract or otherwise) is accepted by HSBC Mexico, any of its affiliates or any of its or their officers, employees, agents or advisers (each an "Identified Person") as to or in relation to this presentation and any subsequent discussions (including the accuracy, completeness or sufficiency thereof) or any other written or oral information made available or any errors contained therein or omissions therefrom, and any such liability is expressly disclaimed. No representations or warranties, express or implied, are given by any Identified Person as to, and no reliance should be placed on the accuracy or completeness of any information contained in this presentation, any other written or oral information provided in connection therewith or any data which such information generates. No Identified Person undertakes, or is under any obligation, to provide the recipient with access to any additional information, to update, revise or supplement this presentation or any additional information or to remedy any inaccuracies in or omissions from this presentation. Past performance of HSBC Mexico can not be relied on as a guide to future performance. This presentation and subsequent discussion may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and forward-looking statements with respect to the financial condition, results of operations, capital position and business of the HSBC Group (together, "forward-looking statements"). Any such forward-looking statements are not a reliable indicator of future performance, as they may involve significant assumptions and subjective judgments which may or may not prove to be correct and there can be no assurance that any of the matters set out in forward-looking statements are attainable, will actually occur or will be realised or are complete or accurate. Forward-looking statements are statements about the future and are inherently uncertain and generally based on stated or implied assumptions. The assumptions may prove to be incorrect and involve known and unknown risks, uncertainties, contingencies and other important factors, many of which are outside the control of HSBC Group. Actual achievements, results, performance or other future events or conditions may differ materially from those stated, implied and/or reflected in any forward-looking statements due to a variety of risks, uncertainties and other factors (including without limitation those which are referable to general market conditions or regulatory changes). Any such forward-looking statements are based on the beliefs, expectations and opinions of HSBC Group at the date the statements are made, and HSBC Group does not assume, and hereby disclaims, any obligation or duty to update, revise or supplement them if circumstances or management's beliefs, expectations or opinions should change. For these reasons, recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. No representations or warranties, express or implied, are given by any Identified Person as to the achievement or reasonableness of any projections, estimates, forecasts, targets, prospects or returns contained herein. Additional detailed information concerning important factors that could cause actual results to differ materially is available in HSBC Holdings plc's Annual Report and Accounts 2017, HSBC Holdings plc's Interim Report 2018, HSBC Holdings plc's 3Q 2018 Earnings Release and Local HSBC Mexico press release. This presentation contains non-GAAP financial information. The primary non-GAAP financial measure we use is 'adjusted performance' which is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items which distort period-on-period comparisons. Significant items are those items which management and investors would ordinarily identify and consider separately when assessing performance in order to better understand the underlying trends in the business. Reconciliations between non-GAAP financial measurements and the most directly comparable measures under GAAP are provided in HSBC Holdings plc's Annual Report and Accounts 2017, HSBC Holdings plc's Interim Report 2018, HSBC Holdings plc's 3Q 2018 Earnings Release, the Reconciliations of Non-GAAP Financial Measures document and HSBC Mexico press release which are available at www.hsbc.com. Information in this document was prepared at 30 October 2018. 2#3Agenda 1 HSBC Group 2 HSBC in Mexico 3 Mexico financial results 4 Key indicators vs total system 5 Characteristics of the offer 6 Appendix 3#41. HSBC Group HSBC 4#51. HSBC Group Strategic differentiators enable a strategy focused on growth, improving returns, and enhancing customer and employee experience Strategic differentiators 1 Leading international bank ■ >50% of Group client revenue connected to the network Strategic priorities Financial targets 1 Accelerate growth from our Asian franchise ROTE1 2 ■ No 1 global transaction bank, gaining market share 2 Unparalleled access to high growth markets ■ Access to high growth developing markets in Asia, Middle East and Latin America ■ Investment aligned to high growth markets to deliver shareholder value Complete establishment of UK ring- fenced bank, increase mortgage market share, grow commercial customer base, and improve customer service ■ >11% by 2020 Gain market share and deliver 3 growth from our international network Costs ■ Positive jaws (adjusted, on an annual basis) 4 Turn around our US business 5 Improve capital efficiency; redeploy capital into higher return businesses ☐ 3 Signature balance sheet strength Strong capital, funding and liquidity position with diversified business model ■ Conservative approach to credit risk and liquidity management ■ Low earnings volatility 6 Create capacity for increasing investments in growth and technology through efficiency gains Capital and 7 Enhance customer centricity and customer service dividend through investments in technology Strong capital position and intrinsic capital generation 80 Simplify the organisation and invest in future skills ■ Sustain dividends through long- term earnings capacity of the businesses ■ Share buy- backs subject to regulatory approval 1. A targeted reported ROTE of 11% is broadly equivalent to a reported return on equity of 10%; assumes a Group CET1 ratio greater than 14%. Return on tangible equity ('ROTE') is calculated as reported profit attributable to ordinary shareholders less changes in goodwill and present value of in-force long term insurance business divided by average tangible shareholders' equity. 5#61. HSBC Group HSBC is a leading international bank Our global footprint Markets at scale and markets as leading international bank Markets to connect the network 1. Diversified global businesses and regions¹ 9M18: by global business, $bn Adjusted 16.8 11.2 12.4 1.4 $41.4bn revenue Adjusted PBT 5.7 6.0 Reported RWAs 125.0 317.1 Customer advances 356.5 332.6 Customer 636.6 deposits RBWM CMB GB&M GPB 9M18: by geographical region, $bn Adjusted 13.9 revenue Adjusted 1.4 PBT Reported RWAs 297.7 Customer Inter- 380.5 advances connected global businesses Customer deposits 502.4 Europe 66 90% 50, 4 Markets Of global GDP, trade and capital flows covered by our footprint Of Group client revenue connected to the network share balance sheets and liquidity in addition to strong commercial links Metrics relate to 9M18 and are on an adjusted basis unless otherwise stated, totals provided are for the Group and include Corporate Centre. 5.4 0.3 $18.3bn 277.5 16.3 $862.7bn 250.7 39.2 $981.5bn 352.5 285.5 63.7 $1,345.4bn 21.9 2.0 5.2 2.2 $41.4bn 13.8 1.2 1.6 0.4 $18.3bn 360.8 57.4 132.1 38.9 $862.7bn 444.2 29.0 106.5 21.3 $981.5bn 24.2 651.8 36.0 $1,345.4bn 131.1 Asia MENA NAM LAM 6#72. HSBC in Mexico HSBC 7#82. HSBC in Mexico Mexico - a priority a priority market for the Group In its June 2018 strategy update, HSBC segmented each local market into one of three segments Aspiration "HSBC is Markets at scale considered one of the leading domestic banks" Markets as leading international bank "HSBC is the leading international bank in the country" Characteristics Top 5 bank, at least 3-5% market share ■ At least USD1bn revenue ■ Universal bank ■ Full participation across customer segments Leading international bank ■ At least USD0.5bn revenue ■ Wholesale bank or Universal bank with very focused retail offering (where strategic) Markets Hong Kong ■ UK Malaysia ■ UAE % of adj. revenue FY17 ■ Mexico ■ Saudi c.60% Arabia1 PRD Singapore ☐ Australia Germany ■ Canada ■ India ■ China ■ Indonesia France ■ US c.25% Markets to connect the network "HSBC is in the country to connect foreign and local customers to our network" Targeted offering for international customers ■ Wholesale-focused ■ Branch or rep office where possible ■ Network markets to connect trade and capital flows (e.g. Japan, Spain, Brazil) Supporting subsidiaries of global customers 1. Engagement in Saudi Arabia primarily through investment in Saudi British Bank (SABB); held as an Associate of HSBC c.15% 80#92. HSBC in Mexico Mexico - Connected with key regions. Mexico in key trade corridors¹ 2017 value of trade (exports and imports), USDbn Trade under NAFTA US 522 Canada 21 NAFTA 543 Trade with S. America Brazil Colombia 953 5 Chile Other 17 South America 34 1. Source: Trademap.org FY 2017 figures Trade with Europe Germany 23 Spain 9 Other 45 Europe 77 Trade with Asia China 81 Japan 22 South Korea 19 Other 45 Asia 167 9#10In retail banking, our market share of customers and product range provides a significant opportunity to further increase our customer base and product penetration 2. HSBC in Mexico Strategic opportunity for HSBC in Mexico Significant opportunity to leverage our existing infrastructure HSBC Mexico retail market share as of 30 June 2018 (%) 1 Comparison vs Dec 15 Branches Market Share % 13.5 7.0% 8.1% 8.9% 5.9% 5.2% 9.6% 1. Source: CNBV, calculated considering 6 largest banks representing 75% of total financial system. Branches 9.3 Customers Market 8.8 8.5 Share Customers card Credit Payroll loans 6.1 loans Personal Mortgages 6.7 6.0 Auto Deposits 110 9.6#112. HSBC in Mexico HSBC in Mexico HSBC in Mexico Our global businesses GB&M Retail Banking and Wealth Management ◆ Full range of banking products and services high net worth, mass affluent and emerging affluent customers ♦ Wealth advisory & investment services Commercial Banking ◆ Full range of products and related solutions for small and medium-sized business to publicly-listed companies Global Banking and Markets ◆ Provides tailored financial solutions to major government, corporate and institutional customers worldwide Competitive top-5 universal bank with scale1 Leading trade and cash management bank² Important retail player³ RBWM 4.7 millions active clients, distributed in retail banking and wholesale National coverage Presence in all 32 states of Mexico CMB Our branch and ATM network reflects the country's GDP distribution, centred on the most important economic centres, Mexico City, Monterrey and Guadalajara Extensive branch and ATM network4 973 branches (13.5% market share, 5th) 5,532 ATMs (13.3% market share, 5th) ◆ Approximately 16,000 FTEs HSBC Mexico Strategy Fully leverage retail scale to consolidate Mexico as HSBC's 3rd retail home market and gain a 10% market share Become the leading wholesale bank for international clients 1234 1. Source: National Commission of Banking and Securities as of June 18 2. Source: Dealogic FY17 figures as of Dec 17 3. Source: Condusef FY17 figures as of Dec 17 4. Source: National Commission of Banking and Securities. Market share based on 6 major banks in Mexico as of June 18 11#122. HSBC in Mexico Our Mexican business is strategically important to Group Ownership chart HSBC Holdings plc HSBC Latin America Holdings (UK) Limited 100% HSBC Mexico, S.A. 99.99% 1. Source: HSBC Holdings plc Interim Report 2018. Adjusted and Reported figures under IFRS HSBC Mexico performance¹ Adjusted revenue USDbn +7% % of Group 1.1 4.0% 1.0 3.8% 1H 17 1H 18 1H 17 1H 18 Reported PBT USDbn 0.2 +54% % of Group 2.5% 0.3 1.7% 1H 17 1H 18 1H 17 1H 18 12#132. HSBC in Mexico HSBC Mexico's progress is recognised worldwide Latin America's best bank transformation 2018: HSBC Mexico Euromoney Awards for Excellence 2018 EUROMONEY AWARDS FOR EXCELLENCE 2018 13#143. Mexico Financial Results HSBC 14#153. Mexico Financial Results HSBC Mexico - Income statement Sep 18 YTD PBT 68% higher than Sep 17 YTD Revenue 1,2 MXNM Loan impairment charges (LICS) 2 MXNM 24,633 +9% 9M16 Operating expenses MXNM -3% 1. 2. 17,513 9M16 26,903 +11% 29,927 5,078 9M17 9M18 17,043 9M17 +6% 18,064 9M18 9M16 +32% Profit before tax MXNM 6,724 -1% 6,665 9M17 9M18 +68% +52% 3,159 2,081 9M16 9M17 5,298 9M18 Revenue includes (Net interest income, Net fees, Trading income and Other operating income) CNBV published a change in the regulation related to the registration of recoveries of loan impairment charges from other operating income to loan impairment charges account in the P&L. The bank decided to early adopt the change of the rule starting 1 Jan 2018. In 2017 and 2016, for comparison purposes, MXN915m and MXN672 were reclassified from other operating income to loan impairment charges. 15#163. Mexico Financial Results HSBC Mexico Loans and asset quality - Robust credit quality, reflecting HSBC's conservative approach to risk management Loan Portfolio MXNbn +6% 287.7 271 +27% Sep 16 Sep 17 Non performing loan ratio 2% 3.5 2.9 LICS1 / Loans % 2.5 365.0 Sep 18 2.1 224 Sep 16 LLR3 / Loans % 4.9 3.1 2.4 Sep 17 Sep 18 4.4 3.6 Sep 16 Sep 17 Sep 18 Sep 16 Sep 17 Sep 18 1. Annualised YTD LICS as a % of net lending. 2. Non-performing loans as a % of net lending 3. LLR allowance for loan losses as a % of net lending 16#173. Mexico Financial Results HSBC Mexico - Funding and liquidity Strong funding and liquidity position, well above regulatory minimum Deposits MXNbn +4% +23% 371.7 301.8 290.3 Sep 16 Sep 17 Liquidity coverage ratio (LCR) % LCR requirement = 100% 162 Sep 18 Advances deposits ratio (ADR) % 93.4% 95.4% 98.2% Sep 17 Sep 18 Sep 16 Net stable funding ratio % 123% 119% 121% 130 122 100% Sep 16 Sep 17 Sep 18 Jun 17 Dic 17 Jun 18 17#183. Mexico Financial Results HSBC Mexico - capital Total capital adequacy ratio of 12.7%, 190bps above regulatory requirements Capitalisation % 12.3% Total capital adequacy ratio 12.7% 12.7% 1.5 2.0 2.1 11.2 10.7 10.2 Sep 16 Sep 17 Sep 18 ■Tier 1 Tier 2 CET1: Common Equity Tier 1 DSIB: Domestic Systemically Important Bank CCyB: Countercyclical Capital Buffer ■ At 30 September 2018, the bank's total capital adequacy ratio was 12.7% and the tier 1 capital ratio was 10.7% ▪ The minimum capital ratios for HSBC Mexico under local rules as of September 2018 are: • CET1 Ratio: CET1 ≥ 7% + DSIB 7.30% • Tier 1 Capital Ratio ≥ 8.5% + DSIB 8.80% • Total Capital Ratio ≥ 10.5% + DSIB 10.80% DSIB 30 bps ■ HSBC's global strategy is to work with optimal levels of capital with a reasonable buffer above regulatory limits. 18#194. Key indicators vs total system HSBC 19#204. Key indicators vs System HSBC Mexico vs Total System HSBC growth Total loans MXNbn 4,462 JUN17 +12% 4,978 297 +14% 340 JUN18 JUN17 JUN18 HSBC México Total Banking system Wholesale loans MXNbn 2,819 +14% 3,202 202 Retail loans MXNbn +8% +5% 1,776 100 1,643 95 JUN18 JUN17 HSBC México JUN18 JUN17 Total Banking system Wholesale loans (excl. Governement) +18% MXNbn +17% 239 2,664 2,276 174 +23% 214 MAY 17 MAY 18 JUN17 JUN18 JUN17 JUN18 JUN17 JUN18 Total Banking system HSBC México Total Banking system HSBC México Source: CNBV, figures under MX GAAP 20 20#214. Key indicators vs System HSBC Mexico vs Total System Net interest margin % 7.9 7.9 6.5 6.5 JUN17 JUN18 JUN17 HSBC México JUN18 Total Banking system Credit cost (Annualised LICS/Loans) % Net interest margin (excluding LICs) % 5.7 5.7 4.5 3.9 JUN17 JUN18 JUN17 JUN18 Total Banking system HSBC México LLR/Loans % 3.4 4.2 3.1 2.8 3.4 3.6 3.3 2.4 JUN17 JUN18 JUN17 JUN18 Total Banking system HSBC México JUN17 JUN18 Total Banking system JUN17 JUN18 HSBC México Source: CNBV, figures under MX GAAP 21 24#224. Key indicators vs System HSBC Mexico vs Total System Non Performing Loan ratios in retail products better than market Non Performing Loan ratio % Wholesale Non Performing Loan ratio % 2.8 2.3 2.1 2.2 1.2 1.3 JUN17 JUN18 Total Banking system JUN17 HSBC Mexico JUN18 Retail Non Performing Loan ratio (excl. Mortgage) % 4.6 4.4 4.3 3.7 2.7 2.1 JUN18 JUN17 HSBC Mexico JUN18 JUN17 Total Banking system Mortgage Non Performing Loan ratio % 2.6 2.6 1.2 1.0 JUN17 JUN18 JUN17 JUN18 Total Banking system HSBC Mexico JUN17 JUN18 Total Banking system JUN17 HSBC Mexico JUN18 Source: CNBV, figures under MX GAAP NPL: Non Performing Loans 22 222#235. Characteristics of the Offer HSBC 23 23#245. Characteristics of the Offer Long Term Notes Issuance of long term notes (Certificados Bursátiles bancarios) up to 10 billion pesos Issuer Type of Security Local Ratings Issuance Amount Objective Issuance Amount Ticker Currency HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC Certificados Bursátiles Bancarios de largo plazo (Long Term Notes) AAA(mex)vra by Fitch Ratings and Aa1.mx' by Moody's Up to MXN 10,000'000,000.00 (ten billion pesos) or its equivalent in USD with communicating tranches MXN 7,000,000,000.00 (seven billion pesos) or its equivalent in USD with communicating tranches HSBC 18D HSBC 18 HSBC 17-2 (Reopening) USD Type of interest rate Tenor Floating Rate Note 1,080 Days (Approximately 3 years) LIBOR 90 days MXN Floating Rate Note 1,092 Days (Approximately 3 years) TIIE 28 Days Reference rate Frequency of Interest payment Every 90 Days Book building date [November 21, 2018] Issuance date [November 23, 2018] Maturity date [November 7, 2021] Every 28 Days [November 21,2018] [November 23, 2018] [November 19, 2021] Bullet MXN Fixed Rate Note 3,223 Days (Approximately 9 years) Mbono 2027 Every 182 Days [November 21,2018] [November 23, 2018] [September 20, 2027] Amortization Guarantee Bookrunner Unsecured HSBC 24 14#256. Appendix HSBC 25#266. Appendix Current credit ratings for key entities Long term senior ratings HSBC Holdings plc HSBC Mexico Rating Fitch Outlook Rating Moody's Outlook Rating S&P Outlook AA- Stable A2 Stable A Stable AAA Stable Aa1 Positive mxAAA Stable 26#276. Appendix Simplified structure chart - principal entities¹ as at 1 October 2018 HSBC Holdings plc UK Holding company Intermediate holding company Operating company Associate 99% HSBC HSBC HSBC Mexico North America Bank S.A. Canada Holdings Inc. HSBC Bank (China) Company Ltd The Hongkong & Shanghai Banking Corporation Ltd HSBC Bank Australia HSBC HSBC Private 95% Bank Ltd Egypt S.A.E. HSBC UK Holdings Ltd Banking Holdings (Suisse) SA HK HSBC Finance Corporation Bank of Commun- 19% ications HSBC The Co., Ltd Bank Malaysia Berhad 40% Saudi British Bank HSBC Private Bank (Suisse) SA USA PRC HSBC Securities Hang Seng HSBC HSBC UK 62% (USA) Bank Inc. Ltd Bank (Taiwan) Ltd Bank Middle East Limited HK UAE HSBC Bank plc HSBC HSBC USA Bank USA, Inc. N.A. Hang Seng Bank (China) Ltd PT 99% Bank HSBC 99.9% Indonesia North America and LatAm HSBC Bank (Singapore) Ltd Asia 1 Showing entities in Priority markets, wholly-owned unless shown otherwise. Excludes other Associates, Insurance companies and Special Purpose Entities. HSBC UK Bank plc 80% HSBC France HSBC Trinkaus & Burkhardt AG Germany Europe and MENA 27#286. Appendix Main launches Retail (RBWM1) HSBC Fusion - 2017 • Samsung Pay - January 2018 Fusion • 2Now Credit Card - February 2018 • HSBC Stilo - July 2018 HSBC Zero - September 2018 SAMSUNG HSBC 2Now PROBADA Wholesale (CMB² / Global Banking and Markets) HSBC • GLCM³: HSBC net Mobile: Touch ID y Face ID • GTRF³: New product launch for GTRF in Mexico Pre Export Finance and new Supply Chain Solution 1. RBWM: Retail Banking and Wealth Management 2. CMB: Commercial Banking (Banca Empresarial), 3. GLCM: Global Liquidity and Cash Management; GTRF: Global Trade and Receivable Finance HSBC Stilo HSBC ZERO HSBCnet Mobile App:: Now with Face ID AIDA La dawa para optimisar pracasas de la cadena de suminist ADA FIPP de HSBC proposona qudd yun mayor on pra e Corporativo, es como oder tanpenca y Process operacional Automatic nvoice Discounting Application Cure of Procesa Gaporativo de HSBC pods segue pasa paa st einado de suas 28#296. Appendix Turnaround On financial results and strengthening of financial crime risk management capabilities 2017 Performance HSBC Grupo Financiero for the year ending 2017 Figures in MXN bn under local GAAP Revenue¹ 40.2 HSBC Positioning PBT 5.5 RoE 6.9% ■ Competitive universal bank with significant scale. Leading bank in payments and commerce management. ■ Relevance in retail banking with high customer satisfaction. ■ Greater competitive pressure. ■ Financial crime. Challenges ■ Macroeconomics (oil, FX). ■ Political uncertainty with the United States / Mexico. ■ Low bancarization. ■ Increase in the customer base. ■ Trade and NAFTA. Opportunities Equity 62.7 ■ Cultural transformation. 1. Revenue includes (Net interest income, Net fees, Trading income and Other operating income) Source: Audited financial statements December 2017, HSBC Grupo Financiero 29#30Empty