Feb 23, 2021 — with the public health crisis, but the economic crisis that unfolded simultaneously has relying less on our balance sheet, and focusing.

290 KB – 382 Pages

PAGE – 2 ============
Strategic report 2 Highlights 4 Who we are 6 Group Chairman™s statement 8 Group Chief Executive™s review 12 Our strategy 16 How we do business 22 Board decision making and engagement with stakeholders 25 Remuneration 26 Financial overview 30 Global businesses 37 Risk overview 41 Long-term viability and going concern statement Environmental, social and governance review 43 Our approach to ESG 44 Climate 52 Customers 62 Employees 70 Governance Financial review 77 Financial summary 85 Global businesses and geographical regions 103 Reconciliation of alternative performance measures Risk review 107 Our approach to risk 110 Top and emerging risks 116 Areas of special interest 118 Our material banking risks Corporate governance report 196 Group Chairman™s governance statement 198 Biographies of Directors and senior management 213 Board committees 229 Directors™ remuneration report Financial statements 267 Independent auditors™ report 278 Financial statements 288 Notes on the ˜nancial statements Additional information 371 Shareholder information 377 Abbreviations This Strategic Report was approved by the Board on 23 February 2021. Mark E Tucker Group Chairman A reminder˜ The currency we report in is US dollars.˜ Adjusted measures˜ We supplement our IFRS ˚gures with non-IFRS measures used by management internally that constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP ˚nancial measures de˚ned in and presented in accordance with US Securities and Exchange Commission rules and regulations. These measures are highlighted with the following symbol: Further explanation may be found on page 28. None of the websites referred to in this Annual Report and Accounts 2020 (including where a link is provided), and none of the information contained on such websites, are incorporated by reference in this report. ˇ Cover image: Opening up a world of opportunity We connect people, ideas and capital across the world, opening up opportunities for our customers and the communities we serve. We have changed how we are reporting this year We have changed our Annual Report and Accounts to embed the content previously provided in our Environmental, Social and Governance Update , demonstrating that how we do business is as important as what we do. Contents HSBC Holdings plc Annual Report and Accounts 2020

PAGE – 3 ============
Our ambition is to be the preferred international ˚nancial partner for our clients. We have re˚ned our purpose, ambition and values to re˛ect our strategy and to support our focus on execution. Read more on our values, strategy and purpose on pages 4, 12 and 16. Opening up a world of opportunity Financial performance Reported pro˚t after tax $6.1bn (2019: $8.7bn) Basic earnings per share $0.19 (2019: $0.30) Common equity tier 1 capital ratio 15.9% (2019: 14.7%) Non-˜nancial highlights Gender diversity 30.3% Women in senior leadership roles. (2019: 29.4%) Sustainable ˚nance and investment $93.0bn Cumulative total provided and facilitated since 2017. (2019: $52.4bn) Read more on how we set and de˚ne our environmental, social and governance (‚ESG™) metrics on page 18. Key themes of 2020 The Group has been Œ and continues to be Œ impacted by developments in the external environment, including: Covid-19 The Covid-19 outbreak has signi˚cantly a˝ected the global economic environment and outlook, resulting in adverse impacts on ˚nancial performance, downward credit migration and muted demand for lending. Read more on page 38. Market factors Interest rate reductions and market volatility impacted ˚nancial performance during 2020. We expect low global interest rates to provide a headwind to improved pro˚tability and returns. Read more on page 26. Geopolitical risk Levels of geopolitical risk increased with heightened US-China tensions and the UK™s trade negotiations with the EU notably impacting business and investor sentiment. We continue to monitor developments closely. Read more on page 38. Supporting customers We continued to support our customers during the Covid-19 outbreak, providing relief to wholesale and retail customers through both market-wide schemes and HSBC- speci˚c measures. Read more on page 17. Strategic progress We made good progress with our transformation programme in 2020. We have now set out the next phase of our strategic plan. Read more on page 12. Climate In October 2020, we set out an ambitious plan to prioritise sustainable ˚nance and investment that supports the global transition to a net zero carbon economy. Read more on page 15. Progress in key areas The Group continued to make progress in areas of strategic focus during 2020, including: Read more on our ˚nancial overview on page 26. Customer satisfaction 7 out of 8 Wealth and Personal Banking markets sustained top-three rank and/or improved in customer satisfaction. 5 out of 8 Commercial Banking markets sustained top-three rank and/or improved in customer satisfaction. 1

PAGE – 4 ============
Highlights Financial performance in 2020 was impacted by the Covid-19 outbreak, together with the resultant reduction in global interest rates. Nevertheless, performance in Asia remained resilient and our Global Markets business delivered revenue growth. Financial performance (vs 2019) ŒReported pro˚t after tax down 30% to $6.1bn and reported pro˚t before tax down 34% to $8.8bn from higher expected credit losses and other credit impairment charges (‚ECL™) and lower revenue, partly o˝set by a fall in operating expenses. Reported results in 2020 included a $1.3bn impairment of software intangibles, while reported results in 2019 included a $7.3bn impairment of goodwill. Adjusted pro˚t before tax down 45% to $12.1bn. ŒReported revenue down 10% to $50.4bn, primarily due to the progressive impact of lower interest rates across our global businesses, in part o˝set by higher revenue in Global Markets. Adjusted revenue down 8% to $50.4bn. ŒNet interest margin of 1.32% in 2020, down 26 basis points (‚bps™) from 2019, due to the impact of lower global interest rates. ŒReported ECL up $6.1bn to $8.8bn, mainly due to the impact of the Covid-19 outbreak and the forward economic outlook. Allowance for ECL on loans and advances to customers up from $8.7bn at 31 December 2019 to $14.5bn at 31 December 2020. ŒReported operating expenses down 19% to $34.4bn, mainly due to the non-recurrence of a $7.3bn impairment of goodwill. Adjusted operating expenses down 3% to $31.5bn, as cost-saving initiatives and lower performance-related pay and discretionary expenditure more than o˝set the growth in investment spend. ŒDuring 2020, deposits grew by $204bn on a reported basis and $173bn on a constant currency basis, with growth in all global businesses. ŒCommon equity tier 1 (‚CET1™) ratio of 15.9%, up 1.2 percentage points from 14.7% at 31 December 2019, which included the impact of the cancellation of the fourth interim dividend of 2019 and changes to the capital treatment of software assets. ˜ ŒAfter considering the requirements set out in the UK Prudential Regulation Authority™s (‚PRA™) temporary approach to shareholder distributions for 2020, the Board has announced an interim dividend for 2020 of $0.15 per ordinary share, to be paid in cash with no scrip alternative. Outlook and strategic update In February 2020, we outlined our plan to upgrade the return pro˚le of our risk-weighted assets (‚RWAs™), reduce our cost base and streamline the organisation. Despite the signi˚cant headwinds posed by the impact of the Covid-19 outbreak, we have made good progress in implementing our plan. However, we recognise a number of fundamental changes, including the prospect of prolonged low interest rates, the signi˚cant increase in digital engagement from customers and the enhanced focus on the environment. We have aligned our strategy accordingly. We intend to increase our focus on areas where we are strongest. We aim to increase and accelerate our investments in technology to enhance the capabilities we provide to customers and improve e˙ciency to drive down our cost base. We also intend to continue the transformation of our underperforming businesses. As part of our climate ambitions, we have set out our plans to capture the opportunities presented by the transition to a low-carbon economy. We will continue to target an adjusted cost base of $31bn or less in 2022. This re˛ects a further reduction in our cost base, which has been broadly o˝set by the adverse impact of foreign currency translation due to the weakening US dollar towards the end of 2020. We will also continue to target a gross RWA reduction of over $100bn by the end of 2022. Given the signi˚cant changes in our operating environment during 2020, we no longer expect to reach our return on average tangible equity (‚RoTE™) target of between 10% and 12% in 2022 as originally planned. The Group will now target a RoTE of greater than or equal to 10% in the medium term. We intend to maintain a CET1 ratio above 14%, managing in the range of 14% to 14.5% in the medium term and managing this range down in the longer term. The Board has adopted a policy designed to provide sustainable dividends going forward. 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 ˛exibility to adjust EPS for non-cash signi˚cant items such as goodwill or intangibles impairments. We will no longer o˝er a scrip dividend option, and will pay dividends entirely in cash. Delivery against our ˜nancial targets Return on average tangible equity 3.1% February 2020 target: in the range of 10% to 12% in 2022. (2019: 8.4%) Adjusted operating expenses $31.5bn Target: ˆ$31bn in 2022. (2019: $32.5bn) Gross RWA reduction $61.1bn Target: >$100bn by end-2022. Further explanation of performance against Group ˚nancial targets may be found on page 26. 2Strategic report

PAGE – 5 ============
Key ˜nancial metrics For the year ended Reported results 2020 2019 2018 Reported revenue ($m) 50,429 56,098 53,780 Reported pro˚t before tax ($m) 8,777 13,347 19,890 Reported pro˚t after tax ($m) 6,099 8,708 15,025 Pro˚t attributable to the ordinary shareholders of the parent company ($m) 3,898 5,969 12,608 Cost e˙ciency ratio (%) 68.3 75.5 64.4 Basic earnings per share ($) 0.19 0.30 0.63 Diluted earnings per share ($) 0.19 0.30 0.63 Net interest margin (%) 1.32 1.58 1.66 Alternative performance measures Adjusted revenue ($m) 50,366 54,944 52,098 Adjusted pro˚t before tax ($m) 12,149 22,149 21,199 Adjusted cost e˙ciency ratio (%) 62.5 59.2 60.9 Expected credit losses and other credit impairment charges (‚ECL™) as % of average gross loans and advances to customers (%) 0.81 0.25 0.16 Return on average ordinary shareholders™ equity (%) 2.3 3.6 7.7 Return on average tangible equity (%) 13.1 8.4 8.6 At 31 December Balance sheet 2020 2019 2018 Total assets ($m) 2,984,164 2,715,152 2,558,124 Net loans and advances to customers ($m) 1,037,987 1,036,743 981,696 Customer accounts ($m) 1,642,780 1,439,115 1,362,643 Average interest-earning assets ($m) 2,092,900 1,922,822 1,839,346 Loans and advances to customers as % of customer accounts (%) 63.2 72.0 72.0 Total shareholders™ equity ($m) 196,443 183,955 186,253 Tangible ordinary shareholders™ equity ($m) 156,423 144,144 140,056 Net asset value per ordinary share at period end ($) 8.62 8.00 8.13 Tangible net asset value per ordinary share at period end ($) 27.75 7.13 7.01 Capital, leverage and liquidity Common equity tier 1 capital ratio (%) 315.9 14.7 14.0 Risk-weighted assets ($m) 3857,520 843,395 865,318 Total capital ratio (%) 321.5 20.4 20.0 Leverage ratio (%) 35.5 5.3 5.5 High-quality liquid assets (liquidity value) ($bn) 678 601 567 Liquidity coverage ratio (%) 139 150 154 Share count Period end basic number of $0.50 ordinary shares outstanding (millions) 20,184 20,206 19,981 Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions) 20,272 20,280 20,059 Average basic number of $0.50 ordinary shares outstanding (millions) 20,169 20,158 19,896 Dividend per ordinary share (in respect of the period) ($) 40.15 0.30 0.51 For reconciliations of our reported results to an adjusted basis, including lists of signi˚cant items, see page 85. De˚nitions and calculations of other alternative performance measures are included in our ‚Reconciliation of alternative performance measures™ on page 103. 1 Pro˚t attributable to ordinary shareholders, excluding impairment of goodwill and other intangible assets and changes in present value of in-force insurance contracts (‚PVIF™) (net of tax), divided by average ordinary shareholders™ equity excluding goodwill, PVIF and other intangible assets (net of deferred tax). 2 Excludes impact of $0.10 per share dividend in the ˚rst quarter of 2019, following a June 2019 change in accounting practice on the recognition of interim dividends, from the date of declaration to the date of payment. 3 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™, which are explained further on page 173. Leverage ratios are calculated using the end point de˚nition of capital and the IFRS 9 regulatory transitional arrangements. 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, as amended. 4 The fourth interim dividend of 2019, of $0.21 per ordinary share, was cancelled in response to a written request from the PRA. 2019 has been re-presented accordingly. 3Highlights

PAGE – 6 ============
ˇ ˜˚˛˝˙ˆ˛˝ ˇ˛ˆ˝Our global functions Our business is supported by a number of corporate functions and our Digital Business Services teams, formerly known as HSBC Operations, Services and Technology. The global functions include Corporate Governance and Secretariat, Communications, Finance, Compliance, Human Resources, Internal Audit, Legal, Marketing, Risk and Strategy. Digital Business Services provides real estate, procurement, technology and operational services to the business. Wealth and Personal Banking (™WPB™) We help millions of our customers look after their day-to-day ˚nances and manage, protect and grow their wealth. Commercial Banking (‚CMB™) Our global reach and expertise help domestic and international businesses around the world unlock their potential. Global Banking and Markets (™GBM™) We provide a comprehensive range of ˚nancial services and products to corporates, governments and institutions. About HSBC With assets of $3.0tn and operations in 64 countries and territories at 31 December 2020, HSBC is one of the largest banking and ˚nancial services organisations in the world. More than 40 million customers bank with us and we employ around 226,000 full-time equivalent sta˝. We have around 194,000 shareholders in 130 countries and territories. Our global businesses˚ We serve our customers through three global businesses. On pages 30 to 36 we provide an overview of our performance in 2020 for each of our global businesses, as well as our Corporate Centre. During the year, we simpli˚ed our organisational structure by combining Global Private Banking and Retail Banking and Wealth Management to form Wealth and Personal Banking. We also renamed our Balance Sheet Management function as Markets Treasury to re˛ect the activities it undertakes more accurately and its relationship to our Group Treasury function more broadly. These changes followed realignments within our internal reporting and include the reallocation of Markets Treasury, hyperin˛ation accounting in Argentina and HSBC Holdings net interest expense from Corporate Centre to the global businesses. Each of the chief executive o˙cers of our global businesses reports to our Group Chief Executive, who in turn reports to the Board of HSBC Holdings plc. For further information on how we are governed, see our corporate governance report on page 195. 1 Calculation is based on adjusted revenue of our global businesses excluding Corporate Centre, which is also excluded from the total adjusted revenue number. Corporate Centre had negative adjusted revenue of $262m in 2020. Who we are Our values Our values help de˚ne who we are as an organisation, and are key to our long-term success. We value di˛erence Seeking out di˝erent perspectives We succeed together Collaborating across boundaries We take responsibility Holding ourselves accountable and taking the long view We get it done Moving at pace and making things happen For further details on our strategy and purpose, see pages 12 and 16. 4Strategic report

PAGE – 8 ============
Group Chairman™s statement The past year brought unprecedented challenges, but our people responded exceptionally well and our performance has been resilient. helped ensure our customers received the support they needed Œ all the while managing their own, at times extremely di˙cult, situations at home. On behalf of the Board, I would like to express my deepest thanks to them all for the exceptional way they are responding to these most challenging circumstances. Against this backdrop, HSBC demonstrated a resilient performance. Reported pro˚t before tax was $8.8bn, a fall of 34%, and adjusted pro˚t before tax was $12.1bn, down 45%. Within this, Global Banking and Markets performed particularly well, while Asia was once again by far the most pro˚table region. Deposits also increased signi˚cantly across the Group, reinforcing the strength of our funding and liquidity positions. In response to a request from the UK™s Prudential Regulation Authority, we cancelled the fourth interim dividend for 2019. We also announced that, until the end of 2020, we would make no quarterly or interim dividend payments or accruals in respect of ordinary shares. This was a di˙cult decision and we deeply regret the impact it has had on our shareholders. We are therefore pleased to restart dividend payments at the earliest opportunity. The Board has announced an interim dividend of $0.15 for 2020, and adopted a policy designed to provide sustainable dividends in the future. Board of Directors The con˚rmation of Noel Quinn as permanent Group Chief Executive underlined the Board™s belief that he is the best person to lead the delivery of the strategic plan. We look forward to working closely with Noel and the management team as they focus on executing our strategic priorities in 2021. Jamie Forese, Steve Guggenheimer and Eileen Murray joined the Board as independent non-executive Directors in 2020. All three have already demonstrated the valuable skills, expertise and experience they bring across a wide range of areas, including technology. We have also announced that Dame Carolyn Fairbairn will join the Board as an independent non-executive Director. Carolyn will bring a wealth of relevant experience, and her appointment will be e˝ective from 1 September 2021. In 2020, we experienced economic and social upheaval on a scale unseen in living memory. Even before the year began, the external environment was being reshaped by a range of factors Œ including the impact of trade tensions between the US and China, Brexit, low interest rates and rapid technological development. The spread of the Covid-19 virus made that environment all the more complex and challenging. The Covid-19 pandemic has severely impacted our customers, our colleagues, our shareholders and the communities we serve. The ˚rst priority was, and remains, dealing with the public health crisis, but the economic crisis that unfolded simultaneously has also been unprecedented in recent times. The ˚nancial services industry has been at the forefront of helping businesses and individuals through the di˙culties they have faced, working with governments and regulators towards expected recovery and future growth. I am enormously proud of the professionalism, dedication and energy that my colleagues around the world have demonstrated as they Mark E Tucker Group Chairman 6Strategic report

PAGE – 9 ============
As reported in the Annual Report and Accounts 2019 , Sir Jonathan Symonds and Kathleen Casey retired from the Board last year. Today we also announced that Laura Cha will step down from the Board immediately after our 2021 Annual General Meeting (‚AGM™) in May. I would like to thank Jon, Kathy and Laura for the enormous contributions they made to HSBC during their years of service. We are now in the advanced stages of a search for suitable candidates to join and strengthen the Board, and I will update further on the outcome of this search in due course. Like the rest of the Group, the Board had to adapt its ways of working in 2020. We met virtually for much of the year, which brought bene˚ts including less travel and more frequent, shorter meetings. It will be important for us to consider how we retain what has worked well over the last year once restrictions are lifted and it becomes possible to travel once again. The Board enjoys the constructive discussions that we have with shareholders at the AGM in the UK and the Informal Shareholders™ Meeting in Hong Kong, so it was a matter of regret that we did not meet in person in 2020. While we did maintain regular contact with shareholders throughout the year, we will resume our face-to-face engagement with shareholders in the UK, Hong Kong and more widely, as soon as is practicable. External environment After the signi˚cant deterioration in global economic conditions in the ˚rst half of the year due to the Covid-19 pandemic, there were signs of improvement in the second half, especially in Asia. The most impressive economic recovery has been in China Œ still the biggest driver of global growth Œ where international trade is rebounding most strongly. The signing of the Regional Comprehensive Economic Partnership should further boost intra-regional activity across Asia, while the recent political agreement between the EU and China on an investment deal should, once rati˚ed, bolster the already signi˚cant two-way investment ˛ows. Covid-19 infection levels remain very high in Europe, the US and Latin America, and new variants of the virus have spread quickly. This has necessitated new lockdown measures in the UK and other countries. While the deployment of multiple vaccines means we are more optimistic about the future, there is clearly still some way to go before life can return to something like normality. Recovery will therefore take longer in these economies, with growth more likely later in 2021 in these economies. The agreement of a trade deal between the UK and EU prior to the end of 2020 provides some certainty for cross-border trade. However, the reduced access for ˚nancial services under these new arrangements means that further work is needed to maintain the level playing ˚eld that has existed until now. Given the many bene˚ts that the UK ˚nancial services industry brings to the UK and EU economies, equivalence must be a key priority for both parties. The geopolitical environment remains challenging Œ in particular for a global bank like HSBC Œ and we continue to be mindful of the potential impact that it could have on our strategy. We continue to engage fully and frequently with all governments as we seek to do everything we possibly can to help our customers navigate an increasingly complex world. Capturing future opportunities Given the external environment, it is vital we stay focused on what we can control. The Board is con˚dent there are many opportunities ahead for a bank with HSBC™s competitive strengths. This makes it all the more important that we position ourselves to capture them. While we prioritised supporting our customers and our people during the pandemic, we made good progress against the three strategic priorities announced in February 2020 Œ reallocating capital from underperforming parts of the business, reducing costs and simplifying the organisation. In particular, the Board worked closely with the management team over the course of the year on plans to accelerate progress and investment in key areas of growth, which include our Asian franchise, our wealth business and new technology across the Group. We are today unveiling the outcome of extensive consultation with our people and customers on the Group™s purpose and values. Being clear about who we are, what we stand for and how this connects to our strategy is an important part of how we align and energise the organisation to create long-term value for all those we work with and for Œ our investors, customers, employees, suppliers and the communities we serve. The Board fully endorses the outcome of this work. Our commitment to create sustainable value is demonstrated by the new climate ambitions we announced in October 2020. The most signi˚cant contribution that HSBC can make to the ˚ght against climate change is to bring our customers with us on the transition to a low-carbon future. Our goal of being net zero for our ˚nanced emissions by 2050 sends an important signal to our investors, our customers and our people Œ if our clients are prepared to change their business models and make that transition, we will help and support them to do so. HSBC was also delighted to be one of the founding signatories of the Terra Carta, which was launched last month by HRH The Prince of Wales™ Sustainable Markets Initiative. Further details about all of the steps we are taking towards a more sustainable future are set out in the ESG review, which for the ˚rst time is included within the Annual Report and Accounts 2020 .Finally, 2020 underlined once again that our people are the driving force behind our business. I would like to reiterate how enormously grateful I am to my colleagues for the great dedication and care they showed to our customers and to each other during such testing times. Further empowering and enabling them to do their jobs and execute our strategic priorities is the key to our future success. Mark E Tucker Group Chairman 23 February 2021 fi There are many opportunities ahead for a bank with HSBC™s competitive strengths.fl 7Group Chairman™s statement

PAGE – 10 ============
Group Chief Executive™s review digital capabilities Œ both in 2020 and in previous years Œ enabled our customers to access more services remotely, and we worked closely with our regulators around the world to open new digital channels in a safe and secure way. In total, we provided more than $26bn of relief to our personal customers and more than $52bn to our wholesale customers, both through government schemes and our own relief initiatives. We also played a vital role in keeping capital ˛owing for our clients, arranging more than $1.9tn of loan, debt and equity ˚nancing for our wholesale customers during 2020. Even in the middle of the pandemic, we continued to look to the future. In October, we announced our ambition to become a net zero bank by 2050, supporting customers through the transition to a low-carbon economy and helping to unlock next-generation climate solutions. If the Covid-19 pandemic provided a shock to the system, a climate crisis has the potential to be much more drastic in its consequences and longevity. We are therefore stepping up support for our clients in a material way, working together to build a thriving low-carbon economy and focusing our business on helping achieve that goal. The actions we outlined in February 2020 are largely on track or ahead of where we intended them to be, despite the complications of the pandemic. We renewed and re-energised the senior management team, with around three-quarters of the Group Executive Committee in post for just over a year or less. Our business is more streamlined than it was a year ago, with three global businesses instead of four and increased back-o˙ce consolidation. Costs are down materially, with over $1bn of gross operating costs removed during 2020. We are also already more than half-way towards our target to reduce at least $100bn of gross risk- weighted assets by 2022. Unfortunately, the changed interest-rate environment means we are no longer able to achieve a return on tangible equity of 10% to 12% by 2022. We will now target a return on tangible equity of 10% or above over the medium term. The world around us changed signi˚cantly in 2020. Central bank interest rates in many countries fell to record lows. Pandemic-related lockdowns led to a rapid acceleration in the shift from physical to digital banking. Like many businesses, we learned that our people could be just as productive working from With a blueprint for the future and a renewed purpose to guide us, we are building a dynamic, e˙cient and agile global bank with a digital-˚rst mindset, capable of providing a world-leading service to our customers and strong returns for our investors. Noel Quinn Group Chief Executive In 2020, HSBC had a very clear mandate Œ to provide stability in a highly unstable environment for our customers, communities and colleagues. I believe we achieved that in spite of the many challenges presented by the Covid-19 pandemic and heightened geopolitical uncertainty. Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us. We achieved this while delivering a solid ˚nancial performance in the context of the pandemic Œ particularly in Asia Œ and laying ˚rm foundations for our future growth. I am proud of everything our people achieved and grateful for the loyalty of our customers during a very turbulent year. 2020 Helping our customers emerge from the Covid-19 pandemic in a sustainable position was our most pressing priority. We did this by equipping our colleagues to work from home at the height of the pandemic, and keeping the vast majority of our branches and all of our contact centres open. Our investment in our 8Strategic report

PAGE – 11 ============
home as in the o˙ce. Also, as the world resolved to build back responsibly from the pandemic, governments, businesses and customers united to accelerate a low-carbon transition that works for all. All of these things caused us to adjust and reinforce elements of our strategy to ˚t this new environment. The growth plans that we have developed are a natural progression of our February 2020 plans. They aim to play to our strengths, especially in Asiaˇ to accelerate our technology investment plans to deliver better customer service and increased productivityˇ to energise our business for growthˇ and to invest further in our own low-carbon transition and that of our customers. They are also designed to deliver a 10% return on tangible equity over the medium term in the current low interest- rate environment. Our purpose As we charted the next stage of HSBC™s journey, we also re˛ected on our purpose as a business. We consulted widely both internally and externally, speaking to thousands of colleagues and customers, and looked deeply into our history. The same themes came up again and again. HSBC has always focused on helping customers pursue the opportunities around them, whether as individuals or businesses. Sometimes those opportunities are clear and visible, and sometimes they are far from obvious. Sometimes they arise in the next street, and sometimes on the next continent. Sometimes they exist in the status quo, and sometimes they are a product of great social or economic change. But always, they represent a chance for our customers to grow and to help those close to them Œ protecting, nurturing, building. ‚Opening up a world of opportunity™ both captures this aim and lays down a challenge for the future. Opportunity never stands still. It changes and evolves with the world around us. It is our job to keep making the most of it, and to ˚nd and capture it with a spirit of entrepreneurialism, innovation and internationalism that represents HSBC at its very best. This is the essence of what our plans intend to deliver, and what we intend to keep delivering for our customers, colleagues and communities as we navigate change and complexity together. Financial performance The pandemic inevitably a˝ected our 2020 ˚nancial performance. The shutdown of much of the global economy in the ˚rst half of the year caused a large rise in expected credit losses, and cuts in central bank interest rates reduced revenue in rate-sensitive business lines. We responded by accelerating the transformation of the Group, further reducing our operating costs and moving our focus from interest-rate sensitive business lines towards fee-generating businesses. Our expected credit losses stabilised in the second half of the year in line with the changed economic outlook, but the revenue environment remained muted. As a consequence, the Group delivered $8.8bn of reported pro˚t before tax, down 34% on 2019, and $12.1bn of adjusted pro˚ts, down 45%. Our Asia business was again the major contributor, delivering $13bn of adjusted pro˚t before tax in 2020. Adjusted revenue was 8% lower than in 2019. This was due mainly to the impact of interest rate cuts at the start of the year on our deposit franchises in all three global businesses. By contrast, our Global Markets business bene˚ted from increased customer activity due to market volatility throughout the year, growing adjusted revenue by 27%. We made strong progress in reducing our operating expenses. A combination of our cost-saving programmes, cuts in performance-related pay and lower discretionary spending due to the Covid-19 pandemic helped to reduce our adjusted operating expenses by $1.1bn or 3%. fi Helping our customers emerge from the Covid-19 pandemic in a sustainable position was our most pressing priority.fi 9Group Chief Executive™s review

290 KB – 382 Pages