#1HSBC HSBC SFH (France) Investor Presentation - September 2018 1#2Content 1 2 HSBC SFH (France) key messages HSBC Group 1H18 performance 3 HSBC France key facts 2 4 12 4 French home loan market 20 5 HSBC SFH (France) CO 6 Appendix 25 38 38 2#3HSBC SFH (France) key messages HSBC 3#4HSBC SFH (France) key messages Issuer HSBC France ECB / ACPR AAA / Aaa Specialised Credit Inst. • Specialised credit institution licensed as a Société de Financement de l'Habitat Fully-owned by HSBC France Jointly regulated by the European Central Bank (ECB) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) Programme rated AAA/Aaa by S&P and Moody's Full recourse obligation of the Issuer against HSBC France Cover pool 100% Prime Home Loans AA- / Aa3 / AA- 111.1% Committed OC 61.0% Average Indexed LTV1 • • 100% prime home loans, all fixed-rate, with first-lien mortgage (16%) or guaranteed by Crédit Logement (84%)1 18 All originated by HSBC France (rated AA- / Aa3 / AA- by S&P / Moody's / Fitch 1) with 100% income verification and focus on affluent and high net worth individuals Granular pool with 39k loans¹ Voluntary over-collateralisation of 111.1%, above the regulatory minimum of 105% Weighted average indexed LTV at 61.0% Supervision Specific Controller 180 Days Liquidity Maturity Mismatch Stress Tests Cover pool compliance monitored by an independent Specific Controller Regulatory limits on ALM risks measured between the cover pool and the covered bonds for: 180 days liquidity requirements - Maturity mismatch Stress tests on the renewal of the cover pool Bankruptcy remoteness of the covered bonds Market standards ○ B ECBC EUROPEAN COVERED BOND COUNCIL COVERED BOND LABEL+ HTT Level 1B HQLA • Member of the European Covered Bond Council Compliant with the Covered Bond Label Quarterly Harmonised Transparency Template published and monthly Asset Cover Test published on hsbc.fr Series in EUR eligible to the level 1B LCR HQLA and to the favourable risk-weighting² 4#5HSBC Group 1H18 performance HSBC 5#6HSBC Group Key messages 1st half 2018 Reported PBT (1H17: $10.2bn) $10.7bn 5% t Adjusted PBT (1H17: $12.4bn) $12.1bn 2% RoE3 (1H17: 8.8%) 8.7% 2Q18 key messages 1 Reported PBT of $6.0bn, 13% higher than 2Q17: $6.1bn adjusted PBT, in line with 2Q17 2 0.1ppt 3 Reported ROTE³ (1H17: 9.9%) 9.7% 0.2ppt 4 A/D ratio (1H17: 70.1%) 71.8% 1.7ppt CET1 ratio4 (1H17: 14.7%) 14.2% 0.5ppt Total adjusted revenue increased $0.2bn to $13.7bn vs. 2Q17; good business momentum with revenue up $0.9bn or 7% in all four global businesses; Corporate Centre down $0.6bn Adjusted operating costs of $8.1bn were $0.6bn or 7% higher than 2Q17, reflecting increased investment in growth and technology; in line with 1Q18 and guidance $26bn or 3% lending growth compared with 1Q18 and $43bn or 5% compared with 1.1.18 (on a constant currency basis) 5 Strong capital base with a common equity tier 1 ratio of 14.2% 6#7HSBC Group - Financial overview 1H18 Profit before tax Revenue 1H18 A 1H17 adverse favourable $27,535m LICS / ECL $(407)m Operating $(16,370)m (1 175) expenses Share of profits in associates and $1,381m joint ventures Profit before tax $12,139m (225)- 578 2% Adjusted revenue by global business, $m +8% 11,065 10,283 250 38% (8)% 122 10% (2)% +12% +1% 8,192 8,265 7,439 6,622 +6% >(100)% 874 929 986 RBWM CMB GB&M GPB (163) Corporate Centre 1H17 1H18 Adjusted PBT by global business, $m 1H17 1H18 A 1H17 A % RBWM 3,397 3,630 233 7% Adjusted PBT by geography, $m Europe CMB 3,564 4,111 547 15% Asia 1H17 1H18 A 1H17 2,100 464 (1,636) 8,223 9,360 1,137 A % (78)% 14% GB&M 3,543 3,568 25 1% Middle East and North Africa 816 834 18 2% GPB 144 190 46 32% North America 944 1,104 160 17% Corporate Centre 1,716 640 (1,076) (63)% Latin America 281 377 96 34% Group 12,364 12,139 (225) (2)% Group 12,364 12,139 (225) (2)% 7#8HSBC Group - Loan impairment charges and expected credit losses Credit outlook remains stable Loan impairment charges and expected credit losses, $m Analysis by stage as at 30 Jun 2018 By global business RBWM CMB GB&M GPB Corporate Centre 254 IAS 39 2Q17 1Q18 IFRS 9 $bn 2Q18 30 Jun 2018 Stage 3 as Stage 1 Stage 2 Stage 3 Total5 a % of Total Loans and advances to customers 898.9 68.8 14.2 982.2 1.4% 417 237 Allowance for ECL 1.3 2.0 5.3 8.7 161 31 Mar 2018 296 240 119 Loans and advances to customers 906.3 68.1 15.4 990.5 1.6% Allowance for ECL 1.3 2.2 5.7 9.4 119 63 20 (19) (3) (1) (2) (66) (86) (119) ◆ Expected credit losses of $237m in 2Q18 related mainly to charges in RBWM, notably in Mexico and the UK, against our unsecured lending portfolios ◆ North America ECLs benefited from a release in the oil and gas sector By region, $m Europe (14) 60 125 ◆ The credit environment remains stable - of which UK (16) 56 99 Asia 282 32 84 - of which Hong Kong 231 14 6 MENA 65 3 99 99 North America (32) (47) (187) Latin America 116 113 116 Total 417 161 237 8#9HSBC Group-Capital Structure and Debt Issuance Group CET1 requirements Common Equity Tier 1 ratio, versus Maximum Distributable Amount ("MDA") Buffer to MDA6 $22bn 2.5% 11.7% 0.7% 2.0% of 5.2% 2.5% 14.2% CET1 ratio as at 30 Jun 2018 2.0% 4.5% Fully phased requirements7 Combined buffer 14.2% CET1 ratio, down 40bps from 1 Jan 2018 (after the IFRS9 transitional day 1 impact) $7.2bn of profit attributable to ordinary shareholders in the half $36.5bn of distributable reserves Throughout the period from 2018 to 2020, our plan assumes our CET1 ratio will be above 14% Countercyclical Buffer (CCYB) G-SII Buffer Capital Conservation Buffer (CCB) Pillar 2A Pillar 1 6#10HSBC Group Capital Structure and Debt Issuance Total capital and estimated MREL requirements8 Regulatory capital and MREL-eligible HoldCo Senior versus regulatory requirements as a % of RWAs 6.1% 3.2% 23.2% 6.5% AT1 and Senior MREL increased in 1H18 due to planned issuance Tier 2 increased due to the change in regulatory capital recognition of selected capital securities HSBC group MREL requirement for 2022 is the greater of: 18% of RWAS 2.4% 2.9% 18% of RWAs 2.2% - 14.2% Capital structure as at 30 June 18; on an end- point basis MREL-eligible HoldCo Senior Combined buffer of 5.2% 1 6.75% of leverage exposures 11.7% Known end-point requirements 2022 The sum of requirements relating to each of its resolution groups We are currently evaluating HKMA proposals, and await final rules Based on current assumptions, HSBC Senior MREL issuance requirement 10 is estimated to fall in the range $60-80bn HSBC manages its capital and debt securities to meet end-point regulatory requirements, as well as funding and other business needs HSBC has a Multiple Point of Entry resolution strategy Tier 2 AT1 CET1 10#11HSBC Group - Balance sheet Customer lending 2Q18 Loans and advances to customers 11 2Q18 growth by global business and region excluding red-inked and CML balances Balances increased by $26bn from 1Q18, reflecting: Continued lending growth in Asia ($16bn) primarily in Hong Kong in term lending in line with our strategic focus; Hong Kong mortgage growth of $2.4bn UK mortgage growth of $2.4bn Loan growth compared with 1.1.18 of $43bn or 5% Growth since 1Q18 Growth since 1Q18 Europe $349bn 8 2% RBWM $351bn 8 2% o/w UK $265bn 7 3% CMB $324bn 11 3% Asia $446bn 16 4% GB&M $230bn 9 4% o/w Hong Kong $283bn 11 4% 973 944 947 931 931 GPB $41bn 1 2% MENA $29bn (1)% 0 919 893 2 21 25 25 18 25 25 25 25 25 Corporate Centre $2bn (57)% (3) North America Latin America $104bn -1 1% $20bn -1 6% 26 3% Total $948bn 26 3% Total $948bn 13 898 906 919 906 922 948 874 1Q17 2Q17 3Q17 4Q17 IFRS 9 transition 1.1.18 1Q18 2Q18 impact UK 265 268 269 263 258 258 265 Hong 235 252 258 268 268 273 283 Kong Total on a Red-inked CML Balances excl. constant balances 12 balances red-inked currency basis balances 75 75 GTRF funded assets, $bn 81 81 82 83 87 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 11#12HSBC Group - Balance sheet Customer accounts 2Q18 Customer accounts 11, $bn Balances increased $21bn in 2Q18: Growth in Europe of $9bn, all in the UK from higher GLCM deposits Growth in Asia of $11bn mainly from Hong Kong ($6bn or 1%) largely from term deposits 1,356 1,340 1,336 1,335 1,311 1,320 1,293 25 25 21 25 18 25 25 25 Customer accounts 13, US$bn 1,000 663 6% CAGR (Demand deposits) 1,025 LLLLLLLL 2010 25 25 2011 2012 2013 Demand and other non-interest bearing and demand interest bearing 2014 2015 2016 2017 Time and other Savings 1,275 1,290 1,295 1,315 1,311 1,310 1,331 Average GLCM deposits, US$bn (Includes banks and affiliate balances) c5% CAGR c560 c540 1Q17 2Q17 3Q17 4Q17 IFRS 9 1.1.18 1Q18 2Q18 transition impact UK 361 363 359 366 366 370 379 Hong Kong 454 465 471 475 475 472 478 Total on a Red-inked Balances excl. constant balances 12 red-inked currency basis balances c500 1H16 1H17 1H18 12#13HSBC France key facts HSBC 13#14HSBC France HSBC Group Legal Structure - Principal entities as of 1st July 2018 HSBC Holdings plc UK Holding company Intermediate holding company Operating company Associate 99% HSBC HSBC Mexico HSBC North Bank America S.A. Canada Holdings Inc. HSBC Bank (China) Company Limited The Hongkong & Shanghai Banking Corporation HSBC Bank HSBC HSBC 959 Bank Bank Australia Egypt HSBC UK Holdings Ltd Limited S.A.E. plc Limited HK UK HSBC Finance Corporation Bank of Commun- ications Co., Limited 19% HSBC Bank Malaysia Berhad The 40% Saudi British Bank 80% HSBC Trinkaus & Burkhardt AG HSBC UK Bank plc USA HSBC Securities PRC Hang HSBC HSBC Seng 6296 (USA) Inc. Bank Limited Bank (Taiwan) Limited Bank HSBC Banking Middle East 99.99 France Holdings Limited (Suisse) SA HK UAE Germany HSBC Private HSBC HSBC USA Bank USA, Inc NA North America and LatAm Hang Seng Bank (China) Limited 9996 PT Bank HSBC Indonesia Asia HSBC Bank (Singapore) Limited Europe and MENA HSBC Private Bank (Suisse) SA 14#15HSBC France HSBC France - A key priority market for the Group France France is the 5th largest global economy based on GDP14 and a key member of the eurozone. It also is the 5th largest trade nation 15 and it has a wealthy population, ranking 3rd in wealth per adult among large countries 16. HSBC in France Our Global Businesses ■ HSBC France is one of HSBC Group's scale markets with the 4th largest balance sheet by assets RBWM Retail Banking and Wealth Management: Personal Financial Services, Asset Management and Insurance activities " Gross customer loans of €45bn ($54bn) as at 30 June 2018, representing 6% of the Group Commercial Banking: ☐ Benefits from an international network CMB Banking products and services for businesses " Positioned as the largest foreign bank in the French market, by assets Acting as the HSBC Group's Global Markets centre of excellence in euro rate products Global Banking and Markets: GB&M Banking and market support for large corporates, institutional investors and governments Well-positioned in the context of Brexit. HSBC France acquired operations and subsidiaries in Greece, Poland and Ireland and will acquire operations in seven other EEA countries from HSBC Bank plc early 2019. Global Private Banking: GPB Services to High Net Worth customers Strategy ■ HSBC seeks to partner with French corporates in respect of their international development and retail clients for their wealth management needs HSBC France positions itself for future growth through a number of strategic investments: - Grow Global Markets revenues by intensifying client coverage in Europe, extending the scope of traded rates products, and leveraging technology and e-platforms to enhance sales Grow its share of wallet on Corporates by leveraging specialised product teams and increase international business by focusing on key corridors (US, UK, China, Germany) - Implement an omni-channel model and improve customer experience in retail banking 15#16HSBC France Capital structure HSBC France has enhanced its capital structure in 2017 and 2018 to support its business planning and strategic initiatives. Capital and loss-absorbing instruments 24.0% 23.3% HSBC France's capital position as at 30 June 2018: CET1 ratio of 12.2% Total Capital Ratio of 15.2% net of prudential deductions versus requirement of 12.6% Regulatory capital base further optimised during 2018: 19.5% 7.9% 7.9% - 5.6% 0.8% 1.6% 0.6% 2.5% 1.4% 13.1% 13.2% 12.2% Dec-16 Dec-17 Jun-18 - Issued €0.3bn of AT1 and €0.3bn of Tier 2 capital to parent MREL strategy is on track with the issuance €2.8bn senior to parent in 2016 and 2017 intended to be converted into senior non- preferred (SNP) when MREL regulation is finalised, taking potential total loss-absorbing capacity up to €8.5bn, including the €0.3bn of AT1 and €0.3bn of Tier 2 issued in 1H 2018. Senior MREL T2 AT1 CET1 16#17HSBC France Liquidity and Funding Advances / Deposits Ratio (ADR) 121% 117% 117% 115% Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) LCR requirement 169% 149% 127% 122% 100% 80% 70% 60% 120% 116% 112% 2015 2016 2017 1H18 2015 2016 2017 1H18 2016 2017 1H18 Liquid Asset Buffer - Dec 17 4.3% 0.0% ■ HSBC France has a robust liquidity position and maintains its LCR and NSFR well above the regulatory minimum ■ The Liquid Asset Buffer is mainly comprised of cash and government bonds ■ € 19.4bn HSBC France maintains a stable and diversified funding base, with around half of its Available Stable Funding (ASF) coming from customer deposits, and the remainder coming from a variety of different debt and capital instruments 95.7% Level 1 Level 2a Level 2b ■ HSBC France has participated with €4.1bn in the TLTRO 17 program and through its covered bond vehicle HSBC SFH (France) has €4.6bn of covered bonds outstanding 17#18HSBC France Asset structure and quality Gross loans and advances to customers, €bn 45.4 45.3 42.0 1 39.2 2015 2016 I I 2017 I 1H18 Impaired loans as a % of gross loans and advances to customers LICS as a % of total gross loans and advances to customers Impairment ratio 18 3.4% IAS 39 IFRS 9 (Impaired) (Stage 3) 0.31% 2.9% 2.3% 2.1% 55% 55% 0.17% IAS 39 (LICs) IFRS 9 (ECL) 0.18% la lu. 51% 52% 0.07% 2015 2016 2017 1H18 2015 2016 2017 1H18 Gross loans and advances to customers by lending type Non-bank financial institutions Residential mortgages 5.3% Other commercial 3.8% 18.4% Credit logement 19 24.3% € 45.4bn Commercial 10.5% real estate 6.3% Other personal ■ HSBC France has a conservative approach to risk management, consistent with the Group ■ HSBC France has a high quality lending portfolio, with 82% of gross loans to customers of 'Strong' or 'Good' credit quality in 2017 Impaired loans and LICs as a % of gross loans and advances to customers showing a decreasing trend over 2015 to 2017, and its 2018 ECL as a % of gross loan underlines the portfolio quality The impairment ratio continues to improve, with 55% of impaired loans covered by impairment allowances 31.4% Commercial, industrial and international trade 18#19HSBC France 1H18 HSBC France results 20 Global businesses and Corporate Centre HSBC France €m RBWM CMB GB&M GPB Corporate Centre Revenue 406 259 218 27 (10) 900 ECL (3) (12) (3) 1 2 (15) Operating expenses (409) (185) (211) (23) (26) (854) Profit before tax (6) 62 (34) 31 €bn Reported RWAs21 4.6 11.1 16.7 1.0 0.6 35.4 Customer advances 18.9 12.0 12.0 2.2 (0.5)22 44.6 Customer deposits 16.8 11.0 11.1 0.9 (1.1)22 38.7 A/D ratio (%) 112% 109% 108% 228% n/d 115% 19#20HSBC France External credit ratings Long term senior ratings as at 30 June 18 Fitch Rating Moody's Outlook Rating S&P Outlook Rating Outlook AA- Stable A2 Stable A Stable HSBC Holdings plc HSBC Bank plc HSBC France HSBC SFH (France) AA- Stable Aa3 Stable AA- Stable AA- Stable Aa3 Stable AA- Stable Aaa Stable AAA Stable ■ HSBC France has strong ratings with a stable outlook from all three main rating agencies ■ HSBC France is perceived by all the main rating agencies as a core strategic subsidiary of HSBC Group In September 2017, Moody's upgraded HSBC France from A2 to Aa3 " HSBC France has AA- Rating from S&P since 2011 and from Fitch since 2012 20 20#21French home loan market HSBC 21#222% French market French home loans market Typical loan characteristics Fixed rate for the entire length of the home loan ☐ Fully amortising, not "re-advanceable" Mortgage24 34% 35% 35% 34% 32% 30% 29% Underwriting criteria primarily based on the creditworthiness of the borrower ■ Compulsory life and disability insurance Institutional guarantees available in addition to traditional mortgages Guarantee24 52% 52% 52% 53% 57% 58% 59% ■ Low delinquency ◉ Regulated product environment Other24 14% 13% 13% 13% 12% 11% 12% 2011 2012 2013 2014 2015 2016 2017 French market - home loan interest rate type Production in 2017 23 Fixed rate 7.5bp 7.1bp Floating rate and other 98% 2007 4.3bp 5.7bp 4.0bp 2008 2009 2010 2011 2012 French market - home loan security type 23 Average loss rate 25 on home loans - French market23 2013 5.5bp 2014 22 22 5.6bp 6.5bp 2015 2016 2017 6.3bp 5.9bp 4.4bp#23French market French home loans market Market dynamics (2017) 23 ■ In a context of sustained low borrowing rates, the housing has been very dynamic in 2017 in terms of volumes and prices. In a context where the number of transactions increased 15% over the year, home prices increased sharply in Paris (+8.6%) and in France (+3.9%). The sustained level of interest rates increased the purchasing power of all segments of borrowers. Production and outstanding balance of home loans (EUR bn) 26 Renegociations Production Outstanding 847 874 907 927 964 998 1,058 1,084 798 710 738 295 278 220 ■ Production has been contrasted over the year, with a peak over 1H where the 12 rolling month growth was up to 59%, and a slowdown on the second half of the year. 136 140 158 144 151 99 122 98 108 89 98 Borrowers preferred fixed rate loans (97.9% of new lending) and opted for slightly longer maturities (19y in 2017). 18 121 160 137 80 ■ The average LTV of all home loans increased slightly to 72.3% while the credit risk decreased with LICs observed on average at 4.4bps of outstanding loan balances in 201721. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H18 French house price index (2015 average = 100)27 107.6 103.3 105.9 105.1 105.7 105.9 102.1 102.1 102.7 103.1 103.8 102.4 101.5 105.4 106.5 102.4 105.2 101.5 102.4 105.1 100.9 103.4 104.3 102.8 98.1 102.7 102.9 99.7 101.7 102.4 102.7 99.4 96.7 101.8 100.2 96.6 100.4 99.5 100.1 99.8 95.5 99.2 95.7 98.7 97.4 96.0 94.2 لال 2018 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 23 3#24Guarantees as a distinctive characteristic of the French home loan market French market French home loans market ■ Home loans which are secured by a guarantee provided either by a selected financial institution or a selected insurance company represent the majority of the French home loan market (59.3% of outstanding home loans in 201723). ☐ ☐ Crédit Logement's business model Crédit Logement is an entity owned by France's major banks, providing guarantees to French home lending as an alternative to the more classic mortgage registration. Main features for the lender - - A second risk review, with regular feedback to the lending institution: Crédit Logement accepts or refuses each guarantee application following its independent credit review and scoring Statistics are given on the lender's position (especially on risk) against Crédit Logement average A complete financial guarantee " A complete alternative to the mortgage: Crédit Logement guarantee is not limited to a first loss tranche 100% of the amount of the loan is guaranteed A complete range of guarantees. . From bridge loans to long term loans (up to 30 years) • For a maximum amount of EUR 2 million per loan or borrower • Also covers buy to let loans - A collections service takes over recovery of loans in default: " From the guarantee exercise, normally after three unpaid instalments To the recovery completion (loan put back on track or totally repaid to the lending institution), with full collection carried out by Crédit Logement Advantages for the borrower - - Lower costs: mortgage registration costs are in general between 2.2% and 2.5% vs. a below 1% home loan guarantee fee The administrative process is simplified at loan inception and maturity Up to 75% of the guarantee fee is paid back to the borrower at maturity, if there is no payment incident during the life of the loan 24 24#25French market French home loans market Crédit Logement is a major partner in the french home loan guarantee market Crédit Logement is a fully regulated financial institution with a strong balance sheet28 55% Proportion of 2017 French residential loans balance secured by a guarantee28 excluding refinancing loans 325.7 49,1 301.1 43,2 280.3 254.3 245.5 2013 2014 2015 2016 2017 Outstanding guaranteed balance (EUR bn) 28 33% 3% 9% 80,4 84,1 69,4 2013 2014 2015 2016 2017 Enforced production (EUR bn) 28 Equity participation from all major French retail banks28, with commitment to rebuild capital in 15% proportion to their share if ever necessary HSBC France Société Générale BNP Paribas 6% Crédit Mutuel/CIC BPCE/Crédit Foncier Crédit Agricole/LCL 17% 17% Banque Postale 2.0% Minimum capital ratio required by the French ACPR for all guarantee providers 29 2x Coverage of the guaranteed portfolio credit risk by the EUR 5.3bn mutual guarantee funds (MGF)28 Aa3 (stable) / AA Low (stable) Long-term ratings granted by Moody's and by DBRS 0,40% 0,30% 0,30% 0,31% 0,26% 0,28% 0,29% 0,25% 0,24% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average Estimated 1y Probability of Default 25#26HSBC SFH (France) HSBC 26#27HSBC SFH Legal features and structure - Protecting Investors ☐ Dedicated issuing entity with a limited business purpose - Specialised credit institution licensed as a Société de Financement de l'Habitat, with a purpose limited by the law to the sole refinancing of eligible assets originated by the Borrower Regulated by the European Central Bank (ECB) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR - French financial regulator) Specific insolvency regime 30 Privilege (legal preferential claim and absolute seniority of payments over all creditors) granted to investors by the Art. L.513-11 of the French Financial and Monetary Code (FMFC) for covered bonds with the form of Obligations de Financement de l'Habitat (OH) Regulated covered bonds exempted from bail-in (BRRD) ■ Transfer of collateral 30 - - Valid and enforceable legal transfer of full title as security under the European Collateral Directive and as per the collateral provisions of the articles L. 211-36 to L. 211-40 of the FMFC Collateral Security HSBC France Borrower Administrator Issuer Calculation Agent Borrower Advances Loan Receivables HSBC SFH (France) The Issuer Cash Covered Bonds - Dual recourse on the cover pool and on HSBC France Investors 27#28HSBC SFH HSBC France SFH legal framework ☐ Key provisions of SFH law - Requirement to cover all liquidity needs for the next 180 day period on an ongoing basis - Minimum 5% legal over-collateralisation of the cover assets Possibility for the issuers to use up to 10% of outstanding issued covered bonds for direct repo operations with ECB Guaranteed home loans: ☐ The rating of the guarantor directly impacts the weighting of such home loans in the cover pool valuation Guarantor Rating External Guarantor Internal Guarantor ≥ A- 100% 80% Guaranteed home loans secured by an "internal" guarantee (i.e. when the guarantor is at least 20% owned by the sponsor bank) are applied an additional 20% weighting haircut Obligations de financement de l'Habitat (OH) investors benefit from the Privilege (statutory priority right of payment) over all the assets and revenues of the Issuer ≥ BBB- and < BBB+ 80% 60% < BBB- or not rated 0% 0% OH are subject to strict criteria in terms of asset eligibility, supervision, control and license requirements ■ The control over cover pool assets and guarantors are further tightened under the OH regime with the appointment of the specific controller, who publishes a yearly report to the Directors of HSBC SFH (France) on (i) the governance of the issuer, (ii) its ALM procedures, (iii) the eligibility of cover assets and (iv) the compliance with any other aspects of the law. This report is directly sent by the specific controller to the regulator. Moreover, the specific controller must certify any regulatory reporting sent to ACPR. 28#29HSBC SFH Programme features - Asset Cover Test The Asset Cover Test (ACT) 31 is designed to ensure that the collateral constituted by home loans, cash and other collateral is able to meet the future cash flows (interest and principal) on the covered bonds (performed monthly by the calculation agent) Asset Cover Ratio Whereby Adjusted Aggregate Asset Amount || Adjusted Aggregate Asset Amount Aggregate Covered Bond Outstanding Principal Amount Lower of: Adjusted Home Loan Outstanding Principal Amount And (Sum of all Unadjusted Home Loan Outstanding Principal Amounts - Applicable Deemed reductions) Asset Percentage Less IV Cash + Aggregate Plus Eligible Substitution Assets Amount + Aggregate Value of Permitted Investments Zero Or Potential financing costs of the swap Plus Weighted Average Maturity x Covered Bond Outstanding Principal Amount x Carrying Cost 29 29 1#30HSBC SFH Programme features - Amortisation Test The Amortisation Test 31 32 is designed to ensure that the Issuer has the capacity to meet its commitments following the enforcement of the Borrower Event of Default. Compliance with the Amortisation Test requires compliance with the Amortisation Ratio (RA) Amortisation Ratio Whereby Transferred Aggregate Asset Amount || Transferred Aggregate Asset Amount Aggregate Covered Bond Outstanding Principal Amount Sum of all: Transferred Home Loan Outstanding Principal Amount¹ X M (M=1 if loan less than 3 months in arrears; M=0.7 if loan 3 months or more in arrears) Less Plus IV Cash + Aggregate Eligible Substitution Assets Amount + Aggregate Value of Permitted Investments Weighted Average Maturity x Covered Bond Outstanding Principal Amount x Carrying Cost 30 1#31HSBC SFH Programme features - Structural highlights ◉ Pre-maturity test Designed to ensure that the Borrower can provide sufficient liquidity in case of a downgrade If, 180 days before the maturity of any series of hard bullet Covered Bonds, the Borrower's rating is below A (long term) by S&P or P-1(cr) (short term) by Moody's, the Borrower must fund the cash collateral account to a sufficient level calculated by the Issuer Security agent as the Covered Bond Principal Amount + Costs ■ A non-compliance with the Pre-Maturity Test will prevent the Issuer from issuing any further series of Covered Bonds as long as it remains un-remedied. A failure to fund the cash collateral account to the required level within 30 calendar days of receipt of a notice of non-compliance will result in a Borrower Event of Default Accounts agreement ■ HSBC France provides bank accounts to the Issuer as long as it is an eligible bank for the rating agencies Asset servicing ■ HSBC France will perform the Asset Servicing and will provide HSBC SFH (France) with asset reporting Commingling risk ■ A cash collateral reserve will be placed under a specific account (the "Collection Loss Reserve Account") in case of downgrade of HSBC France below BBB (long term) by S&P or P-1(cr) (short term) by Moody's 31 31#32HSBC SFH Programme features - Key events ☐ Borrower Event of Default The occurrence of any of the following events will constitute a Borrower Event of Default - Default in the payment of principal or interest on any Borrower Facility not remedied within 3 business days. after the due date - Breach of Pre-Maturity Test - Breach of Asset Cover Test - - - Breach of Collection Loss Reserve Funding requirement Any material representation or warranties made by the Borrower is incorrect in any material aspect Failure to comply with any of the Borrower's material obligations Occurrence of Insolvency Event Any of the Borrower's material obligations becomes unlawful or ceases to be legal, valid and binding ■ A Borrower Event of Default will result in a Borrower Enforcement Notice No further Borrower advances shall be available - Borrower advances become due and payable - Enforcement of the Borrower Facility with a transfer of assets to the Issuer 32#33HSBC SFH Programme features - Key events Issuer Event of Default ■ The occurrence of any of the following events will constitute an Issuer Event of Default - - Breach of Amortisation Test Default in the payment of principal or interest on any Covered Bond not remedied within 5 business days after the due date Default in the performance or observance of any of its other material obligations not remedied within 30 days after receipt by Fiscal Agent Covered Bonds Cross Acceleration Event Order made for the liquidation or winding up the Issuer Occurrence of Insolvency Event - The Issuer ceases to carry on all or a material part of business ■ An Issuer Event of Default will result in an Issuer Enforcement Notice - An Issuer Enforcement Notice causes the principal amount of all Covered Bonds of such Series to become due and payable, subject to the relevant Payment Priority Order 33#34HSBC SFH Programme features - Key events No further issuance ■ The Issuer undertakes not to issue any new Covered Bonds under the Programme - - - As from the date a Borrower Enforcement Notice has been served As from the date an Issuer Enforcement Notice has been served For so long as Non-Compliance with Asset Cover Test has occurred and is not remedied For so long as Non-Compliance with Amortization Test has occurred and is not remedied For so long as, regarding the Pre-Maturity Test, a Non-Compliance Notice has been delivered and is not withdrawn 34#35HSBC SFH Programme features - Cash flow priorities Pre-Enforcement Priority Payment Order Prior to any enforcement notice being served 1. Interest amounts due on the Covered Bonds 2. Principal amounts due on the Covered Bonds 3. Fees due and payable to the Administrator and the Servicer 4. Amounts due and payable to the Cash Collateral Provider 5. Other administrative and tax costs 6. Dividend to the Issuer's shareholders and any payment under the subordinated loan To be paid on any Payment Date Controlled Post-Enforcement Priority Payment Order In the event of service by the Issuer to the Borrower of a Borrower Enforcement Notice 1. Interest amounts due on the Covered Bonds Principal amounts due on the Covered Bonds Fees due and payable to the Administrator and the Servicer 2. 3. 4. Amounts due and payable to the Cash Collateral Provider 5. Other administrative and tax costs 6. Subject to full repayment of any outstanding Covered Bonds, distribution of remaining enforcement proceeds to the Borrower and payment of dividend to the Issuer's shareholders and any payment under the subordinated loan In the event of service by the Issuer Accelerated Post-Enforcement Priority Payment Order An Issuer Event of Default will result in an Issuer Enforcement Notice and an Accelerated Post-Enforcement Priority Payment Order 1. Interest amounts due on the Covered Bonds 2. All principal outstanding amounts under the Covered Bonds 3. Fees due and payable to the Administrator and the Servicer 4. Amounts due and payable to the Cash Collateral Provider 5. Other administrative and tax costs 6. Subject to full repayment of any outstanding Covered Bonds, distribution of remaining enforcement proceeds to the Borrower and payment of dividend to the Issuer's shareholders and any payment under the subordinated loan Instruction to pay to be given within three business days of receipt of Issuer Enforcement Notice 35#36HSBC SFH Cover Pool - Cash flow priorities high quality and diversified collateral Main cover pool metrics¹ Regional distribution1 33 Loan security¹ Pool notional Collateral 11.5% Greater Paris EUR 5.9bn North East 22.2% North West 52.8% South East 100% prime home loans South West 6.6% 6.9% Number of loans 39.2k loans LTV range1 29,3% 25,6% 20,6% Average loan balance EUR 149k Max loan amount EUR1m 12,1% 6,4% 15.6% 84.4% Seasoning¹ Crédit Logement Mortgage < 12 16.4% 15.6% ≥12 - <24 24.4% ≥24 <36 ≥36-<60 ≥60 23.6% 2,9% 1,9% 0,8% 0,5% 20.0% ≤40% >40% >50% >60% >70% >80% >85% >90% >95% ≤50% ≤60% ≤70% ≤80% ≤85% ≤90% ≤95% ≤100% Occupancy type¹ WA seasoning 38 months Loan purpose¹ WA remaining term 161 months 29.4% WA indexed LTV 61.0% 3.1% 67.5% Purchase Remortgage Construction 15.1% 7.7% 77.2% Owner-occupied Buy-to-let Vacation second home 36#37HSBC SFH Funding Strategy Rationale for covered bonds issuance ■ Fund asset growth and refinance maturing debt ■ Manage HSBC France's consolidated liability maturity profile HSBC SFH year end covered bonds balances 34 EUR bn, as at 30 June 2018 4.5 ☐ ■ Diversify investor base ■ Reduce overall cost of funds 4.3 4.3 3.3 3.3 2.3 1.0 0.2 ■ Use as collateral for refinancing operations 2018 2019 2020 2021 2022 2023 Covered bonds issuance strategy Mainly public benchmark series on various medium and long term maturities ■ Issuance mainly in EUR denominated units, with the ability to issue in other major currencies HSBC SFH covered bonds redemption profile 34 EUR bn, as at 30 June 2018 1.3 1.0 1.0 ■ Hard or soft bullets 0.2 0.2 ■ Public issuance, private placement or retained series 2018 2019 2020 2021 2022 2023 37 EUR CHF#38HSBC SFH Legal entity governance - Strong internal supervision and risk management Specific governance dedicated to SFH Board and sub-committees of the board - set risk appetite - review evolution of the structure against these limits Management committee involving all stakeholders - decides on project priorities Quarterly Every 6 Months Monthly Weekly Board Board Meeting - reviews collateral availability and quality Executives - monitors identification / resolution of operational issues Monthly supervision of the structure performance and risks Weekly monitoring of project progress Management Committee Audit Sub- Committee Risk Sub- Committee Key Indicators Dashboard Project Meeting 38 38#39Appendix#40Appendix Home loan eligibility criteria 35 a. All lending criteria and conditions precedent as applied by the originator of the Home Loan pursuant to its customary lending procedures were satisfied b. The purpose of the Home Loan is either to buy, to renovate, to build or to refinance a residential real estate property c. The underlying property is located in France d. The Home Loan is governed by French law e. The Home Loan is denominated in Euro f. The Home Loan bears a fixed interest rate g. All sums due under the Home Loan (including interest and costs) are secured by a fully effective Home Loan Security h. When the relevant Home Loan is guaranteed by a Home Loan Guarantee, the borrower is contractually prevented from constituting a Mortgage on the underlying property without the previous consent of the originator i. On the relevant Selection Date, the current principal balance of such Home Loan is no more than EUR1m j. On the relevant Selection Date, the loan-to-value of the Home Loan is no more than 100% k. When the relevant Home Loan is guaranteed by a Home Loan Guarantee, on the date upon which it has been made available to the borrower thereof, the loan-to-income ratio (taux d'effort) of this borrower was not above 33%; I. On the relevant Selection Date, the remaining term for the Home Loan is less than 30 years m. On the relevant Selection Date, the borrower under the Home Loan has paid at least 1 instalment in respect of the Home Loan n. the borrower under the relevant Home Loan is either (i) an individual who is not an employee of the originator of such relevant Home Loan or (ii) a "SCI patrimoniale" (provided that the shareholders of such SCI shall only be individuals) o. The Home Loan is current (i.e. does not present any arrears) as at the relevant Selection Date p. The Home Loan is either monthly or quarterly amortizing as at the relevant Selection Date q. The borrower under the Home Loan does not benefit from a contractual right of set-off r. The opening by the borrower under the Home Loan of a bank account dedicated to payments due under the Home Loan is not a condition precedent to the originator of the Home Loan making the Home Loan available to the borrower under the Home Loan s. Except where prior Rating Affirmation has been obtained, no amount drawn under the Home Loan is capable of being redrawn by the borrower thereof (i.e. the Home Loan is not flexible) 40#41Appendix Glossary OH Obligations de Financement de l'Habitat PBT Profit before tax CET1 Common Equity Tier 1 CMB Commercial Banking, a global business CML Consumer Mortgage Lending portfolio PRD RBWM FMFC French Monetary and Financial Code RoE GB&M Global Banking and Markets, a global business ROTE GLCM GPB Global Liquidity and Cash Management Global Private Banking, a global business RWA TLTRO GTRF HTT Global Trade and Receivables Finance Harmonised Transparency Template IFRS International Financial Reporting Standard Jaws A ratio which measures the difference between the rates of change for revenue and costs LICS Loan Impairment charges and other credit risk provisions MDA MENA MREL NAV Maximum Distributable Amount Middle East and North Africa Minimum requirement for own funds and eligible liabilities Net Asset Value Transaction Banking Pearl River Delta Retail Banking and Wealth Management, a global business Return on Equity Return on Tangible Equity Risk-Weighted Asset Targeted Longer-Term Refinancing Operations Products including Foreign Exchange, GLCM, GTRF and Securities Services 41#42Appendix Footnotes -2 1. 2. 3. 34 4. 599 7. 8. 9. 10. 11. 12. 13. HSBC SFH Investor Report, Selection on 30 June 2018 HSBC SFH (France) believes that, at the time of its issuance and based on transparency data made publicly available by HSBC SFH (France), these covered bonds would satisfy the eligibility criteria for Article 129(7) of the Capital Requirements Regulation (EU) 648/2012. It should be noted, however, that whether or not exposures in the form of covered bonds are eligible to preferential treatment under Regulation (EU) 648/2012 is ultimately a matter to be determined by a relevant investor institution and its relevant supervisory authority and HSBC SFH (France) does not accept any responsibility in this regard. Annualised Unless otherwise stated, risk-weighted assets and capital are calculated using (i) the CRD IV transitional arrangement as implemented in the UK by the Prudential Regulation Authority; and (ii) EU's regulatory transitional arrangements for IFRS 9 in article 473a of the Capital Requirements Regulation. Figures at 31 December 2017 are reported under IAS 39 This table excludes POCI balances and related allowances. Full details can be found on page 55 of the 1H18 Interim Report Pro forma buffer to MDA trigger based on RWAs and CET1 capital resources at 30 June 2018 Pillar 2A requirements are shown as applicable on 30 June 2018 and are subject to change, held constant for illustrative purposes. The capital buffers on an end point basis include: a) the fully phased-in capital conservation buffer of 2.5% of RWAs; b) the countercyclical capital buffer, which is dependent on the prevailing rates set in the jurisdictions where HSBC has relevant credit exposures (this buffer amounts to 0.7% of RWAS on an end-point basis, based on confirmed rates as of July 2018); c) the fully phased-in Global Systemically Important Institutions Buffer (G-SII buffer) of 2% of RWAs. With the exception of the capital conservation buffer, the remaining buffers are subject to change. Minimum requirement for own funds and eligible liabilities (MREL) consists of a minimum level of equity and eligible debt liabilities that will need to be maintained pursuant to a direction from the Bank of England in the exercise of its powers under the Bank Recovery and Resolution Directive (BRRD) and associated UK legislation, with the purpose of absorbing losses and recapitalise an institution upon failure whilst ensuring the continuation of critical economic functions. The criteria for eligibility is defined in "The Bank of England's approach to setting a minimum requirement for own funds and eligible liabilities (MREL)" policy statement, published in June 2018 (updating November 2016). In November 2016, the European Commission also published proposed amendments to MREL which are yet to be finalised. The final MREL rules are subject to change pending the outcome and timing of these amendments, alongside the UK withdrawal from the EU. End-point MREL requirements calculated as a % of Group consolidated RWAs. The Bank of England (BOE) has written to HSBC outlining its current expectation with regard to the Group's Multiple Point of Entry resolution strategy and the Group's indicative MREL to be met by 2019 and 2022. The Group's MREL requirements are expected to be set at the higher of (i) 16% of RWAS (consolidated) from 1 Jan 2019 and 18% of RWAs (consolidated) from 1 Jan 2022; (ii) 6% of leverage exposures (consolidated) from 1 Jan 2019 and 6.75% from 1 Jan 2022; and (iii) the sum of requirements relating to our resolution groups, and entities/sub-groups located outside these resolution groups, which are not fully known. The 2019 and 2022 MREL requirements are subject to a number of caveats including: changes to the firm and its balance sheet (RWAS, FX and leverage); liability management and share buy backs; changes in accounting and regulatory policy; stress test requirements and, not least, confirmation of the final requirements from the Bank of England and other regulators, including the resolution strategy which is subject to revision on a regular basis. Balances presented by quarter are on a constant currency basis. Reported equivalents for 'Loans and advances to customers' are as follows: 1Q17: $876bn, 2Q17: $920bn, 3Q17: $945bn, 4Q17: $963bn, 1Q18: $981bn, 2Q18: $973bn. Reported equivalents for 'Customer Accounts' are as follows: 1Q17: $1,273bn, 2Q17: $1,312bn, 3Q17: $1,337bn, 4Q17: $1,364bn, 1Q18: $1,380bn, 2018: $1,356bn Red-inked balances relate to corporate customers in the UK, who settle their overdraft and deposit balances on a net basis. CMB red-inked balances 1Q17: $5bn, 2Q17: $5bn, 3Q17: $6bn, 4Q17: $6bn, 1Q18: $6bn, 2Q18: $6bn; GB&M red-inked balances: 1Q17: $13bn, 2Q17: $16bn, 3Q17: $18bn, 4Q17: $20bn, 1Q18: $19bn, 2Q18: $20bn Source: Form 20-F; Average balances on a reported basis 42 24#43Appendix Footnotes 14. Source: IMF (June 2018) 15. Source: Global Insights (Import + Export 2016) 16. Source: Wealth per adult among Top 10 GDPs (Credit Suisse Global Wealth Databook 2017) 17. TLTRO: Targeted long-term refinancing operations 18. 19. Impairment ratio is calculated as Impairment allowances / Total impaired loans Crédit Logement is a French nationwide home loans guarantee scheme regulated by the French regulatory authority, the ACPR. It provides robust guarantees to lenders against the risk of borrower default 20. All numbers presented are on an adjusted basis unless otherwise stated 21. 22. 23. 24. 25. 26. As at December 2017, including Basel 1 floor impact of €1.3bn, which is not included within the Global Business or Corporate Centre Relates to intragroup balances Source: Annual study of the French Autorité de Contrôle Prudentiel et de Résolution on Home loans - 2017 (published on 12 July 2018) Mortgage: 1st lien mortgage Guarantee: Commitment to bear the credit risk provided by a credit institution or an insurance company Other: Other types of security (eg. pledge of securities portfolio) and no security Loan impairment charges to total average home loans outstanding balances Source: Banque de France Webstat Outstanding: serie BSI1.M.FR.N.R.A220Z.A. 1.U6.2250.Z01.E Production: serie MIR1.M.FR.B.A22.A.Y.A.2250U6.EUR.N Production excluding renegociations: serie MIR1.M.FR.B.A22HR.A.5.A.2254U6.EUR.N Source: INSEE - Indice de prix des notaires (notary index on home prices), nationwide series ref 10001868 Source: Annual Report Crédit Logement 2017 27. 28. 29. 2016 30. 31. 32. 33. 34. 35. Requirement as of 1 January 2018, to compare with an average cost of risk of 6bps as per the Annual study of the French Autorité de Contrôle Prudentiel et de Résolution on Home loans - Insolvency protection and security enforcement in case of bankruptcy of HSBC France based on the legal framework of the Sociétés de Crédit Foncier (SCF) (articles L513-2 to L513-27 of the French Monetary and Financial Code - FMFC) and of the Sociétés de Financement de l'Habitat (SFH) (articles L513-28 to L513-33 of the FMFC) Please refer to the Asset Monitoring section of the prospectus for the detailed definitions All Home Loans title to which has been transferred to the Issuer upon enforcement of the Borrower Collateral Security following the enforcement of a Borrower Event of Default Greater Paris = Ile-de-France North East Alsace, Bourgogne, Champagne-Ardenne, Franche-Comté, Lorraine, Nord-Pas-de-Calais North West = Basse-Normandie, Bretagne, Haute-Normandie, Pays-de-la-Loire, Picardie South East Auvergne, Corse, Limousin, Provence-Alpes-Côte d'Azur, Rhône-Alpes South West = Aquitaine, Centre, Languedoc-Roussillon, Midi-Pyrénées, Poitou-Charentes Source: HSBC SFH Investor website https://www.about.hsbc.fr/fr-fr/investor-relations/hsbc-sfh-france Source: HSBC SFH Base Prospectus 43 43#44Appendix Key Contacts and further information HSBC France Laurence Rogier Chief Financial Officer [email protected] +33 1 40 70 30 17 Guillaume Makowski HSBC SFH (France) Chief Executive Officer [email protected] +33 1 58 13 03 76 Greg Case HSBC Holdings plc Head of Fixed Income Investor Relations [email protected] +44 20 7992 3825 Websites for Investor Relations and HTT http://www.about.hsbc.fr/hsbc-sfh-france-disclaimer www.hsbc.com/investor-relations 44#45Appendix Important notice and forward-looking statements Important notice The information, statements and opinions set out in this presentation and subsequent discussion 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. The information contained in this presentation and subsequent discussion, which does not purport to be comprehensive nor render any form of financial or other advice, has been provided by the Group and has not been independently verified by any person. 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 and any subsequent discussions (including the accuracy, completeness or sufficiency thereof) or any other written or oral information made available or any errors contained therein or omissions therefrom, and any such liability is expressly disclaimed. No representations or warranties, express or implied, are given by any Identified Person as to, and no reliance should be placed on the accuracy or completeness of any information contained in this presentation, any other written or oral information provided in connection therewith or any data which such information generates. No Identified Person undertakes, or is under any obligation, to provide the recipient with access to any additional information, to update, revise or supplement this presentation or any additional information or to remedy any inaccuracies in or omissions from this presentation. Forward-looking statements This presentation and subsequent discussion may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and forward-looking statements with respect to the financial condition, results of operations, capital position, strategy and business of the Group (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 assumptions and subjective judgements which may or may not prove to be correct and there can be no assurance that any of the matters set out in forward-looking statements are attainable, will actually occur or will be realised or are complete or accurate. Forward-looking statements are statements about the future and are inherently uncertain and generally based on stated or implied assumptions. Certain of the assumptions and judgements upon which forward-looking statements regarding strategic priorities and targets are based are discussed under "Targeted Outcomes: Basis of Preparation", available separately from this presentation at www.hsbc.com. The assumptions may prove to be incorrect and involve known and unknown risks, uncertainties, contingencies and other important factors, many of which are outside the control of 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 or regulatory changes). 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 is available in our Annual Report and Accounts for the fiscal year ended 31 December 2017 filed with the Securities and Exchange Commission on Form 20-F on 20 February 2018 (the "2017 20-F") and in our Interim Report for the six months ended 30 June 2018 furnished to the SEC on Form 6-K on 6 August 2018 (the "Interim Report"). This presentation contains non-GAAP financial information. The primary non-GAAP financial 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 non-GAAP financial measurements and the most directly comparable measures under GAAP are provided in the 2017 20-F, the Interim Report and the corresponding Reconciliations of Non-GAAP Financial Measures document which are available at www.hsbc.com. Information in this presentation was prepared as at 11 September 2018. 45#46Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ United Kingdom www.hsbc.com Cover image: Guangzhou is located at the heart of China's Pearl River Delta, one of the country's fastest growing economic regions. Photography: Getty Images 46