Q4 2025 HSBC Holdings PLC Earnings Call

Speaker #2: Ladies and gentlemen, welcome to HSBC Holdings plc's 2025 Annual Results webinar for investors and analysts. For your information, today's webinar is being recorded. At this time, I will hand the call over to Georges El Hedery, Group CEO.

Speaker #3: Welcome, everyone. Thank you for joining us. As we celebrate the Year of the Horse, Kong Hei Fa Choi, our 2025 full-year performance was strong.

Speaker #3: It was a year in which we performed, transformed, and invested for growth. I will discuss our strong strategic progress today. First, the strong momentum in our 2025 performance; second, the execution of our three strategic priorities, where we are progressing at pace and with discipline; and third, the new growth and return targets we are setting out today for 2026, 2027, and 2028.

Speaker #3: So first, the full-year earnings. My comments will exclude notable items, and the comparisons will be year-on-year on a constant currency basis. In 2025, there were $6.7 billion of notable items.

Speaker #3: You are already aware of these from prior quarters. They are set out on appendix slide 36. So first, we delivered strong earnings. Group revenues grew 5%.

Speaker #3: Profit before tax rose 7%, reaching a record $36.6 billion. Return on tangible equity was 17.2%. And we delivered 3% cost growth on the target basis in 2025, in line with our cost target.

Speaker #3: Second, we delivered strong growth. Our deposit balances grew 5%, with deposit growth in each of our four businesses. Our deposit base is a core strength.

Speaker #3: It contributes the lion's share of our banking MII. We also grew fee and other income. In transaction banking, it grew by 4%. Elevated market activity demonstrates the power of our deep international network, which gives access to 86% of our trade flows.

Speaker #3: Alongside our product and service expertise, in wealth, it grew by 24%, reflecting our leadership position in the world's fastest-growing wealth markets and continued investment in our products and proposition.

Speaker #3: And we are investing for strategic long-term $13.7 billion privatization of Hang Seng Bank. This brings together 255 years of history and heritage, combining global reach and local depth.

Speaker #3: It reflects our confidence and conviction in Hong Kong's future growth. And third, we delivered strong returns to our shareholders. We announced a full-year ordinary dividend per share of $0.75, up 14% on 2024.

Speaker #3: Let's turn straight to the progress we are making on strategy execution. In October 2024, I set out a clear agenda to unlock HSBC's full potential.

Speaker #3: To do so, we now run the bank on four core complementary businesses: two home market businesses—UK and Hong Kong—and two international network businesses, competent institutional banking and international wealth and premier banking.

Speaker #3: Each business is growing, each is generating above mid-teens return on tangible equity, and each is building on a strong foundation for future growth. We are focused on three clear priorities.

Speaker #3: And we are moving at pace with each. One, be simple and agile. Two, drive customer centricity. And three, deliver focused, sustainable growth. Now, let's look at each priority in turn and our progress.

Speaker #3: First, simple and agile. The first step in unlocking HSBC's full potential is re-engineering to reduce complexity and cost. Structure and strategy are now aligned.

Speaker #3: Accountability is sharpened and roles deduplicated. In 2025, we reduce net managing director positions by circa 15%. We are taking $1.5 billion of annualized simplification saves straight to the bottom line with immaterial revenue impact.

Speaker #3: We expect to have taken action to deliver these saves by the first half of 2026, six months ahead of plan. We are also seeing positive progress with the reallocation of approximately $1.5 billion from non-strategic or low-returning businesses.

Speaker #3: The medium-term intent being to reallocate these costs to areas of competitive strength and generate accretive returns. In 2025, we announced 11 business or market exits.

Speaker #3: Completed and announced exits account for $0.7 billion in annualized cost savings, with around $1 billion of associated revenue. $0.6 billion remains in active execution, including those under strategic review.

Speaker #3: Then, following the privatization of Hang Seng Bank, we are increasing reallocation costs to $1.8 billion, reflecting an additional $0.3 billion of reported basis cost synergies across HSBC and Hang Seng Bank.

Speaker #3: We will direct this $0.3 billion to growth opportunities in Hong Kong. We are also streamlining and upgrading our operating model by simplifying the bank at scale and retiring non-strategic applications.

Speaker #3: And we are re-engineering, whilst focusing on resilience and risk management. Next, priority number two: drive customer centricity. Our four businesses are built on customer trust.

Speaker #3: Our investments to improve customer proposition and experience are yielding results. Net promoter scores have improved or remained top-ranked in our home markets. In Hong Kong, we added 1.1 million new-to-bank customers, taking the total number of customers to more than 7 million.

Speaker #3: Our UK business lending—our UK business banking lending—grew 13% year on year, excluding COVID loan runoff. In CIB, corporate surveys have positioned us as a market leader in trade, in payments, and in foreign exchange.

Speaker #3: In IWPB, we attracted net new invested assets of $80 billion. Next, priority number three: investing to deliver focused, sustainable growth. Our Hong Kong home market is a dynamic economy.

Speaker #3: A top three global financial center and a thriving trade gateway. It is the super connector between mainland China and the world, and it is set to become the world’s leading cross-border wealth hub by 2029.

Operator: Welcome to the HSBC Holdings PLC Investor and Analyst Presentation for the 2025 Annual Results. We will begin in two minutes. Following the presentation, there will be an opportunity to ask questions. If you are joining via the Zoom link provided, please use the Raise Hand function in Zoom to register your interest in asking a question. You may raise your hand now or at any other time during the call, and please ensure your camera is also turned on. If you are invited to ask a question, please accept the prompt to unmute your line. Please note that it will not be possible to ask a question if you are joining via the webcast link on the HSBC website. Ladies and gentlemen, welcome to HSBC Holdings PLC's 2025 Annual Results Webinar for Investors and Analysts. For your information, today's webinar is being recorded.

Speaker #3: The privatization of Hang Seng Bank enables us to scale capabilities and drive growth across both banks for all customers. We have the ambition, and we have comprehensive plans to deliver $0.9 billion of synergies and an unlock of opportunities by 2028.

Speaker #3: It is an investment for growth. And if we move beyond Hong Kong and look at HSBC's other core strengths, we are an Asia–Middle East powerhouse.

Speaker #3: Asia and the Middle East are increasingly central to global trade and capital flows. Global trade has been rewired. Asia’s growth is increasingly powered by intra-Asia demand—Asia is buying Asia.

Speaker #3: The Middle East is scaling as a global capital, trade, and investment hub. Its integration with Asia is accelerating. The Asia–Middle East corridor is becoming a defining axis of global growth.

Speaker #3: Wealth creation across Asia and the Middle East is also structurally strong. That is why we are investing to consolidate our powerhouse position and capture these growth opportunities.

Speaker #3: We are also investing to connect the world, scaling our capabilities, building new capabilities, and supporting customers to secure commercial advantage from real-time services. Our customers are making real-time, 24/7 payments across 35 markets that are also using frictionless tokenized deposits and payments in four markets, including the UK, with more to follow.

Speaker #3: And we are pioneering the future of finance. Last month, the UK Treasury selected HSBC's distributed ledger technology as its preferred platform for its UK Digital Guild pilot.

Speaker #3: Next, our people and technology. We see innovation and culture as core to our competitiveness, and we are investing in both. We are scaling AI adoption—first, to empower our colleagues; second, for end-to-end process re-engineering; and third, to enhance customer experience.

Operator: At this time, I will hand the call over to Georges Elhedery, Group CEO.

Georges Elhedery: Welcome, everyone. Thank you for joining us. As we celebrate the Year of the Horse, Gong Hei Fat Choy. Our 2025 full year performance was strong.... It was a year in which we performed, transformed, and invested for growth. I will discuss our strong strategic progress today. First, the strong momentum in our 2025 performance. Second, the execution of our 3 strategic priorities, where we are progressing at pace and with discipline. Third, the new growth and return targets we are setting out today for 2026, 2027, and 2028. First, the full year earnings. My comments will exclude notable items, and the comparisons will be year-on-year on a constant currency basis. In 2025, there were $6.7 billion of notable items. You are already aware of these from prior quarters. They are set out on appendix slide 36.

Speaker #3: Our customer relationships are built on trust. AI strengthens how we act on that trust, personalizing service at scale. A strong culture turns a clear strategy into results.

Speaker #3: And we are investing to nurture a high-performance culture. All our senior leaders and the broader Managing Director cohort have attended our new group-wide leadership training.

Speaker #3: Finally, let's turn to our new targets for 2026–27 and 2028. 2025 has been a year in which we have performed, transformed, and invested for growth.

Speaker #3: This gives us the confidence to set out new growth targets. We will target revenues growing year-on-year, every year, rising to 5% in 2028, excluding notable items.

Speaker #3: We will target return on tangible equity of 17% or better in each year from 2026 to 2028, excluding notable items. And a dividend payout ratio of 50% for each year, excluding material notable items.

Georges Elhedery: First, we delivered strong earnings. Group revenues grew 5%. Profit before tax rose 7%, reaching a record $36.6 billion. Return on tangible equity was 17.2%, and we delivered 3% cost growth on a target basis in 2025, in line with our cost target. Second, we delivered strong growth. Our deposit balances grew 5%, with deposit growth in each of our 4 businesses. Our deposit base is a core strength. It contributes the lion's share of our banking NII. We also grew fee and other income. In transaction banking, it grew by 4%. Elevated market activity, demonstrating the power of our deep international network, which gives access to 86% of world trade flows, alongside our product and service expertise.

Speaker #3: To conclude, we are creating a simple, agile, growing bank built to generate high returns. We are executing our strategy with discipline and precision. We are delivering growth.

Speaker #3: We are investing for growth, and we are confident we can navigate uncertainty from a position of strength. That is why we are confident in setting these new targets and in our ability to continue delivering for our shareholders.

Speaker #3: Let me now hand over to Pat. Thank you.

Speaker #1: Thank you, George. Thank you, everyone, for joining. We have had another strong quarter, which reflects the positive progress we are making towards creating a simpler, more agile, growing HSBC.

Speaker #1: We are investing for growth. Throughout this presentation, I will exclude notable items and focus on the fourth quarter numbers compared to the same period last year on a constant currency basis.

Georges Elhedery: In wealth, it grew by 24%, reflecting our leadership position in the world's fastest growing wealth markets and continued investment in our products and proposition. We are investing for strategic long-term growth. We completed the $13.7 billion privatization of Hang Seng Bank. This brings together 255 years of history and heritage, combining global reach and local depth. It reflects our confidence and conviction in Hong Kong's future growth. Third, we delivered strong returns to our shareholders. We announced a full year ordinary dividend per share of $0.75, up 14% on 2024. Let's turn straight to the progress we are making on strategy execution. In October 2024, I set out a clear agenda to unlock HSBC's full potential.

Speaker #1: Let's turn straight to the highlights. In the fourth quarter, revenues grew 6% to $17.7 billion. This was driven by broad-based growth in banking NII and fee and other income.

Speaker #1: Profit before tax was $8.6 billion, up 17%. Our customer deposit balances stand at $1.8 trillion, an increase of $78 billion when we include held for sale balances.

Speaker #1: Full year return on tangible equity was 17.2%, achieving our mid-teens or better target. In 2025, we maintained tight cost discipline, managing target basis cost growth to 3% in line with our cost growth target.

Georges Elhedery: To do so, we now run the bank on 4 core complementary businesses: 2 home market businesses, UK and Hong Kong, and 2 international network businesses, Corporate Institutional Banking and International Wealth and Premier Banking. Each business is growing, each is generating above mid-teens return on tangible equity, and each is building on strong foundation for future growth. We are focused on 3 clear priorities, and we are moving at pace with each. 1, be simple and agile. 2, drive customer centricity, and 3, deliver focused, sustainable growth. Now, let's look at each priority in turn and our progress. First, simple and agile. The first step in unlocking HSBC's full potential is reengineering to reduce complexity and cost. Structure and strategy are now aligned. Accountability is sharpened and roles deduplicated. In 2025, we reduce net managing director positions by circa 15%.

Speaker #1: Turning to capital and distributions. Our CET1 capital ratio was 14.9%, up 40 basis points in the quarter, reflecting our organic capital generation and our expectation not to initiate any further buybacks for up to three quarters following October's announcement of our intention to privatize Hang Seng Bank.

Speaker #1: As George said, this strong performance allows us to announce ordinary dividends for the year of 75 cents per share and increase of 14% on the prior year.

Speaker #1: Turning to our business segment performance. We grew full year revenue by 5% to 71 billion dollars. Each of our four businesses grew revenues, each grew deposits, deepening customer relationships each returned a mid-teens or better return on tangible equity excluding notable items.

Georges Elhedery: We are taking $1.5 billion of annualized simplification saves straight to the bottom line with immaterial revenue impact. We expect to have taken action to deliver these saves by the first half of 2026, 6 months ahead of plan. We are also making positive progress with the reallocation of circa $1.5 billion from non-strategic or low-returning businesses. The medium-term intent being to reallocate these costs to areas of competitive strength and generate accretive returns. In 2025, we announced 11 business or market exits. Completed and announced exits account for $0.7 billion in annualized cost savings, with around $1 billion of associated revenue. $0.6 billion remains in active execution, including those on the strategic review.

Speaker #1: We are pleased to be making such positive progress firm-wide. Moving next to our privatization of Hang Seng Bank. On 9th October, we announced our intention to privatize Hang Seng Bank.

Speaker #1: We are pleased to have completed on 26th January, sooner than our initial expectation of the first half of 2026. This slide explains the financial rationale.

Speaker #1: Let's walk through it. Starting with a 13.7 billion dollar purchase price. The removal of the 3.8 billion dollar minority capital inefficiency takes you to the 9.9 billion dollars of common equity tier one consumption.

Georges Elhedery: Following the privatization of Hang Seng Bank, we are increasing re- reallocation costs to $1.8 billion, reflecting an additional $0.3 billion of reported basis cost synergies across HSBC and Hang Seng Bank. We will direct this $0.3 billion to growth opportunities in Hong Kong. We are also streamlining and upgrading our operating model by simplifying the bank at scale and retiring non-strategic applications. We are reengineering whilst focusing on resilience and risk management. Next, priority number two, drive customer centricity. Our four businesses are built on customer trust. Our investments to improve customer proposition and experience are yielding results. Net promoter scores have improved or remained top ranked in our home markets. In Hong Kong, we added 1.1 million new-to-bank customers, taking the total number of customers to more than 7 million.

Speaker #1: The removal of the capital inefficiency is around a quarter of the purchase price. The $9.9 billion CET1 consumption is equivalent to buying back 4% of group shares at the point of announcement.

Speaker #1: Next, we show the 0.8 billion dollar minority interest in the P&L and the 0.5 billion dollars of pre-tax synergies from the privatization. Together, the minority interest and the synergies contribute more than 4% to our profit beating the buyback threshold.

Speaker #1: On top of this, we see potential further revenue and cost upside of 0.4 billion dollars enabled by the privatization. Then on the right of the slide, we see good growth in Hong Kong in the years ahead.

Georges Elhedery: Our UK business banking lending grew 13% year-on-year, excluding COVID loan run-off. In CIB, corporate surveys have positioned us as a market leader in trade, in payments, and in foreign exchange. In IWPB, we attracted net new invested assets of $80 billion. Next, priority number 3, investing to deliver focused, sustainable growth. Our Hong Kong home market is a dynamic economy, a top 3 global financial center and a thriving trade gateway. It is the super connector between mainland China and the world, and it is set to become the world's leading cross-border wealth hub by 2029. The privatization of Hang Seng Bank enables us to scale capabilities and drive growth across both banks for all customers.

Speaker #1: Having two fully owned banks positions us well to capture this growth. As we said in October, we are acquiring a business with structurally high pre-impairment margins.

Speaker #1: And while we are not calling the credit cycle, we believe it is a cycle. Let's now turn to banking NII. Our full year banking NII was 44.1 billion dollars.

Speaker #1: In the fourth quarter, banking NII of 11.7 billion dollars grew 0.7 billion dollars. 0.4 billion dollars of this growth was in Hong Kong. Including the recovery of HIBOR during the quarter.

Speaker #1: Banking NII in the fourth quarter included a positive benefit of around $100 million for items that we do not expect to repeat. We expect full-year 2026 banking NII of at least $45 billion.

Georges Elhedery: We have the ambition, we have comprehensive plans to deliver $0.9 billion of benefits through reported synergies and an unlock of opportunities by 2028. It is an investment for growth. If we move beyond Hong Kong and look at HSBC's other core strengths, we are an Asia, Middle East powerhouse. Asia and the Middle East are increasingly central to global trade and capital flows. Global trade is being rewired. Asia's growth is increasingly powered by intra-Asia demand. Asia is buying Asia. Middle East is scaling as a global capital, trade, and investment hub. Its integration with Asia is accelerating. The Asia-Middle East corridor is becoming a defining axis of global growth. Wealth creation across Asia and the Middle East is also structurally strong. That is why we are investing to consolidate our powerhouse position and capture these growth opportunities.

Speaker #1: With the impact of expected lower rates more than offset. By deposit growth and the tailwind from our structural hedge. Next, to wholesale transaction Banking this year has really validated the strength of our franchise in a range of economic , market and tariff situations We have deepened customer relationships and our global network has helped our customers navigate volatility and uncertainty in the quarter Security services grew fee and other income 6% , reflecting higher market valuations and new mandates Payments grew 3% , driven by new mandates and payment volumes in particular , international payments Foreign exchange increased by 1% , reflecting strong client flows and higher levels of volatility This was a good performance given the strong prior year comparison Trade was down 5% in the quarter , but it was stable over the full year I would note the first half was particularly strong given advance ordering as we supported clients to navigate a fast changing landscape We continue to see growth in volumes and strong client engagement Let's now turn to wealth , including the new disclosures we are setting out today .

Georges Elhedery: We are also investing to connect the world, scaling our capabilities, building new capabilities, and supporting customers secure commercial advantage from real-time services. Our customers are making real-time, 24/7 payments across 35 markets. They are also using frictionless tokenized deposits and payments in four markets, including the UK, with more to follow. We are pioneering the future of finance. Last month, the UK Treasury selected HSBC's distributed ledger technology as its preferred platform for its UK digital gilt pilot. Next, our people and technology. We see innovation and culture as core to our competitiveness, and we are investing in both. We are scaling AI adoption, first, to empower our colleagues, second, for end-to-end process reengineering, and third, to enhance customer experience. Our customer relationships are built on trust. AI strengthens how we act on that trust, personalizing service at scale.

Speaker #1: We are very pleased with the 20% year on year fee and other income growth to $2.1 billion , and we are very encouraged that this was driven by all four areas , which shows the sharpening of our strategy is working .

Speaker #1: Asset management grew 14% and private banking group investment distribution also performed well up 14% , reflecting strength in our customer franchise in Hong Kong Our insurance CSM balance was $14.6 billion , up 21% versus the prior year .

Georges Elhedery: A strong culture turns a clear strategy into results, and we are investing to nurture a high-performance culture. All our senior leaders and the broader managing director cohort have attended our new group-wide leadership training. Finally, let's turn to our new targets for 2026, 2027, and 2028. 2025 has been a year in which we have performed, transformed, and invested for growth. This gives us the confidence to set out new growth targets. We will target revenues growing year-on-year every year, rising to 5% in 2028, excluding notable items. We will target Return on Tangible Equity of 17% or better in each year from 2026 to 2028, excluding notable items, and a dividend payout ratio of 50% for each year, excluding material notable items. To conclude, we are creating a simple, agile, growing bank, built to generate high returns.

Speaker #1: We continue to attract net new invested assets with $7 billion in the fourth quarter Today , we are giving you new disclosures , which you will see through on this slide These better show the strength of our relationship with our customers , including both their deposits and invested assets .

Speaker #1: We are focused on capturing the full wealth opportunity, and we will now report wealth balances and net new money. I appreciate that the wealth balance figure is similar to the invested assets, but I would highlight two changes to note.

Georges Elhedery: We are executing our strategy with discipline and precision. We are delivering growth, we are investing for growth, and we are confident we can navigate uncertainty from a position of strength. That is why we are confident in setting these new targets and in our ability to continue delivering for our shareholders. Let me now hand over to Pat. Thank you.

Speaker #1: You will see these set out on appendix slides 31 , 32 and 33 . We have added $608 billion of Premier and private bank deposits to the invested assets .

Speaker #1: That is offset by taking out $580 billion of asset management , third party distribution assets . This is a good business , but it does not reflect our wealth .

Pam: Thank you, George. Thank you everyone for joining. We have had another strong quarter, which reflects the positive progress we are making towards creating a simple, more agile, growing HSBC. We are investing for growth. Throughout this presentation, I will exclude notable items and focus on the Q4 numbers compared to the same period last year on a constant currency basis. Let's turn straight to the highlights. In the Q4, revenues grew 6% to $17.7 billion. This was driven by broad-based growth in banking NII and fee and other income. Profit before tax was $8.6 billion, up 17%. Our customer deposit balances stand at $1.8 trillion, an increase of $78 billion when we include held for sale balances. Full-year return on tangible equity was 17.2%, achieving our mid-teens or better target.

Speaker #1: Customers Adjusting our disclosure in this way also means our wealth business is more easily comparable to the broader peer group These new disclosures will replace the existing ones from the first quarter of 2026 .

Speaker #1: We saw net new money in the quarter of $26 billion, of which $19 billion was in Asia, and wealth is not just a Hong Kong story.

Speaker #1: It runs across our Asia and Middle East franchise , with double digit invested asset growth in Singapore , mainland China , India and the UAE Next to credit , our ECL charge this quarter was naught point $9 billion .

Speaker #1: There was no material impact from Hong Kong commercial real estate in the quarter. On slide 29, you will see we have updated the commercial real estate disclosures. Movements in the fourth quarter were in line with our expectations. Our full year 2026 ECL guidance is around 40 basis points.

Pam: In 2025, we maintained tight cost discipline, managing target basis cost growth to 3%, in line with our cost growth target. Turning to capital and distributions. Our CET1 capital ratio was 14.9%, up 40 basis points in the quarter, reflecting our organic capital generation and expectation not to initiate any further buybacks for up to 3 quarters following October's announcement of our intention to privatize Hang Seng Bank. As George said, this strong performance allows us to announce ordinary dividends for the year of $0.75 per share, an increase of 14% on the prior year. Turning to our business segment performance. We grew full-year revenue by 5% to $71 billion. Each of our four businesses grew revenues. Each grew deposits, deepening customer relationships. Each returned a mid-teens or better return on tangible equity, excluding notable items.

Speaker #1: This is at the higher end of our typical range , reflecting the economic outlook and remaining pressures in parts of retail and office commercial real estate in Hong Kong Let's now turn to costs We delivered 3% target basis cost growth in the full year , hitting our cost goals while making the space to invest in the bank was a key theme of 2025 .

Speaker #1: It will be again in 2026 . We have taken actions to realise $1.2 billion of annualised simplification savings with in material revenue impact .

Speaker #1: This is ahead of our original timeline of $1 billion by the year end 2025 . On a real basis . We have taken naught point $6 billion off the simplification saves into the full year 2025 PNL , together with ongoing discipline .

Speaker #1: This allows us to guide for 1% cost growth on a target basis for 2026 , while reinvesting in the business Next to customer deposits and loans We had another strong quarter with deposit growth of $50 billion .

Pam: We are pleased to be making such positive progress firm-wide. Moving next to our privatization of Hang Seng Bank. On 9 October, we announced our intention to privatize Hang Seng Bank. We are pleased to have completed on 26 January, sooner than our initial expectation of the first half of 2026. This slide explains the financial rationale. Let's walk through it, starting with a $13.7 billion purchase price. The removal of the $3.8 billion minority capital inefficiency takes you to the $9.9 billion of common equity Tier 1 consumption. The removal of the capital inefficiency is around a quarter of the purchase price. The $9.9 billion CET1 consumption is equivalent to buying back 4% of group shares at the point of announcement.

Speaker #1: We saw good growth in each of our four businesses. Loans increased by $5 billion. The UK was again the standout, with another quarter of growth in mortgages and commercial lending.

Speaker #1: Our UK business is well positioned to support growth in the UK economy . We are particularly pleased with the momentum in our commercial loan book , where we see significant potential , particularly in infrastructure innovation , social housing and mid-market direct lending Now turning to capital Our Cet1 ratio is up strongly to 14.9% , primarily reflecting good organic capital generation , although after the balance sheet date , I draw your attention to the impact of the Hang Seng Bank privatisation , which is 110 basis points .

Pam: Next, we show the $0.8 billion minority interest in the P&L and the $0.5 billion of pre-tax synergies from the privatization. Together, the minority interest and the synergies contribute more than 4% to our profit, beating the buyback threshold. On top of this, we see potential. Further revenue and cost upside of $0.4 billion, enabled by the privatization. On the right of the slide, we see good growth in Hong Kong in the years ahead. Having two fully owned banks positions us well to capture this growth. As we said in October, we are acquiring a business with structurally high pre-impairment margins. While we are not calling the credit cycle, we believe it is a cycle. Let's now turn to banking NII. Our full year banking NII was $44.1 billion.

Speaker #1: In addition to the ten basis points already incurred in the fourth quarter, we have set this out in appendix Slide 27. As a reminder, we said when announcing the offer on 9th October that we expected to suspend buybacks for up to the next three quarters.

Speaker #1: That is , of course , dependent on underlying capital generation with strong profitability and current modest loan growth . We remain highly capital generative , a decision on future share buybacks will be taken quarterly , subject to a normal buyback considerations .

Speaker #1: Let's next turn to the full year performance Excluding notable items and at constant currency , revenues grew 5% to $71 billion . Profit before tax was $36.6 billion , up 7% year on year to a record high return on tangible equity was 17.2% , achieving our mid-teens or better target Our strong performance allows us to announce ordinary dividends for the year of $0.75 per share , or $12.9 billion .

Pam: In Q4, banking NII of $11.7 billion grew $0.7 billion. $0.4 billion of this growth was in Hong Kong, including the recovery of HIBOR during Q4. Banking NII in Q4 included a positive benefit of around $100 million for items that we do not expect to repeat. We expect full year 2026 banking NII of at least $45 billion, with the impact of expected lower rates more than offset by deposit growth and the tailwind from our structural hedge. Next, to wholesale transaction banking. This year has really validated the strength of our franchise in a range of economic, market, and tariff situations. We have deepened customer relationships, and our global network has helped our customers navigate volatility and uncertainty.

Speaker #1: Let's briefly return to the new targets George set out earlier, before I close on guidance. We made clear and positive progress in 2025.

Speaker #1: That is why we are now raising our ambition to target a 17% return on tangible equity or better, excluding notable items in each year from 2026 to 2028.

Speaker #1: We will also target year-on-year revenue growth in each year over the period, rising to 5% in 2028 compared to 2027.

Speaker #1: Excluding notable items . And as you would expect , we maintain our discipline of a 50% dividend payout ratio excluding material . Notable items and related impacts Finally , to guidance , this slide gives you our guidance mainly for 2026 .

Pam: In the quarter, security services grew fee and other income 6%, reflecting higher market valuations and new mandates. Payments grew 3%, driven by new mandates and payment volumes, in particular, international payments. Foreign exchange increased by 1%, reflecting strong client flows and higher levels of volatility. This was a good performance, given the strong prior year comparison. It was stable over the full year. I would note the first half was particularly strong, given advance ordering as we supported clients to navigate a fast-changing landscape. We continue to see growth in volumes and strong client engagement. Let's now turn to wealth, including the new disclosures we are setting out today. We are very pleased with the 20% year-on-year fee and other income growth to $2.1 billion.

Speaker #1: We saw revenue momentum continue in January, including in Wealth. On the slide, you see banking NII of at least $45 billion.

Speaker #1: Our revenue ambitions for our Wealth business are contained within our revenue target. We have therefore removed 'grow fee and other income at a double-digit percentage.'

Speaker #1: Kegger, from our guidance, we see an ECL charge of around 40 basis points, broadly stable on 2025. We expect to constrain cost growth to 1% on a target basis.

Speaker #1: This benefits from our organisational simplification and allows us to continue to invest in the business. There is no change to our CET1 target range of 14.0% to 14.5% in 2026.

Pam: We are very encouraged that this was driven by all four income areas, which shows the sharpening of our strategy is working. Asset management grew 14%, and private banking grew 8%. Investment distribution also performed well, up 14%, reflecting strength in our customer franchise in Hong Kong. Our insurance CSM balance was $14.6 billion, up 21% versus the prior year. We continue to attract net new invested assets with $7 billion in Q4. Today, we are giving you new disclosures, which you will see through on this slide. These better show the strength of our relationship with our customers, including both their deposits and invested assets. We are focused on capturing the full wealth opportunity, and we will now report wealth balances and net new money.

Speaker #1: We will deliver the $1.5 billion of savings from the reorganisation. We are well on track with the $1.5 billion of reallocation costs, which will be redirected towards priority growth areas.

Speaker #1: We are now adding the expected $0.3 billion of Hang Seng Bank cost synergies to the original, not $1.5 billion of reallocation costs.

Speaker #1: Taking this to circa $1.8 billion on Hang Seng Bank specifically , we see $0.5 billion of revenue and cost synergies to be achieved by year end 2028 , as well as an additional naught point $4 billion of potential further upside enabled by the privatisation to achieve this $0.9 billion , we will incur a restructuring charge of naught point $6 billion from the Hang Seng privatisation , which will be a material notable item to close .

Pam: I appreciate that the wealth balance figure is similar to the invested assets, but I would highlight two changes to note. You will see these set out on appendix slides 31, 32, and 33. We have added $608 billion of premier and private bank deposits to the invested assets. That is offset by taking out $580 billion of asset management, third-party distribution assets. This is a good business, but it does not reflect our wealth customers. Adjusting our disclosure in this way also means our wealth business is more easily comparable to the broader peer group. These new disclosures will replace the existing ones from Q1 2026. We saw net new money in the quarter of $26 billion, of which $19 billion was in Asia. Wealth is not just a Hong Kong story.

Speaker #1: As I said to you last year . I am fully focused on discipline , performance and delivery . Discipline means prioritizing with precision , maintaining strong cost control and ensuring investment rigor for growth .

Speaker #1: Performance means gearing our financial strategy towards achieving our new returns. Target delivery means ensuring we remain agile and resilient, enhance operating leverage, and are always well positioned to support our customers.

Speaker #1: This is exactly how we will continue to run the bank. With that, we are happy to take your questions, Alastair.

Speaker #2: Thank you Thank you George . We'll take any questions from the room here in Hong Kong First , if I could ask you to introduce yourself a company and this being the hard part , cell , two questions which these That goes for people on zoom as well .

Speaker #2: In the room . Anybody like to ask a first question here Yeah . We'll take a question from Nick Yeah . Let's go .

Pam: It runs across our Asia and Middle East franchise, with double-digit invested asset growth in Singapore, Mainland China, India, and the UAE. Next, to credit. Our ECL charge this quarter was $0.9 billion. There was no material impact from Hong Kong commercial real estate in the quarter. On slide 29, you will see we have updated the commercial real estate disclosures. Movements in the Q4 were in line with our expectations. Our full year 2026 ECL guidance is around 40 basis points. This is at the higher end of our typical range, reflecting the economic outlook and remaining pressures in parts of retail and office commercial real estate in Hong Kong. Let's now turn to costs. We delivered 3% target basis cost growth in the full year.

Speaker #2: Yep .

Speaker #3: It's Nick from Morgan Stanley . And thank you very much for taking my question . I'll put it one question in two parts , if that's okay I'm just interested in your revenue target by 2028 .

Speaker #3: Of achieving 5% revenue growth. And I just wonder if you could talk about some of the components of how you would get there.

Speaker #3: Presumably wealth is is part of that . And so maybe you could talk about the wealth trajectory and how sustainable that is . Presumably at some stage we're going to see sort of a kick in of sort of development of markets in Asia .

Speaker #3: And , and that markets business can grow more . So I wonder if you could talk a little bit about how you want to grow that .

Speaker #3: Markets business in Asia

Speaker #4: Thank you. Thank you, Nick, for the question. I'm going to share some high-level comments as we're looking at the growth opportunities.

Speaker #4: And Pam can take you through the various components . The first thing is we have delivered growth in 2025 . And of growth as we mentioned across all our businesses and all our key metrics , including deposits , loans , including fee income and transaction And and this is reflected in our revenues growing at 5% 2025 The second item to call out is if you look at our footprint , we're actually basically aligned to the strong structural growth opportunities Hong Kong .

Pam: Hitting our cost goals while making the space to invest in the bank was a key theme of 2025. It will be again in 2026. We have taken actions to realize $1.2 billion of annualized simplification savings with immaterial revenue impact. This is ahead of our original timeline of $1 billion by the year end 2025. On a realized basis, we have taken $0.6 billion of the simplification saves into the full year 2025 P&L. Together, with ongoing discipline, this allows us to guide for 1% cost growth on a target basis for 2026, while reinvesting in the business. Next to customer deposits and loans. We had another strong quarter, with deposit growth of $50 billion. We saw good growth in each of our 4 businesses. Loans increased by $5 billion.

Speaker #4: We've called it out and we're basically consolidating our leadership position , capture these growth opportunities . With the privatization of Hang Seng , among other Asia , Asia and Middle East , structural growth opportunities in wealth , but also Asia hitting record volumes and shipments for trade , Asia is buying Asia .

Speaker #4: And we are in our footprint , allows us to capture these growth opportunities . The UK , we've seen the strongest loan growth in 2025 and caters to to believe that there is a possibility for the strength to carry on .

Speaker #4: This is the strongest growth we've seen in the UK for many years, but it's also the strongest growth that we've seen across all our businesses that we have in the UK. And then the last thing I'll call out is that we are investing for all these growth opportunities.

Speaker #4: We're putting now , investment from within our cost base . We're putting investment from the additional costs we're taking 2026 , and we will be putting even further investment from the reallocation of the 1.8 billion as we free up these costs back into those core areas where we can grow .

Pam: The UK was again the standout, with another quarter of growth in mortgages and commercial lending. Our UK business is well positioned to support growth in the UK economy. We are particularly pleased with the momentum in our commercial loan book, where we see significant potential, particularly in infrastructure, innovation, social housing, and mid-market direct lending. Now, turning to capital. Our CET1 ratio is up strongly to 14.9%, primarily reflecting good organic capital generation. Although, after the balance sheet date, I draw your attention to the impact of the Hang Seng Bank privatization, which is 110 basis points, in addition to the 10 basis points already incurred in the Q4. We have set this out in appendix slide 27. As a reminder, we said, when announcing the offer on 9 October, that we expected to suspend buybacks for up to the next 3 quarters.

Speaker #4: And this is what's giving us this confidence to give you the growth targets of revenue growing year on year, every year, rising to 5% in 2028.

Speaker #4: Then thank .

Speaker #5: You , George .

Speaker #1: So firstly , in 2026 , we expect broad based growth in revenue across all our businesses . But just unbundling a little in banking and I , as we have said , we expect a low single digit growth fundamentally driven through deposits .

Speaker #1: Yes , there are pockets of growth , but so far we've just seen in the UK overall , we expect that growth in wealth and transaction banking and our fee generating businesses will continue to be very positive as we go beyond 26 .

Speaker #1: We expect balance sheet growth should kick in in Asia and other markets , not just in the UK . Of course , we are seeing growth in the US already , but we are not a big player in the US market Domestic growth and we are continuing to invest in our fee businesses and our investment plans are multi-year plans .

Speaker #1: So it's not just for growth . For one year . It's a very strong building block for growth through the period . We have called out and beyond , particularly in markets like Hong Kong .

Speaker #1: In the UK and other key markets. For us, in Asia and the Middle East,

Speaker #4: Thank you . Nick

Speaker #2: Thank you . Any further questions in Hong Kong will go straight to the zoom . I think the first question on zoom , then please , is with Joe Dickerson at Jefferies .

Speaker #2: Actually, I've announced you yourself there, Joe, so please unmute and go ahead.

Pam: That is, of course, dependent on underlying capital generation. With strong profitability and current modest loan growth, we remain highly capital generative. A decision on future share buybacks will be taken quarterly, subject to our normal buyback considerations. Let's next turn to the full-year performance. Excluding notable items and at constant currency, revenues grew 5% to $71 billion. Profit before tax was $36.6 billion, up 7% year-on-year to a record high. Return on Tangible Equity was 17.2%, achieving our mid-teens or better target. Our strong performance allows us to announce ordinary dividends for the year of $0.75 per share or $12.9 billion. Let's briefly return to the new targets George set out earlier before I close on guidance.... We made clear and positive progress in 2025.

Speaker #6: Thank you . Alistair . Good set of results guys . Just a quick question on the costs . How if you look at the 2026 number that you've given , the kind of 1% growth I know you've got your recycling , how do you think about when you look back ?

Speaker #6: What's the the metabolic rate of of growth in costs , particularly coming from investments , because you clearly have some global peers who've accelerated their investments around AI .

Speaker #6: So I was just curious how you think about that . And then secondly , nitpicky question , but what rate of high boar have you assumed in the in the banking NII guide of greater than 45 billion ?

Speaker #6: Thanks .

Speaker #4: Thank you very much , Joe , for your questions . I'll let me let me share some high level considerations . How we're looking at costs .

Speaker #4: And I'll ask Pam to comment then on cost and on high rates . And I shared a bit earlier , but I want to emphasize first , within our cost base , there is a proportion set aside for investments for change .

Speaker #4: The bank investments , digital capabilities , additional people , hires , relationship managers , weather advisory , etc. of course , generative AI efficiency generation .

Speaker #4: That's within our cost base . Second , the fact that we're adding cost adjusted for these savings , half of that additional cost will go towards payroll inflation .

Speaker #4: But the other half will go towards additional investments . And then third , the recycling of those 1.8 billion , which is a commensurate to about 5 or 6% of our cost base .

Pam: That is why we are now raising our ambition to target 17% Return on Tangible Equity or better, excluding notable items, in each year from 2026 to 2028. We will also target year-on-year revenue growth in each year over the period, rising to 5% in 2028 compared to 2027, excluding notable items. As you would expect, we maintain our discipline of a 50% dividend payout ratio, excluding material notable items and related impacts. Finally, to guidance. This slide gives you our guidance mainly for 2026. We saw revenue momentum continue in January, including in Wealth. On the slide, you see banking NII of at least $45 billion. Our revenue ambitions for our Wealth business are contained within our revenue target. We have therefore removed grow fee and other income at a double-digit percentage CAGR from our guidance.

Speaker #4: We'll go back into those areas of investment for growth. So we believe we have ample capacity to invest and deliver the growth that we are setting ourselves, setting targets to deliver against.

Speaker #4: Then the next thing I would say about costs is that it's important, Joe, that we are committed to cost discipline. We are confident in our ability to deliver cost discipline.

Speaker #4: And as you've seen for our 2025 results , we have met our cost targets . So I think that's an important guide . Also , as you look at our cost guidance for 2026 per .

Speaker #1: Thank you, George. So, firstly, I would note that we are ahead on our simplification saves because our plan and the actions we have taken have come through sooner than what we had originally outlined.

Speaker #1: This gives us incremental savings of $700 million in full year 2026, so that has been a consideration in the overall 1% cost growth envelope.

Speaker #1: And as George said, you know, as we have divestments happening, we are continuously redeploying those or reallocating those costs to our priority growth areas.

Speaker #1: What's really important for us is that our investment rigor is focused on our strategic priorities . That's what we've done in 2025 . That's what we will do going forward .

Speaker #1: And these are committed plans which are multi-year plans . They don't go back and forth every year . So that's all part of the the overall cost envelope guidance we have given for this year .

Pam: We see an ECL charge of around 40 basis points, broadly stable on 2025. We expect to constrain cost growth to 1% on a target basis. This benefits from our organizational simplification and allows us to continue to invest in the business. There is no change to our CET1 target range of 14 to 14.5%. In 2026, we will deliver the $1.5 billion of savings from the reorganization. We are well on track with the $1.5 billion of reallocation costs, which will be redirected towards priority growth areas. We are now adding the expected $0.3 billion of Hang Seng Bank cost synergies to the original $1.5 billion of reallocation costs, taking this to circa $1.8 billion.

Speaker #1: And again, we're only going to give guidance for Q1. But we expect to maintain a cost rigor on a continuous basis in terms of rate assumptions.

Speaker #1: We have used the end January forward rate curve for our banking and AI guidance for all major currencies . So in terms of high bore , just to note , a couple of points are haibo volatility that we saw in Q2 and Q3 when high was at 1% , has an impact of about $100 million on banking .

Speaker #1: And II the moment hybrid sort of stabilizes , as it did in Q4 . And indeed , this year , although it has fluctuated a little bit around the 2.5 mark that is captured in our guidance .

Speaker #1: And we look at a few plausible downside scenarios as well, before we give a full guidance.

Speaker #4: Thank you . Joe

Speaker #2: Thank you. Our next question on the Zoom is from Ben Toms at RBC.

Speaker #7: Morning , both . Thank you for taking my questions . Morning , Alastair . Firstly on your wrote guidance of greater than 17% .

Speaker #7: I'm just looking for some commentary about how sustainable you feel that guidance is beyond the announced planning horizon . So how much do you feel this guidance is an all weather guidance post ?

Pam: On Hang Seng Bank specifically, we see $0.5 billion of revenue and cost synergies to be achieved by year-end 2028, as well as an additional $0.4 billion of potential further upside enabled by the privatization. To achieve this $0.9 billion, we will incur a restructuring charge of $0.6 billion from the Hang Seng privatization, which will be a material notable item. To close, as I said to you last year, I'm fully focused on discipline, performance, and delivery. Discipline means prioritizing with precision, maintaining strong cost control, and ensuring investment rigor for growth. Performance means gearing our financial strategy towards achieving our new returns target. Delivery means ensuring we remain agile and resilient, enhance operating leverage, and are always well-positioned to support our customers. This is exactly how we will continue to run the bank.

Speaker #7: All the investments that you've been making into the business , and then secondly , on the Hang Seng synergies on slide 13 . I just talk a little bit about why you've adopted two buckets that you've labeled synergies and upside is the upside bucket .

Speaker #7: Basically, where there's a lower degree of certainty over the synergies. Some color on what type of synergies fall into each bucket would be useful.

Speaker #7: And presumably there's no incremental restructuring costs associated with the upside bucket on top of the $0.6 billion. Thank you.

Speaker #4: Thank you very much , Ben . On on the Hang Seng guidance . What I will share is we do have the management ambition and we do have comprehensive set of plans , which is the full $0.9 billion upside with the restructuring costs that we've called out .

Speaker #4: I'll let them give you the details on the guidance. We are not guiding beyond our horizon, but you should always assume that we are ambitious.

Speaker #1: Thank you . George , and say on our guidance , we continue to see positive momentum in our businesses . And as we said earlier , we are investing for growth .

Speaker #1: But of course, the targets are only for three years. So in terms of the Hang Seng synergies, you're quite right.

Speaker #1: The $500 million is what I would call the reported synergies, following accounting rules. The $400 million synergies are depending, to some extent, on markets and customer behavior.

Speaker #1: So, there is some degree of uncertainty, and they don't strictly fall between what is considered to be reported synergies. So that's the reason why there are two separate—both these synergies.

Pam: With that, we are happy to take your questions. Alistair?

[Company Representative] (HSBC Holdings PLC): Thank you, Pam. Thank you, George. We'll take any questions from the room here in Hong Kong first. If I could ask you to introduce yourself and your company, and this being the hard part, constrain yourself to two questions each, please. That goes for people on Zoom as well as people in the room. Anybody who'd like to ask the first question here? We'll take a question from Nick.

Speaker #1: The plan to get that 900 million benefit is by the end of 28 . And the restructuring cost of 600 million covers the benefits across both buckets and now beyond that , we actually believe , as it says on the slide , that at some stage the credit cycle will be normalized .

Speaker #1: So there will be some benefit coming from there . There will be more growth in lending as well as overall Hong Kong growth , which we will continue to be very well positioned for because of the redeployment of the cost allocations that we have , there will be a fair chunk that obviously goes into Hong Kong , which is a core market on our strategy

Nick Lord: Sure.

[Company Representative] (HSBC Holdings PLC): Yeah, let's go. Yeah.

Nick Lord: Yeah, it's Nick Lord from Morgan Stanley. Thank you very much for taking my question. I'll put it in 1 question in 2 parts, if that's okay. I'm just interested in your revenue target by 2028 of achieving 5% revenue growth. I just wonder if you could talk about some of the components of how you would get there. Presumably, Wealth is part of that, so maybe you could talk about the Wealth trajectory and how sustainable that is. Presumably, at some stage, we're going to see a kick-in of development of markets in Asia, and that markets business can grow more. I wonder if you could talk a little bit about how you want to grow that markets business in Asia.

Speaker #4: Perfect . Thank you . Ben .

Speaker #2: Yeah , we have a question in the room next . Melissa . So you'll have to introduce yourself fully .

Speaker #8: Hi, I'm Melissa from Goldman Sachs. Just two questions in terms of the strategy that you have. The five rising to 5% revenue growth.

Speaker #8: Just wanted to see if you can give a bit of a kegger growth instead . So we can understand , you know , the pathway there in terms of that .

Georges Elhedery: ... Thank you. Thank you, Nick, for the question. Going to share some high-level comments as we are looking at the growth opportunities, and Pam can take you through the various components. The first thing is, we have delivered growth in 2025. We've delivered growth, as we mentioned, across all our businesses and all our key metrics, including deposits, loans, including fee income and transaction, banking, and wealth. This is reflected in our revenues growing at 5% in 2025. The second item to call out is if you look at our footprint, we're actually basically aligned to these strong structural growth opportunities. Hong Kong, we've called it out, and we're basically consolidating our leadership position to capture these growth opportunities with the privatization of Hang Seng, among other.

Speaker #8: You know, I suppose—will it be coming largely from the non-banking NII portion, or will it be from the banking? And so, that's my first question.

Speaker #8: On the second question , perhaps on the restructuring costs at HSBC of 0.6 . Can you just give a little flavor about what is it that we are doing on this in terms of the restructuring that we need such a cost where we focusing on in terms of delivery and then how , you know , we'll see the revenue synergies and , and in terms of the revenue synergies , can it be as quick as next year or will it be more heavy into 2028 as per your three year guidance rising to 5% ?

Speaker #4: Thank you very much , Melissa . I think Pam can address both questions .

Speaker #1: Thank you, George. So firstly, we've said that revenue growth is positive each year, but it's also progressive and reaching up to 5% by '27 to '28.

Georges Elhedery: Asia and Middle East, structural growth opportunities in wealth. Also, Asia, Middle East, hitting record volumes and shipments for trade. Asia is buying Asia. We are, you know, our footprint allows us to capture these growth opportunities. The UK, we've seen the strongest loan growth in 2025. We have indicators to believe that there is a possibility for this trend to carry on. This is the strongest loan growth we've seen in the UK for many years. It's also the strongest loan growth that we've seen across all our businesses that we have seen in the UK. The last thing I would call out is that we are investing for all these growth opportunities. We're putting now investment from within our cost base.

Speaker #1: In terms of the underlying building blocks . We said to you that in 2026 , where we have given the guidance on banking , NII , it's a low single digit .

Speaker #1: So therefore similar to to the prior year , we will see more positive growth momentum on the fee generating businesses . And beyond 2026 banking NII .

Speaker #1: Of course, we look and see where the guidance is, where it is, where the rates are, and what's the timing of the rate cuts as we go into '26.

Speaker #1: But we are continuing to to invest in our fee generating businesses . So we see that momentum in those businesses , including wealth , which really underpins this revenue growth and wholesale transaction banking to continue .

Georges Elhedery: We're putting investment from the additional costs we're, you know, taking in 2026, and we will be putting even further investments from the reallocation of the $1.8 billion as we free up these costs back into those core areas where we can grow. This is what's giving us this confidence to give you the growth targets of revenue growing year-on-year every year, rising to 5% in 2028. Pam?

Speaker #1: And I'm hoping that at some stage we'll see a little bit more of growth on the balance sheet in terms of lending beyond UK that we have already seen .

Speaker #1: Now , in terms of the restructuring costs , there are a couple of elements that drive it . One is the some organizational alignment .

Speaker #1: So there will be some roles which will evolve and teams that will be realigned . But a large chunk of this is really in terms of technology .

Pam: Thank you, George. Firstly, in 2026, we expect broad-based growth in revenue across all our businesses. Just unbundling a little, in banking NII, as we have said, we expect a low single-digit growth, fundamentally driven through deposits. Yes, there are pockets of growth in loans, but so far we've just seen in the UK market. Overall, we expect that growth in wealth and transaction banking and our fee-generating businesses will continue to be very positive. As we go beyond 2026, we do expect balance sheet growth should kick in Asia and other markets, not just in the UK. Of course, we are seeing growth in the US already, but we are not a big player in the US market, domestic growth. We are continuing to invest in our fee businesses, and our investment plans are multi-year plans.

Speaker #1: So, the investment in technology, so that we can better harmonize our technology and better get results from the technology investment, we have across both the green and the red brand.

Speaker #1: And this is really quite critical for us in order to achieve the overall ambition of the £900 million, because it's the £900 million ambition.

Speaker #1: Just to reiterate, it's not just a cost story; it's a revenue and a cost story. And this is an investment for growth.

Speaker #1: And that's how we look at it. And we plan to spend the restructuring costs of $600 million across the three years. And of course, this will be spread through these three years.

Speaker #1: We're not saying any more in terms of revenue synergies. We strongly believe that by the privatization of Hang Seng Bank, our ability to be able to provide a broader product proposition into the green band is highly enhanced.

Pam: It's not just for growth for one year, it's a very strong building block for growth through the period we have called out and beyond, particularly in markets like Hong Kong, in the UK, and other key markets for us in Asia and the Middle East.

Georges Elhedery: Thank you, Nick.

Speaker #1: So, we'll have better wealth products for our retail customers. We will have capital markets and broader wholesale transaction banking products for the wholesale customers, but more importantly, we will be able to have access to the same international network that we have for the Red brand.

[Company Representative] (HSBC Holdings PLC): Thank you. Any further questions in Hong Kong? We'll go straight to the Zoom. I think the first question on the Zoom then, please, is with Joseph Dickerson at Jefferies. Actually, I've announced yourself there, Joe, so please unmute and go ahead.

Speaker #1: Also , within the green brand . And last but not least , we will have more balance sheet flexibility in terms of how we leverage our Treasury capabilities , but also in terms of upstream and downstream capital .

Joseph Dickerson: Thank you, Alistair. Good set of results, guys. Just a quick question on the costs. How, if you look at the 2026 number that you've given, the kind of 1% growth, I know you've got your recycling. How do you think about when you peel that back, you know, what's the metabolic rate of growth in costs, particularly coming from investments? You clearly have some global peers who've accelerated their investments around AI. I was just curious how you think about that. Secondly, nitpicky question, what rate of HIBOR have you assumed in the banking NII guide of greater than $45 billion? Thanks.

Speaker #1: And this will all be done over the next three years .

Speaker #4: Great . Thank you very much , Melissa .

Speaker #2: Thank you. We'll go back to the Zoom. The next question will be from Aman Raka at Barclays.

Speaker #9: Hi , Pam . Hi , George . Had two questions , please . So one is around capital . It looks like a decent chance that you'll be within your target range in Q1 .

Speaker #9: Based on historical, and perhaps projected, capital generation kind of estimates, obviously it raises the prospect as to whether you might be able to reintroduce a buyback earlier than planned.

Georges Elhedery: Okay. Thank you very much, Joe, for your questions. Let me share some high-level considerations, how we're looking at costs, and I'll ask Pam to comment then on costs and on HIBOR rates. I shared a bit earlier, but I want to emphasize. First, within our cost base, there is a proportion set aside for investments, for Change the Bank, investments, digital capabilities, additional people hires, relationship managers, wealth advisory, et cetera, of course, generative AI, efficiency there. That's within our cost base. Second, the fact that we're adding cost adjusted for these savings, half of that additional cost will go towards payroll inflation, but the other half will go towards additional investments.

Speaker #9: I don't know if you're able to kind of comment on whether that's a realistic or plausible scenario, but I guess more specifically, just interested in the capital.

Speaker #9: Capital allocation , thought process from here . Clearly your stocks trading at a level now where the return on investment around buyback , you know , might be beaten by alternative uses of capital .

Speaker #9: Obviously you did it with Hang Seng , but you know should we be thinking about inorganic growth as well as the organic growth within your footprint .

Speaker #9: And then I just wanted to ask around banking NII , please . Clearly that that kind of Q4 jumping off point is flattered by 100 million .

Georges Elhedery: Third, the recycling of those $1.8 billion, which is commensurate to about 5%, 6% of our cost base, will go back into those areas of investment for growth. We believe we have ample capacity to invest and deliver the growth that we are setting ourselves for setting targets to deliver against. The next thing I would say about costs is that it's important, Joe. We are committed to cost discipline. We are confident in our ability to deliver cost discipline, and as you've seen for our 2025 results, we have met our cost targets. I think that's an important guide also as you look at our cost guidance for 2026. Pam?

Speaker #9: I don't know if there's anything else that you'd direct us to, to kind of strip out of that number, in terms of catch-up or, you know, the impact I bore.

Speaker #9: And I was particularly interested in what your deposit growth assumption is that sits behind the guidance you’ve given for ’26, because I think that could be a sensitivity around the ultimate outturn of thinking in AI in ’26.

Speaker #9: Thank you very much .

Speaker #4: Thank you, Aman. Time is best placed to answer both, but I want to share a few thoughts about our philosophy on capital.

Pam: Thank you, George. Firstly, I would note that we are ahead on our simplification saves because our plan and the actions we have taken have come through sooner than what we had originally outlined. This gives us incremental saves of $700 million in full year 2026. That has been a consideration in the overall 1% cost growth envelope. As George said, you know, as we have divestments happening, we are continuously redeploying, or reallocating those costs to our priority growth areas. What's really important for us is that our investment rigor is focused on our strategic priorities. That's what we've done in 2025. That's what we will do going forward. These are committed plans, which are multi-year plans. They don't go back and forth every year.

Speaker #4: First, we remain capital generative, as you see from our targets, but also as we've experienced in the first month and a half of the year in 2026.

Speaker #4: So we're very pleased to see that our capital generation is strong. But our first priority is now restoring the CET1 ratio following the privatisation of Hang Seng, which we estimate will take us three quarters.

Speaker #4: But of course , we do that assessment quarter by quarter . I do want to point out to the increased dividend we are paying this year , $0.75 , $0.45 on the fourth quarter , which is a on a full year basis , 14% higher than last year .

Speaker #4: So, we are distributing through dividends. What I wanted to share is about the discipline—how we use capital. We've shared it in February 2025, and we've set ourselves four key criteria.

Speaker #4: They are a high bar, and we strictly adhere to them in the way we look at inorganic opportunities, in that these four criteria are met. Like in the case of the Hang Seng privatisation, then we will consider inorganic.

Pam: That's all part of the overall cost envelope guidance we have given for this year. Again, we're giving guidance for this year only, but we expect to maintain a cost rigor on a continuous basis. In terms of rate assumptions, we have used the end-January forward rate curve for our banking NII guidance for all major currencies. In terms of HIBOR, just to note a couple of points. Our HIBOR volatility that we saw in Q2 and Q3, when HIBOR is at 1%, has an impact of about $100 million on banking NII. The moment HIBOR sort of stabilizes, as it did in Q4, and indeed this year, although it has fluctuated a little bit around the 2.5 mark, that is captured in our guidance.

Speaker #4: But if one of these criteria is defeated, then our preference will be to utilize or return any excess capital back to our shareholders in the form of share buyback.

Speaker #4: Pam .

Speaker #1: Thank you , Dodge , and thank you for your questions . So firstly , as George said , we continue to remain highly capital generative .

Speaker #1: We've had a good start to the year, as I called out earlier in my remarks. But as you know, we look at our share buyback decisions on a quarterly basis, and that will be a quarterly process.

Speaker #1: The starting point is clearly our target operating range , which we are working hard so that we can replenish the capital that has been deployed in the Hang Seng Bank privatisation .

Pam: We look at a few plausible downside scenarios as well before we give a full guidance.

Speaker #1: That's the first priority . As George said , and that Cet1 operating range remains 14 to 14.5% . That's the one , which underpins all the targets and guidance we have given today .

Georges Elhedery: Thank you, Jo.

[Company Representative] (HSBC Holdings PLC): Thank you. Our next question on the Zoom is from Benjamin Toms at RBC.

Speaker #1: Just to clarify , in terms of our priorities from there on , of course , the priorities are 50% . Is the dividend payout ratio , which we have again reaffirmed .

Benjamin Toms: Morning, both. Thank you for taking my questions. Morning, Elsa. Firstly, on your RoTE guidance, the greater than 17%, I'm just looking for some commentary about how sustainable you feel that guidance is beyond the announced planning horizon. How much do you feel this guidance is an all-weather guidance post all the investments that you've been making into the business? Secondly, on the Hang Seng synergies on slide 13, do you mind just talking a little bit around why you've adopted two buckets that you've labeled synergies and upside? Is the upside bucket basically where there's a lower degree of certainty over the synergies? Some color on what type of synergies fall into each bucket would be useful. Presumably, there's no incremental restructuring costs associated with the upside bucket on top of the $0.6 billion. Thank you.

Speaker #1: We would like to see balance sheet growth, and we want to invest for growth. That's if we can have growth at the right return levels.

Speaker #1: Our distribution priorities, hence, have not changed. And share buyback remains for us a useful tool to deploy surplus capital, irrespective of where the share price is.

Speaker #1: So I think that's an important consideration for us going forward . Last question on banking . You're right . There was a 100 million non-repeat items .

Speaker #1: So if you take that out for modeling purposes , you come to 11.6 billion . There are no other one offs . There was a higher higher quarter on quarter .

Georges Elhedery: Thank you very much, Ben. On the Hang Seng guidance, what I will share is we do have the management ambition, and we do have comprehensive sets of plans to achieve the full $0.9 billion upside with the restructuring costs that we've called out. I'll let Pam give you the details. On the ROTI guidance, we are not guiding beyond our horizon, but you should always assume that we are ambitious.

Speaker #1: And hyper also stabilized. And that's why, as you remember, in the third quarter when we gave a more cautious outlook, it was because we didn't know where hyper would be.

Speaker #1: But having seen hyper stabilize , it gave us the the upbeat on our banking NII results . We also saw low betas on savings accounts in Hong Kong and very importantly , we saw strong deposit growth .

Speaker #1: And we do expect this strong deposit growth to continue to be a key driver in 2026 , along with the tailwinds of the structural hedge , similar to last year and redeployment at higher rates , the only thing to bear in mind is that for this year , clearly in Q1 , given that there will be two days less , there will be a headwind of 300 million in Q1 .

Pam: Just to say on our ROTI guidance, we continue to see a positive momentum in our businesses. As we said earlier, we are investing for growth. Of course, the targets are only for 2 years. In terms of the Hang Seng synergies, you're quite right. The $500 million is what I would call the reported synergies, following accounting rules. The $400 million synergies are depending to some extent on markets and customer behavior, there is some degree of uncertainty, and they don't strictly fall between what is considered to be accounting-reported synergies. That's the reason why they're 2 separate. For these synergies, the plan to get that $900 million benefit is by the end of 2028, and the restructuring cost of $600 million covers the benefits across both buckets.

Speaker #1: We have assumed , obviously , the rate changes both that we've seen to date as well as projected for the year , but a lot depends on , as you can imagine , the timing of those rate changes , particularly in the US dollar and sterling .

Speaker #4: Thank you Aman .

Speaker #2: Yeah. Thank you. So we'll take the next question back on the Zoom. Amit Goel at Mediobanca.

Speaker #10: Hi . Thank you and thanks for taking my questions . So two for me . The first one just coming back on the roti , the upgraded roti targets the 17% plus .

Speaker #10: Just wanted to check in terms of how you're thinking about that on a kind of year on year on year basis for 2728 .

Pam: Now beyond that, we actually believe, as it says on the slide, that at some stage the credit cycle will be normalized, so there'll be some benefit coming from there. There'll be more growth in lending, as well as overall Hong Kong growth, which we will continue to be very well positioned for. Because of the redeployment of the cost allocations that we have, there will be a fair chunk that obviously goes into Hong Kong, which is a core market on our strategy.

Speaker #10: I mean , are you are you thinking that roti kind of continues to improve or are you thinking more , you know , 17% is kind of a very acceptable and a good level .

Speaker #10: And so , you know , any additional upside you would look to reinvest . And within that I kind of note that , you know , on the tip , you've kind of brought up the lower end of the , the , the kind of the boundary for performance to , I think to 16.5% from 14 , but the 18% at the top end hasn't changed .

Georges Elhedery: Perfect. Thank you, Ben.

[Company Representative] (HSBC Holdings PLC): Yeah, we have a question in the room next, Melissa. You'll have to introduce yourself fully.

Speaker #10: So I appreciate that's done by the compensation committee. But I'm just kind of curious how you're thinking about what an appropriate or sustainable level of return is.

[Analyst] (Goldman Sachs): Hi, I'm Melissa from Goldman Sachs. Just 2 questions. In terms of the syne strategy, that you have rising to 5% revenue growth, just wanted to see if you can give a bit of a CAGR growth instead, so we can understand, you know, the pathway there. In terms of that, you know, I suppose, will it be coming largely from the non-banking NII portion, or will it be from the banking NII? That's my first question. On the second question, perhaps on the restructuring cost at HSBC of $0.6, can you just give a little flavor about what is it that we are doing on this in terms of the restructuring that we need such a cost?

Speaker #10: And then secondly, again, just coming back, maybe more clarification on the Hang Seng Bank kind of benefit and restructuring charge.

Speaker #10: So , I mean , I guess I was just curious really , for a bit more detail on the point , 4 billion of additional benefit that I guess from an accounting standpoint can't be treated as a synergy .

Speaker #10: What exactly that is ? And , and within the restructuring charge , I think previously there's actually going to be more of a , you know , less staff .

Speaker #10: There will be more natural attrition, and so there'd be very limited kind of day-one costs. I'm just curious what you're spending that money on.

[Analyst] (Goldman Sachs): Where are we focusing on in terms of delivery, and then how, you know, we'll see the revenue synergies out? In terms of the revenue synergies, can it be as quick as next year, or will it be more heavy into 2028 as per your three-year guidance rising to 5%?

Speaker #10: Thank you .

Speaker #4: Thank you very much for your two questions . I'm can address them just to talk about briefly . This is indeed a remuneration committee consideration .

Speaker #4: It reflects the performance that we will achieve in 26 , 27 , 28 , which aligns to the guidance we're giving you . So there isn't more we can say at this stage , apart from that , it is more ambitious and reflects our ambition to the business .

Georges Elhedery: Thank you very much, Melissa. I think Pam can address both questions.

Pam: Thank you, George. Firstly, we've said that revenue growth, it's positive each year, but it's also progressive and reaching out to 5% by 2070 2028. In terms of the underlying building blocks, we said to you that in 2026, where we have given the guidance on banking NII, it's a low single digit. Therefore, similar to the prior year, we will see more positive growth momentum on the fee-generating businesses. Beyond 2026, banking NII, of course, we look and see where the guidance is, where it is, where the rates are, and what's the timing of the rate cuts as we go into 2026. We are continuing to invest in our fee-generating businesses.

Speaker #1: Thank you , John , and thank you for your questions . Firstly , yes , targets and the target is 17% plus each year .

Speaker #1: We are not giving a trajectory , whether it's the same or progressive , but of course we continue to grow our business and invest in it diligently .

Speaker #1: But the target is just 17% plus each year in terms of our the Hang Seng benefits . Firstly , to call out , these are both benefits we are getting from a cost perspective , but also revenue perspective .

Speaker #1: So classically, what you would see in terms of cost synergies and all the restructuring is actually severance costs. That is not the case here because there is so much focus on the revenue as well.

Pam: We see that momentum in those businesses, including wealth, which really underpins this revenue growth and wholesale transaction banking to continue. I'm hoping that at some stage we'll see a little bit more of growth on the balance sheet in terms of lending, beyond UK that we have already seen. In terms of the restructuring costs, there are a couple of elements that drive it. One is there's some organizational alignment, so there will be some roles which will evolve and teams that will be realigned. A large chunk of this is really in terms of technology. The investment in technology, so that we can better harmonize our technology and better get results from the technology investment we have across both the green and the red brand.

Speaker #1: A lot of the restructuring will be in terms of investment from a technology perspective , the cost synergies themselves . Of course , there'll be some realignment and evolution of roles and individual areas .

Speaker #1: It's not something which is going to lead to severance or staff reductions . There could be some role changes . Clearly , there will be some scale in product manufacturing and there will be some technology harmonisation .

Speaker #1: Now , what you think in terms of the two bits about the 500 and the 400 and why it's so clearly from a cost synergies perspective , it's easier to call out revenue synergies .

Speaker #1: There are greater haircuts, but we do have very detailed, comprehensive plans on how we are going to drive these revenue synergies, and those plans underpin the 400.

Pam: This is really quite critical for us in order to achieve the overall ambition of $900 million. Because it's the $900 million ambition, just to reiterate, it's not just a cost story. It's a revenue and a cost story. This is an investment for growth, and that's how we look at it. We plan to spend the restructuring costs of $600 million across the three years, and of course, this will be spread through these three years. We're not saying any more. In terms of revenue synergies, we strongly believe that by the privatization of Hang Seng Bank, our ability to be able to provide a broader product proposition into the green brand is highly enhanced. We'll have better wealth products for our retail customers.

Speaker #1: Even though they were haircut in the 500, and just in total. To reiterate, because there are lots of numbers going around, I appreciate that.

Speaker #1: Think of it: $800 million benefit in those with different degrees of accounting rules and different probability of expectations. And then an overall restructuring cost of $600 million to achieve that total.

Speaker #4: And we are a net investor in people in Hong Kong. We are also an investor in technology in Hong Kong, to capture all these growth opportunities.

Speaker #4: We have been talking about . Therefore , we do not expect , anticipate or plan any program of redundancies . We do , though , expect that some roles may need to evolve and we are basically committing to training , reskilling to make sure that our own colleagues have these growth opportunities , career opportunities to be able to capture these roles in which we will be investing over the duration of our programme of three years .

Pam: We'll have capital markets and broader wholesale transaction banking products for the wholesale customers. More importantly, we will be able to have access for the same international network that we have for the Red brand, also within the Green brand. Last but not least, we will have more balance sheet flexibility in terms of how we leverage our treasury capabilities, but also in terms of upstreaming and downstream capital, and this will all be done over the next 3 years.

Speaker #4: Thank you .

Speaker #1: Remember that we have already included in that 600 million restructuring costs for training and reskilling of our colleagues as their roles change and evolve .

Georges Elhedery: Thank you very much, Melissa.

[Company Representative] (HSBC Holdings PLC): Thank you. We'll go back to the Zoom. The next question will be from Aman Rakkar at Barclays.

Speaker #4: Thank you Amit .

Speaker #2: Thank you. We'll stay on the Zoom with Kian Abu Husain from JP Morgan. Again,

Aman Rakkar: Hi, Pam. Hi, George. Had two questions, please. One is around capital. It looks like a decent chance that you'll be within your target CET1 range in Q1, based on historical and perhaps projected capital generation, kind of estimates. Obviously, it raises the prospect as to whether you might be able to reintroduce a buyback earlier than planned. I don't know if you're able to kind of comment on whether that's a realistic or plausible scenario. I guess more specifically, just interested in the capital allocation thought process from here. Clearly, your stock's trading at a level now where the return on investment around buyback, you know, might be beaten by alternative uses of capital.

Speaker #11: Thanks for taking my questions . First of all , George , congratulations . I have to say , you really driving the bank to a better process and discipline .

Speaker #11: We haven't seen in HSBC before . If I may say so , to the questions . Tech stack , can you go a little bit more into detail ?

Speaker #11: You gave a number in 2022 that you're spending about 20% on it as a percentage of expenses. I'm wondering if we should think about a similar ballpark within that.

Speaker #11: Can you go a little bit under the hood and discuss where you are on iCloud , on cloud transformation ? Are you done ?

Speaker #11: Where are we on platforms? Are you done, or what platforms still have to be produced new or integrated data management? So I really want to understand a little bit what you're doing on the tech side.

Aman Rakkar: Obviously, you did it with Hang Seng, you know, should we be thinking about inorganic growth as well as the compelling organic growth within your footprint? I just wanted to ask around banking NII, please. Clearly that kind of Q4 jumping off point is flattered by $100 million. I don't know if there's anything else that you'd direct us to to kind of strip out of that number in terms of deposit catch up or, you know, the impact of IBOR. I was particularly interested in what your deposit growth assumption is that sits behind the guidance you gave in 2026, please, because I think that could be a sensitivity around the ultimate outterm of banking and NII in 2026. Thank you very much.

Speaker #11: And then this is still an area where I'm a little bit uncomfortable. Stage three, Siri, China 18% coverage, 16% on Hong Kong, 14.

Speaker #11: Sorry, on Hong Kong Stage Three, can you talk a little bit about where you want to drive that to? And clearly I heard Pam's remarks about provisions, and CIRI was mentioned.

Speaker #12: Are perfect .

Speaker #4: Thank you, Ken, for your two questions and for your feedback. I'm going to take your tech question, and Pam will cover the Hong Kong.

Speaker #4: And I think it's a very important question. Thank you for asking. We are indeed driving both performance and transformation with discipline and with precision.

Georges Elhedery: Thank you, Aman. Pam is best placed to answer both, but I want to share a few thoughts about our philosophy on capital. First, we remain capital generative, as you've seen from our targets, but also as we've experienced over the first month and a half in the year in 2026. We're very pleased to see that our capital generation is strong. Our first priority is now restoring the CET1 ratio, following the privatization of Hang Seng, which we estimated to take us three quarters. Of course, we do that assessment quarter by quarter. I do want to point out to the increased dividend we are paying this year, $0.75, $0.45 on the Q4, which is on a full year basis, 14% higher than last year. We are distributing through dividends.

Speaker #4: And we're doing it at pace . And we're we're very glad to see that the results of both performing growing and transforming is delivering at pace .

Speaker #4: As you've seen in our 2024 numbers, so in terms of tech, you could broadly assume that 20% is the cost that we're spending on technology.

Speaker #4: But the way we're talking technology now is number one , we're thinking about all those legacy or non-strategic applications , which are consumers of from the bank costs , consumers of maintenance costs , patching costs , license fees that we are going to very proactively demise at scale .

Speaker #4: And we're very pleased to be able to say that we've demised more than one and 100 applications this year . Well , in 2025 , this is more than a third of the about 3000 applications that we have deemed non-strategic .

Georges Elhedery: What I wanted to share about the discipline, how we use capital, we've shared it in February 2025, Aman. We've set ourselves four key criteria. They are a high bar, and we strictly adhere to them in the way we look at inorganic opportunities. In so far that these four criteria are met, like in the case of Hang Seng privatization, then we will consider inorganic. If one of these criterias is defeated, then our preference will be to utilize or return any excess capital back to our shareholders in the form of share buyback. Pam?

Speaker #4: And looking to demise . Just to give you a perspective , we run about 10,000 applications , 9000 actually , of which 3000 are flagged for demise over the horizon between now and 2028 .

Speaker #4: And we're moving at pace for that now. That demise will allow us to free up investment capacity to put it in new technology and new capabilities in tech space, cloud transformation.

Speaker #4: I think we are quite mature on cloud. I think we've moved from a cloud-first strategy, where we moved many of our applications to cloud, to now a more mature, and therefore more sophisticated, approach to cloud.

Pam: Thank you, George, thank you, Aman, for your questions. Firstly, as George said, we continue to remain highly capital generative. We've had a good start to the year, as I called out earlier in my remarks. As you know, we look at our share buyback decisions on a quarterly basis. That will be a quarterly process. The starting point is clearly our target operating range, which we are working hard so that we can replenish the capital that has been deployed in the Hang Seng Bank privatization. That's the first priority, as George said. CET1 operating range remains 14 to 14.5%. That's the one which underpins all the targets and guidance we have given today, just to clarify.

Speaker #4: By optimization of hosting of applications . And therefore we would look at any new applications or our existing stack where it is better set if it's on cloud , where the majority is , then it will be on cloud , and then we will look at portability capabilities and resilience capabilities .

Speaker #4: And if it is on premise, then we are in a cloud. We will look at that. So I think we have matured our cloud approach and we're already in a place where we want to be.

Speaker #4: But of course we'll continuously evolve . If you ask me , where is the biggest investment going into the new technology today ? It is definitely going into generative AI .

Pam: In terms of our priorities from there on, of course, the priorities are: 50% is the dividend payout ratio, which we have again reaffirmed. We would like to see balance sheet growth, and we want to invest for growth. That's if we can have growth at the right return levels. Our distribution priorities, hence, have not changed, and share buyback remains for us a useful tool to deploy surplus capital, irrespective of where the share price is. I think that's an important consideration for us going forward. Next question. On banking NII, you're right, there was a $100 million non-repeat items, so if you take that out for modeling purposes, you come to $11.6 billion. There are no other one-offs. There was a higher HIBOR quarter-on-quarter. HIBOR also stabilized.

Speaker #4: I want to just take a minute to explain how we're thinking about generative AI, because that's quite important. We're looking at generative AI in three workstreams.

Speaker #4: They're on on the slide eight of the of the pack , the first workstream is we're making generative AI available to all our colleagues in time , 85% mostly now , you know , enabled to make sure that we're helping our colleagues upgrade themselves and become future ready .

Speaker #4: The first thinking is, how do we bring our whole colleague population with us in becoming future-ready, generative AI-enabled? They will have generative AI tools that they can use.

Speaker #4: They will have coding assistants, or coding assistants for those among our engineers, 31,000 already enabled. And we're seeing immediate productivity gains.

Pam: That's why, as you remember, Q3, when we gave a more cautious outlook, because we didn't know where HIBOR would be, but having seen HIBOR stabilize, it gave us the upbeat on our banking NII results. We also saw low betas on saving accounts in Hong Kong, and very importantly, we saw strong deposit growth. We do expect this strong deposit growth to continue to be a key driver in 2026, along with the tailwinds of the structural hedge, similar to last year, and redeployment of higher rates. The only thing to bear in mind is that for this year, clearly in Q1, given that there will be two days less, there will be a headwind of $300 million in Q1.

Speaker #4: We're seeing 60% speeding up in our unit testing . We're seeing five times faster of code patching of vulnerabilities in code . Thanks to these capabilities .

Speaker #4: This is our first mission . All our colleagues to benefit , to be trained , to be upskilled , to become future ready , better version of themselves , more productive , better outcome for our customers .

Speaker #4: The second workstream generative AI is fundamentally re-engineering of our processes end to end . 50 of those processes are already under review . Some of them have already delivered and finished , such as onboarding and KYC , but all sorts of processes , including fraud detection and prevention , credit applications , capital allocations and what have you data .

Pam: We have assumed, obviously, the rate changes, both that we've seen to date as well as projected for the year, but a lot depends on, as you can imagine, the timing of those rate changes, particularly in the US dollar and sterling. Thank you.

Speaker #4: We want to allow generative AI to help us redesign a process in a much simpler way, and also allow AI to be integrated into the process to process data in a much more efficient way.

Georges Elhedery: Thank you, Aman. Yeah, thank you. We'll take the next question back on the Zoom. Amit Goel at Mediobanca.

Speaker #4: The result of which is a more productive bank , more efficient bank , and a safer bank with stronger controls and more importantly , a very simple bank that will be able to ultimately deliver to our customers closer to near closer to near real time or real time at the highest possible standard that's available for us .

Amit Goel: Hey, thank you. Thanks for taking my question. 2 for me. The first one, just coming back on the RoTE, the upgraded RoTE targets, the 17%+. I just want to check, in terms of how you're thinking about that, on a kind of year-on-year basis for 2027, 2028. I mean, are you thinking that RoTE kind of continues to improve, or are you thinking more, you know, 17% is kind of a very acceptable and a good level, and so, you know, any additional upside you would look to reinvest?

Speaker #4: And that is an ongoing journey . The third workstream we're taking , generative AI is how we enhance customer experience at the customer touchpoints .

Speaker #4: So this is our relationship managers, wealth advisors, contact centre operators, as they engage with customers. Generative AI tools already rolled out.

Speaker #4: As you can see on the slide, it will allow them to personalize at scale, to tailor-make, to customize at scale, at the highest possible.

Amit Goel: Within that, I note that, you know, on the LTIP, you've brought up the lower end of the boundary for performance to, I think to 16.5% from 14, the 18% at the top end hasn't changed. I appreciate that's done by the compensation committee, but I'm just curious how you're thinking about what an appropriate or sustainable level of return is. Secondly, again, just coming back, maybe more clarification on the Hang Seng Bank benefit and restructuring charge.

Speaker #4: Standards for our customers, close to real time, in a way that can allow us to deliver our capabilities to customers in a much more seamless, faster, better way.

Speaker #4: Customer experience will be materially enhanced now. Today, we will have operators using this generative AI at the service of our customers.

Speaker #4: But you can envisage that in a few years time , we could possibly put these generative AI tools straight for utilization by our customers .

Speaker #4: Those are the three Workstreams . What I want to say is that we're doing this with safety and security at the forefront . We're doing this in a way that we can review , monitor and audit everything we're doing in this space as a as a critical standard .

Amit Goel: I mean, I guess I'm just curious, really, for a bit more detail on the $0.4 billion of additional benefit that, I guess, from an accounting standpoint, can't be treated as a synergy. What exactly that is? Within the restructuring charge, I think previously you said that there's actually gonna be more of a, you know, less staff, there would be more natural attrition and deployment, so there'd be very limited kind of day one kind of cost. I'm just curious what you're spending that money on. Thank you.

Speaker #4: And we're doing this in a way to keep . Controls , resilience and human accountability always there . Because we had a regulated industry and our customers trust is the most important asset .

Speaker #4: And we will do everything to make sure customers' trust is always protected and nurtured. Thank you for that question. I'll hand over to Pam on Hong Kong.

Speaker #1: Thank you so just looking overall in our guidance , are around 40 basis points . Guidance for 2026 considers all our portfolios . And of course Hong Kong commercial real estate as well as the very small residual amount of China commercial real estate .

Georges Elhedery: Perfect. Thank you, Amit, very much for your 2 questions. Pam can address them, but just to talk about LTIP briefly, this is indeed a remuneration committee consideration. It reflects the performance that we will achieve in 2026, 2027, 2028, which aligns to the guidance we're giving you. There isn't more we can say at this stage. Apart from that, it is more ambitious and reflect our ambition to the business.

Speaker #1: And we look at a range of plausible downside scenarios before we give you this guidance. So, just unbundling a bit, the China commercial real estate portfolio has really come down.

Speaker #1: It's now less than $1 billion . And our easels this year for this was below 200 million . So in that context , the names that I've left that portfolio that's left , we feel much better about it compared to where the other portfolio was when we first started with it .

Pam: Thank you, George, and thank you for your question. Firstly, yes, we have ambitious targets, and our target is 17% plus each year. We are not giving a trajectory, whether it's the same or progressive, but of course, we continue to grow our business and invest in it diligently, but the target is just 17% plus each year. In terms of our the Hang Seng benefits, firstly, to call out, these are both benefits we are getting from a cost perspective, but also revenue perspective. Classically, what you would see in terms of cost synergies and all the restructuring is actually seven costs. That is not the case here. There is so much focus on the revenue as well, a lot of the restructuring will be in terms of investment from a technology perspective.

Speaker #1: Now , when we think in terms of Hong Kong commercial real estate , firstly , I'm going to give you a bit of an update on the three segments within this Hong Kong commercial real estate portfolio .

Speaker #1: And then how we look at the names, particularly the credit and paid names. Now, the first one we've been calling it for a year, and now I'm very pleased to say that the residential component of Hong Kong commercial real estate is near normalized.

Speaker #1: And I say that because, whether I look at it in terms of price increases, you know, HPI has been up 5% year on year in 2025.

Speaker #1: But more importantly, we've seen a 10% growth. Also, volume rentals have already stabilised, both in terms of the rental demand as well as the rental pricing.

Pam: The cost synergies themselves, of course, there'll be some realignment and evolution of roles and individual areas. It's not something which is going to lead to severance or staff reductions. There could be some role changes, clearly. There will be some scale in product manufacturing, and there'll be some technology harmonization. When you think in terms of the two bits, with the 500, the 400, and why it's so, clearly from a cost synergies perspective, it's easier to call out. Revenue synergies, there are greater haircuts, but we do have very detailed, comprehensive plans on how we are going to drive these revenue synergies, and those plans underpin the 400, even though they were haircut in the 500. Just in total, to reiterate, because there are lots of numbers going around, I appreciate that.

Speaker #1: Now when we look at retail and the office space , of course , there are pockets of distress in it . But just as a broader context , we saw retail sales also in Hong Kong in May turn into positive , and they are now up year on year at 6.6% .

Speaker #1: But, of course, this alone is not going to solve the problems of the retail sector, because people's retail shopping patterns have changed.

Speaker #1: They don't need to go to shops on malls , etc. . Having said that , as there is more consumption in Hong Kong , we are seeing this shift from shopping places being changed into more food and beverage .

Speaker #1: And so on . But there will be pockets of stress in it and that will be coming from mainly over , over supply .

Speaker #1: At this point of time . Now , office is the sector we are watching very carefully because recently we have seen both in terms of rental demand and in transactions for the best properties , for the best spec in central , in the best areas .

Pam: Think of it as the $900 million benefit in those two buckets with different degrees of accounting rules and different probability of expectations, and then an overall restructuring cost of $600 million to achieve that total.

Speaker #1: There are some green shoots, but the downside is, at this point in time, vacancy rates are still around 17%. So that's what we will be managing through.

Georges Elhedery: Amit, we are a net investor in people in Hong Kong. We are also an investor in technology in Hong Kong to capture all these growth opportunities we have been talking about. Therefore, we do not expect, anticipate, or plan any program of redundancies. We do, though, expect that some roles may need to evolve, and we are basically committing to training, reskilling, to make sure that our own colleagues have these growth opportunities, career opportunities, to be able to capture these roles in which we will be investing over the duration of our program of three years. Thank you, Amit.

Speaker #1: And following up very , very carefully . Having said that , in Hong Kong we are not a distressed seller . It's a market .

Speaker #1: We are deeply embedded in. We really understand well, but we are very resilient in terms of how we do our valuations.

Speaker #1: So we go and look at valuations , including distressed valuations , and we look at whether collateral position and we stay well collateralized .

Speaker #1: And we've been following through this very closely over the last couple of years . The one metric which I personally follow , though my job has changed now , is what happens to credit impaired known names and the exposure that you need to focus on is credit impaired names , which have an LTV over 70% .

Pam: There's a meaningful number that we have already included in that $600 million restructuring costs for training and reskilling of our colleagues as their roles change and evolve.

Georges Elhedery: Thank you, Amit. Thank you. We'll stay on the Zoom, with Kian Abouhossein from J.P. Morgan. Kian?

Speaker #1: Now , this number has grown and is now stands at $1.9 billion . But the Against it have also grown and they have grown to around 900 million .

Kian Abouhossein: Thanks for taking my questions. First of all, George, congratulations, I have to say, you're really driving the bank to a better process and discipline, we haven't seen in HSBC before, if I may say so. To the questions, tech stack, can you go a little bit more into detail? You gave a number in 2022, that you're spending about 20% on IT as a percentage of expenses. Wondering if we should think about similar ballpark? Within that, can you go a little bit under the hood and discuss where you are on cloud, on cloud transformation? Are you done? Where are we on platforms? Are you done, or what platforms still have to be produced new or integrated data management?

Speaker #1: And if you go back quarter on quarter, that differential between the ECL number and the exposure sits around the $1 billion number. So that's where you think your risk is.

Speaker #1: And of course , you have to see if some of the , you know , substandard names don't fall down . And so on .

Speaker #1: So overall I would say given what we are seeing and particularly to notice that in this quarter , we had a stage three against one name .

Speaker #1: But the macro environment on Hong Kong was positive . And as a consequence through our first nine calculation , those two almost offset each other .

Speaker #1: So in that broader picture , we feel very comfortable for basis point guidance .

Speaker #4: Ken, thank you for your question.

Speaker #2: We will take Rob Noble at Deutsche Numis next.

Kian Abouhossein: I really want to understand a little bit what you're doing on the tech side. Then, CRE, this is still an area where I'm a little bit uncomfortable. Stage three, CRE, China, 18% coverage, 16% on Hong Kong, 14, sorry, on Hong Kong, stage three. Can you talk a little bit where you want to drive that to? Clearly, I heard Pam's remarks about provisions, and CRE was mentioned.

Speaker #9: Morning. Thanks for taking my questions. Just on net.

Speaker #13: noninterest income in 2026 . What are the negatives in noninterest income for next year ? So if you were if you were to grow at the same level , which was I think the low teens in 2025 , you would blow through 5% revenue growth in in 26 , let alone 2028 .

Georges Elhedery: Perfect. Thank you, Kian, for your two questions, and for your feedback. I'm going to take your tech question, and Pam will cover the Hong Kong CRE. I think it's a very important question. Thank you for asking it. We're indeed driving both performance and this, and transformation with discipline, with precision, and we're doing it at pace. We're very glad to see that the results of both performing, growing, and transforming is delivering at pace, as you've seen in our 2024 numbers. In terms of tech, you could broadly assume that 20% is the cost that we're spending on technology.

Speaker #13: So why aren't you why aren't we much more positive on revenues than your kind of sat here ? Now and then ? Secondly , just on Hang Seng , what's the difference in the local capital requirements in in Hong Kong and the U.K.

Speaker #13: Does the transaction change anything in terms of minimum regulatory requirements and how you manage capital through the group? Thanks.

Speaker #12: Okay .

Speaker #4: Rob , thank you very much . Let me address your first question . And Pam may add to it . And address definitely the Hang Seng Capital question .

Speaker #4: So the 90% or more of our noninterest income and therefore our fee or other income is driven by transaction banking and wealth . So looking at the dynamic in these two will give you a good perspective of how NII is evolving .

Georges Elhedery: The way we're talking technology now is, number 1, we are thinking about all those legacy or non-strategic applications, which are consumers of run-the-bank costs, consumers of maintenance costs, patching costs, license fees, that we're going to very proactively demise at scale. We're very pleased to be able to say that we've demised about more than 1,100 applications this year. Well, in 2025, this is more than a third of the above 3,000 applications that we have deemed non-strategic and looking to demise. Just to give you perspective, we run about 10,000 application, 9,000 actually, of which 3,000 are flagged for demise over the horizon between now and 2028, and we're moving at pace for that.

Speaker #4: Transaction banking . With reported full year growth of 4% year on year , we're seeing continued momentum in this space . We are a leader in practically all the aspects of transaction banking that we prosecute with our clients .

Speaker #4: We've been voted by 30,000 of businesses as the leader in payments , both in product services and technology . We've been nine years consecutively a leader in trade .

Speaker #4: We've been voted by corporates using foreign exchange as the leader in servicing the foreign exchange . We continue investing in this space . We continue expecting resilience in this space , in particular in trade .

Georges Elhedery: Now, that demise will allow us to free up investment capacity to put it in new technology and new capabilities in tech space. Cloud transformation, I think we are quite mature on cloud. I think we've moved from a cloud-first strategy, where we moved many of our applications to cloud, to now a more mature and therefore more sophisticated approach to cloud by looking at optimization of hosting of applications. Therefore, we would look at any new applications on our existing stack, where it is better sat. If it is on cloud, where the majority is, then it will be on cloud, and then we will look at portability capabilities and resilience capabilities. If it is on-premise, then or in the private cloud, then we will look at that.

Speaker #4: And I can talk more to to trade if if desired . As you look at wealth , wealth remain unequivocally one of the strongest growth opportunities in particular one , given our footprint where we are focusing on Asia and East and the underlying growth in Asia and the Middle East of wealth is very strong and our ability to capture more market share is very strong .

Speaker #4: We're already a leader in wealth in Asia . If you look at wealth balances and that's an area where we can benefit from this underlying structural growth opportunity .

Speaker #4: And second , wealth , because we are also accelerating our investments in this space . You've seen we've you know , we've launched 6 or 27 wealth centers in 2025 , taking the total 64 .

Georges Elhedery: I think we have matured our cloud approach, and we're already in a place where we want to be, but of course, we'll continuously evolve it. If you ask me where is the biggest investment going into the new technology today, it is definitely going into generative AI. I want to just take a minute to explain how we're thinking about generative AI, because that's quite important. We're looking at generative AI in three work streams, they're on the slide, 8 of the pack. The first work stream is we're making generative AI available to all our colleagues in time, 85%, mostly now, you know, e-enabled, to make sure that we're helping our colleagues upgrade themselves and become future ready.

Speaker #4: We're hiring relationship managers , wealth advisors . We're empowering our self with generative AI wealth capabilities . We're building technology . We're creating a comprehensive set of products , and we continue investing in this space .

Speaker #4: So, we do believe that wealth remains a very strong growth opportunity, albeit we have dropped the guidance on that. And the idea is to give you an overall revenue guidance, which is based on increasing the overall opportunities and, probably, is more relevant for you.

Speaker #4: Forecasting

Speaker #5: Thank you . George .

Speaker #1: So firstly , the only comment I'll make on wealth is , as George said , we are very comfortable in our broad based product proposition .

Speaker #1: But the only thing we need to remember is that this year , with how the markets have performed , therefore , on some of the wealth that is generated through transactional kind of activity , we'll just have to see how that , you know , progresses in next year .

Georges Elhedery: The first thinking is: how can we bring our whole colleague population with us in becoming future ready, generative AI enabled? They will have generative AI tools that they can use. They will have coding assistance, or vibe coding assistance for those among our engineers, 31,000 already enabled, and we're seeing immediate productivity gains. We're seeing 60% speeding up in our unit testing. We're seeing 5 times faster patching of code, patching of vulnerabilities in code, thanks to all these capabilities. This is our first mission. All our colleagues to benefit, to be trained, to be upskilled, to become future ready, better version of themselves, more productive, better outcome for our customers. The second work stream in generative AI is fundamental reengineering of our processes end to end. 50 of those processes are already under review.

Speaker #1: We're not going to make a call out on how volatile or otherwise markets are going to be in 2026 . So if there's anything that's what would have been good consideration because we have to look at plausible downsides clearly in giving our guidance as opposed to just a base case or an optimistic case .

Speaker #1: So that's all I would say on that . Now from a Hang Seng Capital perspective , we have already got the 3.8 billion benefit , which comes from the disallowed minority capital , which we don't need to have an impact on a Cet1 anywhere .

Speaker #1: So that's a positive straight on . But generally in a broader picture , you know , across all our subsidiaries , which are 100% owned , we do have more flexibility in terms of how we move our capital , whether it's upstream or downstream .

Speaker #1: Obviously, subject to what we consider the market outlook is, where our portfolio is, and subject to sort of regulatory discussions. So, all in all, it does give us a better ability to move capital around the group and be more efficient in the deployment of capital.

Georges Elhedery: Some of them have already delivered and finished, such as onboarding and KYC, but all sorts of processes, including fraud detection and prevention, credit applications, capital allocations, and what have you, data, visas, what have you, to allow generative AI to help us redesign the process in a much simpler way, and also allow gen AI to be integrated in the process, to process data in a much more efficient way. The result of which is a more productive bank, more efficient bank, and a safer bank with stronger controls, and more importantly, a very simple bank that will be able to ultimately deliver to our customers closer to near real time or real time, at the highest possible standard, that's available for us. That is an ongoing journey.

Speaker #4: Perfect. Thank you very much, Rob.

Speaker #2: Thank you . The next question , we will take again from the zoom is Chen Li at China Securities

Speaker #14: Good afternoon , George and Pam , I have a question about preservation of Hanson Bank . Could you provide a further further information about the growth opportunities ?

Speaker #14: I want to know, in which aspects of the wealth management business will there be stronger synergies with Hanson Bank, and what are the other outlooks for the wealth balances and wealth management margins?

Georges Elhedery: The third work stream we take in generative AI is how we enhance customer experience at the customer touch points. This is our relationship managers, wealth advisors, contact center operators. As they engage with customers, generative AI tools already rolled out, as you can see on the slide, will allow them to personalize at scale, to tailor-make, to customize at scale, at the highest possible standards for our customers, close to real time, in a way that can allow us to deliver our capabilities to customers in a much more seamless, faster, better way. Customer experience will be materially enhanced. Now, today, we will have operators using this generative AI at the service of our customers, but you can envisage that in a few years' time, we could possibly put these generative AI tools straight for utilization by our customers. Those are the three work streams.

Speaker #14: Thank you .

Speaker #4: Okay , Chen , thank you very much . I'll hand over to Pam , but remember what we said at the announcement on the 9th of October of our intent to privatize Hang Seng ?

Speaker #4: As per our commitments, we are holding that Hang Seng Bank will retain its own authorized institution and governance. It will retain its own brand in Hong Kong.

Speaker #4: Of course , as a major community bank and the largest local bank , it will retain an independent customer proposition that will compete in the market for all customers .

Speaker #4: It will retain each its branch network and that proposition will remain intact with a distinctive cultural strength and customer proposition . Customer experience strength that Hang Seng has been known for .

Georges Elhedery: What I want to say, though, is that we're doing this with safety and security at the forefront. We're doing this in a way that we can review, monitor, and audit everything we're doing in this space, as a critical standard. We're doing this in a way to keep controls, resilience, and human accountability always there, because we are a regulated industry and our customers' trust is the most important asset. We will do everything to make sure the customers' trust is always protected and nurtured. Thank you for that question. I'll hand over to Pam on Hang Seng Bank.

Speaker #4: For practically a century in Hong Kong . What we are driving through this privatizations is better efficiencies and cross-selling , or better efficiencies in aligning back office or manufacturing capabilities that are not related to the customer proposition .

Speaker #4: Pam .

Speaker #1: Thank you . George . So firstly , as George has said , that the positioning of Hang Seng Bank as an iconic community bank in Hong Kong .

Pam: Thank you, Kian. Just looking overall in our guidance, our around 40 basis points guidance for 2026 considers all our portfolios and of course, Hong Kong commercial real estate, as well as a very small residual amount of China commercial real estate. We look at a range of plausible downside scenarios before we give you this guidance. Just unbundling a bit. The China commercial real estate portfolio has really come down. It's now less than one and a half billion dollars, and our ECLs this year for this was below $200 million. In that context, the names that have left that portfolio, that's left, we feel much better about it compared to where the other portfolio was when we first started with it.

Speaker #1: Stays what we will endeavor to do is that post the privatization , we don't have that arm's length relationship restriction that prevents us to do more in terms of product proposition offerings and cross referral to our customers , and also in terms of the investment dollars that we spend .

Speaker #1: We can spend them if it's on the same product , on the same customer journeys , seamlessly across both the Red brand and the green brand .

Speaker #1: So that gives us a very good position that as these two standalone brands are ability to lean into the growth in Hong Kong and the macro opportunities including cross-border , will be available to the broadest customer base .

Pam: When you think in terms of Hong Kong commercial real estate, firstly, I'm going to give you a bit of an update on the 3 segments within this Hong Kong commercial real estate portfolio, and then how we look at the names, particularly the credit impaired names. The 1st one, we've been calling it for 1 year, and I'm very pleased to say that the residential component of Hong Kong commercial real estate is near normalized. I say that because when I look at in terms of price increases, you know, HPI has been up 5% year-over-year in 2025. More importantly, we've seen a 10% growth in also sales volume. Rentals have already stabilized, both in terms of the rental demand as well as the rental pricing.

Speaker #1: While maintaining that community element of service . For this customers . So that's how we are looking at it , and we will look at obviously wealth products as well as pricing margins so that we can really make them more easily available for our customers .

Speaker #4: And we are the market. We are the market leader in Hong Kong, undisputed. We are consolidating and cementing this leadership.

Speaker #4: The Hang Seng Bank privatization will allow us to consolidate that leadership , even further . And all sorts of broad range of products and services .

Speaker #4: And we have a leadership position in capturing these growth opportunities that Tam , we're talking about in Hong Kong , as a super connector between the mainland and the world , as a as a , you know , the poised to become the leading cross-border wealth hub on the planet before the end of the decade .

Pam: Now, when we look at retail and the office space, of course, there are pockets of distress in it. Just as a broader context, we saw retail sales also in Hong Kong in May turn into positive, and they are now up year-on-year at 6.6%. Of course, this alone is not going to solve the problems of the retail sector, because people's retail shopping patterns have changed. They don't necessarily need to go to shops or malls, et cetera. Having said that, as there is more consumption in Hong Kong, we are seeing this shift from shopping places being changed into more food and beverage and so on. There will be pockets of stress in it, and that will be coming from mainly over supply at this point of time.

Speaker #4: And it's it's really a privilege to be in the position we are in , to be able to capture this with the , you know , full HSBC and Hang Seng propositions .

Speaker #4: Thank you . Chen .

Speaker #2: Yeah , thanks very much . So I will take the next question from Ed Firth at KBW .

Speaker #15: Go ahead

Speaker #16: Yeah . Thanks very much . Good morning everybody . I just had two questions . One , just talking about the high BAU benefit in Q4 for your net interest income .

Speaker #16: I think one of your peers talked about is it as a temporary benefit . And I guess I'm not close enough to the franchises and how you price , etc.

Pam: Now, office is a sector we are watching very carefully. Recently we have seen both in terms of rental demand and in transactions, for the best properties, for the best spec in Central, in the best areas, there are some green shoots. The downside is, at this point of time, vacancy rates are still around 17%. That's what we will be managing through and following up very carefully. Having said that, in Hong Kong, we are not a distressed seller. It's a market we are deeply embedded in, we really understand well, but we are very resilient in terms of how we do our valuations. We go and look at valuations, including distressed valuations. We look at with our collateral position, and we stay well collateralized, and we've been following through this very closely over the last couple of years.

Speaker #16: domestically . But I guess , do you know , is there anything peculiar about you or some of the peers about the way you Repriced Casa accounts or something in Q4 , which would mean that yours should be sustained , but somebody else's might be might be temporary .

Speaker #16: So I guess that's the first question . And the second question is , I guess it's slightly an extension of Rob's question . I'm not quite sure what is so specific about 2028 .

Speaker #16: That means you can get 5% revenue growth . There . But but I assume you don't feel you can before then . And I know that at the moment .

Speaker #16: We've got some headwinds from from interest rates . But you've also got a very strong tailwinds around things like wealth management . Pam highlighted that .

Speaker #16: And '27, I guess, should be a reasonably normal year. So I'm just trying to think, is there something that I need to think about that you can see that is happening from '28 and beyond?

Speaker #16: That will make your revenue growth better , that we're not seeing today . Thanks very much .

Speaker #4: Okay. Thank you very much for your two questions, Pam. Do you want to address them?

Pam: The one metric which I personally follow, though my job has changed now, is what happens to credit-impaired names. The exposure that you need to focus on is credit-impaired names, which have an LTV over 70%. Now, this number has grown and it now stands at $1.9 billion. The ECLs against it have also grown, and they have grown to around $900 million. If you go back quarter-on-quarter, that differential between the ECL number and the exposure sits around a billion-dollar number. That's where you think your risk is. Of course, you have to see if some of the, you know, substandard names don't fall down and so on.

Speaker #5: Yeah .

Speaker #1: So let me just unbundle the situation with regard to Haibo . So in the fourth quarter , Haibo stabilized and we had called out in the prior quarters that in 20 and I'll come to Q1 in a second , that in Q2 and Q3 , Haibo was very volatile and we were looking at the comparison for a hyper close to a 1% where it has an impact of about 100 million in terms of banking .

Speaker #1: And I , on a monthly basis . And then stabilizing to something which is in the 2% mark , we look at Hibor on a one month hyper basis .

Speaker #1: We feel very comfortable as long as hyper is around 2.25 , 2.5 and so on , I fully recognize that in and I don't know what other peers would say , like what you know , tenor of hyper rate is most relevant for them .

Pam: Overall, I would say, given what we are seeing, and particularly to notice that in this quarter, we had a stage three against one name, but the macro environment in Hong Kong was positive. As a consequence, through our first nine calculation, those two almost offset each other. In that broader picture, we feel very comfortable with the 40 basis point guidance.

Speaker #1: I'm just telling you from our perspective now in Q1 , hyper has fallen , but we have to see the context . There's been a range of IPOs that normally happens where , you know , when there's that demand for for hyper fluctuation , but it is fluctuated within a narrow range .

Speaker #1: So the impact isn't . There also , last year in Q4 , there was a benefit of a lower betas . So when Hypo went up the same impact wasn't there on the savings rates .

Georges Elhedery: Kim, thank you for your question.

[Company Representative] (HSBC Holdings PLC): We will take Robert Noble at Deutsche Numis next.

Robert Noble: Morning. Thanks to take my questions. Just on non-interest income in 2026, what are the negatives in non-interest income for next year? If you were to grow at the same level, which was, I think, the low teens, in 2025, you would blow through 5% revenue growth in 2026, let alone in 2028. Why aren't we much more positive on revenues than you're kind of sat here now? Secondly, just on Hang Seng, what's the difference in the local capital requirements in Hong Kong and the UK? Does the transaction change anything in terms of minimum group regulatory requirements, and how you manage capital through the group? Thanks.

Speaker #1: Of course , we'll have to look at betas , how they evolve . And then we have a very strong deposit franchise . And I think that's our differentiator in terms of the level that we have in terms of our accounts .

Speaker #1: And therefore we have a good positioning where that deposit base helps us on the banking NII more than most of our of our peers .

Speaker #1: Obviously , in terms of both banking and AI , this year and also our ambition , it's the rate headwinds . And as I said earlier , it's the timing of the rate headwinds .

Speaker #1: If they're delayed, of course, it becomes less of a headwind. If they are earlier, then there is more sensitivity to it.

Speaker #1: So I would say from a wealth business , as I also alluded to earlier , yes , the growth is very strong with its asset management , wealth , products , insurance .

Georges Elhedery: Rob, thank you very much. Let me address your first question, and Pam may add to it and address definitely the Hang Seng capital question. The 90% or more of our non-interest income, and therefore our fee or other income, is driven by transaction banking and wealth. Looking at the dynamic in these two, will give you a good perspective of how non-NII is evolving. Transaction banking, we've reported full year growth of 4% year-over-year. We're seeing continued momentum in this space. We are a leader in practically all the aspects of transaction banking that we prosecute with our clients. We've been voted by 30,000 of businesses as the leader in payments, both in product, services, and technology. We've been 9-year consecutively a leader in trade.

Speaker #1: It's broad based growth . But last year there was , you know , a great advantage or a tailwind coming from markets , which gave us a lot of uplift on the transactional based fee income .

Speaker #1: We can't assume that for this year . Of course , if markets stay well and that happens , then that's a positive tailwind .

Speaker #1: So that's how I would look at it.

Speaker #12: Yeah .

Speaker #4: And I would look at '28 not specifically as the year '28, but as what we would believe our long-term structural opportunity to grow.

Speaker #4: It's it's our guidance for 28 . But we've delivered 5% revenue growth in 25 . We've delivered 4% in in 24 . So it's just you know , the the footprint we are in and the capabilities for us to capture the growth is there .

Speaker #1: And we like to be cautious . To be fair , we have to consider downside scenarios as well . We don't always take the best case .

Speaker #1: That's all I would add .

Georges Elhedery: We've been voted by corporate using foreign exchange, as the leader in servicing them with foreign exchange. We continue investing in this space. We continue expecting resilience in this space, in particular in trade. I can talk more to trade if desired. As you look at wealth remain unequivocally one of the strongest growth opportunities. In particular, one, given our footprint, where we are focusing on Asia and the Middle East. The underlying growth in Asia and the Middle East of wealth is very strong. Our ability to capture more market share is very strong. We're already a leader in wealth in Asia, if you look at wealth balances. That's an area where we can benefit from this underlying structural growth opportunity. Second, wealth, because we are also accelerating our investment in this space.

Speaker #4: Perfect . Thank you . Editor .

Speaker #2: Many thanks . We probably time for a couple more questions . We'll take Alastair Waugh at Autonomous next Morning , George . Morning , Pam .

Speaker #2: Thanks for making time for us . Two questions . Back to Hang Seng Bank . I'm afraid you touched on Potential upsides from asset quality improving .

Speaker #2: I just wondered if that's something you're thinking about in terms of maybe more active steps, or is this just about being patient with the property cycle?

Speaker #2: And then just on the wealth side for a second question , looks like there's a bit of a slowdown in the new account opening in the fourth quarter .

Speaker #2: If you've got 1.1 million for the year and you were running at about 300,000 , a quarter , is that just seasonal or or nothing's changing there that we should be aware of .

Speaker #2: Thank you .

Speaker #4: Thank you . Alastair .

Speaker #1: So just in terms of the asset quality, the comment I made was that if you look at Hang Seng's premium impairment margins, they've been very strong.

Georges Elhedery: You've seen, you know, we've launched 26 or 27 wealth centers in 2025, taking the total to 64. We're hiring relationship managers, wealth advisors. We're empowering ourselves with generative AI wealth capabilities. We're building technology, we're creating a comprehensive set of products, and we continue investing in this space. We do believe they remain, wealth remains a very strong growth opportunity, albeit we have dropped the guidance on that, and the idea is to give you an overall revenue guidance, which is better encompassing the overall opportunities and probably more relevant for your forecasting. Pam?

Speaker #1: If you look at what Hang Seng ECL charges have been prior to 22 versus in 24 , 25 , and even the run rate for the first half of the year , and then what's consolidated for the for the full year .

Speaker #1: That's what I meant by the overall improvement. And that would be both for Hang Seng Bank, as it would be for HSBC, the Red brand.

Speaker #1: And that's the only way to to look at it in terms of , you know , our own policies or processes on how we manage exposures , both for the red brand and green brand .

Pam: Thank you, George. Firstly, the only comment I'll make on wealth is, as George said, we are very comfortable in our broad-based product proposition, but the only thing we need to remember is that this year, with how the markets have performed, therefore, some of the wealth that is generated through transactional kind of activity, we'll just have to see how that, you know, progresses in next year, we're not going to make a call out on how volatile or otherwise markets are going to be in 2026. If there's anything, that's what would have been a good consideration, because we have to look at plausible downsides, clearly, in giving our guidance, as opposed to just a base case or an optimistic case. That's all I would say on that.

Speaker #1: They are highly aligned . How the rigor we follow through them . I don't expect any of that to give us either a tailwind or a headwind .

Speaker #1: So in terms of the new to bank customers , you know , yes , it was 1.1 million . Just to clarify for the red brand and the fourth quarter also had a good number .

Speaker #1: We believe that this new to bank customers is a huge growth opportunity for us . However , we are trying to be now a little bit more selective on the acquisition because we've now had a three year trend on how the acquisition has happened in between the lower end of the customer base and the more premier we have added a fee for the new to bank customers who have a balance less than 10,000 HKD , and because of that , we expect that there would be slightly slower acquisition in 2026 .

Pam: Now, from a Hang Seng Capital perspective, we have already got the $3.8 billion benefit, which comes from the disallowed minority capital, which we don't need to have an impact on a CET1 anywhere. That's a positive straight on. Generally, in a broader picture, you know, across all our subsidiaries, which are 100% owned, we do have more flexibility in terms of how we move our capital, whether it's upstreaming or downstreaming. Obviously, subject to what we consider the market outlook is, where our portfolio is, and subject to sort of regulatory discussions. All in all, it does give us a better ability to move capital around the group and be more efficient in the deployment of capital.

Speaker #1: But the focus on our affluent customers is going to continue the focus of the improvement in our overall income , whether it's through deposits , wealth , products , insurance is very healthy coming from these new to bank customers .

Speaker #1: So we don't see any change . We just don't want people to say that every month is going to be like 100,000 . Number , because it's like a almost like a ticker number , because that's what the trend was .

Speaker #1: They will be fluctuations and changes month to month and quarter to quarter , but nothing material to call out as such .

Georges Elhedery: Perfect. Thank you very much, Rob. Thank you. The next question we will take again from the Zoom is Chen Li at China Securities.

Speaker #4: Okay. Thank you very much, Alastair.

Speaker #2: We'll

Speaker #17: Take Kendra Yan at CIBC next .

Speaker #18: Yeah, thanks for taking my question. My question is kind of related to the macro side, as the newly nominated US Federal Reserve Chair has proposed interest rate cuts and balance sheet reduction.

Chen Li: Good afternoon, George and Pam. I have a question about preservation of Hang Seng Bank. Could you provide further information about the growth opportunities? I want to know in which aspects of the wealth management business will have stronger synergies with Hang Seng Bank? What are the other outlooks for the wealth balances and the wealth management margins? Thank you.

Speaker #18: Could you please share your macro assumption behind the future ? Three years guidance ? And are there any risks that we need to pay attention to ?

Speaker #18: Thanks

Speaker #4: Yes . Thank you Kendra . We can we can do that . Pam .

Speaker #1: Yeah . So just as I said earlier , Kendra , when we look at our guidance , we look at plausible downside scenarios that include interest rate cuts , both quantum as well as duration .

Georges Elhedery: Okay, Chen, thank you very much. I'll hand over to Pam, but remember what we said, at the announcement on 9 October, of our intent to privatize Hang Seng, is these are commitments we are holding. Hang Seng Bank will retain its own authorized institution and governance. It will retain its own brand in Hong Kong, of course, as a major community bank and the largest local bank. It will retain an independent customer proposition that will compete in the market for all customers. It will retain its branch network, and that proposition will remain intact with a distinctive cultural strength and customer proposition, customer experience strength that Hang Seng has been known for practically, essentially in Hong Kong.

Speaker #1: This time around , as we said , the starting point for the guidance for this was the January year end cuts . But we also stress test our portfolios on a regular basis for a range of scenarios .

Speaker #1: And we consider those and the impact on ECL also on a weighted average basis , when we look at our overall portfolios , we have looked at the some of the macro , you know , I would say recent news , whether it's to do with private credit or otherwise , because as I said earlier , we look at second and third order risks that may come from some sort of a macro event or issue , even though our own underwriting practices are very stringent and very rigorous in this respect , what I will say is that despite the the evolving scenarios that you're facing on tariffs and trade , our business has been really quite resilient and that has overall , it is up to percent year on year in 2025 .

Georges Elhedery: What we are driving through this privatizations is better efficiencies in cross-selling or better efficiencies in aligning back office or manufacturing capabilities that are not related to the customer proposition. Pam?

Pam: Thank you, George. Firstly, as George has said, that the positioning of Hang Seng Bank as an iconic community bank in Hong Kong stays. What we will endeavor to do is that post the privatization, we don't have that arm's length relationship restriction that prevents us to do more in terms of product proposition offerings and cross-referral to our customers, and also in terms of the investment dollars that we spend. We can spend them if it's on the same product, on the same customer journeys, seamlessly across both the red brand and the green brand. That gives us a very good position that as these two standalone brands, our ability to lean into the growth in Hong Kong and the macro opportunities, including cross-border, will be available to the broadest customer base while maintaining that community element of service for those customers.

Speaker #1: In a complex market , as this landscape evolves , our relationships and engagement with clients gets even stronger . We have taken market share in corridors through in Hong Kong , UK , Asia .

Speaker #1: Overall , as supply chains are moving and corridors are shifting . So I would say overall , if I think in a macro sense , there are headwinds and tailwinds as well as for the for the world at large .

Speaker #1: But also for HSBC . We look at specific idiosyncratic factors that could impact us . Any risk concentrations we may have in our home markets .

Speaker #1: And that's all part of our guidance. And that's how I said to you earlier, or to the earlier question, that when we give our guidance and our targets, we like to be rightfully conservative.

Speaker #1: But the most important thing is, through this period, we have made an assumption that we will continue to invest for growth. We have the right strategy.

Speaker #1: We have the right priorities. We have the focus to retain and win market share, and we will continue to do that with the basic underlying principle that George called out earlier.

Pam: That's how we are looking at it, and we will look at, obviously, wealth products as well as pricing margins, so that we can really make them more easily available for our customers.

Speaker #1: We are here to serve our customers and is the strength of our relationship with our customers . That gives us the confidence for our guidance and targets .

Georges Elhedery: Chen, we are the market leader in Hong Kong, undisputed. We are consolidating and cementing this leadership. Hang Seng Bank privatization will allow us to consolidate that leadership even further in all sorts of a broad range of products and services. We have a leadership position in capturing these growth opportunities that Pam was talking about in Hong Kong. As a super connector between the mainland and the world, as a, you know, poised to become the leading cross-border wealth hub on the planet before the end of the decade. It's really a privilege to be in the position we are in, to be able to capture this with the, you know, full HSBC and Hang Seng propositions. Thank you, Chen. Yeah, thanks very much. I will take the next question from Ed Firth at KBW.

Speaker #4: Perfect . Very good . Thank you .

Speaker #17: Yeah . Thank you . So we'll just take a final question today from JP Morgan .

Speaker #19: Oh , thank you . Hi . Thank you for taking the last questions from me . Okay . My question is still on revenue side , right ?

Speaker #19: I think the 5% revenue growth in 2028, and then the about 17% royalty guidance—I think these are the two key drivers. One will be on NII, and the other will be on wealth.

Speaker #19: But my question is that on NII , what is like what do you actually see ? The confidence then on the sustainability of the deposit Because one trend we noted is that say , for example , in China with RMB appreciation and also China start to tackling its citizens globally , will that actually slow down , say , for example , Chinese nationals coming to Hong Kong to open new accounts and then the money flow movement , so can can we be more a bit specific on what are the key drivers ?

Georges Elhedery: To go...

Edward Firth: Thanks very much, and morning, everybody. I just have two questions. One, just talking about the HIBOR benefit in Q4 for your net interest income. I think one of your peers talked about it as a temporary benefit. I guess I'm not close enough to the franchises and how you price, et cetera, domestically, but I guess, do you know, is there anything peculiar about you or some of the peers about the way you repriced CASA accounts or something in Q4, which would mean that yours should be sustained, but somebody else's might be temporary? I guess that's the first question. The second question is, I guess it's slightly an extension to Rob's question.

Speaker #19: And then the key path on the deposit growth ? This is number one . Number two , I think is still on . Number two is on wealth .

Speaker #19: And on that trend . Right . So what do you think that will have an impact on our wealth as well . Thank you .

Speaker #4: Okay . Thank you very much Catherine . Let me address them in reverse order . I'll speak a little bit about wealth and I'll share some thoughts about deposits .

Edward Firth: I'm not quite sure what is so specific about 2028 that means you can get 5% revenue growth there? I assume you don't feel you can before then. I know that at the moment, you know, 2026, we've got some headwinds from interest rates, but you've also got a very strong tailwinds around things like wealth management. Pam highlighted that. 2027, I guess, should be a reasonably normal year. I'm just trying to think, is this something that I need to think about, that you can see that it's happening from 2028 and beyond, that will make your revenue growth better, but we're not seeing today? Thanks very much.

Speaker #4: And Pam can give you additional granularity to to address your question , wealth remains a structurally a very important growth opportunity for HSBC .

Speaker #4: As we said specifically that we're aligning our wealth footprint . Asia and Middle East to where the wealth is growing fastest in the world , in Asia and the Middle East .

Speaker #4: Also , our ability to capture wealth all the way from the Premier customer base , which is the affluent middle class , all the way to the high net worth , means we have a better catchment of all these opportunities .

Georges Elhedery: Okay, thank you very much. Ed, for you, two questions. Pam, do you wanna address?

Speaker #4: We're also present in a number of onshore markets such as China . Onshore , we are the leading international wealth manager in China , mainland China , onshore , which is not dependent to flows outside China .

Pam: Yeah. Let me just unbundle the situation with regard to HIBOR. In Q4, HIBOR stabilized, and we had called out in the prior quarters that I'll come to Q1 in a second, in Q2 and Q3, HIBOR was very volatile, and we were looking at the comparison for a HIBOR close to a 1%, where it has an impact of about $100 million in terms of banking NII on a monthly basis, and then stabilizing to something which is in the 2% mark. We look at HIBOR on a one-month HIBOR basis. We feel very comfortable as long as HIBOR is around 2.25, 2.5, and so on.

Speaker #4: For instance , when investing in India , we of course have a big wealth hubs in places such as Hong Kong . Of course , Singapore , the UAE and a number of other markets .

Speaker #4: The challenges possibly to , you know , to to anticipate is there is a turnaround or a change in the overall outlook of investment because inevitably wealth will depend on the underlying performance of the investor .

Speaker #4: Investor markets and and and if there , you know , there is . Today there is a strong resilience in these markets , which is what we're you know , what we're you know , our customers are also looking at .

Pam: I fully recognize that I don't know what, you know, other peers would say, like, what, you know, tenor of HIBOR rate is most relevant for them. I'm just telling you from our perspective. Now, in Q1, HIBOR has fallen, we have to see the context. There's been a range of IPOs that normally happen, where, you know, when there's that demand for HIBOR fluctuation, it has fluctuated within a narrow range, the impact isn't there. Also, last year in Q4, there was a benefit of a lower betas. When HIBOR went up, the same impact wasn't there on the savings rates. Of course, you'd have to look at betas, how they evolve.

Speaker #4: But that is , of course , always a risk that we need to be watchful of . We're also investing to gain share and we're investing to diversify the product offering .

Speaker #4: And to diversify the rapper offering all the way from insurance to asset management to other forms of brokerage , etc. . So that we are able to meet the varying wealth customers needs in how they look at their investment requirements .

Speaker #4: Finally , we're also investing in generational generational wealth . So specifically supporting transfer to the youth or the next generation or transfer between wealth centers .

Pam: We have a very strong deposit franchise, and I think that's our differentiator in terms of the CASA level that we have, in terms of our accounts, and therefore, we have a good positioning where that deposit base helps us on the banking NII more than most of our peers. Obviously, in terms of both banking and NII this year and also our ambition, it's the rate headwinds. As I said earlier, it's the timing of the rate headwinds. If they're delayed, of course, it becomes less of a headwind. If they are earlier, then there is more sensitivity to it. I would say from a wealth business, as I also alluded to earlier, yes, the growth is very strong with asset management, wealth products, and insurance. It's broad-based growth.

Speaker #4: In a way , our footprint allows us to do that is competitively very strong compared to a number of our peers who are offering wealth from very , very few number of hubs .

Speaker #4: Okay , that's the wealth . Now , with regards to deposits , Pam will give you a better answer in the details you're asking for .

Speaker #4: But let me say one thing about deposit: it is the foundational product on which our customers' trust is expressed with HSBC. And this is how we look at it.

Speaker #4: Customers trust us with their deposits . That's the starting point of any possible service . And proposition in transaction banking . Payment financing and otherwise .

Speaker #4: So we cherish this asset class . We have always cherished it through thick and thin and good rates and bad rates . And we will always focus on what it takes to make sure our customers trust us .

Pam: Last year there was, you know, a great advantage or a tailwind coming from markets, which gave us a lot of uplift on the transactional-based fee income. We can't assume that for this year. Of course, if markets stay well and that happens, then that's a positive tailwind. That's how I would look at it.

Speaker #4: The financial strength , the level of service , so that we earn their trust with their deposits . When you look at our deposit base , it has grown in every business .

Georges Elhedery: Yeah. I would look at 2028, not specifically as the year 2028, but as what would we believe our long-term structural opportunity to grow? It's our guidance for 2028. We've delivered 5% revenue growth in 2025. We've delivered 4% in 2024. It's just, it's, you know, the footprint we are in and the capabilities for us to capture the growth is there.

Speaker #4: It has grown and we are highly , highly surplus . Liquidity in every currency , every major currency , in every major geography .

Speaker #4: So there is a deep rooted across our four businesses and across all the geographies where we operate . A deep rooted trust , which we nurture to support customers .

Speaker #4: You know , giving us their deposits and using us as their deposit bank by preference or by access . That can support . If you want our outlook on our deposit growth .

Pam: We like to be cautious. To be fair, we have to consider downside scenarios as well. We don't always take the best case. That's all I would add.

Speaker #4: Yeah .

Edward Firth: Perfect. Thank you, Ed.

Speaker #1: Thank you George . And Catherine , a really good question to close on . We have seen deposit growth as you've seen in our new disclosures and wealth across the spectrum of customer base , premier private Bank , retail in every market , in every jurisdiction , even when there isn't a home market .

[Company Representative] (HSBC Holdings PLC): Many thanks. We've probably time for a couple more questions. We'll take Alastair Warr at Autonomous next.

Alastair Warr: Morning, George. Morning, Pam. Thanks for making time for us. 2 questions. Back to Hang Seng Bank, I'm afraid. You touched on potential upsides from asset quality improving. I just wondered if that's something you're thinking about in terms of maybe more active steps, or is this just about being patient with the property cycle? Just on the wealth side, for a 2nd question, looks like there's a bit of a slowdown in the new accounts opening in Q4. If you've got $1.1 million for the year, and you were running at about $300,000 a quarter, is that just seasonal or, are there things changing there that we should be aware of? Thank you.

Speaker #1: And that really underpins the growth that we are seeing in our banking NII. We have taken a very conservative trajectory on loan growth.

Speaker #1: I'm hopeful at some stage , loan growth will also pick up , which will then also support the banking NII . If from an interest rate perspective , the timing of the interest rate becomes a headwind and one of those plausible downside scenarios , we have a structural hedge , which is continuing to be a tailwind given all the work we did , a few years ago , we will also continue to build on this structural hedge , even though the largest increases we have done are have been behind us now .

Georges Elhedery: thank you, Alistair. Pam.

Pam: Just in terms of the asset quality, the comment I made was that if you look at Hang Seng's pre-impairment margins, they've been very strong. If you look at what Hang Seng's ECL charges have been prior to 2022 versus in 2024, 2025, and even the run rate for the first half of the year, and then what's consolidated for the full year, that's what I meant by the overall improvement, and that would be both for Hang Seng Bank as it would be for HSBC Red Brand. And that's the only way to look at it. In terms of, you know, our own policies or processes on how we manage exposures, both for the Red brand and Green brand, they are highly aligned.

Speaker #1: So if I look at all of these things in the round, and I look at the momentum of the business that we have seen in the first seven weeks of this year, that gives us confidence for our banking.

Speaker #1: And guidance for 2026 . If you underpin that , just based on the fourth quarter , obviously it will give you a number of 46 , but we are not calling that out because we are very cognizant of the headwinds on interest rates .

Speaker #1: And you're right , you know , the interest rates in the US is down 50 basis points UK 25 basis points . Just year to date with further 2 to 3 rate cuts to happen .

Speaker #1: So with that , I think in the round we feel very confident that the banking NII , which is again the trust of our customers and what we are doing everything to preserve that trust and to build on those relationships , because I'll just end with one thing .

Pam: How the rigor we follow through them, I don't expect any of that to give us either a tailwind or a headwind. In terms of the new to bank customers, you know, yes, it was $1.1 million, just to clarify for the HSBC brand, and the Q4 also had a good number. We believe that this new to bank customers is a huge growth opportunity for us. However, we are trying to be now a little bit more selective on the acquisition because we've now had a three-year trend on how the acquisition has happened in between the lower end of the customer base and the more premier.

Speaker #1: We are fundamentally a relationship bank . We have a full service suite of products we offer to our customers . So for our guidance , for our targets , we look at that full range .

Speaker #1: We are not a product proposition based bank , in which case some of the comments you made would obviously be a bigger headwind .

Speaker #4: Perfect . Thank you Pam , and thank you , Catherine for your last question . Thank you everyone for joining us . We are pleased to report strong revenues , strong profits , strong returns and strong distribution to our shareholders .

Pam: We have added a fee for the new to bank customers who have a balance less than HKD 10,000. Because of that, we expect that there would be slightly slower acquisition in 2026. The focus on our excellent customers is going to continue. The focus of the improvement in our overall income, whether it's through deposits, wealth products, insurance, is very healthy coming from these new-to-bank customers. We don't see any change. We just don't want people to say that every month is going to be like a 100,000 number, because it's like almost like a ticker number, because that's what the trend was. There will be fluctuations and changes month-to-month and quarter-to-quarter. Nothing material to call out as such.

Speaker #4: We are confident we can navigate the challenges ahead of us from a position of strength , and this has allowed us to put ambitious targets about our revenue growing every year for 26 , 27 , 28 , rising to 5% in 28 , as well as our return on tangible equity , delivering 17% or better every year over that period , with a 50% dividend payout ratio .

Speaker #4: All, excluding notable items. Thank you very much for joining us this morning. With this, afternoon, and I hope you have a good day.

Speaker #20: Thank you Thanks

Georges Elhedery: Okay, thank you very much, Alistair. We'll take Kendra Yan at CICC next.

Kendra Yan: Yeah, thanks for taking my question. My question is kind of related to macro side. As the newly nominated Federal Reserve System Chair has proposed interest rate cuts and balance sheet reduction, could you please share your macro assumption behind the future three years guidance? Are there any risks that we need to pay attention to? Thanks.

Georges Elhedery: Yes, thank you, Kendra. We can do that, Pam.

Pam: Just as I've said earlier, Kendra, when we look at our guidance, we look at plausible downside scenarios. That include interest rate cuts, both quantum as well as duration. This time around, as we said, the starting point for the guidance of this year was the January year-end cuts. We also stress test our portfolios on a regular basis for a range of scenarios. We consider those and this impact on ECLs also on a weighted average basis when we look at our overall portfolios.

Pam: We have looked at some of the macro, you know, I would say, recent news, whether it's to do with private credit or otherwise, because as I said earlier, we look at second and third order risks that may come from some sort of a macro, event or issue, even though our own underwriting practices are very stringent and very rigorous in this respect. What I will say is that despite the evolving scenarios that we are facing on tariffs and trade, our business has been really quite resilient, it is up 2% year-on-year in 2025. In a complex market, as this landscape evolves, our relationships and engagement with clients gets even stronger.

Pam: We have taken market share in corridors through in Hong Kong, UK, Asia overall, as supply chains are moving and corridors are shifting. I would say overall, if I think in a macro sense, there are headwinds and tailwinds, as well as for the world at large, but also for HSBC. We look at specific idiosyncratic factors that could impact us, any risk concentrations we may have in our home markets, and that's all part of our guidance, and that's why I said to you earlier or to the earlier question, that when we give our guidance and our targets, we like to be rightfully conservative. The most important thing is, through this period, we have made an assumption that we will continue to invest for growth.

Pam: We have the right strategy, we have the right priorities, we have the focus to retain and win market share, and we will continue to do that with the basic underlying principle that George called out earlier: We are here to serve our customers, and it's the strength of our relationship with our customers that gives us the confidence for our guidance and targets.

Georges Elhedery: Perfect. Very good. Kendra, thank you.

[Company Representative] (HSBC Holdings PLC): Yeah. Thank you, George. We'll just take a final question today from Katherine Lei, J.P. Morgan.

Kendra Yan: Oh, thank you. Hi, thank you for taking the last questions from me. Okay, my question is still on revenue side, right? I think the 5% revenue growth in 2028 and then the above 17% RoTE guidance, I think there's two key drivers. One will be on NII, and then the other will be on wealth. My question is that on NII, what gives HSBC the confidence then, on the sustainability of the deposit growth? One trend we noted is that, say, for example, in China, with RMB appreciations and also, China start to taxing its citizens globally, will that actually slow down, say, for example, Chinese nationals coming to Hong Kong to open new accounts and then the money flow movement?

Kendra Yan: Can we be more there, a bit specific on who are the key drivers, and then the key path on the deposit growth? This is number one. Number two, I think is still on. Number two is on wealth, and on that trend, right? What do you think that will have an impact on our wealth as well? Thank you.

Georges Elhedery: Okay, thank you very much, Katherine. Let me address them in reverse order. I'll speak a little bit about wealth, and I'll share some thoughts about deposits, and Pam can give you additional granularity to address your question. Wealth remains structurally a very important growth opportunity for HSBC, as we said, specifically that we're aligning our wealth footprint, Asia and Middle East, to where the wealth is growing fastest in the world, in Asia and Middle East. Also, our ability to capture wealth all the way from the premier customer base, which is the affluent middle class, all the way to the high net worth, means we have a better catchment of all these opportunities. We are also present in a number of onshore markets, such as China onshore.

Georges Elhedery: We are the leading international wealth manager in China, mainland China, onshore, which is not dependent to flows outside China, for instance. We're investing in India. We, of course, have big wealth hubs in places such as Hong Kong, of course, Singapore, the UAE, and a number of other markets. The challenges possibly, you know, to anticipate is there is a turnaround or a change in the overall outlook of investment, because inevitably, wealth will depend on the underlying performance of the invested markets. If there, you know, today, there is a strong resilience in these markets, which is what we're, our customers are also looking at. That is, of course, always a risk that we need to be watchful of.

Georges Elhedery: We're also investing to gain share, and we're investing to diversify the product offering and to diversify the wrapper offering, all the way from insurance to asset management, to other forms of brokerage, et cetera, so that we are able to meet the varying wealth customers' needs in how they look at their investment requirements. Finally, we're also investing in generational wealth, so specifically supporting transfer to the youth or the next generation, or transfer between wealth centers. In a way, our footprint allows us to do that is competitively, a very strong compared to a number of our peers who are offering wealth from very few, a number of hubs. Okay, that's the wealth. With regards to deposits, Pam will give you a better answer in the details you're asking for, but let me tell you one thing about deposit.

Georges Elhedery: It is the foundational product on which our customers' trust is expressed with HSBC, and this is how we look at it. Customers trust us with their deposits. That's the starting point of any possible service and proposition in transaction banking, payment, financing, and otherwise. We cherish this asset class. We have always cherished it, through thick and through thin, in good rates and bad rates, and we will always focus on what it takes to make sure our customers trust us: the financial strength, the level of service, so that we earn their trust with their deposits. When you look at our deposit base, it has grown in every business. It has grown, and we are highly surplus liquidity in every currency, every major currency, in every major geography.

Georges Elhedery: There is a deep-rooted, across our four businesses and across all the geographies where we operate, a deep-rooted trust, which we nurture to support customers, you know, giving us their deposits, and using us as their deposit bank, by preference or by accident. That can support, if you want, our outlook on our deposit growth. Pam?

Pam: Thank you, George. Katherine, a really good question to close on. We have seen deposit growth, as you've seen in our new disclosures in wealth, across the spectrum of our customer base. Premier, private bank, retail, in every market, in every jurisdiction, even when there isn't our home market, and that really underpins the growth that we are seeing in our banking NII. We have taken very conservative trajectory on loan growth. I'm hopeful at some stage, loan growth will also pick up, which will then also support the banking NII. If from an interest rate perspective, the timing of the interest rate becomes a headwind in one of those plausible downside scenarios. We have a structural hedge, which is continuing to be a tailwind, given all the work we did a few years ago.

Pam: We will also continue to build on the structural hedge, even though the largest increases we have done have been behind us now. If I look at all of these things in the round, and I look at the momentum of the business that we have seen in the first sort of 7 weeks of this year, that gives us confidence for our banking NII guidance for 2026. If you underpin that just based on Q4, obviously, it'll give you a number of $46. We are not calling that out because we are very cognizant of the headwinds on interest rates. You're right, you know, the interest rates in the US is down 50 basis points, UK, 25 basis points just here to date, with further two to three rate cuts to happen.

Pam: With that, I think in the round, we feel very confident that the banking NII, which is again, the trust of our customers and what we are doing everything to preserve that trust and to build on those relationships, because I'll just end with one thing: We are fundamentally a relationship bank. We have a full service, a suite of products we offer to our customers. For our guidance, for our targets, we look at that full range. We are not a product proposition-based bank, in which case some of the comments you made would obviously be a bigger headwind.

Georges Elhedery: Perfect. Thank you, Pam, and thank you, Katherine, for your last question. Thank you, everyone, for joining us. We are pleased to report strong revenues, strong profits, strong returns, and strong distribution to our shareholders. We are confident we can navigate the challenges ahead of us from a position of strength, and this has allowed us to put ambitious targets about our revenue growing every year for 2026, 2027, 2028, rising to 5% in 2028, as well as our return on tangible equity, delivering 17% or better every year over that period, with a 50% dividend payout ratio, all excluding notable item. Thank you very much for joining us this morning or this afternoon, and I hope you have a good day.

Pam: Thank you.

Operator: Thank you, ladies and gentlemen, for joining today's webinar. You may now disconnect.