#1HSBC Holdings plc 4020 Results Opening up a world of opportunity Presentation to Investors and Analysts#2Agenda Results FY20 highlights and achievements FY20 and 4Q20 results Opening up a world of opportunity Our Strategy Driving growth in Asia Pivot to Wealth Digital Business Services Financial snapshot Conclusion Noel Quinn Ewen Stevenson Noel Quinn Peter Wong Nuno Matos John Hinshaw Ewen Stevenson Noel Quinn HSBC 1#3Noel Quinn Group Chief Executive HSBC 2#4Results FY20: A strong base to deliver future growth FY20 highlights FY20 & 4020 results 1 2 Continued support for customers and communities through Covid-19 restrictions >$52bn of wholesale lending support through government schemes and moratoria, with >$26bn of additional relief granted to personal customers¹ Profits down, strong balance sheet FY20 reported PBT of $8.8bn, down $4.6bn (34%) vs. FY19; adjusted PBT of $12.1bn down $10.0bn (45%), driven by higher ECL charges and lower revenue Strong funding, liquidity and capital; CET1 ratio² of 15.9% 3 DPS of $0.15, to be paid in cash, with no scrip alternative, and policy designed to provide sustainable dividends going forward; transitioning towards a payout ratio of 40-55%³ from 2022 A reconciliation of reported results to adjusted results can be found on slide 55, the remainder of the presentation unless otherwise stated, is presented on an adjusted basis 3#5Results FY20 highlights FY20 & 4020 results A refreshed purpose, values and ambition to support the execution of our strategy Our purpose Opening up a world of opportunity Our ambition To be the preferred international financial partner for our clients Our values We value difference We succeed together We take responsibility We get it done Our strategy Focus on our strengths Digitise at scale Energise for growth Transition to net-zero 4#6Results Delivering against our February 2020 Update Progress against our financial targets FY22 target (as announced at Feb20) Costs Adjusted costs <$31bn; $4.5bn of cost programme saves RWAS >$100bn gross RWA reduction FY20 highlights FY20 & 4020 results FY20 progress4 ✓ $1bn cost saves ✓ $52bn gross reduction Capital CET1 ratio >14%; manage in 14-15% range ✓ CET1 ratio of 15.9% ROTE 10% -12% × 3.1% LO 5#7Ewen Stevenson Group Chief Financial Officer HSBC 10 6#8Results FY20 results summary $m NII FY20 FY19 A 27,599 30,339 (9)% Non interest income Revenue 22,767 24,605 (7)% 50,366 54,944 (8)% ECL (8,817) (2,627) >(100)% Costs Associates Adjusted PBT Significant items and FX translation Reported PBT (31,459) (32,519) 3% 2,059 2,351 12,149 22,149 (12)% (45)% (3,372) (8,802) 62% 8,777 13,347 (34)% Reported profit after tax 6,099 8,708 (30)% Profit attributable to ordinary shareholders 3,898 5,969 (35)% Reported EPS, $ 0.19 0.30 $(0.11) Memo: impact of significant items on EPS, $ DPS, $ (0.13) (0.43) $0.30 0.15 0.30 $(0.15) $bn FY20 FY19 Δ Customer loans 1,038 1,063 (2)% Customer deposits 1,643 1,470 12% Reported RWAS 858 843 2% CET1 ratio, % 15.9 14.7 1.2ppt TNAV per share, $ 7.75 7.13 $0.62 FY20 highlights FY20 & 4Q20 results Reported PBT of $8.8bn down $4.6bn (34%) vs. FY19, primarily from lower revenue and higher ECL, offset by lower costs and lower significant items FY20 adjusted costs decreased $1.1bn (3%) vs. FY19 including $1.4bn of cost saves 5; continued investment was offset by reductions in discretionary spending Significant items of $3.4bn, includes $0.3bn of losses on disposal, decreased by $5.4bn vs. FY19 Customer loans decreased $25bn (2%) vs. FY19, declines in CMB and GBM were offset by mortgage growth in WPB Customer deposits increased $173bn (12%) vs. FY19 as customers held liquidity DPS of $0.15 per share, with policy designed to provide sustainable dividends going forward³ 7#9Results 4020 results summary FY20 highlights FY20 & 4Q20 results (50)% 90% >100% > 100% >100% $0.30 Adjusted revenue down $2.0bn (14%) vs. 4019, primarily due to lower global interest rates, partly offset by higher revenue in Global Markets ECL up by $0.5bn (69%) vs. 4019, from higher stage 3 charges in CMB, and continued economic uncertainty in the UK Costs down $0.1bn (1%) vs. 4019, cost programme saves were offset by increased performance-related pay and increased technology spending Significant items of $0.8bn decreased by $7.5bn vs. 4019, due to the non-recurrence of a $7.3bn impairment of goodwill 4020 TNAV per share of $7.75 up $0.20 vs. 3Q20, due primarily to retained profits and FX movements $m NII Non interest income 4Q20 4019 Δ 6,620 7,751 (15)% 5,204 6,031 (14)% Revenue 11,824 13,782 (14)% ECL Costs (1,174) (696) (69)% (9,106) (9,176) Associates 666 546 1% 22% Adjusted PBT 2,210 4,456 Significant items and FX translation (825) (8,353) Reported PBT 1,385 (3,897) Reported profit after tax 935 (5,024) Profit attributable to ordinary shareholders 562 (5,509) Reported EPS, $ 0.03 (0.27) DPS, $ 0.15 n.m. $bn 4Q20 3Q20 A Customer loans 1,038 1,074 (3)% Customer deposits 1,643 1,615 2% Reported RWAS 858 857 0% CET1 ratio, % 15.9 15.6 0.3ppt TNAV per share, $ 7.75 7.55 $0.20 8#10Results 4Q20 adjusted revenue performance 4020 revenue FY20 highlights FY20 & 4Q20 results 4020 vs. 4019 Revenue by global business, $bn Retail Banking $3,043m (972) (14)% WPB $5,321m (18)% Wealth Management $2,053m o/w insurance market impacts: $98m 13.8 (91) 12.2 Other $225m (89) 11.8 3.8 GTRF $423m (15) 3.7 3.5 Credit and Lending $1,457m 108 CMB $3,147m (15)% 3.7 GLCM $895m Other $372m (541) (122) 3.2 3.1 Global Markets, $1,869m Securities Services o/w bid-offer adjustments: $3m 88 82 6.5 GBM $3,511m V Global Banking, 5.5 5.3 (7)% GLCM, GTRE $1,561m (314) Principal Investments, XVA, Other $81m o/w XVAS: $(124)m (22) (0.2) (0.2). (0.2) Corp. Centre $(155)m Group $11,824m (14)% o/w valuation differences: $61m 18 4019 3Q20 4020 WPB GBM (1,958) (1,131) (827) CMB Corporate Centre NII Non-NII Totals may not cast due to rounding 9#11Results Net interest income Reported NIM progression, bps 120 (3) 122 1 5 3Q20 Asset yields Asset volumes Liability costs Liability volumes 4Q20 Reported NIM trend Discrete quarterly 2bps 156bps 154bps reported NIM 133bps 120bps 122bps Reported NII, $m of which: 7,654 7,612 significant items 6,897 6,450 6,619 Average interest earning assets, $bn (39) 26 (48) 4Q19 1Q20 2Q20 3Q20 ·1. 4020 1,946 1,992 2,078 2,141 2,159 FY20 highlights FY20 & 4Q20 results FY20 reported NII of $27.6bn was down $2.9bn (9%) vs. FY19 due to global reductions in interest rates, partly offset by increases in AIEAs FY20 NIM of 1.32% was down 26bps vs. FY19 with decreases in market rates on AIEAs more than offsetting lower funding costs 4Q20 reported NII of $6.6bn was $0.2bn (3%) higher vs. 3Q20 as liability costs decreased more than asset yields 4020 reported NII was $1.0bn (14%) lower vs. 4019 primarily from reductions in global interest rates; 4Q20 adjusted NII was $1.1bn lower vs. 4019 10#12Results Non-NII Group, $m Net fees (1)% 2,989 3,017 (2)% 2,966 4019 3Q20 4Q20 WPB, $m Net fees (3)% — (6)% · 1,372 1,406 4019 WM 3Q20 RB CMB, $m Net fees FY20 highlights GBM, $m Net fees FY20 & 4Q20 results 1% 1% 1,327 0% T 1% 828 828 840 804 797 808 4Q20 Other 4019 GLCM 3Q20 GTRF 4Q20 C&L Other 4019 GB HSS 3Q20 GLCM 4Q20 GTRF Other 2,638 T (20)% ◆ Net fees: broadly stable vs. 4019 Other income ୮ 3,042 (26)% T (15)% 7 Net fees: seasonality and lower market activity and unsecured lending vs. 3Q20 Other income -(30)% ◆ Net fees: higher corporate card spend and payment volumes vs. 3020 Other income ◆ Net fees resilient despite fee compression and seasonality vs. 3Q20 Other income (5)% T (12)% 1,647 1,788 1,565 2,238 634 553 (26)% 444 (18)% T 7 174 157 129 4019 3Q20 4Q20 4019 3Q20 4Q20 4019 3Q20 4Q20 4019 3020 4Q20 Other income: down $0.8bn (26%) vs. 4019, mainly lower interest earned on securities in the trading book, and from lower XVAs ◆ Other income: lower insurance from reduced client activity vs. 4Q19 ◆ Other income: lower fair value gain ◆ Other income (incl. trading on shares income): down vs. 3020 due to lower client activity and seasonality 11#13Results Credit performance Adjusted ECL charge trend 0.25 1.47 1.13 0.26 0.81 0.29 0.44 4,033 3,071 696 806 4Q19 1Q20 2020 3Q20 1,174 4Q20 ECL by geography, $m FY20 highlights FY20 & 4Q20 results ECL as a % of average gross loans and advances (annualised) ECL, $m FY ECL as a % of average gross loans and advances FY20 ECL charge of $8.8bn, up $6.2bn vs. FY19, due to deteriorations in forward economic outlook from the global impact of the Covid-19 pandemic 4Q20 ECL charge of $1.2bn up $0.4bn (46%) vs. 3020, primarily from higher Stage 3 charges; 3Q20 charge also benefitted from higher releases (c.$0.3bn) Stage 1-2 ECL reserve build in FY20 was $3.9bn (mostly in 1H20); total Stage 1-2 ECL reserve was $7.9bn at 4020 (4019: $4.0bn reported Stage 1-2 ECL reserve) Cautious on outlook due to continued uncertainty, but expect FY21 ECL charge to be materially lower than in FY20 Expect normalisation of ECL charge to at or below the lower end of 30-40bps range by 2022 4Q20 ECL charge by stage, $bn 3Q20 499 4Q20 Stage 1-2 Stage 3 Total 219 216 237 256 271 Wholesale 0.2 0.8 0.9 164 89 103 Personal 0.1 0.2 0.3 55 0.3 0.9 1.2 Total (10) (119) Hong Kong Asia ex. HK UK RFB NRFB Mexico Other Totals may not cast due to rounding 12#14Results Adjusted costs Operating expenses trend, $m 9,176 9,106 988 7,836 7,554 7,524 1,372 802 1,416 1,521 1,322 1,314 6,816 6,315 6,232 6,210 6,888 4019 1Q20 2020 3Q20 4Q20 Technology6 Other Group costs UK bank levy FY20 vs. FY19 (ex. levy), $m 31,531 FY20 highlights FY20 & 4Q20 results FY20 costs of $31.5bn down $1.1bn (3%) vs. FY19 primarily from cost programme saves and reductions in performance-related pay (PRP), partially offset by increases in technology spend and inflation 4020 costs (ex. levy) of $8.3bn up $0.8bn (10%) vs. 3Q20 primarily from increased performance-related pay, technology spend, marketing and other BAU cost increases 4Q20 costs (ex. levy) of $8.3bn up $0.1bn (1%) vs. 4019; cost programme saves were offset by increased technology spend, performance-related pay and other BAU cost increases ◆ FY20 cost saves* of $1.4bn, includes $1.0bn from the 2020-22 cost programme with associated CTA of $1.8bn ◆ Expect broadly stable costs (excluding the bank levy) in 2021 4020 vs. 4019 (ex. levy), $m (3)% 282 (1,352) 927 (1,108) 377 30,657 8,188 1% 62 (435) o/w performance- related pay: +$162m 377 103 8,304 FY19 Inflation Cost saves* Discretionary Technology? Other spend items FY20 4Q19 Inflation Cost saves* Discretionary Technology? spend Other items 4Q20 *Note: cost saves include 2020-22 cost programme saves as announced at Feb-20 and 2019 cost initiatives 13#15Results Transformation programme - RWA saves FY20 RWA savings, $bn 24.4 9.9 o/w client optimisation: $5.4bn o/w Global Markets: $17.0bn 9.4 51.5 7.8 NRFB in Europe and the UK US GBM ex. US and NRFB Other FY20 saves FY20 highlights FY20 & 4Q20 results $51.5bn of saves over FY20*, primarily in GBM NRFB saves of $24.4bn, with $17.0bn in Global Markets. UK NRFB reductions of $16.5bn includes $15.6bn related to Global Markets. US reductions of $9.9bn, mainly in Global Markets and from client optimisation Other RWAs of $7.8bn mainly in CMB in UK RFB and Asia ♦ Expect c.$30bn of saves over FY21 Saves by global business ◆ Total GBM reductions of $37.4bn8; c.60% in Global Markets primarily from novation and exits of positions and c.40% in Global Banking primarily from client exits and remediation CMB reductions of $12.9bn largely in Europe, the UK RFB, Asia and US from portfolio and client optimisation *Note: In 2020, we achieved gross RWA reductions of $51.5bn, taking our cumulative RWA reductions to $61.1bn when including accelerated transformation saves of $9.6bn made over 4Q19 14#16Results Capital adequacy CET1 ratio, % (0.0)- 0.2 0.1 (0.4) 15.9 15.6 0.4 3Q20 Change in RWAs FX translation differences Software capitalisation benefit⁹ Other Dividend 4Q20 CET1, $bn 133.4 4.3 2.1 (0.6) (3.1) 136.1 RWAs, $bn 857.0 (22.7) 20.9 2.3 857.5 Capital progression 4019 1Q20 2020 3Q20 Common equity tier 1 capital, $bn 124.0 125.2 128.4 133.4 Risk-weighted assets, $bn 843.4 857.1 854.6 857.0 4020 136.1 857.5 CET1 ratio, % 14.7 14.6 15.0 15.6 Leverage ratio exposure, $bn 2,726.5 2,782.7 2,801.4 2,857.4 15.9 2,897.1 Leverage ratio 10, % 5.3 5.3 5.3 5.4 5.5 FY20 highlights FY20 & 4Q20 results CET1 ratio of 15.9%, up 0.3ppts vs. 3Q20; including the impact of software capitalisation benefits and favourable FX movements CET1 ratio increased 1.2ppts from 14.7% at FY19, mainly from cancellation of the 4Q19 dividend, increases in retained profits and other comprehensive income Reported RWAs up $14.1bn (2%) vs. 4019 from credit migration of $29.7bn and FX movements of $13.1bn, offset by $52bn of gross RWA saves Expect increase in RWAs from regulatory changes of c.5% over 2022-23, including the impact of Basel 3 reform, amendments to CRR and changes to internal models under the IRB approach, before any mitigating actions 15#17Agenda Results FY20 highlights and achievements FY20 and 4Q20 results Opening up a world of opportunity Our Strategy Driving growth in Asia Pivot to Wealth Digital Business Services Financial snapshot Conclusion Noel Quinn Ewen Stevenson Noel Quinn Peter Wong Nuno Matos John Hinshaw Ewen Stevenson Noel Quinn HSBC 16#18Noel Quinn Group Chief Executive HSBC 17#19Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials We recognise some fundamental shifts and have aligned our strategy accordingly Lower for longer interest rates globally The digital experience economy as a new norm Increased focus on sustainability Evolution of major interbank rates 11, % Digital banking usage up -30% 12 % customers increasing digital usage, mid-2020 vs. pre-Covid-19 Green, Social and Sustainability (GSS) bond market14, $bn 3.0 US UK - HK 80% Mobile Online 60% 40% 2.5x 445 261 179 Industry - Avg 1.5 20% 2018 2019 2020 0% US UK China India GSS share of Global 2.7% 3.6% 5.0% 125% 253% DCM14 0.0 2018 2019 2020 2021 HSBC increase in HSBCnet mobile downloads13 increase in HSBCnet mobile payments13 Companies with disclosed climate action targets 15 228 5x increase ➤ 1,106 Our response Accelerate shift towards fee income and improved cost efficiencies Our response Increase investments in technology across customer platforms Our response Ambitious Sustainable Finance support for our clients and to be a net-zero bank 18#20Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials A refreshed purpose, values and ambition to support the execution of our strategy Our purpose Opening up a world of opportunity Our values We value difference We succeed together We take responsibility We get it done Our ambition To be the preferred international financial partner for our clients Our strategy Focus on our strengths Be the global leader in cross- border banking flows aligned to major trade and capital corridors Lead the world in serving mid market corporates globally Become a market leader in Wealth management, with a particular focus on Asia Invest at scale domestically where HSBC's opportunity is greatest Digitise at scale Deliver an easy and excellent customer experience Ensure the bank is resilient and secure Automate to improve services and reduce cost Partner more often to deliver customer benefits Energise for growth Inspire a dynamic culture where the best want to work Encourage an inclusive culture fostering diversity Be a leaner, simpler organisation Help colleagues develop future-ready skills Transition to net-zero Become a net-zero bank by reducing, replacing and resolving our operational emissions Support our customers in their transition to a low carbon future, especially in carbon challenged industries Accelerate development of new climate solutions 19#21Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Focus on our strengths: Drivers of growth Wealth and Personal Banking (WPB) 2 3 Lead in Wealth with a particular focus on Asia and the Middle East while investing in scale retail markets e.g. HK, UK Commercial Banking (CMB) Accelerate international client acquisition and deepen share of wallet in cross- border services Global Banking & Markets (GBM) Lead in Asia and the Middle East with a Global network to support trade and capital flows Investing >$3.5bn16 in Asia... ◆ To capture HNW and UHNW segments across Asia, especially in mainland China, Hong Kong, Singapore and Southeast Asia by serving their wealth needs globally across key booking centres ◆ To deploy our manufacturing capabilities at scale in Insurance and Asset Management across customer solutions, e.g. health and wellness, sustainability etc. - particular focus on mainland China, Hong Kong, India and Singapore ◆ To build propositions that facilitate origination from our distinctive CMB and GBM "feeder channels" e.g. three quarters of $53bn in asset management NNM originated from GBM and CMB clients in FY20 Investing c.$2bn16 across global platforms 17... To develop front end ecosystems to drive customer acquisition at scale with international mid market clients globally To improve SME proposition in key scale markets with digital sales and service journeys To continue to invest in GLCM, GTRF and FX front end platforms to drive more fee income and accelerate asset distribution Investing c.$0.8bn 16 in Asia... To enhance digital platforms for Asian Wealth (e.g. FX, structured products, investment opportunities for HNW/UHNW clients and family offices) To develop market access and execution capabilities (digitise on-boarding, execution and servicing) in Global Markets and Securities Services To expand our coverage in key sectors and countries across Asia - especially to facilitate cross Asian and global inbounds flows 20 20#22Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Focus on our strengths: A focused international business in the US and NRFB US: leading international corporate business and a new wealth management platform CMB and Global Banking 18 Non Ring-Fenced Bank in Europe and the UK: a leaner, simpler operating model RWAS 19, $bn revenue, $bn 1.9 mid single digit CAGR Costs 19, $bn. >(15)% 3.9 3.6 c.(25)% 173 167 Costs 19, $bn c.(20)% 6.9 6.9 2020 Medium- term 20 2019 2020 2022 2019 202021 2022 2019 202021 2022 Key initiatives Key initiatives Continuing to invest in serving internationally-connected wholesale clients Maintaining a leading position in USD clearing, trade and FX and continue to drive outbound revenues ◆ Focusing on an international Wealth platform to connect our clients to the US Wealth market Enhancing a limited number of branches to also serve as wealth management centres for our globally mobile and affluent clients ◆ Exploring organic and inorganic options for the retail banking franchise Focusing on a Wholesale footprint that serves international customers both inbound and outbound to our network, especially Asia and the Middle East Continuing to invest in transaction banking franchise with strong linkage to Asia Simplified operating model with two hubs (London & Paris) with reduced complexity in cost and RWA consumption Continuing with the strategic review of our retail banking operations in France and are in negotiations in relation to a potential sale although no decision has yet been taken. If any sale is implemented, given the underlying performance of the French retail business, a loss on sale is expected 21#23Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Digitise at scale: by unlocking investment capacity Accelerating technology investment Driving down our cost base Adjusted costs $bn <$30bn based on FY20 average FX rates 32.5 c.7-10% ≤31* Delivering excellent customer experience throughout our network Building platforms for higher front end productivity We plan to: Increase 2022 cost reduction target by $1bn (<$30bn based on FY20 average FX* vs. $31bn in FEB20 Update) CAGR increase in investment22 2019-22 Automating our middle and back office Building solutions to free up office footprint Increase cost programme saves to $5-5.5bn (vs. $4.5bn in FEB20 Update) Increase CTA to $7bn (vs. $6bn in FEB20 Update) Keep costs broadly stable from 2022, while increasing the proportion of investment and technology spend c.4-5% CAGR decrease in BAU costs 2019-22 c.29 Investment22 BAU costs FX impact* 2019 2022 Medium to long-term 20 *Note: Impact of the weakening USD at end-2020. Target of $30bn is based on average FX in FY20 (consistent with the results presented); using the average December 2020 FX rates, the target would be retranslated to <$31bn. Using average December 2020 FX rates, 2020 adjusted revenue would increase by c.$1.5bn 22 222#24Our Strategy Asia Wealth Digital Business Services Financials Opening up a world of opportunity Energise for growth: to be 'fit for the future' Inspire a dynamic culture ♦ Reenergise our culture to succeed with purpose ◆ Bring our values to life, everywhere Adopt future ways of working Champion inclusion Increase diverse representation, particularly at senior levels ◆ Close gaps in employee engagement in under- represented groups Improve our diversity data and benchmark our actions Develop future skills Source and build future skills and capabilities Deepen the prevalence of digital, professional and enabling skills across HSBC Secured inputs from ~120K colleagues and engaged with over 2.5K customers to shape our refreshed Purpose and Values Launching new leadership expectations to: "Give life to our purpose" "Unleash our potential" "See it through" Group Executive Committee: c.75% members in post for just over a year or less Stonewall TOP GLOBAL EMPLOYERS 2020 Achieved >30% female leaders in 2020 Increase to >35% female leaders by 2025 Published new Race Commitments, including to more than double our black senior leadership population by 2025 Recognised within Top Global Employers index for LGBT staff (Stonewall) in 2020 Founding Partner, Global Business Collaboration for Better Workplace Mental Health ୪୪ gloat Expanding HSBC University, our in-house technical and performance academy for Future Skills, Digital, and Sustainability Launching new and leading enabling technologies (Learning Experience Platform and Talent Marketplace) 23#25Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Transition to net zero: we have set out an ambitious plan Become a net zero bank Support for customers Unlock new climate solutions Our ambitions Align our financed emissions 23 to net zero by 2050 or sooner Net zero in our operations and supply chain by 2030 or sooner Support our clients in the transition with $750bn to $1tn of financing and investment over the next 10 years Unlock investments into the next horizon of climate solutions that are currently not accessible for investors Our actions Set out clear and measurable pathways to net zero, using the Paris Agreement Capital Transition Assessment tool (PACTA) ◆ Provide transparency through our TCFD disclosures Engage with the financial services industry to develop standards and comparability ◆ A climate resolution to be put to shareholders at AGM in May-21 to help our customers to transition to Paris Agreement goals Maintain market leadership in sustainable finance; #1 underwriter of GSSS bonds in 2020 and 201924 ♦ Increase portfolio of transition finance and our advisory solutions building new capabilities in structuring for climate, new technology and risk management ◆ Apply a climate lens to financing decisions Created HSBC Pollination Climate Asset Management Enable $100m CleanTech investment; launch a $100m philanthropic programme for key initiatives25 ◆ Lead FAST-Infra 26 initiative to establish sustainable infrastructure principles and investment vehicles 24#26Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Accelerating the shift to our highest return and growth opportunities, to deliver above cost of capital returns Capital allocation Asia as % of Group TE27 c.50 WPB as % of Group TE28 c.42 From... (2020) c.25 C.35 Fees + Insurance Revenue growth rate Group targets, dividend and capital policy % of total revenues From... Costs Adjusted costs of <$31bn in 2022 on Dec 2020 average FX rates <$30bn using FY20 average FX rates C.35 Low single digits29 RWA Gross RWA reduction of >$100bn by end- 202219 c.29 To... (medium to long-term) 20 Capital To... CET1 ratio ≥14% manage in a 14-14.5% range over medium term; manage range down further long-term Mid single digits Sustainable dividends Dividends Payout ratio of 40-55%³ from 2022 onwards ROTE ≥10% over the medium-term 25#27Peter Wong Chief Executive Officer, Asia-Pacific HSBC 26#28Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Economic growth and wealth creation make Asia the largest banking opportunity in the world Asia forecasted to represent c.50% of global economy by 202530 GDP based on PPP share of world total (%) Asia ROW Trade flows in Asia growing faster than world average 32 Trade growth, % CAGR RoW Asia 100 38 100 44 100 % CAGR, 2019-25e 8.6% 48 6.0% 6.9% 62 56 52 3.1% 3.3% нн HH 1.1% 1.2% 2010 2019 2025e 0.1% 2010-15 2015-20 2020-25e Asia contributed 71% of global growth in 201930 More investments are flowing into Asia33 2019 2025E Total client assets and AUM, $tn ~6% ~12% ~8% Wealth assets to double by 202531 2019 Personal Financial Assets, $tn CAGR, % ~12% 24.3 12.0 50 50 Mainland China 2.0 2.4 Hong Kong 1.0 2.4 2.0 2.4 11 India Southeast Asia 2015 67 17 2020e Total client assets AUM 92 30 30 2025e 27#29Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Over the past 10 years, we have a strong track record of growth in Asia Recent growth drivers Greater Bay Area (GBA) Strengthening Hong Kong ◆ Sustained market leadership³4: #1 in deposits (29%), #1 in Cards (46%), #1 in Mortgages (34%) ◆ Leadership in Global Transaction Banking 35 ◆ #1 for Investment Banking fees for the past 3 years 36 Developing our business in the Pearl River Delta ◆ 4X growth in active WPB customers since 2016 ◆ 37% growth in CMB customers 37 since 2016 ☑Expanding in South Asia 38 ◆ Total ASEAN markets revenue grew to c.$3.5bn in 2019, with all markets now >$175m revenue ♦ India delivering 20% growth in revenues in wholesale banking in 2020 Growing Asian Wealth #1 in Hong Kong for Wealth, #2 for Insurance39 Top 3 Private Bank in Asia 40 ♦ Incremental growth of c.800 new staff hires from 2017-2019 Asia reported revenue, $bn 19 "Pivot to Asia" strategy launched | Covid-19 related GDP decline and compressed interest rates | c.60% 23 23 30 27 HH HH 2010 2016 2019 2020 Share of Group's 27% 53% revenue 28#30Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Greater China, Southeast Asia, and India will be key drivers of our future growth Hong Kong Defend and grow from our #1 position $16.4bn adjusted revenue Mainland China $3.1bn $1.8bn adjusted associate Develop mainland China into a revenue42 income more meaningful market ◆ Solidify #1 in Wealth position Grow from our current #2 Insurance position (current share of c.19%) ◆ Further develop our retail digital banking, starting from a strong position with 1 out of 2 Hong Kong adults already digital banking customers41 ♦ Enhance Digital Banking for SMEs and expand customer base in Greater Bay Area ◆ Grow Global Transaction Banking wallet share ◆ Grow Capital Markets and Investment Banking Drive SME and retail customer acquisition by serving cross-border needs across Greater Bay Area (population: 72.7m, GDP $1.7tn43) ◆ Scale digital hybrid mobile wealth planning for affluent customers by hiring 3K wealth managers ◆ Deepen CMB and GBM coverage in key sectors with focus on key China trade corridors ◆ Leadership in Capital Financing and Securities Investment services India $3.0bn Singapore adjusted revenue42 $1.3bn adjusted revenue Grow Wealth and International Wholesale Grow market share in Transaction Banking including trade and FX, driven by Digital (e.g. UTB, Omni-collect) and new supply chain solutions ♦ In Wealth, expand Insurance and Asset Management and build position as #1 foreign bank for Non-Resident Indian ("NRI") and top 10 Insurance player; digitise the client journey including cross-border ◆ For Overseas Indian customers, grow NRI hubs, enabled by digital and remittance proposition, addressing significant NRI footprint across HSBC Build out as a global Wealth hub and Wholesale gateway to ASEAN Further develop as international wealth hub for HSBC to address growing offshore asset pool (estimated $1.48tn by 202344) ◆ Scale client coverage teams in key growth sectors for the >4,200 multinational regional headquarters 45 Enhance regional product and coverage expertise to ASEAN markets and South Asia Note: numbers as at FY20 29#31Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Future growth in Asia will be driven by c.$6bn of additional growth investment in Wealth and International Wholesale over the next 5 years Leading bank for Asian Wealth Management ◆ Grow international Wealth franchise, build on strength in HK, increasing the number of advisers, and exporting digital product innovations to key markets ◆ Grow in Asia beyond HK, including mainland China where we are launching new wealth platforms, and Singapore to capture Asian and Western offshore wealth ◆ Capture greater share of global offshore business from key diasporas (e.g. global Chinese and Indian communities) ◆ Grow fee income through cross-sell of Insurance, Asset Management, FX and structured products to our 13.5m clients ◆ Expect to grow WPB revenue and lending balances by high- single digit CAGR WPB revenue $bn 12.0 High single- digit CAGR Leverage the network Connectivity to the HSBC global network c.55% of CMB and Global Banking client revenue booked in Asia is driven by cross-border46 Of which: Intra Asia: c.20% Europe and N. America: c.30% Collaboration across lines of business to fully serve client spectrum, e.g.: Wholesale referrals into Private Bank Serving Wealth clients with FX and structured products Extending capital financing solutions into middle market client base Leading International Bank in Asia for Wholesale ◆ Enhance wholesale coverage in CMB and GBM to deepen relationships and grow client base, serving more multi-national corporates and international SMEs Invest significantly to enhance Digital Transaction Banking capabilities in Trade, Cash Management, Custody, and FX ◆ Strengthen market access and execution capabilities, including Capital Financing, Structured Finance, and Equity offerings Expect to grow wholesale (CMB + GBM) revenue and lending balances by mid-single digit CAGR Wholesale revenue $bn Mid single- digit CAGR 13.5 2020 Long term 22 2020 Long term 22 Ambition: Drive double digit PBT growth in Asia47 30#32Nuno Matos Chief Executive Officer, Wealth and Personal Banking HSBC 31#33Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Strongly positioned to capture the wealth opportunity Wealth is the most attractive segment for growth and profitability Wealth is a distinctive source of structural growth in financial services A growing affluent and HNW population globally, particularly in Asia ◆ Lower for longer rate environment coupled with higher liquidity resulting in greater client demand to diversify into wealth products Capital light, higher return with a higher proportion of recurring revenue Significant potential to accelerate growth of our c.$8bn Wealth Management revenues* based on HSBC's strengths Р Capture growth across our full 'client continuum' from >4m mass affluent to Ultra High Net Worth clients. $1.6tn 50 in wealth balances growing by >$160bn in 2020; 2nd largest wealth manager in Asia 51 Capitalise on our international network - booking centres across major global hubs to capture both on-shore and offshore wealth (mainland China, Channel Islands, Hong Kong, Singapore, Switzerland, UK, US) Wealth AUM 48 2019 CAGR APAC 49 8.5% 4.7% CAGR (ex-Japan) N. America 4.4% MENA 3.9% W. Europe 2.4% Rest of World 3.7% 2025E *Note: of which c.50% is net fee income Take advantage of our significant wholesale franchise to acquire and deepen GPB relationships and significantly increase current 18% 52 penetration Leverage full range of in-house manufacturing capabilities - Insurance, Asset Management and Global Markets Build on our integrated hybrid digital and RM wealth capabilities for all segments 32#34Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Our wealth ambition Enabled by significant >$3.5bn growth investment, including in technology and hiring >5,0005³ client facing wealth planners over the next 3-5 years Premier Jade $780bn wealth balances 54 HSBC Insurance $776m VNB Create a more seamless client continuum extending bespoke wealth products to Jade clients Improve customer engagement with mobile-first hybrid digital-RM journeys ◆ Grow Jade franchise in high growth markets, particularly mainland China and Singapore Scale digitally enabled health and wellness platforms (Well + launched in HK) Expand professional wealth planner platform in mainland China ◆ Remote advice and digital fulfillment models HSBC Private Banking $394bn client assets Scale the business with strategic core platforms and enhance client experience ◆ Expand UHNW client relationships with dedicated coverage, bespoke products and seamless cross-border accounts ◆ Build out presence in mainland China, deepen leading proposition in HK and grow Singapore as a key hub HSBC Asset Management $602bn AUM55 ◆ Pivoting towards high conviction products (Alternatives, ESG, thematic Fixed income and Active Equities) ◆ Expand footprint in emerging Asia (India, Malaysia) and deliver solutions to wealth channels in core markets (mainland China, HK, Singapore) Ambition Note: numbers as at FY20; VNB: Value of New Business ➤ Grow Asian wealth AUM faster than the market56 Grow wealth revenues at >10% CAGR56 33#35Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Building on our strength in Hong Kong to grow onshore and offshore Asian Wealth in mainland China and internationally Hong Kong Mainland China International Objective ◆ Strengthen our leadership position in Hong Kong ◆ Become a leading international wealth manager57 with new wealth platforms Our Credentials Strong 10% AUM CAGR over last five years ◆ #1 wealth, #2 Insurance market share39 Launched Well+, Benefits+ and FlexInvest digital propositions Launched insurance-led financial planning platform (Pinnacle); hired c.200 of our c.3K goal over the medium term Building out full service GPB platform 58 leveraging offshore HK proposition strength Moving toward fully owned Asset Management franchise ◆ Grow Asian wealth internationally leveraging our network and platforms Growing Singapore, Switzerland, UK, Channel Islands and the US as our key international wealth hubs; become #1 foreign bank in India for NRIs Our international market share is 7.2% (5.6m customers) and of this, c.2m are mass affluent 59 Market share of 8-9% of the Overseas Chinese diaspora currently60 2000 Our platform launches Integrated Digital Wealth Digital wealth ecosystem offering deeply personalised wealth HSBC Pinnacle Digital-first, hybrid financial planning wealth platform HSBC Global Money Mobile-based international account to spend, send, and receive money in multiple currencies 34#36John Hinshaw Group Chief Operating Officer HSBC 35#37Digital Business Our Strategy Asia Wealth Financials Services Opening up a world of opportunity Investing to digitise, automate and innovate Accelerating investments in technology Technology spend, $bn 5.5 5.3 4.7 Investments HP 2018 2019 2020 BAU Investing and digitising at scale Delivering excellent customer experience throughout our network ◆ Drive straight through processing with a target for 99% of payments to be processed with 'no-touch'46 >100 key partnerships across the globe established to support innovation - e.g. Google, Amazon, Apple, Microsoft, Alibaba as well as many smaller FinTechs Building platforms for higher front end productivity ◆ Data analytics and visualisation tools to provide our front-line staff key insight ◆ Launch Digital Credit Portal which, through automation, the time-to-decision for judgmental lending will reduce from 25 to 5 days (going live in Hong Kong in 2021) Automating our middle and back office ♦ Integrating machine learning to improve the performance of analytics >725 automation solutions deployed processing more than 21.5m transactions in 2020 2022 Building solutions to free up office footprint Moving to an agile way-of-working and driving efficiencies to reduce headcount 36#38Opening up a world of opportunity Our Strategy Asia Digital Business Wealth Financials Services Driving customer experience through our global platforms and partnerships Mobile X, our flagship banking app ◆ Standardised our core digital platforms to achieve global economies of scale ◆ Accelerating rollout throughout 2021 ◆ Successful launch of Mobile X marketing campaign in HK with record credit card spending in Jan-21 (up 20% month on month and 6% year on year) # of markets where Mobile X has been deployed ☐ % of global customer base in deployed markets in 2021 82% 28 I 20 20 Global Money Account without borders Mobile-first proposition for customers with international banking needs Single global account to Manage, Send and Spend in multiple currencies with real time FX rates Built on common global platform, improving our feature set and market coverage in 2021 9:41 9:41 < ⑦ < Kinetic, mobile-first, cloud-first business banking HSBC Kinetic, the new UK mobile banking service built on the cloud, designed for small businesses The app is simple, fast and intuitive and built on feedback from over 3,000 business owners Intend to leverage Kinetic capabilities in Asia c.4k users61 Apply for an account in minutes Accounts ▶▶HSBC 4.7 iOS App Store Rating Stay on top of everyday expenses Apriv -£8,349 93% satisfaction rating 62 Plan ahead with cashflow insights April Casttow £1,049 >> 14 1 2018 2019 2020 2021E Better conversion and FX rates Get preferential conversion rates on your HSBC Global Money transfers, and choose when to lock in transfers for the best exchange rates. Pay friends and family abroad for free Transfer to another HSBC account anywhere in the world for free Current account £320 > Next About HSBC Global Money Get Started About HSBC Global Money тако In Jane your cashflow i £4,325.0 Gen €1.250 2050 Administration €345 T C210 es & Charges €117 Food & Drink F110 F 750 37#39Opening up a world of opportunity Our Strategy Asia Digital Business Wealth Financials Services Driving operational efficiency through automation and innovation Example outcomes47 ↓↑ DODO Reduction in Technology headcount63 Reduction in Operations headcount64 Drive STP with a target for 99% of payments to be processed with 'no-touch' 49k GD Finance function FTE reduction of c. 1/3 Future of Work - enabling 40% reduction in office footprint 88 long-term Engineering Infrastructure DevOps Teams (Design, Run, Change) Infrastructure Specialist Roles (i.e. Architects / Cybersecurity) 2020 Specialist Roles (i.e. Architects / Cybersecurity) 74k Long-term 20 2020 Long-term 20 38#40Ewen Stevenson Group Chief Financial Officer HSBC 39#41Opening up a world of opportunity Our Strategy Asia Wealth Digital Business Services Financials Rebuilding equity returns above the cost of capital Drivers to achieve ROTE target 1 Expect normalisation of ECL charge from $8.8bn (81bps) in FY20 to at or below the lower end of 30- 40bps normalised range by 2022 Indicative reported ROTE walk by driver ≥10% Revenue growth 2 3 NII growth driven by mid-single digit volume growth, and a better mix of higher returning lending relationships; with no base rate changes assumed before 2024 Incremental Non-NII growth driven by Wealth Management and Transaction Banking; Non-NII expected to grow mid single-digit CAGR in the medium-term Increased commitment on costs, with a $1bn increased cost 4 reduction target and plan to keep costs stable from 2022, while increasing the proportion of investment and technology spend LO 5 Active capital management to allocate more capital towards Asia and WPB, reduce levels of stress, and reduce "trapped capital" in subsidiaries (e.g. US) 3.1% Cost efficiency Capital actions ECL Bank levy 2020 ECL normalisation & lower bank levy Management actions Medium-term 20 Interest rate rise* *Year 1 impact of 100bps increase globally. In year 1 the impact is +$5.3bn, in year 2 +$6.5bn, in year 3 +$7.1bn, in year 4 +$7.4bn. For further detail please refer to the NII sensitivity on p69 Bars in the chart are illustrative 40#42Opening up a world of opportunity Group targets, dividend and capital policy Our Strategy Asia Wealth Digital Business Services Financials Adjusted costs of ≤$31bn in 2022 on Dec 2020 average FX rates Costs RWAS <$30bn using FY20 average FX rates, a $1bn increase in our cost reduction target Plan to keep costs broadly stable from 2022, while increasing the proportion of technology spend Gross RWA reduction of >$100bn by end-202221 Whilst allocating more capital and tangible equity to WPB and Asia, away from the US and NRFB CET1 ratio ≥14% Capital Dividends Manage in a 14-14.5% range over medium-term; manage range down further long-term 20 Sustainable cash dividends Transition towards a payout ratio of 40-55% from 2022 onwards³ Dividends could be supplemented by buybacks or special dividends, over time and not in the near-term 65 We will no longer offer a scrip dividend option, and will pay dividends entirely in cash We will not be paying quarterly dividends during 2021 but will consider whether to announce an interim dividend at 1H21 results66 ROTE ≥10% over the medium-term 41#43Noel Quinn Group Chief Executive HSBC 42#44Conclusion In summary Our Strategy Asia Wealth Digital Business Services Financials In 2020, we set our strategy in motion and supported our customers and communities through the Covid-19 pandemic We will significantly increase the Group's capital and resource allocation to faster growing markets in Asia | We will capitalise on the opportunity offered by our network and our franchise to drive growth from fee generating products in Wealth and platform businesses in wholesale banking We will leverage technology to help transform our cost position, offering significantly higher operating leverage and freeing up resources for investments As a result, we expect to deliver returns above the cost of capital while driving revenue growth from Asia and supporting sustainable dividends 43 33#45Appendix HSBC 44#46Appendix Assumptions and basis of preparation Strategy Results ◆ Medium term is defined as 3-4 years; long term is defined as 5-6 years ⚫ 'Wholesale' refers to CMB plus GBM ◆ Assumed no changes from 2020 in IFRS accounting rules, and excludes the potential impact of IFRS17 ◆ Losses on asset disposals expected to be reported as a revenue significant item ◆ Costs to achieve expected to be reported as a cost significant item Bank levy forecast based upon levy rates effective 31 December 2020. From 2021, the bank levy will be chargeable only on the UK balance sheet equity and liabilities of banks and building societies. The bank levy is forecast to reduce from $0.8bn to c.$0.3bn Group effective reported tax rate of c.25% is assumed in 2021. Assumed Group adjusted effective tax rate of 19-20% in the medium-term. Note the tax rates are highly sensitive to the overall profitability of the UK group entities ◆ Assumed that where targeted reduction on RWAs require regulatory approvals (e.g. model changes), these will be received ◆ Absolute targets presented in this document will be restated for prevailing foreign exchange rates in subsequent updates to the market Basel III Reform assumed implementation date is on 1 January 2023, including the capital requirements of the new FRTB, CVA and Operational Risk rules. Other regulatory changes assumes UK and EU maintain broad equivalence Macro planning assumptions 2021e 2022e 2023e 2024e 2025e World GDP growth 3.96 3.37 3.06 2.72 2.80 US Fed. funds upper bound rate (year-end) 0.25 0.25 0.25 0.50 0.75 Bank of England base rate (year-end) 0.00 0.00 0.00 0.00 0.25 1 month HIBOR (year-end) 0.43 0.47 0.60 0.78 0.95 45 45#47Appendix Update on guidance versus Feb-20 update Adjusted costs Feb-20 guidance <$31bn in FY22 $6bn FY19-22 (phasing: 40%/>50%/<10% in 2020-22) CTA Costs $4.5bn Cost saves (cumulative phasing: c.$1bn / c. $3bn / c.$4.5bn in 2020-22) Investments Disposal losses Increase from FY19 base New guidance <$31bn in FY22 on Dec 2020 average FX rates* <$30bn using average FY20 FX rates $7bn FY19-22 (phasing: 25%/50%/25% in 2020-22) $5-5.5bn FY19-22 (cumulative phasing: c. $1bn / c. $3bn / c. $5-5.5bn in 2020-22) c.7-10% CAGR in investments FY19-22 Strategy Results As at FY20 $31.5bn $1.8bn $1.0bn n.a. $1.2bn $1.2bn $0.3bn (phasing: c.40% / c.40% / c.20% in 2020-22) (phasing: 25% c.50% / c.25% in 2020-22) RWAs CET1 Dividends/buybacks >$100bn gross RWA reduction FY19-22 CET1 ratio >14%; manage in 14-15% range over the medium-term Sustain the dividend ($0.51 annually) >$100bn gross RWA reduction FY19-22 CET1 ratio ≥14%; manage in 14-14.5% range medium-term manage range down further long-term $52bn 15.9% Transition towards a payout ratio of 40-55% from 2022 onwards³ $0.15 ROTE 10-12% in FY22 ≥10% over the medium-term (defined as 3-4 years) *Note: Impact of the weakening USD at end-2020. Target of <$30bn is based on average FX in FY20 (consistent with the results presented); using the average December 2020 FX rates, the target would be retranslated to <$31bn. Using average December 2020 FX rates, 2020 adjusted revenue would increase by c.$1.5bn) 3.1% 46#48Appendix How we will succeed Strategy Results A strategy already in motion Ф Key initiatives already kicked off in 2020 ◆ Transformation initiatives well underway to unlock growth capacity; decisive actions in US and NRFB Key initiatives focused on client acquisition already launched (e.g. Pinnacle in China) GBM pivot to Asia strategy already in motion both from a capital and talent reallocation perspective Driven by a renewed operating model and a fresh leadership team Simplified organisation empowered to execute Refreshed management team with new performance measures aligned to our strategy Three global businesses: merged GPB and RBWM to form WPB; combined middle and back office of CMB and Global Banking Senior management personnel down 17% 67 in 2020 driving simplification and faster decision making Group Executive Committee: c.75% members in post for just over a year or less Significant capital and funding strength to drive high returns growth in Asia Putting HSBC's weight behind Asia Material step up in growth investments of c.$6bn planned in Asia to boost growth through new customer platforms and talent Accelerating capital re-allocation to Asia: committing to allocate 800bps additional capital to Asia (vs. 42% at FY20) over the medium to long-term WPB Wealth expansion into Greater China and Rest of Asia to serve international needs of our Asian customers GBM rebalancing of capital, investments and talent from West to East68 47#49Appendix A GBM refocused on the high-growth East Strategy Results Reallocating resources Accelerate investment in Asia Leverage network and serve clients across the Group RWAS Asia market positioning 69 Global revenues East68 West68 GLCM #1 East West GTRF #1 Securities Services #1 FX #2 c.45% c.55% Fixed Income #1 DCM #1 c.40% 70 of revenues associated with the Eastern franchise is inbound from the West ◆ Prioritise serving clients into and within Asia and the Middle East Provide global institutions with access to developed and emerging markets 2019 2020 2022 Loans #3 M&A #5 2020 ♦ Reducing exposure to low-return clients and businesses ♦ Re-deploying capital to high- growth opportunities Rebalancing financial resources, talent and risk appetite to support growth in the East Be the preeminent corporate and investment bank in Asia to capture: Rise in Wealth creation • Reconfiguration of trade and capital flows Deepening of capital markets and a transition to a low-carbon economy Deeper presence in Greater China, ASEAN and India Collaboration revenues71 c.$4bn 2020 FX for CMB & WPB Wealth & Risk Management Capital Markets & Advisory Referrals ◆ Providing product capabilities to support client relationships in WPB and CMB ◆ Asset light, fee-driven business model 48#50Appendix The value of our international network Strategy Results CMB and Global Banking client revenue72 FY20 International clients73 (incl. domestic and cross-border revenue74) C.75% c.10% c.15% Domestic clients: HK, UK Domestic clients: other c.75% of CMB and Global Banking client revenue is linked to HSBC's international network HSBC franchise is highly connected and focused on international clients This focus enables leading positions in transaction banking and cross- border transactions West-East connectivity is a key differentiator; we provide access to Western capital markets and USD clearing Access to product, technology and innovation expertise in the West, enables strength in our higher return Eastern franchise Our network positions us to be the international bank of choice and capture high-value affluent Retail and Wealth clients 49#51Appendix Strategy Results Taking further action to reduce the Group's cost base, whilst increasing investment Adjusted costs, $bn 32.5 c.7-10% CAGR increase 5-5.5 Expect to keep costs broadly stable from 2022 onwards ≤31* Stable costs ≤30 2019 Investment Inflation Cost programme saves Bank levy Other 2022 Impact of FX* 2022 BAU costs c.4-5% CAGR decrease Medium to long-term Increasing the cost ambition by $1bn, with a new cost target of <$31bn in 2022 (<$30bn based on average FY20 FX rates), vs. <$31bn target in Feb-20 Update Expected gross cost saves increased to $5-5.5bn and Costs to Achieve (CTA) increased to $7bn for 2020-22 Expect to drive positive operating leverage through broadly stable costs, whilst delivering mid-single digit revenue and volume growth in the medium to long-term *Note: Impact of the weakening USD at end-2020. Target of <$30bn is based on average FX in FY20 (consistent with the results presented); using the average December 2020 FX rates, the target would be retranslated to <$31bn. This impact of FX would increase revenue by c.$1-1.5bn 50#52Appendix Strategy Results Increasing capital allocation to higher returning and higher growth franchises Accelerating pace of Tangible Equity allocation to Asia and WPB Tangible Equity, % of Group By legal entity27 Asia NRFB US UK RFB Others By global business28 WPB CMB GBM Expect to double 24% 25% C.35% 41% 42% pace of TE TE allocation to increase by c.50% allocation to Asia from 1ppt to c.2ppts ра c. 10ppts 36% 36% 19% 17% 13% 12% TE further reduced in US by upstreaming capital to Group 14% 15% 13% 14% 2018 2020 Medium to long-term 40% 39% 2018 2020 Medium to TE allocation to reduce by c. 10ppts long-term 51#53Appendix February 2020 Business Update progress and business highlights Detail on progress against our FY22 financial targets Other business highlights Strategy Results Costs Wealth balances increased $0.2tn (12%) to $1.6tn vs. FY19 FY22 target FY20 progress4 WPB (as announced at Feb20) Adjusted costs <$31bn; $4.5bn of cost programme saves $1.0bn cost saves RWAS >$100bn gross RWA reduction $52bn gross reduction 15.9% Capital CET1 ratio >14%; manage in 14-15% range × 3.1% ROTE 10% -12% ◆ $1.0bn of cost programme saves delivered in FY20 FY20 costs in the US decreased by $302m (8%) vs. FY19 Global number of branches reduced by c.5%; US retail branch footprint reduced by over 30%, exceeding 2020 reduction target ◆ FTE and contractors down by c.11k, from c.243k to c.232k, despite pauses in our redundancy programme in 1H20; US FTE down by c.1,400 and NRFB FTE down C. 1,100 ◆ Gross RWA reductions of $51.5bn; $24.4bn of reductions in the NRFB; $37.4bn in GBM Asset Management AUM of $602bn grew by $96bn (19%) YoY; Net New Money of $53bn over FY20, with 75% of NNM coming from collaboration with GBM and CMB ◆ Premier customer numbers up by 124k (3%) to 4.2m and Jade client numbers up by 18k (12%) to 175k 5 minute wealth account opening now live in Hong Kong Wholesale (CMB and GBM) HSBC has helped raise $1.9tn of financing for clients over FY20, including $125bn of Social and Covid-19 relief bonds75 Solid GBM performance, notably in FICC and Capital Markets; best GM 4Q20 performance since 2016 with revenue of $1.4bn; FY20 Capital Markets gross revenue of $1.8bn, up 21% vs. FY1976 FY20 international customer account openings up 8% YoY Asia Asia Trade market share of 9.3% at 9M2077, up 0.3ppt YoY GBM retained #1 rank in Asia Transaction Banking 69 ◆ PayMe has been the leading P2P wallet in Hong Kong for 3 years running 78; PayMe customer numbers grew 25% to 2.3m over FY20 UK RFB Strong mortgage lending: FY20 gross market share of 10.3%, leading to a YoY increase in stock market share of 0.4ppts to 7.47⁹%; mortgage balances up $13bn (9%) vs. FY19 ◆ First Direct named 'Best British brand'80 out of 271 companies in the 2020 Institute of Customer Service Customer Satisfaction Index with a score of 85.1 vs. 76.8 average 52#54Appendix ESG highlights81 Environmental Target Sustainable finance Provide and facilitate $100bn by the end of 2025 Social Progress Target $93bn cumulative progress since 2017 Customer satisfaction Customer satisfaction improvements in 8 scale markets Progress 7 WPB and 5 CMB markets sustained top-3 rank 82 and/or improved in customer satisfaction Reduce operational CO2 emissions Governance Target Strategy Results Progress Conduct outcomes 98% of staff to complete annual conduct training 93% of staff completed annual conduct training tonnes used per FTE Employee advocacy 69% of employees recommend HSBC as a great place to work by end-2020 71% of employees would recommend HSBC as a great place to work Long-term incentives 25% of executive director scorecard measures aligned with climate ambitions 25% of executive director scorecard measures aligned with climate ambitions 2.0 tonnes used per FTE by 1.8 t end-2020 Climate related disclosures Continued implementation of TCFD Published our 4th TCFD Gender diversity 30% female employees in senior leadership roles by end-2020 30.3% female employees in senior leadership roles by end- 2020 Board of Directors reduced from 17 to 14 members since end-2017 with 3 new appointments in 2020 53#55Appendix Key financial metrics. Strategy Results Reported results, $m 4Q20 3Q20 4019 Balance sheet, $m NII Other Income Revenue ECL 6,619 6,450 7,654 Total assets 5,138 5,477 5,717 Net loans and advances to customers 11,757 11,927 13,371 Adjusted net loans and advances to customers (1,174) (785) Costs (9,864) (8,041) (733) (17,053) Customer accounts Adjusted customer accounts Associates Profit before tax Tax Profit after tax 666 1,385 (27) 3,074 518 Average interest-earning assets 2,159,003 4020 2,984,164 2,955,935 2,715,152 1,037,987 1,041,340 1,036,743 1,037,987 1,074,491 1,062,696 1,642,780 1,568,714 1,439,115 1,642,780 1,614,877 1,470,207 2,141,454 3Q20 4019 1,945,596 (3,897) (450) (1,035) (1,127) Reported loans and advances to customers as % of customer accounts 63.2 66.4 72.0 935 2,039 (5,024) Total shareholders' equity 196,443 191,904 183,955 Profit attributable to ordinary shareholders 562 1,359 (5,509) Tangible ordinary shareholders' equity 156,423 152,260 144,144 Profit attributable to ordinary shareholders excl. 751 1,109 1,882 Net asset value per ordinary share at period end, $ 8.62 8.41 8.00 goodwill and other intangible impairment and PVIF Basic earnings per share, $ 0.03 0.07 (0.27) Tangible net asset value per ordinary share at period end, $ 7.75 7.55 7.13 Diluted earnings per share, $ 0.03 0.07 (0.27) Dividend per share (in respect of the period), $ 0.15 - Return on avg. tangible equity (annualised), % 1.9 2.9 5.2 Capital, leverage and liquidity 4020 3Q20 4Q19 Return on avg. equity (annualised), % 1.3 3.2 (13.3) Risk-weighted assets, $bn 857.5 857.0 843.4 Net interest margin, % 1.22 1.20 1.56 CET1 ratio, % 15.9 15.6 14.7 Total capital ratio (transitional), % 21.5 21.2 20.4 Adjusted results, $m 4Q20 3Q20 4Q19 Leverage ratio, % 5.5 5.4 5.3 NII 6,620 6,590 7,751 Other Income 5,204 5,655 6,031 Revenue ECL Costs 11,824 12,245 13,782 High-quality liquid assets (liquidity value), $bn Liquidity coverage ratio, % 677.9 654.2 601.4 139 147 150 (1,174) (9,106) (806) (7,524) (696) (9,176) Associates 666 450 Profit before tax 2,210 Cost efficiency ratio, % 77.0 4,365 61.4 546 4,456 Share count, m 4Q20 3Q20 4019 Basic number of ordinary shares outstanding 20,184 20,173 20,206 66.6 ECL as a % of average gross loans and advances to Basic number of ordinary shares outstanding and dilutive potential ordinary shares 20,272 20,227 20,280 0.44 0.29 0.26 customers Average basic number of ordinary shares outstanding, QTD 20,179 20,166 20,433 54#56Appendix Reconciliation of reported and adjusted results $m Reported PBT Revenue Currency translation Customer redress programmes Disposals, acquisitions and investment in new businesses Fair value movements on financial instruments Restructuring and other related costs Currency translation on significant items ECL Currency translation Operating expenses Currency translation Cost of structural reform Customer redress programmes Strategy Results 4Q20 3020 4019 1,385 3,074 (3,897) FY20 8,777 FY19 13,347 178 134 (471) (1) 46 1=262 48 45 21 163 55 10 (768) (11) 176 (264) (84) 20 101 170 2 1 6 67 318 411 (63) (1,154) (21) 37 129 (120) (152) 223 - 32 158 (107) 3 183 (54) 1,281 Impairment of goodwill and other intangibles 8 57 7,349 1,090 7,349 Past service costs of guaranteed minimum pension benefits equalisation Restructuring and other related costs 17 17 836 567 400 1,908 827 o/w: costs to achieve 810 565 1,839 Settlements and provisions in connection with legal and regulatory matters Currency translation on significant items 4 3 5 12 (61) 7 60 53 758 517 7,877 2,973 9,830 Share of profit in associates and joint ventures Currency translation 15 28 Impairment of goodwill 462 - 477 28 Total currency translation and significant items Adjusted PBT Memo: tax on significant items (at reported FX rates) 825 1,291 8,353 462 462 3,372 (3) 8,802 2,210 4,365 4,456 12,149 22,149 (381) (161) (84) (660) (255) 55#57Appendix Tax impacts of significant items $m Reported Less: Significant items Tax-only significant items Adjusted basis Adjusted tax charge includes: Impact of tax rate and law changes Write-off/write-back of opening DTAs Adjustments in respect of prior periods' tax liabilities Impacts of hyperinflation accounting Strategy Results FY20 PBT Tax 8,777 2,678 ETR 30.5% 3,372 660 117 12,149 3,455 28.4% 58 279 78 65 FY20 reported ETR primarily driven by the regional mix of profits and losses taxed at different local statutory rates and the write-off and ongoing non-recognition of elements of deferred tax assets ◆ The impact of ongoing non-recognition of deferred tax is a consequence of the profits and losses arising in these jurisdictions each year Group effective reported tax rate of c.25% is assumed in 2021. Assumed Group adjusted effective tax rate of 19-20% in the medium-term. Note the tax rates are highly sensitive to the overall profitability of the UK group entities 56#58Appendix Certain items and Argentina hyperinflation. Strategy Results Certain items included in adjusted revenue highlighted in management commentary83, $m Insurance manufacturing market impacts in WPB Credit and funding valuation adjustments in GBM Legacy Credit in Corporate Centre 4Q20 3Q20 2020 1Q20 4019 FY20 FY19 298 126 362 (710) 200 90 128 70 33 (9) (354) 194 (252) 41 3 28 42 (92) 13 (17) (111) Valuation differences on long-term debt and associated swaps in Corporate Centre (12) (32) (64) 259 (73) 150 146 Argentina hyperinflation*84 (42) (31) (29) (22) 30 (124) (143) Bid-offer adjustment in GBM* 18 35 249 (310) 15 (8) 4 WPB disposal gains in Latin America* 133 CMB disposal gains in Latin America* 24 GBM provision release in Equities* 106 Total 335 159 551 (1,229) 379 (161) 328 Argentina hyperinflation84 impact included in adjusted results, $m 4Q20 3Q20 2020 1020 4019 FY20 FY19 Net interest income 2 (1) (7) (3) 33 (9) (12) Other income (44) (30) (22) (19) (3) (115) (131) Total revenue (42) (31) (29) (22) 30 (124) (143) ECL (2) 2 2 (10) 2 (0) Costs (2) 1 5 2 (26) 6 8 PBT (44) (32) (22) (18) (6) (116) (135) *Comparative figures have not been retranslated for foreign exchange movements 57#59Appendix Certain volatile items analysis WPB: Insurance manufacturing market impacts revenue, $m GBM: Credit and funding valuation adjustments revenue and bid-offer adjustment, $m 362 240 298 209 200 68 88 126 4019 (710) 1Q20 2Q20 3Q20 4Q20 4Q19 (664) 1Q20 2Q20 3Q20 4Q20 Strategy Results Corporate Centre: Valuation differences on long- term debt and associated swaps, $m 259 (12) (32) (73) 4019 1020 (64) 2Q20 3Q20 4Q20 Stock market indices performance86 Sensitivity of HSBC's insurance manufacturing subsidiaries to market risk factors85 +100 basis point parallel shift in yield curves Effect on profit after tax, $m Effect on total equity, $m (67) (188) 160 I 4019 ▲ 8% 8% 16% 1Q20 2Q20 3Q20 I 4Q20 ▼21% 1 19% 8% 3% 4% I I ▲ 14% I ▲ 16% I -100 basis point parallel shift in yield curves (68) 58 140 120 10% increase in equity prices 332 332 100 10% decrease in equity prices (338) (338) 80 I 10% increase in $ exchange rate compared with all currencies 84 84 I 0 L 10% decrease in $ exchange rate compared with all currencies (84) (84) 12/18 03/19 06/19 09/19 12/19 03/20 MSCI World Hang Seng 06/20 09/20 Source: Bloomberg 12/20 58#60Appendix FY20 adjusted revenue performance FY20 revenue Strategy Results FY20 vs. FY19 Revenue by global business, $bn Retail Banking $12,938m (2,717) (8)% WPB $22,013m (14)% Wealth Management $7,818m o/w insurance market impacts: $(38)m (815) 54.9 52.1 50.4 Other $1,257m (20) 14.9 15.1 GTRF $1,744m (82) 15.3 Credit and Lending $5,640m 219 CMB $13,312m (12)% 15.2 GLCM $4,178m (1,754) 14.4 13.3 Other $1,750m (235) Global Markets, $9,082m Securities Services o/w bid-offer adjustments: $(12)m 1,328 Global Banking, 23.6 25.6 22.0 GBM $15,303m A 3% $6,594m (805) GLCM, GTRF Principal Investments, $(373)m o/w XVAS: $(293)m (89) XVA, Other ¡(0.9) (0.7) (0.3)- Corp. Centre $(262)m Group 392 FY18 FY19 FY20 $50,366m ▼ (8)% (4,578) (2,740) (1,838) WPB GBM CMB Corporate Centre NII Other Totals may not cast due to rounding 59#61Appendix Global business management view of adjusted revenue. Strategy Results Group, $m Total Group revenue Adjusted revenue reported at original FX rates87 WPB, $m Retail Banking Net Interest Income Non-interest income Wealth Management Investment distribution. Life insurance manufacturing Private banking Net interest income 2,144 1,438 2,234 2,178 2,053 4019 1020 2020 3020 4020 13,782 13,508 13,625 12,245 11,824 13,647 13,327 13,150 12,065 A4Q19 GBM, $m (14)% Global Markets FICC 4019 1020 2020 3020 4Q20 1,260 2,164 2,204 1,608 1,430 1,082 1,867 2,134 1,311 1,069 A4Q19 13% (1)% Foreign Exchange 676 1,149 814 776 689 2% 4019 1020 2020 3020 4,015 3,878 3,185 3,052 3,598 3,527 2,928 2,734 417 351 257 318 4020 3,043 2,721 322 A4Q19 Rates 276 678 693 234 151 (45)% (24)% Credit 130 40 627 301 229 76% (24)% (23)% Equities 178 297 70 297 361 >100% (4)% Securities Services 527 521 452 416 439 (17)% 727 893 733 879 736 1% Global Banking 998 958 1,038 967 907 (9)% 685 (221) 805 605 628 (8)% GLCM 676 613 499 462 469 (31)% 468 526 425 422 407 (13)% GTRF 201 197 208 195 185 (8)% 223 219 165 143 156 (30)% Principal Investments 46 (239) 228 53 74 61 % Non-interest income 245 307 260 279 251 2% Credit and funding valuation adjustments Asset management 264 240 271 272 282 7% Other 194 (354) (114) (132) (142) (9) 33 70 (64)% Other 213 132 155 100 73 (66)% (150) (121) (6)% Markets Treasury, Holdings interest expense and Argentina hyperinflation 101 241 249 190 152 50% Markets Treasury, Holdings interest expense and Argentina hyperinflation 102 Total 6,473 5,689 5,823 5,520 5,321 (18)% Total Adjusted revenue reported at original FX rates87 6,409 5,621 5,630 5,441 Adjusted revenue reported at original FX rates87 (23) 3,765 3,830 4,591 3,672 3,511 3,715 3,759 4,419 3,614 113 88 58 >100% (7)% CMB, $m GTRF Credit and Lending GLCM 1,436 4019 1Q20 2020 3020 4020 438 475 437 434 423 1,349 1,408 1,412 1,461 1,457 1,345 1,043 A4Q19 Corporate Centre, $m 4019 1020 2020 3020 4Q20 A4Q19 (3)% Central Treasury (47) 265 8% 946 895 (38)% Of which: Valuation differences on long-term debt and associated swaps (73) 259 Markets products, Insurance and Investments and other Markets Treasury, Holdings interest expense and Argentina hyperinflation 506 491 436 349 364 (28)% Legacy Credit (12) 75 64 19 8 >100% Other 13 (92) (139) (64) (32) (12) (64) (32) (12) 42 22 (159) (152) (146) 74% 84% 28 3 (77)% (5)% Total 3,717 3,794 3,392 Adjusted revenue reported at original FX rates87 3,678 3,733 3,267 3,209 3,165 3,147 (15)% Total (173) 195 (181) (156) (155) 10% Adjusted revenue reported at original FX rates87 (155) 214 (166) (155) 60#62Appendix Wealth and Personal Banking 4Q20 financial highlights Strategy Results Balance sheet89 $bn Revenue $5.3bn (18)% (4019: $6.5bn) 9% 3% 21% 814 835 768 ECL $(0.3)bn (4019: $(0.4)bn) 0% 456 476 469 Costs $(4.0)bn (4019: $(4.0)bn) PBT $1.0bn (51)% 4Q19 3Q20 4Q20 (4019: $2.1bn) ROTE88 9.1% 10.6ppt (FY19: 19.7%) Customer lending Customer accounts Revenue performance83, $m Reported Wealth Balances 50 $bn 12% (18)% 1,588 6,473 5,689 5,823 5,520 5,321 1,421 1,489 394 200 362 126 298 361 371 (710) 380 373 407 314 373 404 290 433 450 470 -225- 4,015 3,878 247 295 317 3,185 3,052 3,043 4019 3Q20 4Q20 1,944 2,148 1,872 2,052 1,755 Global Private Banking Client Assets 4019 1Q20 2Q20 3Q20 4Q20 Other* Retail banking Wealth management excl. market impacts Insurance manufacturing market impacts *Other includes MT, Holdings interest expense and Argentina hyperinflation Retail Wealth Balances Premier and Jade deposits Asset Management third party distribution 4020 vs. 4019 Revenue down $1,152m (18%) driven by lower Retail Banking (down $972m) following interest rate cuts, lower Insurance Manufacturing (down $57m) primarily from lower VNB partially offset by positive insurance market impacts of $98m ◆ ECL down $84m (21%) to $310m, as a result of an Insurance ECL charge in Argentina in 4019 ◆ Costs stable with reductions in discretionary spend offsetting increases in performance-related pay and a one off real estate impairment ◆ Customer lending up $14bn (3%) driven by growth in mortgages ($22bn) particularly in the UK and Hong Kong, partially offset by lower cards spending ($4bn) and reduced unsecured lending ($4bn) ◆ Customer accounts up $67bn (9%) mainly from higher inflows and reduced spending across all markets most notably UK / Hong Kong ♦ Wealth balances up $167bn (12%) driven by inflows into both liquidity and long-term products as well as higher market levels 4020 vs. 3020 Revenue down $199m (4%) driven by Wealth Management ($125m) from seasonality and reduced market activity, which included $172m of favourable insurance market impacts ◆ ECL down $49m (14%) to $310m, underlying performance has remained resilient as we continue to support our customers with payment holidays ◆ Costs up $257m (7%) following a one off real estate impairment and seasonal cost increases including targeted marketing campaigns ◆ Customer lending down $6bn (1%) with underlying growth in mortgages ($6bn) and a recovery in card spend offset by the repayment of Hong Kong IPO short term lending activity in 3Q20 ($12bn) ♦ Customer accounts up $21bn (3%) from higher inflows and reduced spending, particularly in the UK and Hong Kong Commentary above is based on unrounded figures 61#63Appendix Commercial Banking 4Q20 financial highlights Balance sheet89, $bn Revenue $3.1bn (15)% (4019: $3.7bn) Customer lending ECL $(0.9)bn >(100)% (4019: $(0.3)bn) 354 (3)% — (3)% 354 343 2% Costs $(1.8)bn (4019: $(1.8)bn) PBT $0.5bn (69)% (4019: $1.6bn) ROTE88 1.3% (11.7)ppt (2019: 13.0%) 4019 3Q20 4Q20 Revenue performance83, $m (15)% (2)% 3,717 3,794 Customer accounts 3,392 494 566 3,209 3,147 500 438 475 368 372 437 434 423 18% 6% 470 445 1,349 1,408 397 1,412 1,461 1,457 1,436 1,345 1,043 946 895 4019 1Q20 2020 3Q20 4Q20 Markets products, Insurance GTRF and Investments and Other* Credit and Lending GLCM 4Q19 3Q20 4Q20 *Other includes MT, Holdings interest expense and Argentina hyperinflation Strategy Results 4020 vs. 4019 Revenue down $570m (15%), reflecting the impact of lower global interest rates in GLCM and other products partially offset by higher deposits ECL up $592m reflecting a small number of specific client charges in Asia and updated forward economic guidance in the UK ◆ Costs down $42m (2%) due to controlled discretionary spend, while continuing to invest in digital and transaction banking capabilities ◆ Customer lending down $11bn (3%) primarily due to lower trade and overdraft balances, partly offset by government scheme lending ◆ Customer accounts up $73bn (18%) as customers raised and retained liquidity across all regions 4020 vs. 3020 Revenue down $62m (2%), reflecting the impact of lower interest rates partially offset by higher balances and fees in GLCM ♦ ECL up $515m reflecting a small number of specific client charges in Asia and updated forward economic guidance in the UK Costs up $106m (6%) mainly due to increased investment and performance-related pay Customer lending down $11bn (3%) from the repayment of short- term IPO related loans and reductions in the US and Europe ♦ Customer accounts up $26bn (6%) as customers raised and retained liquidity notably in Hong Kong and the UK Commentary above is based on unrounded figures 62#64Appendix Global Banking and Markets 4Q20 financial highlights View of adjusted revenue Revenue $3.5bn (7)% $m 4Q20 A4Q19 (4019: $3.8bn) Global Markets 1,430 ECL $0.0bn >100% FICC 1,069 (4019: $(0.0)bn) - FX 689 13% (1)% 2 %i - Rates 151 (45)% Costs $(2.5)bn 2% - Credit 229 76% (4019: $(2.5)bn) Equities 361 > 100% PBT $1.1bn (13)% Securities Services 439 (17)% (4019: $1.2bn) Global Banking 907 (9)% GLCM 469 (31)% ROTE88 6.7% (3.1)ppt (FY19: 9.8%) GTRF 185 (8)% Principal Investments 74 61 % Revenue performance83, $m Credit and Funding Valuation 70 (64)% Adjustments (7)% (4)% Other (121) (6)% 3,765 3,830 4,591 3,672 3,511 194 (354) (9) 33 -70- MT, Holdings interest expense and Argentina hyperinflation 58 > 100% Total 3,511 (7)% (5)% 2,656 Adjusted RWAs⁹0, $bn 1,787 2,685 2,024 1,869 (4)% (3)% 1,784 1,499 1,944 1,615 1,572 277 273 265 4019 1Q20 2Q20 3Q20 4Q20 Global Markets Global Banking, and Securities Services GLCM, GTRF, PI and Other* Credit and funding valuation adjustments 4019 3Q20 4Q20 *Other includes MT, Holdings interest expense and Argentina hyperinflation Strategy Results 4020 vs. 4019 ◆ Management have delivered net RWA reductions of $12bn (4%) and lower costs ♦ Revenue down $254m (7%) driven by lower global interest rates: Global Markets up $170m (13%) with the best fourth quarter since 2016 as a result of volatility and increased client activity with stable trading VaR; FICC performance driven by strong Credit performance, with Equities also benefitting from increased derivatives trading; GLCM and Securities Services negatively impacted by lower global interest rates, but both grew average balances and Securities Services grew fees; • Global Banking impacted by lower investment banking fees, compared with strong prior period, and tightening credit spreads on portfolio hedges. ◆ ECL in 4Q20 included a small number of specific Stage 3 client charges offset by release in Stage 1&2 ECL from a marginal recovery in economic outlook in Asia ◆ Costs down $46m (2%) primarily driven by managed cost reduction initiatives, more than offsetting higher investments in technology, regulatory costs and performance costs 4020 vs. 3020 • Revenue down $161m (4%): Global Markets revenue lower primarily due to seasonality Global Banking down driven by seasonal decline in fees, mostly in DCM and Advisory and decline in corporate lending NII due to lower balances ECL down $110m as 3Q20 ECL included a small number of specific client charges. ♦ RWAs down $8bn (3%), from active management actions, with lower trading VaR Commentary above is based on unrounded figures 63#65Appendix Corporate Centre 4Q20 financial highlights Revenue performance83, $m Strategy Results 10% Revenue $(155)m 4019 1Q20 2020 3Q20 4Q20 (4019: $(173)m) Central Treasury (47) 265 (64) (32) (12) ECL $1m (94)% Of which: (4019: $16m) 3% Costs $(876)m Valuation differences on long-term debt and associated swaps (73) 259 (64) (32) (12) (4019: $(854)m) Other central treasury 26 - - 23% Associates $663m Legacy Credit 13 (92) 42 28 3 (4019: $541m) Other (139) 22 (159) (152) (146) PBT $(367)m 22% (4019: $(470)m) Of which: FX revaluation on Holdings balance sheet and net investment hedge 31 105 23 (25) (4) ROTE88 3.1% 2.3ppt (FY19: 0.8%) Total (173) 195 (181) (156) (155) 380 770 796 673 610 Associate income detail83, $m 23% 51% 585 663 541 56 47 447 71 56 440 150 78 616 500 492 466 355 (30) (101) (87) 4019 1Q20 2Q20 Others SABB 3Q20 4Q20 Bank of Communications Not included in Corporate Centre revenue: Markets Treasury revenue allocated to global businesses 4020 vs. 4019 Associates up $122m (23%), primarily due to higher income and share of profit from associates in MENA and the UK 4Q20 vs. 3Q20 Revenue down $1m, largely due to lower revenue from Legacy Portfolio driven by non-recurrence of favourable fair value adjustments in 3Q20 Associates up $223m (51%), primarily due to higher income and share of profits associates in Asia, MENA and the UK Central costs $0.8bn reduction in Holdings retained costs, from $2.5bn to $1.7bn vs. FY19; targeting c. $1bn over time ◆ $0.3bn of retained cost reduction from cost savings, $0.5bn from increased reallocation of Holdings costs 64 ठ#66Appendix Insurance Strategy Results Reported Embedded value⁹1, $bn Key financial metrics Adjusted income statement, $m FY20 FY19 FY18 8% CAGR Net operating income 1,977 2,720 2,020 Of which: Net interest income (NII) 2,408 2,308 2,217 15.4 13.9 12.2 12.2 Of which: market impacts 102 127 (334) ECL (92) (86) (1) Operating expenses (509) (497) (462) FY17 Share of profit in associates and JVs 1 43 Profit before tax 1,377 2,180 31 1,588 FY18 Reported ANP and VNB, $m FY19 FY20 ANP VNB VNB margin Memo: distribution income* 801 1,041 1,040 33% 34% 36% 34% Financial highlights: ◆ Strong growth in EV91 (8% CAGR) since FY17; reflecting consistent VNB generation and margins; FY20 ROEV of 7.4% (2019: 13.3%) Adjusted revenue of $2.0bn, down 27% vs. FY19, from lower sales due to the global impact of the Covid-19 outbreak, including border closures 3,252 3,382 2,805 2,307 919 1,117 1,225 776 FY17 FY18 ◆ Distribution revenue of $0.8bn, down 23% as a result of lower sales vs. FY19 Manufacturing operating expenses of $0.5bn, up 2% vs. FY19 Limited adverse short term Covid-19 effects on policy lapses, morbidity/mortality and other assumptions FY20 VNB by region 86% FY19 FY20 3% 4% 7% Strategic delivery in 2020: Announced agreement to acquire the remaining 50% equity interest in HSBC Life China, subject to regulatory approvals ◆ Launched HSBC Pinnacle (our digital wealth planning and insurance services) and obtained a FinTech licence in China Launched HSBC Life Well+: core retail Health & Wellbeing proposition; and Benefits+: B2B2C employee benefits and Wellness platform in Hong Kong UK Life Protection sales reached 44k policies (+89% PY) ◆ Launched new core platform in Mexico ◆ Pivoted to remote customer engagement in all markets Strong momentum for future growth: ◆ Hong Kong insurance market share of 19.2% 39, (incl. Hang Seng) up from 12.8% at FY16 ◆ HK: Life Insurance Company of the Year Award 92; Seven Bloomberg Awards including Brand of the year and Bancassurance of the Year 93 UK: Ranked #3 in Onshore Investment Bond, with 11.0% market share 94 (AUM of $1.5bn) *Distribution income (HSBC Life and partnerships) through HSBC bank channels Hong Kong Europe Other Asia LATAM 65#67Appendix Hong Kong and UK WPB customer activity data Mortgage drawdowns** 250 Strategy Results 200 150 100 50 سا 0 0 Mar Jun Sep Dec Mar Jun Sep Dec We continue to support home buyers and have seen a pickup in 4Q20; the UK RFB increased its gross mortgage market share to 10.3% over FY20, up from 8.1% in FY1979 ◆ Credit card spending has recovered partially, however it remains below 2019 levels. Hong Kong down 3% YoY, with the UK down 17% YoY Hong Kong card spend in Jan-21 up by 6% vs. prior year and up 20% vs. Dec-20; a 10 year record driven by successful marketing campaigns delivered on Mobile X ◆ Continued digital adoption with UK digital sales increasing by 5% to 75% since start of social distancing. Hong Kong digital sales mix marginally increased by 1% to 28% Hong Kong* Credit card spend** 150 100 50 UK Credit card spend** 200 150 100 50 60 *Excludes Hang Seng **Rebased to 100 0 Mar I 2019 2020 Start of social distancing Mortgage drawdowns** 250 200 150 100 50 0 Jun Sep Dec Mar Jun Sep Dec 66#68Appendix GBM and CMB IRB RWA inflation and mitigating actions. Wholesale counterparty IRB RWAS and exposures All CRR Bands FY19 FY20 A RWA, $bn 341 346 EAD, $bn 695 680 RWA density, % 49.0 50.8 1.8ppt • Weighted average PD, % 0.9 1.2 0.3ppt Of which: CRR 1.1 - 5.3 FY19 FY20 A RWA, $bn 318 314 EAD, $bn 678 655 RWA density, % 46.8 48.0 Weighted average PD, % 0.6 0.7 1.2ppt 0.1ppt Of which: CRR 6.1+ FY19 FY20 A RWA, $bn 23 EAD, $bn 17 32 25 RWA density, % 138.3 Weighted average PD, % 14.2 129.3 13.5 (9.0)ppt (0.7)ppt Strategy Results GBM & CMB wholesale performing IRB book: includes: corporates, sovereigns and financial institutions. excludes: slotting exposures, Markets Treasury allocations and exposures in default Some growth in RWAs due to credit risk migration over FY20 c.90% of the book is higher quality (CRR1-5) with RWAs stable vs. FY19 Total RWA inflation is being mitigated through actions to maintain book quality, namely maintenance of the CRR 1-5 book size and its RWA density, including targeted saves under the transformation programme Of the higher risk bands, 56% of exposures sit in the top two bands (6.1 and 6.2). As at 31 December 2019, this percentage was 60% CRR: Customer risk rating. CRR 1-3 considered Strong to Good credit quality (roughly equivalent to an S&P credit rating of AAA to BBB-); CRR 4-5 considered Satisfactory (BB+ to BB-); CRR 6+ considered Sub- standard, broadly equivalent to a rating of B- or below 10 67#69Appendix ECL and personal lending relief Strategy Results ECL charge by geography, $m Analysis by stage 499 3Q20 Reported basis, $bn 4Q20 Stage 1 Stage 2 Stage 3 Total 95 Stage 3 as a % of Total 4Q20 219 216 237256 271 164 89 103 55 Gross loans and advances to customers Allowance for ECL 869.9 2.0 163.2 5.0 19.1 7.4 1,052.5 14.5 1.8% 3020 (10) Gross loans and advances to customers Allowance for ECL 878.6 157.8 2.0 4.6 18.4 7.0 1,055.0 13.7 1.7% (119) 4019 Hong Kong Asia ex. HK UK RFB NRFB Mexico Other Gross loans and advances to customers Allowance for ECL 951.6 80.2 1.3 2.3 13.4 5.1 1,045.5 8.7 1.3 % 4020 vs. 3Q20 geographic analysis Asia ◆ ECL charge increased by $0.2bn from higher wholesale Stage 3 charges UK RFB ECL charge increase of $0.3bn driven by deterioration in forward economic outlook due to market uncertainty NRFB ECL charge increase of $0.2bn from higher wholesale Stage 1 & 2 charges compared to a net release in 3Q20 UK personal lending relief, $m At 31 December 2020 Drawn loan value UK secured lending 1,419 140 Exited payment holidays 96 11,933 1,166 % of balances exiting Current Noncurrent payment holidays and 11,709 224 1,025 140 UK unsecured lending are current 98% 88% ♦ In the UK, 97% of balances that have exited payment holiday agreements are up to date with their payments ◆ Levels of Covid-19 customer relief in 17 major markets down 79% vs. 2020, c.90% of customers exiting their agreements are current on their payments; c.95% of secured customers are current 97 68#70Appendix Net interest margin supporting information. Strategy Results NII sensitivity to instantaneous change in yield curves (12 months) Quarterly NIM by key legal entity Currency 4019 1020 2020 3Q20 4Q20 % of 4020 % of 4Q20 Group NII Group AIEA Change in Jan USD 2021 to Dec 2021 HKD GBP $m $m $m $m EUR Other Total $m $m +25bps parallel 223 423 555 126 320 1,647 -25bps parallel (227) (343) (548) (88) (302) (1,508) The Hongkong and Shanghai Banking Corporation (HBAP) HSBC Bank plc (NRFB) 2.00% 1.96% 1.69% 1.44% 1.42% 49% 42% 0.46% 0.48% 0.54% 0.50% 0.53% 10% 23% HSBC UK Bank plc 1.95% 2.01% 1.68% 1.60% 1.60% 23% 17% +100bps parallel 546 1,267 1,811 502 1,222 5,348 -100bps parallel (565) (749) (1,906) (299) (1,335) (4,854) (UK RFB) HSBC North America Holdings, Inc 0.99% 0.91% 0.85% 0.83% 0.95% 7% 9% NII sensitivity to instantaneous change in yield curves (5 years), $m Key rates (quarter averages), basis points Change in Jan 2021 to Dec 2021 Year 1 Year 2 Year 3 Year 4 Year 5 Total 216 1M HIBOR 183 165 +25bps parallel -25bps parallel +100bps parallel -100bps parallel 1,647 (1,508) 5,348 1,866 1,930 2,028 2,100 9,571 (1,986) (2,307) (2,045) (2,113) (9,959) 6,538 7,083 7,444 7,736 34,149 (4,854) (6,174) (7,087) (7,660) (8,323) (34,098) 125 Fed effective rate BoE Base Rate 102 75 61 6 10 34 9 10 27 9 10 14 8 10 4Q19 1Q20 2020 3020 4Q20 1Q21 QTD* *At 19 February 2021 Source: Bloomberg 69#71Appendix ROTE by global business excluding significant items and UK bank levy Strategy Results FY20 $m WPB CMB GBM Corporate Centre Group Reported profit before tax 3,704 1,639 3,616 (182) 8,777 Tax expense (509) (661) (977) (531) (2,678) Reported profit after tax 3,195 978 2,639 (713) 6,099 less attributable to: preference shareholders, other equity holders, non-controlling interests Profit attributable to ordinary shareholders of the parent company (736) (673) (784) (8) (2,201) 2,459 305 1,855 (721) 3,898 Increase in PVIF (net of tax)* (242) (10) (1) (253) Significant items (net of tax) and UK bank levy 190 208 958 2,041 3,397 Markets Treasury allocation and other adjustments 20 (14) (25) 60 41 Profit attributable to ordinary shareholders excluding PVIF, significant items and UK bank levy Average tangible shareholders' equity excluding fair value of own debt, DVA and other adjustments ROTE excluding significant items and UK bank levy (annualised), % 2,427 489 2,788 1,379 26,551 9.1 % 37,826 1.3 % 41,566 44,580 7,083 150,523 6.7 % 3.1 % 4.7 % Corporate FY19 $m Reported profit before tax Tax expense WPB CMB GBM Group Centre 6,819 4,159 942 1,427 13,347 (720) (1,502) (460) (1,957) (4,639) Reported profit after tax 6,099 2,657 482 (530) 8,708 less attributable to: preference shareholders, other equity holders, non-controlling interests Profit attributable to ordinary shareholders of the parent company (1,279) (846) (784) 170 (2,739) 4,820 1,811 (302) (360) 5,969 Increase in PVIF (net of tax)* (1,207) (40) (1) (1,248) Significant items (net of tax) and UK bank levy 1,641 3,036 4,218 702 9,597 Markets Treasury allocation and other adjustments 1 2 3 Profit attributable to ordinary shareholders excluding PVIF, significant items and UK bank levy Average tangible shareholders' equity excluding fair value of own debt, DVA and other adjustments ROTE excluding significant items and UK bank levy (annualised), % 5,255 4,807 3,916 343 14,321 26,627 36,856 39,999 40,397 143,879 19.7 % 13.0 % 9.8% 0.8% 10.0 % *Excludes the increase in PVIF (net of tax) attributable to non-controlling interests. The increase in PVIF (net of tax), including those attributable to non-controlling interest, was $338m in FY20 and $1,431m in FY19 Note: Tangible Equity is allocated to global businesses at a legal entity level, using RWAs, or a more suitable local approach, where appropriate 70#72Appendix 4Q20 vs. 3Q20 equity drivers As at 30 September 2020 Profit attributable to: Ordinary shareholders 98 Other equity holders Dividends gross of scrip On ordinary shares On other equity instruments Strategy Results Shareholders' Equity, $bn Tangible Equity, TNAV per share, $bn Basic number of ordinary shares, million 191.9 152.3 7.55 20,173 0.8 1.0 0.05 0.6 1.0 0.05 0.2 (0.2) (0.2) | | | |│ Scrip FX 98 5.4 5.0 0.25 Actuarial gains/(losses) on defined benefit plans (0.0) (0.0) (0.00) I Fair value movements through 'Other Comprehensive Income' (1.5) (1.5) (0.07) Of which: changes in fair value arising from changes in own credit risk Of which: Debt and Equity instruments at fair value through OCI (1.7) (1.7) (0.09) 0.2 0.2 0.01 Other 98 As at 31 December 2020 11 20,184 Average basic number of shares outstanding during 4Q20: 20,179 million 4020 TNAV per share increased by $0.20 to $7.75 per share including retained profits of $0.05 and FX of $0.25; TNAV includes $(0.11) per share of own credit risk reserves (3Q20: $(0.03)) $7.72 on a fully diluted basis 20,272 million on a fully diluted basis 0.0 (0.4) 196.4 156.4 (0.03) 7.75 71#73Appendix FY20 vs. FY19 equity drivers. As at 31 December 2019 Profit attributable to: Ordinary shareholders 98 Other equity holders Dividends gross of scrip On ordinary shares On other equity instruments Strategy Results Shareholders' Equity, $bn Tangible Equity, TNAV per share, $bn Basic number of ordinary shares, million 184.0 144.1 7.13 20,206 5.2 5.6 0.28 3.9 5.6 0.28 1.3 (1.3) (1.3) | || | || I I I Scrip FX 98 4.8 4.4 0.22 Actuarial gains/(losses) on defined benefit plans 0.8 0.8 0.04 Fair value movements through 'Other Comprehensive Income' 2.1 2.1 0.10 Of which: changes in fair value arising from changes in own credit risk Of which: Debt and Equity instruments at fair value through OCI Other 98 0.2 0.2 0.01 1.9 1.9 0.09 0.8 (0.6) As at 31 December 2020 196.4 156.4 (0.02) 7.75 Average basic number of shares outstanding during FY20: 20,169 million ◆ FY20 TNAV per share increased by $0.62 to $7.75 per share including retained profits of $0.28 and FX movements of $0.22 per share; TNAV includes $(0.11) per share of own credit risk reserves (FY19: $0.13) (22) 20,184 $7.72 on a fully diluted basis 20,272 million on a fully diluted basis 72#74Appendix Total shareholders' equity to CET1 capital Total equity to CET1 capital, as at 31 December 2020, $m Total equity to CET1 capital walk, $m Strategy Results Total equity (per balance sheet) Total equity 204,995 - - Non-controlling interests 4Q20 204,995 (8,552) 4019 192,668 (8,713) Total shareholders' equity 196,443 183,955 Non-controlling interests Total shareholder's equity Preference shares and other equity instruments Total ordinary shareholder's equity (8,552) - Preference share premium (1,405) - Additional Tier 1 (22,414) (20,871) 196,443 Total ordinary shareholders' equity 174,029 161,679 (22,414) - Foreseeable dividend (3,055) (3,391) - IFRS 9 transitional add-back 2,351 809 174,029 · Deconsolidation of insurance / SPES (11,977) (10,682) - Allowable NCI in CET1 4,079 4,865 Foreseeable dividend (3,055) · Other movements 52 IFRS 9 transitional add-back Deconsolidation of insurance / SPES 2,351 CET1 before regulatory adjustments 165,479 153,280 - Additional value adjustments (PVA) (1,175) (1,327) (11,977) - Intangible assets - Deferred tax asset deduction (9,590) (12,372) (1,741) (1,281) Allowable NCI in CET1 4,079 - Cash flow hedge adjustment (365) (41) · Excess of expected loss (1,462) (2,424) Other movements 52 CET1 before 165,479 - Own credit spread and debit valuation adjustment Defined benefit pension fund assets 2,101 2,450 (7,885) (6,351) regulatory adjustments Regulatory adjustments (29,429) - Direct and indirect holdings of CET1 instruments - Threshold deductions (40) (40) (9,272) (7,928) Regulatory adjustments (29,429) CET1 capital 136,050 CET1 capital 136,050 (29,314) 123,966 73#75Appendix Sectors particularly affected by Covid-19 At 31 December 2020 Oil and Gas⁹9 3% 8% 27% $23.0bn Aviation 101 4% Strategy Results Restaurants and leisure Retail CRR 1-3 CRR 4-6 CRR 7-8 Defaulted 3% $10.5bn 47% 62% 46% 8% 3% 30% $3.3bn 59% 2% 4% $25.4bn 48% 46% Drawn risk exposure 100 by region, Drawn risk exposure 100 by region, Drawn risk exposure 100 by region, Drawn risk exposure 100 by region, $bn $bn $bn $bn Asia 7.3 Asia 3.8 Asia 0.6 Asia 12.6 Europe 5.7 Europe 3.8 Europe 2.2 Europe 9.0 Middle East and North Africa 3.8 Middle East and North Africa 1.9 Middle East and North Africa 0.0 Middle East and North Africa 0.7 North America 4.5 North America 0.9 North America 0.5 North America 2.1 Latin America 1.6 Latin America 0.1 Latin America 0.0 Latin America 1.0 Total 23.0 Total 10.5 Total 3.3 Total 25.4 ◆ Slight improvement in book quality from 2020; higher percentage of CRR 1-3 CRR 1-6 broadly stable over 2H20; category excludes hotels ◆ Lower proportion of CRR 1-3 vs. 2020; >50% of exposures benefit from credit risk mitigation via collateral and guarantees Totals may not cast due to rounding CRR 1-6 broadly stable over 2H20 74 ☑#76Appendix Balance sheet Customer lending, $bn Customer accounts, $bn 12% (2)% 2% (3)% 1,615 1,643 1,063 1,074 1,038 1,470 1 1 1 355 337 252 244 224 304 445 470 354 354 397 343 456 476 469 768 814 835 4019 3Q20 4Q20 WPB CMB GBM 4019 Corporate Centre 3Q20 4Q20 LDR: 63.2% HQLA: $678bn LCR*: 139% Totals may not cast due to rounding *The methodology used in the Group consolidated LCR in relation to the treatment of part of our HQLA is currently under review with our regulators Strategy Results 4Q20 customer lending decreased $25bn (2%) vs. 4019 despite mortgage growth in WPB, particularly in the UK and Hong Kong 4Q20 customer accounts increased $173bn (12%) vs. 4019 from corporate clients building liquidity and personal customers reducing spending Loan to deposit ratio of 63.2% decreased by 3.3ppts vs. 3020 and decreased by 9.1ppts vs. 4Q19 as customers raised and retained liquidity 75#77Appendix Balance sheet - customer lending Strategy Results Adjusted customer lending (on a constant currency basis), $bn 4020 adjusted customer lending growth by global business and region, $bn 1,037 1,040 1,019 1,041 1,038 Growth since 3020 Hong Kong mortgages Growth since 3Q20 UK mortgages 1,106 1,063 1,075 1,074 1,038 WPB $469bn (6) 4 (1)% Europe $408bn (3)% (12) 442 472 450 434 421 o/w: UK $315bn (2)% (7) 313 322 316 321 315 Asia $473bn (4)% (18) CMB $343bn (3)% (11) 308 312 309 319 302 o/w: Hong Kong $302bn (5)% (17) 4019 Other 1Q20 UK 2020 Hong Kong 3Q20 Reported net loans and advances to customers 4Q20 GBM $224bn (8)% (19) MENA $29bn (3)% (1) Adjusted customer lending of $1,038bn decreased by $37bn (3%) vs. 3020 ◆ WPB lending down $6bn (1%) with growth in mortgages ($6bn) offset by short term Hong Kong IPO lending being repaid CMB lending decreased by $11bn (3%), primarily due to repayments GBM lending decreased by $19bn (8%), from lower term lending in Asia, Europe and the US and lower overdrafts in Europe North America $108bn (4)% (5) Corporate $1bn (1)% Centre o/w: US $58bn (7)% (4) Latin America $20bn Total $1,038bn (3)% (37) Total $1,038bn (3)% (37) (7)% (1) Totals may not cast due to rounding 76#78Appendix Balance sheet - customer accounts Strategy Results Adjusted customer accounts (on a constant currency basis), $bn 4Q20 adjusted customer accounts growth by global business and region, $bn 1,439 1,441 1,532 1,569 1,643 Growth since 3020 Growth since 3020 1,611 1,615 1,643 1,470 1,521 Europe $630bn 4 1% WPB $835bn 21 612 605 608 3% 535 572 o/w: UK $504bn 12 2% Reported customer accounts Adjusted customer accounts of $1,643bn increased by $28bn (2%) vs. 3Q20 433 453 485 493 504 CMB $470bn 502 496 514 517 531 4Q19 1020 2020 3Q20 4Q20 Other UK Hong Kong 26 Asia $762bn 22 3% 26 6% o/w: Hong Kong $531bn 14 3% GBM $337bn (5)% (18) MENA $41bn 0 1% North America $182bn 1% Corporate $1bn (19)% (0) WPB customer accounts increased as a result of higher inflows and lower spending Centre o/w: US $117bn 32% CMB increased by $26bn (6%) as customers raised and retained liquidity across all regions Latin America $27bn 2% Total $1,643bn 28 2% GBM customer accounts decreased by $18bn (5%) due to lower demand for time deposits Total $1,643bn 28 2% Totals may not cast due to rounding 7 77#79Appendix Balance sheet - deposits by type Group customer accounts by type, $bn Average balances At 31 December 2020 Group loans and deposits by currency Strategy Results At 31 December 2020 1,170 Loans and advances to customers Customer accounts 1,025 1,054 1,026 LLLLLL 2015 2016 Demand and 2017 Other Non-interest bearing and Demand Interest bearing 2019 Group government bond exposures in key markets, $bn 290 USD Others 17% 22% Others USD 17% 26% 66 CNY 4% 2018 2020 Savings Time and other CNY 4% $1.0tn EUR 8% $1.6tn 27% 9% GBP EUR At 30 June 2020 104.7 US UK HK 40.9 31.6 21.1 17.5 <1Y 1-3Y 3-5Y 5-10Y >10Y 21% HKD 19% 26% HKD GBP Hong Kong system deposits by currency at 31 December: 50% HKD; 36% USD; 13% Non-US foreign currencies. Source: HKMA 78#80Appendix Asset quality Strategy Results Gross loans and advances to customers By credit quality classification At 31 December 2020 Loans and advances to customers of 'Strong' or 'Good' credit Stage 3 and impaired loans and advances to customers Reported LICS/ECL quality 783 IAS 39 IFRS 9 IAS 39 IFRS 9 8.8 19.1 726 730 740 18.2 638 15.5 Good 13.0 13.4 Strong 22.2% 48.1% $1,052bn 24.4% 74.8 75.0 73.4 73.7 70.3 2.1 1.8 3.4 0.4 1.6 2.8 1.8 1.3 1.3 0.2 1.8 10.3 0.2. 0.8 Satisfactory Impaired Sub-standard 2016 Strong CRR 1-2 Good Satisfactory Sub-standard Credit impaired CRR 3 CRR 4-5 CRR 6-8 CRR 9-10 2017 2018 2019 2020 'Strong' or 'Good' loans as a % of gross loans and advances to customers (%) 'Strong' or 'Good' loans ($bn) Strong or Good loans as a % of gross loans and advances to customers decreased to 70.3% due to the impact of Covid-19 2016 2017 2018 2019 2020 Impaired loans as % of average gross loans and advances to customers (%) Stage 3 loans as a % of average gross loans and advances to customers (%) Impaired loans ($bn) Stage 3 loans ($bn) Stage 3 loans as a % of gross loans and advances to customers of 1.8% at FY20 2016 2017 2018 2019 2020 LICS as a % of average gross loans and advances to customers (%) ECL as a % of average gross loans and advances to customers (%) LICS ($bn) ECL ($bn) ECL charge of $8.8bn in 2020; ECL as a % of average gross loans and advances to customers of 81bps at FY20 79#81Appendix UK RFB disclosures Strategy Results Total RFB lending to customers, £bn Personal At 31 December 2020 94.7 96.0 Residential mortgage balances, £bn 99.4 101.5 Unsecured lending balances, £bn 97.7 102.4 104.2 108.1 110.7 Wholesale 67.4 8.2 8.8 7.3 7.4 7.7 5.9 ₤192bn 110.7 Personal mortgages 13.6 12/18 03/19 06/19 By LTV 09/19 12/19 03/20 06/20 09/20 12/20 Credit cards 2018 Other personal lending 2019 2020 Delinquencies 103 Personal unsecured Wholesale Gross wholesale loans and advances to customers, £bn At 31 December 2020 Other Real estate Less than 50% £48.1bn 50% 60% 60%-< 70% 70%- < 80% 80%-90% 90% + £17.1bn £17.4bn £16.1bn £10.4bn £1.6bn c.26% of mortgage book is in Greater London Buy-to-let mortgages of £2.8bn Credit cards: 90-179 day delinquency trend, % ◆ Mortgages on a standard variable rate of £3.3bn ♦ Interest-only mortgages of £19.4bn 102 LTV ratios: 0.88 1.0 0.64 0.62 0.5 • c.43% of the book <50% LTV% • Publishing and 9.2 new originations average LTV of 70% average portfolio LTV of 51% 0.0 12.1 12/18 06/19 12/19 06/20 12/20 broadcasting Construction 2.4 3.8 Broker coverage (by value of market share) L 8% 1 43% 1 70%| - 84%1 93%1 >93% Agriculture 4.0 £67bn Gross new lending 103 11.0 Wholesale and retail trade c.£24bn c. £22bn ◆ Change in spending due to Covid-19, with a 20% fall in balances vs. 2019. Drop in delinquencies following the introduction of payment holidays Mortgages: 90+ day delinquency trend, % c.£21bn 4.0 Professional activities c. £13bn c. £16bn -7%- c. £19bn 21% 0.3 35% 47% 60% 0.23 0.19 0.16 0.2 Broker channel 4.6 8.9 Administrative 7.4 Direct channel 0.1 and support services Manufacturing Accommodation and food 0.0 2015 2016 2017 2018 2019 2020 12/18 06/19 12/19 06/20 12/20 80#82Appendix Glossary AIEA ANP B2B2C Average interest earning assets Annualised new business premiums Business to Business to Customer Business as usual BAU Bps Basis points. One basis point is equal to one-hundredth of a percentage point CAGR Compound annual growth rate CET1 Common Equity Tier 1 MENA MT NCI LCR LDR Legacy credit Liquidity coverage ratio Loan-to-deposit ratio A portfolio of assets including securities investment conduits, asset-backed securities, trading portfolios, credit correlation portfolios and derivative transactions entered into directly with monoline insurers Middle East and North Africa Markets Treasury. Formerly known as Balance Sheet Management (BSM) Non-controlling interests Corporate Centre Corporate Centre comprises Central Treasury, our legacy businesses, interests in our associates and joint ventures, central stewardship costs and the UK bank levy NII Net interest income NIM Net interest margin CMB Commercial Banking, a global business NRFB CRD IV Capital Requirements Directive IV PBT Non ring-fenced bank in Europe and the UK Profit before tax CRR Customer risk rating. CRR 1-3 considered Strong to Good credit quality (roughly equivalent to an external credit rating of AAA to BBB-); CRR 4-5 considered Satisfactory (BB+ to BB-); CRR 6+ considered Sub-standard, broadly equivalent to an external rating of B- or below PD Probability of default POCI CRR II The amending Regulation to the CRD IV package which implements changes to the own funds regime and to MREL and elements of the Basel III Reforms in EU legislation. These changes follow a phased implementation from June 2019 Ppt PVIF CTA Costs to achieve RBWM C&L Credit and Lending ECL FICC Expected credit losses. In the income statement, ECL is recorded as a change in expected credit losses and other credit impairment charges. In the balance sheet, ECL is recorded as an allowance for financial instruments to which only the impairment requirements in IFRS 9 are applied. Fixed Income, Currencies and Commodities UK RFB ROEV Purchased or originated credit-impaired Percentage points Present value of in-force insurance contracts Retail Banking and Wealth Management, a former global business now part of Wealth and Personal Banking HSBC UK, the UK ring-fenced bank, established July 2018 as part of ring fenced bank legislation Return on Embedded Value ROTE Return on average tangible equity GBM Global Banking and Markets, a global business RWA Risk-weighted asset GLCM Global Liquidity and Cash Management TNAV Tangible net asset value GPB Global Private Banking, a former global business now part of Wealth and Personal Banking VNB Value of new business written Group HSBC Holdings plc and its subsidiary undertakings WPB GTRF Global Trade and Receivables Finance XVAs HIBOR IFRS IRB Hong Kong Interbank Offered Rate International Financial Reporting Standard Internal ratings-based Wealth and Personal Banking. A global business created from the consolidation of RBWM and GPB Credit and Funding Valuation Adjustments 81#83Appendix Footnotes 1. 2. 3. A number of our clients were in need of financial relief as a result of the economic slowdown brought on by the Covid-19 pandemic, which we sought to address in a responsible way. This included extending our own relief measures such as payment holidays and loan moratoria, in addition to other market-wide and government-backed schemes to our customers. As reported at 2020, over 898 thousand accounts were impacted by these measures in 17 major markets, including over $52bn of relief extended to wholesale customers and over $26bn extended to personal customers Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. These include the regulatory transitional arrangements for IFRS 9 'Financial Instruments'. Following the end of the transition period after the UK's withdrawal from the EU, any reference to EU regulations and directives (including technical standards) should be read as a reference to the UK's version of such regulation and/or directive, as onshored into UK law under the European Union (Withdrawal) Act 2018 We intend to transition towards a target payout ratio of between 40% and 55% of reported earnings per ordinary share ('EPS') from 2022 onwards, with the flexibility to adjust EPS for non-cash significant items, such as goodwill or intangibles impairments 4. Ticks and crosses refer to progress in FY20 against the FY20 plans, as communicated in the Feb-20 Update 5. Cost saves include 2020-22 cost programme saves as announced at Feb-20 and 2019 cost initiatives 4569% 6. 7. 8. 9. Technology costs in operating expenses trends include transformation saves and are presented on a net basis Technology cost increases in full-year and quarterly walks are presented on a gross basis (excl. saves) Global Infrastructure Facility (World Bank), and Climate Policy Initiative under the auspices of the One Planet Lab 27. Based on tangible equity of the Group's major legal entities excluding Associates, Holdings Companies, consolidation adjustments, and any potential inorganic actions 28. WPB TE as a share of TE allocated to the Global Businesses (excluding Corporate Centre). Excludes Holdings Companies, consolidation adjustments any potential inorganic actions 29. 2015-19 adjusted revenue CAGR 30. Source: IMF, October 2020 31. Source: internal and external benchmarks, data and industry experts. CAGR from 2019 to 2025 32. Source: IHS Markit Comparative World Overview, October 2020 33. Source: PwC, January 2019. Total client assets include pension funds, insurance companies, sovereign wealth funds, high net worth individual and mass affluent. AUM represents estimated share of total client assets managed on behalf of clients 34. Deposits: including HASE; Source HKMA, December 2020. Mortgage by Legal mortgage units, Source: mReferral, Nov 2020 YTD; Credit Card market share in terms of Receivables; September 2020 35. HK Trade Financing market share of 19.1% (including HASE); December 2020, Source: HKMA; Rank #1 based on other banks' disclosures in their annual reports 36. Source: Dealogic, including M&A, ECM, DCM and Loans for years 2018, 2019, 2020 Ultimate Parent Companies i.e. 'Mastergroups' 37. 38. HSBC presence in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Reported Revenue FY19, including revenue from recoveries by the Group's Service and Technology centres from other Group entities 39. HK Wealth includes Mandatory Provident Fund and Mutual Funds AUM, incl. HASE. source: Mercer October 2020; Insurance: including HASE. Source: Hong Kong Insurance Authority; September 2020 40. By AUM. Source: Asian Private Banker; 2019 Includes $1.1bn of gross RWA saves recognised following the transfer of certain customers to CMB. These saves have not been includes as part of the Group's gross RWA saves The PRA has published a consultation on the reversal of the revised regulatory treatment of software assets; as such we have not considered these related capital benefits in our distributions 10. Leverage ratio at 31 December 2020 is calculated using the CRR II end-point basis for additional tier 1 capital and the CRR regulatory transitional arrangements for IFRS9; Leverage ratio includes CET1 benefit from the change in treatment of software assets, however the impact is immaterial Source: Datastream. 3 month interbank offered rates Source: Bain Covid-19 Pulse Survey, July 2020; Overall sample = 10k 11. 12. 13. 4Q20 v 4Q19 14. Source: Dealogic 15. Number of companies that have set or committed targets under the Science Based Targets Initiative (SBTi) Expected. 'Growth investment': investment in strategic business growth (including build-out of front line staff). Over 5 years, 2020 2025 16. 17. CMB platforms will be tested in Asia and rolled out across globally thereafter 18. Including GLCM and GTRF revenue 19. Excludes any inorganic actions 20. 21. Medium-term defined as 3-4 years; long-term is defined as 5-6 years Gross RWA saves of $24.4bn achieved in 2020, largely offset by changes in asset size and quality, and updates to models, methodology and policy. 2020 costs included a number of adverse items including real estate asset impairments, litigation costs, an increase in the Single Resolution Fund contribution and reduced capitalisation following the write-off of intangible assets 'Investment' includes strategic business growth (including build-out of front line staff), and other strategic, regulatory, and technology investment (including amortisation) 22. 23. 24. The carbon emissions associated with our portfolio of our customers Source: Environmental Finance Bond Database 25. Key initiatives of philanthropic programme include scaling climate innovation, renewable energy in emerging markets and nature-based solutions 26. Finance to Accelerate the Sustainable Transition-Infrastructure ('FAST-Infra') in partnership with the IFC, the OECD, the 41. Excluding HASE; December 2020 42. Includes revenue from recoveries by the Group's Service and Technology centres from other Group entities 43. Statistics Bureau of Guangdong Province, Guangdong Sub-Administration of Customs General Administration, Census and Statistics Department of the Government of Hong Kong SAR, Statistics and Census Service of Macao SAR Boston Consulting Group, 2017 / Scorpio; 2019 44. 45. Singapore Economic Development Board / Cushman Wakefield analysis; 2016 46. 47. 48. Client revenue is based on HSBC internal client management information and differs from reported revenue. Client revenue is the revenue from banking clients in GBM and CMB and excludes Global Markets trading revenue, Principal Investments, Business Banking and non-customer revenue, for example allocations from Corporate Centre. Inbound revenue, which is client revenue booked in a country where the relationship is managed in a different country, as a percentage of total client revenue booked in Asia To be achieved over the medium to long term. Medium-term defined as 3-4 years; long-term is defined as 5-6 years Source: internal and external benchmarks, data and industry experts, 2019. N. America and Japan only include Private Banking; AuM number are inclusive of Insurance 49. Includes APAC ex-Japan onshore and offshore (booked in HK, Singapore and global centres) Inclusive of Premier & Jade deposits and AUM, GPB client assets and AMG AUM 50. 51. On a wealth AUM and GPB client assets basis 52. Of target client base within CMB 53. Comprised of 3K Pinnacle wealth planners and >2K client facing wealth managers 54. Wealth balances include Premier & Jade deposits and AUM 55. AMG AUM also included as part of Premier, Jade and GPB balances 56. 57. To be achieved over the medium to long term, including doubling GPB PBT and ROTE By AUM in the medium to long-term 58. With presence in 10 cities (3 hubs and 7 satellite cities) 82#84Appendix Footnotes International market share calculated using Rfl Group - 20H1 International Banking Report. Mass affluent proportion refers to Jade and Premier Source: World Bank, 2019 59. 60. 61. As at 16 February 2021 62. In January 2021 63. Technology headcount includes: full time equivalent (FTE) employees, contractors and third party service providers 64. Includes Operations within global business and functions, as well as in the Digital Business Services function 65. 66. 67. 68. 69. Should the Group find itself in an excess capital position absent compelling investment opportunities to deploy that excess The Group will review whether to revert to paying quarterly dividends at or ahead of its 2021 results announcement in February 2022 Senior Management 'personnel represented by: Layer 3 i.e. direct reports of the Global Executive Committee (GEC); and Layer 4 i.e. direct reports of Layer 3 Eastern franchise is comprised of Asia Pacific and the Middle East. Western franchise is the rest Based on latest available rankings; GLCM & GTRF source Oliver Wyman/Coalition benchmarking report as of FY19; Securities Services and FX source Coalition as of 1H20; Fixed Income source Coalition as of 1H20; DCM, Loans and M&A source Dealogic FY20, focus Emerging Asia (Asia ex-Japan DCM G3 Volume by Bookrunner, Loans Asia ex-Japan marketed revenues by Bank and M&A APAC Volume by Advisor excluding Japan, Australia, Korea and China domestic). Footnote Source: Coalition Greenwich Competitor Analysis. Analysis based on HSBC internal business structure and internal revenues. GLCM as of FY19, based upon the following peer group: Barc, BofA, BNPP, CACIB, Citi, DB, LBG, JPM, UniCredit, SCB, SG, WFC. GTRF as of FY19, based upon the following peer group: Barc, BofA, BNPP, CACIB, Citi, DB, MUFG, ING, JPM, SANT, SCB, SG, STANB, WFC. Securities Services as of 1H20, based upon the following peer group: BNPP, BNYM, BBH, CACEIS, Citi, DB, JPM, NT, RBC, SCB, State Street. FX and Fixed Income as of 1H20, based upon the following peer group: Barc, BofA, BNPP, Citi, CS, DB, GS, JPM, MS, SCB, SG, NWM, UBS, NOM. 70. Client revenue from transactions booked in the East where client relationships are managed in the West 71. Capital markets and Advisory: all Banking products to CMB. FX: all Markets products to CMB + FX products to Retail. Wealth: all Markets products to Private Banking + rest of Markets products to Retail. Referrals includes AMG products to GBM customers, EBS and Private Banking referrals 222 72. Client revenue is based on HSBC internal client management information and differs from reported revenue. Client revenue is the revenue from banking clients in GBM and CMB and excludes Global Markets trading revenue, Principal Investments, Business Banking and non-customer revenue, for example allocations from Corporate Centre. Analysis considers all CMB Business Banking clients to be domestic clients 73. For GBM, a client is considered as international if they hold a relationship with HSBC in two or more markets, and generate over $10k annually in client revenue across all products; for CMB, a client is considered as international if they either hold a relationship with HSBC in two or more markets, or provide GTRF and FX product revenue greater than or equal to $10k annually 74. Domestic client revenue is client revenue that is booked in the same market in which the primary client relationship is managed. Cross-border client revenue is client revenue that is booked in a different market from where the primary client relationship is managed 75. Source: Dealogic. Volume shows the full (non-apportioned) amount of financing raised in transactions in which HSBC led or co-led 76. 77. 78. Excludes FY20 Corporate Risk Solutions revenue. Including this, Capital markets gross revenue increased by $228m or 13% Oliver Wyman Coalition Global Transaction Banking benchmarking survey 2020; December 2020 Source: HKMA 79. Source: Bank of England 80. 200 81. Source: The Institute of Customer Service For a number of the metrics outlined, 2020 was a transition year. For further details, including the high-level framework for how we are looking to measure the progress on our new climate ambition, see the ESG review on page 42 of the 2020 Annual Report and Accounts. 82. Our customer satisfaction performance is based on improving from our 2017 baseline. Our scale markets are Hong Kong, the UK, Mexico, the Pearl River Delta, Singapore, Malaysia, the UAE and Saudi Arabia 83. Where a quarterly trend is presented on the Income Statement, all comparatives are re-translated at average 4Q20 exchange rates 84. From 1st July 2018, Argentina was deemed a hyperinflationary economy for accounting purposes 85. Where observable long-tenor interest rates are at or close to zero, the -100bps stress sensitivity allows for the impact of negative interest rates. Additionally, the inverse impacts on profit after tax and total equity from interest rate changes is due to changes in risk discount rates which impact the present value of in-force long-term insurance business 86. Equity market investments in the Insurance manufacturing business are mainly benchmarked to MSCI World index (c.50%), MSCI Asia excl. Japan (c.50%); rebased to 100 87. 88. A change in reportable segments was made in 2020. Comparative data have been re-presented accordingly YTD, annualised. ROTE by Global Business excludes significant items and the UK bank levy. RoTE methodology annualises Profits Attributable to Shareholders, including ECL, in order to provide a returns metric. ROTE by Global Business for 4Q20 considers AT1 Coupons on an accruals basis, vs. Reported ROTE where it is treated on a cash basis 89. Where a quarterly trend is presented on the Balance Sheet, all comparatives are re-translated at 31 December 2020 exchange rates 90. 91. A reconciliation of reported RWAs to adjusted RWAs can be found in the 'HSBC Holdings plc 4Q 2020 Datapack' Embedded value in insurance manufacturing is equal to the overall balance sheet equity, including PVIF (present value in- force) 92. Asian Life Insurance company of the year Award at 24th Asia Insurance Industry Awards 2020 93. Bloomberg Businessweek Financial Institution Awards 2020 94. Association of British Insurers, as at Q3 2020 95. Total includes POCI balances and related allowances 96. 'Exited payment holidays' is defined as customers leaving a payment holiday agreements without requiring further lending relief and with payment behaviour. 97. Based on customers exiting payment holiday agreements that have passed one regularly scheduled payment date in 5 markets (the UK, Malaysia, Mexico, the US and Australia) 98. Differences between shareholders' equity and tangible equity drivers primarily reflect goodwill and other intangible impairment, PVIF movements and amortisation expense within 'Profit Attributable to Ordinary shareholders', FX on goodwill and intangibles within 'FX', and intangible additions and other movements within 'Other' 99. HSBC's insurance business has exposure to the oil and gas industry via investment-grade bond holdings which are excluded from these charts and tables. The majority of the credit risk of these instruments is borne by policyholders 100. Risk measure, excludes repos and derivatives. Guarantees are excluded from tables and charts. Oil & gas excludes 4Q20 guarantees of $5.2bn (3Q20: $4.9bn); Aviation excludes 4Q20 guarantees of $0.5bn (3Q20: $0.5bn); Restaurants and leisure excludes 4020 guarantees of $0.2bn (3Q20: $0.2bn); Retail excludes 4020 guarantees of $4.6bn (3Q20: $3.9bn) 101. Includes aircraft lessors. Aircraft lessors that are part of a banking group are not included in aviation exposures 102. Includes offset mortgages in first direct, endowment mortgages and other products 103. Excludes Private Bank 83#85Appendix Disclaimer Important notice The information, statements and opinions set out in this presentation and accompanying discussion ("this Presentation") are for informational and reference purposes only and do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other financial instruments or any advice or recommendation in respect of such securities or other financial instruments. This Presentation, which does not purport to be comprehensive nor render any form of legal, tax, investment, accounting, financial or other advice, has been provided by HSBC Holdings plc (together with its consolidated subsidiaries, the "Group") and has not been independently verified by any person. You should consult your own advisers as to legal, tax investment, accounting, financial or other related matters concerning any investment in any securities. No responsibility, liability or obligation (whether in tort, contract or otherwise) is accepted by the Group or any member of the Group or any of their affiliates or any of its or their officers, employees, agents or advisers (each an "Identified Person") as to or in relation to this Presentation (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 is not necessarily indicative of future results. Differences between past performance and actual results may be material and adverse. Forward-looking statements This Presentation 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, strategy and business of the Group which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "project", "plan", "estimate", "seek", "intend", "target" or "believe" or the negatives thereof or other variations thereon or comparable terminology (together, "forward-looking statements"), including the strategic priorities and any financial, investment and capital targets described herein. Any such forward-looking statements are not a reliable indicator of future performance, as they may involve significant stated or implied assumptions and subjective judgements which may or may not prove to be correct. 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. The assumptions and judgments 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 the 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, regulatory changes or due to the impact of the Covid-19 outbreak). Any such forward-looking statements are based on the beliefs, expectations and opinions of the Group at the date the statements are made, and the 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, expressed or implied, are given by or on behalf of the Group 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 from this Presentation is available in our Annual Report and Accounts for the fiscal year ended 31 December 2019 filed with the Securities and Exchange Commission (the "SEC") on Form 20-F on 19 February 2020 (the "2019 Form 20-F"), our 1Q 2020 Earnings Release furnished to the SEC on Form 6-K on 28 April 2020 (the "1Q 2020 Earnings Release"), our Interim Financial Report for the six months ended 30 June 2020 furnished to the SEC on Form 6-K on 3 August 2020 (the "2020 Interim Report"), our 3Q 2020 Earnings Release furnished to the SEC on Form 6-K on 27 October 2020 (the "Q3 2020 Earnings Release") as well as in our Annual Report and Accounts for the fiscal year ended 31 December 2020 available at www.hsbc.com and which we expect to file with the SEC on Form 20-F on 24 February 2021 (the "2020 Form 20-F"). Alternative Performance Measures This Presentation contains non-IFRS measures used by management internally that constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with SEC rules and regulations ("Alternative Performance Measures"). The primary Alternative Performance Measures we use are presented on an "adjusted performance" basis 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 Alternative Performance Measures and the most directly comparable measures under IFRS are provided in our 2019 Form 20-F, our 1Q 2020 Earnings Release, our 2020 Interim Report, our 3Q 2020 Earnings Release and our 2020 Form 20-F, when filed, each of which are available at www.hsbc.com. Information in this Presentation was prepared as at 23 February 2021. 84#86Empty