TIDMSTAN

RNS Number : 5490D

Standard Chartered PLC

29 October 2020

Standard Chartered PLC - 3Q'20 Results

 
Table of contents 
 Performance highlights                                1 
---------------------------------------------------- 
Statement of results                                   2 
---------------------------------------------------- 
Group Chief Financial Officer's review                 3 
---------------------------------------------------- 
Supplementary financial information                   11 
---------------------------------------------------- 
Underlying versus statutory results reconciliations   28 
---------------------------------------------------- 
Risk review                                           34 
---------------------------------------------------- 
Capital review                                        39 
---------------------------------------------------- 
Financial statements                                  44 
---------------------------------------------------- 
Other supplementary financial information             49 
---------------------------------------------------- 
 

Forward-looking statements

This document may contain 'forward-looking statements' that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek', 'continue' or other words of similar meaning.

By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not limited to) changes in global, political, economic, business, competitive, market and regulatory forces or conditions, future exchange and interest rates, changes in tax rates, future business combinations or dispositions and other factors specific to the Group. Any forward-looking statement contained in this document is based on past or current trends and/or activities of the Group and should not be taken as a representation that such trends or activities will continue in the future.

No statement in this document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclaims any obligation to revise or update any forward-looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.

Please refer to the Group's 2019 Annual Report and the 2020 Half-Year Report for a discussion of certain risks and factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless the context requires, within this document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Greater China & North Asia (GCNA) includes China, Hong Kong, Japan, Korea, Macau and Taiwan; ASEAN & South Asia (ASA) includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand and Vietnam; and Africa & Middle East (AME) includes Bahrain, Egypt, Iraq, Jordan, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.

Standard Chartered PLC is incorporated in England and Wales with limited liability. Standard Chartered PLC is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC stock codes are: HKSE 02888 and LSE STAN.LN.

All figures are presented on an underlying basis and comparisons are made to 2019 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on page 28.

Bill Winters, Group Chief Executive, said:

"Our transformation is allowing us to weather the macroeconomic storm in good shape. Our Wealth Management and Financial Markets businesses have good momentum, we are controlling costs to fund innovation, and we believe we are well provided against credit impairment. Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay. We are further streamlining our organisation to sharpen focus on our retail business, more effectively leverage our unique network, and drive efficiencies."

Update on strategic priorities

-- We are creating a single pan-Asia region to more effectively deliver our network there

-- We will combine our operations that serve individuals to grow our affluent business ...

-- ... and sharpen the focus on transforming and disrupting with digital. Our virtual bank Mox is now live in Hong Kong

-- These organisation changes will also support initiatives to improve productivity

-- Profit in our four large optimisation markets has improved 16% on a constant currency basis year-to-date

-- We are driving sustainability where it matters most: 86% of our sustainable finance assets are in some of the least developed markets

Selected information concerning financial performance (3Q'20 unless otherwise stated)

-- Income lower as previously guided due to interest rates: down 12% to $3.5bn; down 11% constant currency (ccy)

- Income down 10% on a like-for-like basis: at ccy and excluding $36m negative movement in DVA

- Continued recovery in Wealth Management and momentum in Financial Markets offset by interest rate headwinds

-- Net interest margin (NIM) down 38bps to 1.23%; 5bps lower compared to 2Q'20

- Impact of lower rates in the quarter mostly offset by improvement in liability mix and pricing

- Average NIM expected to stabilise slightly below the current level over the next two quarters

-- Expenses of $2.5bn improved 1% YoY; broadly flat ccy

-- Credit impairment of $353m up $74m YoY but lower for second consecutive quarter

- Stage 1 and 2 impairment of $109m (2Q'20: $217m)

- Stage 3 impairment up 9% YoY to $244m (2Q'20: $394m)

- Net stage 3 plus credit grade 12 exposures up $0.8bn since 30.06.20; early alerts reduced $1.0bn to $13.4bn

-- Return on tangible equity down 450bps to 4.4%

- Pre-provision operating profit down 30% to $1.0bn due to lower income; down 28% ccy and ex-DVA

- Underlying profit before tax down 40% to $0.7bn driven by lower income; down 39% ccy and ex-DVA

- Statutory profit before tax down 61% to $0.4bn, includes $231m goodwill impairment in UAE and Indonesia

-- Risk-weighted assets of $267bn up $4bn since 30.06.20

- Negative credit migration and FX movements partly offset by RCF repayments and lower counterparty credit risk

-- The Group remains strongly capitalised and highly liquid

- Common equity tier 1 ratio 14.4% above the top of the 13-14% target range (30.06.20: 14.3%)

- Asset-to-deposit ratio 63.8% (30.06.20: 62.7%); liquidity coverage ratio 142% (30.06.20: 149%)

- Continue to target higher quality deposits: individual CASA up 8% since 30.06.20

-- Earnings per share down 13.0c or 49% to 13.6c

Outlook

We expect similar fourth quarter seasonality to last year, and anticipate client demand to increase over the course of 2021 as more of the markets in which we operate start to come out of recession. The impact of the significant reduction in interest rates that occurred earlier this year should be fully reflected over the next two quarters with the net interest margin stabilising slightly below the current level in that timeframe.

In this protracted low interest rate environment, we will continue to optimise the drivers of our net interest income and are increasingly focusing on generating more fee-based income, particularly from our Financial Markets and Wealth Management businesses that have good momentum. We will continue to reduce operating expenses wherever possible so that we can maximise our investment in digital capabilities; as previously guided we expect expenses to be below $10 billion in both 2020 and 2021.

Our third quarter credit impairment outcome reinforces our previous view that our impairment costs should be lower in the second half of 2020 than in the first half. The expected economic recovery next year would support asset quality improvement, although we anticipate some sectors and markets will face continuing challenges.

On 25 February 2021 we will release our full-year 2020 results and will provide an update on the progress we are making on our strategic priorities in the context of the prevailing macroeconomic outlook. Given our strong capital position the Board will consider at that time resuming shareholder returns, subject to consultation with our regulators.

Statement of results

For the three months ended 30 September 2020

 
                                                                3 months         3 months 
                                                          ended 30.09.20   ended 30.09.19  Change(1) 
                                                                $million         $million          % 
-------------------------------------------------------  ---------------  ---------------  --------- 
Underlying performance 
Operating income                                                   3,519            3,978       (12) 
Operating expenses (including UK bank levy)                      (2,480)          (2,501)          1 
Credit impairment                                                  (353)            (279)       (27) 
Other impairment                                                    (15)              (5)      (200) 
Profit from associates and joint ventures                             74               45         64 
Profit before taxation                                               745            1,238       (40) 
Profit/(loss) attributable to ordinary shareholders(2)               428              857       (50) 
Return on ordinary shareholders' tangible equity 
 (%)                                                                 4.4              8.9   (450)bps 
Cost to income ratio (%)                                            70.5             62.9   (760)bps 
-------------------------------------------------------  ---------------  ---------------  --------- 
Statutory performance 
Operating income                                                   3,506            3,959       (11) 
Operating expenses                                               (2,515)          (2,567)          2 
Credit impairment                                                  (358)            (280)       (28) 
Goodwill impairment                                                (231)                -         nm 
Other impairment                                                    (33)             (60)         45 
Profit from associates and joint ventures                             66               53         25 
Profit before taxation                                               435            1,105       (61) 
Taxation                                                           (274)            (333)         18 
Profit for the period                                                161              772       (79) 
Profit/(loss) attributable to parent company 
 shareholders                                                        154              761       (80) 
Profit/(loss) attributable to ordinary shareholders(2)               123              725       (83) 
Return on ordinary shareholders' tangible equity 
 (%)                                                                 1.3              7.5   (620)bps 
Cost to income ratio (%)                                            71.7             64.8   (690)bps 
-------------------------------------------------------  ---------------  ---------------  --------- 
Balance sheet and capital 
Total assets                                                     754,429          734,800          3 
Total equity                                                      50,570           50,696          - 
Average tangible equity attributable to ordinary 
 shareholders(2)                                                  38,934           38,379          1 
Loans and advances to customers                                  281,380          269,703          4 
Customer accounts                                                417,517          387,857          8 
Risk-weighted assets                                             266,664          268,668        (1) 
Total capital                                                     57,051           54,940          4 
Total capital (%)                                                   21.4             20.4     100bps 
Common Equity Tier 1                                              38,449           36,386          6 
Common Equity Tier 1 ratio (%)                                      14.4             13.5      90bps 
Net Interest Margin (%) (adjusted)                                  1.23             1.61    (38)bps 
Advances-to-deposits ratio (%)(3)                                   63.8             65.6      (1.8) 
Liquidity coverage ratio (%)                                         142              133          9 
UK leverage ratio (%)                                                5.2              5.1      10bps 
-------------------------------------------------------  ---------------  ---------------  --------- 
Information per ordinary share                                     Cents            Cents      Cents 
Earnings per share - underlying(4)                                  13.6             26.6     (13.0) 
                  - statutory(4)                                     3.9             22.5     (18.6) 
Net asset value per share(5)                                       1,405            1,358         47 
Tangible net asset value per share(5)                              1,249            1,199         50 
Number of ordinary shares at period end (millions)                 3,149            3,195        (1) 
-------------------------------------------------------  ---------------  ---------------  --------- 
 

1 Variance is better/(worse) other than assets, liabilities and risk-weighted assets

2 Profit/(loss) attributable to ordinary shareholders is after the deduction of dividends payable to the holders of non-cumulative redeemable preference shares and Additional Tier 1 securities classified as equity

3 When calculating this ratio, total loans and advances to customers excludes reverse repurchase agreements and other similar secured lending, excludes approved balances held with central banks, confirmed as repayable at the point of stress and includes loans and advances to customers held at fair value through profit and loss. Total customer accounts includes customer accounts held at fair value through profit or loss.

4 Represents the underlying or statutory earnings divided by the basic weighted average number of shares

5 Calculated on period end net asset value, tangible net asset value and number of shares

Group Chief Financial Officer's review

The Group delivered a resilient performance in challenging conditions in the third quarter of 2020

Summary of financial performance

 
                                                 Constant                       Constant                                   Constant 
                                                 Currency                       Currency                                   Currency 
                     3Q'20       3Q'19  Change  Change(1)       2Q'20  Change  Change(1)      YTD'20      YTD'19  Change  Change(1) 
                  $million    $million       %          %    $million       %          %    $million    $million       %          % 
--------------  ----------  ----------  ------             ----------  ------  ---------  ----------  ----------  ------  --------- 
  Net Interest 
   income            1,620       1,937    (16)       (16)       1,660     (2)        (3)       5,122       5,799    (12)       (10) 
  Other income       1,899       2,041     (7)        (7)       2,060     (8)        (9)       6,444       5,875      10         11 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Underlying 
 operating 
 income              3,519       3,978    (12)       (11)       3,720     (5)        (6)      11,566      11,674     (1)          - 
Underlying 
 operating 
 expenses          (2,480)     (2,501)       1          -     (2,355)     (5)        (3)     (7,193)     (7,470)       4          1 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Underlying 
 operating 
 profit before 
 impairment 
 and taxation        1,039       1,477    (30)       (30)       1,365    (24)       (24)       4,373       4,204       4          4 
Credit 
 impairment          (353)       (279)    (27)       (32)       (611)      42         42     (1,920)       (533)   nm(2)      nm(2) 
Other 
 impairment           (15)         (5)   (200)      nm(2)        (42)      64         64          97        (26)   nm(2)      nm(2) 
Profit from 
 associates 
 and joint 
 ventures               74          45      64         61          21   nm(2)      nm(2)         150         202    (26)       (26) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Underlying 
 profit 
 before 
 taxation              745       1,238    (40)       (41)         733       2          2       2,700       3,847    (30)       (30) 
Restructuring         (44)       (123)      64         64           2   nm(2)      nm(2)       (134)       (137)       2          1 
Goodwill 
 impairment 
 & other items       (266)        (10)   nm(2)      nm(2)           6   nm(2)      nm(2)       (504)       (191)   (164)      (163) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Statutory 
 profit before 
 taxation              435       1,105    (61)       (62)         741    (41)       (41)       2,062       3,519    (41)       (42) 
Taxation             (274)       (333)      18         16       (192)    (43)       (39)       (835)     (1,251)      33         32 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Profit for the 
 period                161         772    (79)       (80)         549    (71)       (71)       1,227       2,268    (46)       (48) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
 
Net interest 
 margin 
 (%)                  1.23        1.61                           1.28                           1.34        1.64 
Underlying 
 return 
 on tangible 
 equity 
 (%)                   4.4         8.9                            3.5                            5.5         8.6 
Underlying 
 earnings 
 per share 
 (cents)              13.6        26.6                           10.4                           49.5        75.7 
Statutory 
 return on 
 tangible 
 equity (%)            1.3         7.5                            3.6                            3.3         6.8 
Statutory 
 earnings 
 per share 
 (cents)               3.9        22.5                           10.8                           29.7        60.5 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Not meaningful

The Group delivered a resilient performance in challenging conditions in the third quarter of 2020, with lower interest rates partially offset by strong underlying performances in several products and markets, good cost control and an encouraging sequential improvement in credit impairment. Income declined 12 per cent - impacted by lower interest rates - and expenses including continued investment were 1 per cent lower compared to 3Q'19. Credit impairment increased 27 per cent but reduced for the second consecutive quarter despite the extraordinary external environment. Underlying profit declined 40 per cent reflecting higher impairments and a 38 basis point decline in net interest margin.

The Group remains strongly capitalised and highly liquid with a CET1 ratio of 14.4 per cent - above the top of the medium-term target range - an assets-to-deposits ratio of 63.8 per cent and a liquidity coverage ratio of 142 per cent.

All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2019 on a reported currency basis, unless otherwise stated.

-- Operating income declined 12 per cent and was down 10 per cent on a constant currency basis and excluding a $36 million negative movement in the debit valuation adjustment (DVA). The impact of lower interest rates was partially offset by strong performances in Wealth Management and Financial Markets

-- Net interest income decreased 16 per cent with increased volumes more than offset by a 24 per cent (38 basis points) decline in net interest margin

-- Other income decreased 7 per cent, or 5 per cent excluding the negative impact of movements in DVA, with a strong performance in Wealth Management and Financial Markets offset by a $157 million reduction in Treasury. On a statutory basis, fees and commissions have increased 3 per cent

-- Operating expenses were 1 per cent lower and broadly flat on a constant currency basis, absorbing continued investment into strategic initiatives. The cost-to-income ratio increased 7 percentage points to 70 per cent excluding DVA, due to the impact of the significantly lower interest rate environment on net interest income

-- Credit impairment increased by $74 million to $353 million but was lower for a second consecutive quarter, down $258 million compared to 2Q'20. Stage 1 and 2 impairments of $109 million doubled and included a $77 million management overlay. Impairments of Stage 3 assets were up 9 per cent

-- Other impairment of $15 million was primarily driven by impairment charges relating to aircraft

-- Profit from associates and joint ventures was up 64 per cent to $74 million. The Group now recognises its share of profits of its associate China Bohai Bank based upon its most recently available quarterly results: for 3Q'20 reporting purposes this was based on a 19.99 per cent share of China Bohai Bank's 2Q'20 performance, historically the strongest quarter of the year. The Group's share of China Bohai Bank reduced to 16.26 per cent in the third quarter and this will be the share of profit that is reported in future quarters

-- Underlying profit before tax decreased 40 per cent. Charges relating to goodwill impairment, restructuring and other items increased $177 million to $310 million, primarily relating to $231 million of goodwill impairment in UAE ($204 million) and Indonesia ($27 million) due to a lower GDP growth outlook, and a $35 million dilution loss relating to the initial public offering of the Group's associate, China Bohai Bank

-- Taxation was $274 million on a statutory basis with an underlying year-to-date effective tax rate of 31.3 per cent up from the prior year rate of 28.1 per cent reflecting a non-repeat of prior year tax adjustments and lower profits increasing the impact of non-deductible expenses

-- Underlying return on tangible equity declined by 450 basis points to 4.4 per cent, with the impact of reduced profits partly offset by lower tangible equity reflecting the dividends paid and share buy-back programmes completed since 1H'19

Operating income by product

 
                                                  Constant                       Constant                                   Constant 
                                                  Currency                       Currency                                   Currency 
                      3Q'20       3Q'19  Change  Change(1)       2Q'20  Change  Change(1)      YTD'20      YTD'19  Change  Change(1) 
                   $million    $million       %          %    $million       %          %    $million    $million       %          % 
---------------  ----------  ----------  ------             ----------  ------  ---------  ----------  ----------  ------  --------- 
Transaction 
 Banking                665         887    (25)       (25)         721     (8)        (8)       2,186       2,665    (18)       (17) 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
  Trade                 255         282    (10)        (9)         230      11         11         745         841    (11)       (10) 
  Cash 
   Management           410         605    (32)       (32)         491    (16)       (17)       1,441       1,824    (21)       (20) 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Financial 
 Markets                909         877       4          5         970     (6)        (7)       3,157       2,542      24         27 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
  Foreign 
   Exchange             266         261       2          3         343    (22)       (23)       1,024         863      19         21 
  Rates                 201         176      14         16         339    (41)       (41)         918         533      72         77 
  Commodities            60          39      54         50          82    (27)       (27)         186         128      45         44 
  Credit and 
   Capital 
   Markets              188         167      13         15         250    (25)       (25)         464         452       3          4 
  Capital 
   Structuring 
   Distribution 
   Group                 91          87       5          6          52      75         77         204         243    (16)       (14) 
  DVA                  (22)          14   nm(2)      nm(2)       (201)      89         89          82        (28)   nm(2)      nm(2) 
  Securities 
   Services              79          88    (10)        (8)          79       -          -         242         258     (6)        (4) 
  Other 
   Financial 
   Markets               46          45       2          2          26      77         59          37          93    (60)       (59) 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Corporate 
 Finance                284         281       1          3         269       6          4         831         815       2          4 
Lending and 
 Portfolio 
 Management             222         201      10         12         232     (4)        (5)         649         585      11         13 
Wealth 
 Management             568         488      16         16         434      31         30       1,532       1,464       5          5 
Retail Products         859         975    (12)       (11)         913     (6)        (7)       2,718       2,902     (6)        (5) 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
  CCPL and 
   other 
   unsecured 
   lending              309         315     (2)        (1)         295       5          3         908         940     (3)        (2) 
  Deposits              301         510    (41)       (40)         413    (27)       (27)       1,186       1,505    (21)       (20) 
  Mortgage and 
   Auto                 211         123      72         69         169      25         23         516         381      35         37 
  Other Retail 
   Products              38          27      41         50          36       6          8         108          76      42         47 
                 ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Treasury                 40         335    (88)       (88)         178    (78)       (78)         543         894    (39)       (39) 
Other                  (28)        (66)      58         45           3   nm(2)      nm(2)        (50)       (193)      74         73 
---------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Total 
 underlying 
 operating 
 income               3,519       3,978    (12)       (11)       3,720     (5)        (6)      11,566      11,674     (1)          - 
---------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Not meaningful

Transaction Banking income was down 25 per cent. Cash Management declined 32 per cent as double-digit volume growth was more than offset by declining margins given the lower interest rate environment. Trade declined 10 per cent with lower balances reflecting a significant reduction in global trade volumes resulting from the COVID-19 pandemic.

Financial Markets income grew 4 per cent or 8 per cent excluding DVA, despite significantly lower levels of market volatility than in the first half of this year, reflecting the impact of improvements made to the business model in recent years as well as increased hedging and investment activity by clients. There was double-digit growth in Rates, Commodities, Credit and Capital Markets while Foreign Exchange income was up slightly. Income from Securities Services declined 10 per cent due to lower margins partly offset by higher volumes.

Corporate Finance income was up 1 per cent reflecting increased balances primarily in Leveraged Structured Solutions.

Lending and Portfolio Management income was up 10 per cent with improved margins and increased volumes in Corporate Lending.

Wealth Management income was up 16 per cent and while market sentiment remains fragile, it has noticeably improved in many of the Group's larger markets, supplemented by clients increasingly using digital channels. There was a particularly strong sales performance in FX, equities and structured notes driving income excluding bancassurance up 17 per cent. Bancassurance income, which year-to-date is just over a quarter of total Wealth Management income, was 14 per cent higher compared to 3Q'19 as a result of a $53 million accelerated recognition of an annual bancassurance bonus within Retail Banking, which was booked in the second quarter in the prior year. The bonus booking is broadly flat on a year-to-date basis.

Retail Products income reduced 12 per cent on a reported basis and was down 11 per cent on a constant currency basis. Deposits income declined 41 per cent as margin compression more than offset increased volumes. Increases in margins and volumes led to 72 per cent growth across Mortgages & Auto and a 41 per cent increase in Other Retail Products. Credit Cards & Personal Loans income was down 2 per cent with new sales showing signs of recovery to pre-COVID-19 levels in some of the Group's markets.

Treasury income declined 88 per cent, broadly split equally across net interest income and other income. The decline in net interest income reflects reduced returns on deployed assets within Treasury Markets. The reduction in other income is due to a $67 million negative movement in hedging ineffectiveness, including hedge mark-to-market losses incurred in 3Q'20, reduced FX swap income and lower realisation gains. Treasury income declined 78 per cent on the second quarter with $84 million lower realisation gains, negative movements in hedging ineffectiveness and lower FX swap income partly offset by increased interest income where interest paid for external funding reduced more quickly than the returns on deployed assets.

Profit before tax by client segment and geographic region

 
                                                 Constant                       Constant                                   Constant 
                                                 Currency                       Currency                                   Currency 
                     3Q'20       3Q'19  Change  Change(1)       2Q'20  Change  Change(1)      YTD'20      YTD'19  Change  Change(1) 
                  $million    $million       %          %    $million       %          %    $million    $million       %          % 
--------------  ----------  ----------  ------             ----------  ------  ---------  ----------  ----------  ------  --------- 
Corporate & 
 Institutional 
 Banking               525         589    (11)       (12)         476      10          8       1,657       1,886    (12)       (12) 
Retail Banking         257         300    (14)       (15)          93     176        177         583         924    (37)       (37) 
Commercial 
 Banking                19         116    (84)       (84)          80    (76)       (75)         201         453    (56)       (55) 
Private 
 Banking                17         (3)   nm(2)      nm(2)          19    (11)        (6)          73          97    (25)       (26) 
Central & 
 other items 
 (segment)            (73)         236   (131)      (128)          65   nm(2)      nm(2)         186         487    (62)       (64) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Underlying 
 profit 
 before 
 taxation              745       1,238    (40)       (41)         733       2          2       2,700       3,847    (30)       (30) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Greater China 
 & North 
 Asia                  578         610     (5)        (6)         484      19         18       1,712       1,939    (12)       (11) 
ASEAN & South 
 Asia                  243         242       -          1          89     173        160         699       1,002    (30)       (30) 
Africa & 
 Middle East            11         147    (93)       (94)          43    (74)       (80)         101         588    (83)       (82) 
Europe & 
 Americas               37          62    (40)       (50)         255    (85)       (85)         393          75   nm(2)      nm(2) 
Central & 
 other items 
 (region)            (124)         177   (170)      (168)       (138)      10         17       (205)         243   (184)      (179) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
Underlying 
 profit 
 before 
 taxation              745       1,238    (40)       (41)         733       2          2       2,700       3,847    (30)       (30) 
--------------  ----------  ----------  ------  ---------  ----------  ------  ---------  ----------  ----------  ------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Not meaningful

Corporate & Institutional Banking income declined 6 per cent with the low interest rate environment leading to a 33 per cent decline in Cash Management more than offsetting an 8 per cent increase in Financial Markets excluding the impact of negative movements in DVA. Lower expenses and lower credit impairments partly offset the income reduction resulting in profits down 11 per cent or 5 per cent excluding DVA. Retail Banking income declined 2 per cent and 1 per cent on a constant currency basis. Higher impairments, including a management overlay of $48 million, was the primary driver of a 14 per cent reduction in profit. Commercial Banking income reduced 12 per cent, which along with impairments more than tripling resulted in profit declining 84 per cent. Private Banking profit was $17 million, an increase of $20 million with lower expenses and impairments partly offset by a 11 per cent reduction in income. Central & other items (segment) recorded a loss of $73 million as income decreased 95 per cent reflecting the impact of both the depressed interest rate environment and lower non-interest income within Treasury.

Greater China & North Asia income declined 7 per cent partly offset by a near two-thirds reduction in impairments which meant profits were down 5 per cent. ASEAN & South Asia profits were flat with a 5 per cent decline in income offset by lower expenses and impairments. Africa & Middle East continues to experience difficult conditions that included the effect of low oil prices in the period, with profits down 93 per cent after a $127 million increase in credit impairments, over half of which was the result of an overlay. Income was down 4 per cent but was up 1 per cent on a constant currency basis. Europe & Americas income decreased 9 per cent and was down 5 per cent excluding the impact of negative movements in DVA, which along with higher impairments resulted in profits declining 40 per cent. Central & other items (region) recorded a loss of $124 million with income declining $230 million due to negative movements in hedge ineffectiveness and lower returns paid to Treasury on the equity provided to the regions in a falling interest rate environment.

Adjusted net interest income and margin

 
                                3Q'20    3Q'19(1)  Change(2)       2Q'20  Change(2)      YTD'20   YTD'19(1)  Change(2) 
                             $million    $million          %    $million          %    $million    $million          % 
-------------------------  ----------  ----------             ----------  ---------  ----------  ----------  --------- 
Adjusted net interest 
 income(3)                      1,626       2,025       (20)       1,688        (4)       5,245       6,029       (13) 
Average interest-earning 
 assets                       524,921     499,260          5     531,131        (1)     522,251     490,293          7 
Average interest-bearing 
 liabilities                  477,688     453,815          5     479,053          -     473,778     441,029          7 
-------------------------  ----------  ----------  ---------  ----------  ---------  ----------  ----------  --------- 
 
Gross yield (%)(4)               2.07        3.30      (123)        2.37       (30)        2.46        3.40       (94) 
Rate paid (%)(4)                 0.92        1.86       (94)        1.21       (29)        1.23        1.95       (72) 
Net yield (%)(4)                 1.15        1.44       (29)        1.16        (1)        1.23        1.45       (22) 
Net interest margin 
 (%)(4,5)                        1.23        1.61       (38)        1.28        (5)        1.34        1.64       (30) 
-------------------------  ----------  ----------  ---------  ----------  ---------  ----------  ----------  --------- 
 

1 The Group in 2019 changed its accounting policy for net interest income and the basis of preparation of its net interest margin to better reflect the underlying performance of its banking book. See notes to the financial statements in the 2019 Annual Report for further details.

2 Variance is better/(worse) other than assets and liabilities which is increase/(decrease)

3 Adjusted net interest income is statutory net interest income less funding costs for the trading book

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Adjusted net interest income divided by average interest-earning assets, annualized

Adjusted net interest income was down 20 per cent driven by a 24 per cent decline in net interest margin that fell 38 basis points year-on-year and 5 basis points compared to 2Q'20:

-- Average interest-earning assets decreased 1 per cent in the quarter, driven by a decline in Treasury Markets assets. Gross yields declined 30 basis points compared with the average in the prior quarter and predominantly reflected the flow-through of declining interest rates in the second half of 2019 and those that occurred in the first quarter of 2020

-- Average interest-bearing liabilities were broadly flat in the quarter despite the Group rolling off expensive term deposits. The deposit mix improved with a reduction in Corporate and Retail Banking time deposits and growth in individual current accounts. The rate paid on liabilities decreased 29 basis points compared with the average in the prior quarter reflecting interest rate movements, repricing liabilities lower and a shift in deposit mix

Credit risk summary

Income Statement

 
                                3Q'20       3Q'19  Change(1)       2Q'20  Change(1)      YTD'20      YTD'19  Change(1) 
                             $million    $million          %    $million          %    $million    $million          % 
-------------------------  ----------  ----------             ----------  ---------  ----------  ----------  --------- 
Total credit impairment           353         279         27         611       (42)       1,920         533        260 
  Of which stage 1 and 2          109          55         98         217       (50)         777         137        467 
  Of which stage 3                244         224          9         394       (38)       1,143         396        189 
-------------------------  ----------  ----------  ---------  ----------  ---------  ----------  ----------  --------- 
 

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

Balance sheet

 
                                        30.09.20    30.06.20  Change(1)    31.12.19  Change(1)  30.09.19(2)  Change(1) 
                                        $million    $million          %    $million          %     $million          % 
------------------------------------  ----------  ----------  ---------  ----------  ---------  -----------  --------- 
Gross loans and advances to 
 customers(3)                            288,046     282,826          2     274,306          5      275,832          4 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
  Of which stage 1                       251,113     250,278          -     246,149          2      249,123          1 
  Of which stage 2                        27,597      23,739         16      20,759         33       18,928         46 
  Of which stage 3                         9,336       8,809          6       7,398         26        7,781         20 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
 
Expected credit loss provisions          (6,666)     (6,513)          2     (5,783)         15      (6,130)          9 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
  Of which stage 1                         (571)       (476)         20       (402)         42        (373)         53 
  Of which stage 2                         (706)       (780)        (9)       (377)         87        (373)         89 
  Of which stage 3                       (5,389)     (5,257)          3     (5,004)          8      (5,384)          - 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
 
Net loans and advances to customers      281,380     276,313          2     268,523          5      269,703          4 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
  Of which stage 1                       250,542     249,802          -     245,747          2      248,750          1 
  Of which stage 2                        26,891      22,959         17      20,382         32       18,555         45 
  Of which stage 3                         3,947       3,552         11       2,394         65        2,398         65 
                                      ----------  ----------  ---------  ----------  ---------  -----------  --------- 
 
Cover ratio of stage 3 before/after         58 /        60 /      (2) /        68 /       (10)         69 /       (11) 
 collateral (%)(4)                            76          80        (4)          85      / (9)           86     / (10) 
Credit grade 12 accounts ($million)        1,954       1,519         29       1,605         22        1,556         26 
Early alerts ($million)                   13,407      14,406        (7)       5,271        154        4,468        200 
Investment grade corporate exposures 
 (%)(4)                                       59          57          2          61        (2)           63        (4) 
------------------------------------  ----------  ----------  ---------  ----------  ---------  -----------  --------- 
 

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 3Q'19 Stage 3 balances, provisions and cover ratios have been restated to include interest due but unpaid together with equivalent credit impairment charge

3 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $4,330 million at 30 September 2020, $4,383 million at 30 June 2020, $1,469 million at 31 December 2019 and $6,132 million at 30 September 2019

4 Change is the percentage points difference between the two points rather than the percentage change

Asset quality remained broadly stable in the third quarter, with high-risk assets remaining at elevated levels due to the impact of COVID-19 on the economic environment. There has been no further deterioration in the negative economic outlook in the third quarter in many of the markets in which the Group operates and these markets are expected to help drive the global economy out of recession in 2021.

Credit impairment increased by $74 million to $353 million compared to 3Q'19 but was $258 million lower in 3Q'20 than in 2Q'20.

Stage 1 and 2 impairments of $109 million were double the level in 3Q'19 but were half the level recorded in 2Q'20 and included a further management overlay of $77 million. The overlay was taken to reflect the latest macroeconomic outlook not captured in the modelled outcome of Corporate & Institutional Banking and the potential impact to delinquencies and flow rates in Retail Banking of extensions to payment relief schemes in some markets as well as the ending of these schemes in India and Malaysia in 3Q'20.

Stage 3 impairments were up 9 per cent to $244 million reflecting the impact of COVID-19 induced macroeconomic deterioration on Retail Banking portfolios and Commercial Banking clients but were down $150 million on the previous quarter.

Gross stage 3 loans and advances to customers of $9.3 billion were up 6 per cent compared with 30 June 2020 primarily due to increased inflows in Corporate & Institutional Banking. These credit-impaired loans represented 3.2 per cent of gross loans and advances, an increase of 13 basis points compared with 30 June 2020.

The Stage 3 cover ratio of 58 per cent was down 2 percentage points compared with the position as at 30 June 2020, and the cover ratio post collateral at 76 per cent was down 4 percentage points, mainly reflecting new inflows into stage 3 where the Group is confident that it has a low probability of a significant loss.

Credit grade 12 balances have increased 29 per cent since 30 June 2020 primarily from new inflows from Early Alert accounts.

Early Alert accounts of $13.4 billion have reduced by $1 billion since 30 June 2020, with 80 per cent of the decline relating to downgrades in the Aviation and Metals & Mining sectors. The Group is continuing to monitor its exposures in the Aviation, Metals & Mining and Oil & Gas sectors particularly carefully, given the unusual stresses caused by the effects of COVID-19 including low oil prices.

The proportion of investment grade corporate exposures has increased since 30 June 2020 by 2 percentage points to 59 per cent.

Restructuring, goodwill impairment and other items

 
                                          3Q'20                       3Q'19                       2Q'20 
------------------------------  --------------------------  --------------------------  -------------------------- 
                                Restructuring  Other items  Restructuring  Other items  Restructuring  Other items 
                                     $million     $million       $million     $million       $million     $million 
------------------------------  -------------  -----------  -------------  -----------  -------------  ----------- 
Operating income                           22         (35)           (19)            -             38            6 
Operating expenses                       (35)            -           (44)         (22)           (25)            - 
Credit impairment                         (5)            -            (1)            -            (3)            - 
Goodwill impairment                         -        (231)              -            -              -            - 
Other impairment                         (18)            -           (55)            -           (15)            - 
Profit from associates 
 and joint ventures                       (8)            -            (4)           12              7            - 
------------------------------  -------------  -----------  -------------  -----------  -------------  ----------- 
Profit/(loss) before taxation            (44)        (266)          (123)         (10)              2            6 
------------------------------  -------------  -----------  -------------  -----------  -------------  ----------- 
 

The Group's statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period and items which management and investors would ordinarily identify separately when assessing underlying performance period-by period.

Other items of $266 million relates mainly to $231 million of goodwill impairment in UAE ($204 million) and Indonesia ($27 million) due to both a worsening GDP growth outlook and lower interest rate environment. Other items also includes a $35 million dilution loss relating to the initial public offering of the Group's associate China Bohai Bank. Restructuring charges of $44 million primarily reflect redundancy related charges as well as impairments from the Group's discontinued ship leasing business.

Balance sheet and liquidity

 
                                      30.09.20    30.06.20  Change    31.12.19  Change(1)    30.09.19  Change(1) 
                                      $million    $million       %    $million          %    $million          % 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Assets 
Loans and advances to banks             49,040      50,499     (3)      53,549        (8)      60,743       (19) 
Loans and advances to customers        281,380     276,313       2     268,523          5     269,703          4 
Other assets                           424,009     414,773       2     398,326          6     404,354          5 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Total assets                           754,429     741,585       2     720,398          5     734,800          3 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Liabilities 
Deposits by banks                       28,138      28,986     (3)      28,562        (1)      32,603       (14) 
Customer accounts                      417,517     421,153     (1)     405,357          3     387,857          8 
Other liabilities                      258,204     241,549       7     235,818          9     263,644        (2) 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Total liabilities                      703,859     691,688       2     669,737          5     684,104          3 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Equity                                  50,570      49,897       1      50,661          -      50,696          - 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
Total equity and liabilities           754,429     741,585       2     720,398          5     734,800          3 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
 
Advances-to-deposits ratio (%)(2)        63.8%       62.7%               64.2%                  65.6% 
Liquidity coverage ratio (%)              142%        149%                144%                   133% 
----------------------------------  ----------  ----------  ------  ----------  ---------  ----------  --------- 
 

1 Variance is increase/(decrease)comparing current reporting period to prior reporting periods

2 The Group now excludes $14,363 million held with central banks (30.06.20: $13,595 million, 31.12.19: $9,109 million, 30.09.19: $10,632 million) that has been confirmed as repayable at the point of stress

The Group's balance sheet remains strong, liquid and well diversified:

-- Loans and advances to customers increased 2 per cent since 30 June 2020 to $281 billion driven mainly by growth in Retail Mortgages within Greater China & North Asia and Corporate Lending which in part benefited from a temporary increase in balances relating to upcoming initial public offerings in Hong Kong

-- Customer accounts of $418 billion decreased 1 per cent since 30 June 2020 with an increase in operating account balances within Retail Banking current accounts more than offset by a reduction in Corporate and Retail Banking time deposits

-- Other assets increased 2 per cent since 30 June 2020 driven by increased balances at central banks and reverse repurchase agreements. Other liabilities increased 7 per cent from increased repurchase agreements and issued debt securities

The advances-to-deposits ratio increased to 63.8 per cent from 62.7 per cent at 30 June 2020. The liquidity coverage ratio reduced from 149 per cent to 142 per cent as the Group unwound some of the liquidity actions undertaken while funding markets were stressed earlier in the year and remains well above the minimum regulatory requirement of 100 per cent.

Risk-weighted assets

 
                     30.09.20    30.06.20  Change(1)    31.12.19  Change(1)    30.09.19  Change(1) 
                     $million    $million          %    $million          %    $million          % 
-----------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
By risk type 
Credit risk           217,720     213,136          2     215,664          1     218,198          - 
Operational risk       26,800      26,800          -      27,620        (3)      27,620        (3) 
Market risk            22,144      22,616        (2)      20,806          6      22,850        (3) 
-----------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
Total RWAs            266,664     262,552          2     264,090          1     268,668        (1) 
-----------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
 

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

Total risk-weighted assets (RWA) increased 2 per cent or $4 billion since 30 June 2020 to $267 billion:

-- Credit Risk RWA increased by $4.6 billion in the third quarter to $217.7 billion driven by negative credit migration of $5.2 billion from the impact of economic disruption related to COVID-19. FX movements of $2.2 billion were offset by a $1.4 billion reduction in counterparty credit risk and a $0.9 billion reduction in revolving credit facilities

-- Operational Risk RWA remained stable at $26.8 billion

-- Market Risk RWA decreased by $0.5 billion to $22.1 billion primarily due to a decline in positions capitalised under standardised rules

Capital base and ratios

 
                                     30.09.20    30.06.20  Change(1)    31.12.19  Change(1)    30.09.19  Change(1) 
                                     $million    $million          %    $million          %    $million          % 
---------------------------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
CET1 capital                           38,449      37,625          2      36,513          5      36,386          6 
Additional Tier 1 capital (AT1)         5,611       5,612          -       7,164       (22)       7,153       (22) 
---------------------------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
Tier 1 capital                         44,060      43,237          2      43,677          1      43,539          1 
Tier 2 capital                         12,991      13,231        (2)      12,288          6      11,401         14 
---------------------------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
Total capital                          57,051      56,468          1      55,965          2      54,940          4 
---------------------------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
CET1 capital ratio end point 
 (%)(2)                                  14.4        14.3        0.1        13.8        0.6        13.5        0.9 
Total capital ratio transitional 
 (%)(2)                                  21.4        21.5      (0.1)        21.2        0.2        20.4        1.0 
UK leverage ratio (%)(2)                  5.2         5.2          -         5.2          -         5.1        0.1 
---------------------------------  ----------  ----------  ---------  ----------  ---------  ----------  --------- 
 

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Change is percentage points difference between two points rather than percentage change

The Group is well capitalised with low leverage and high levels of loss-absorbing capacity. Its capital metrics remain well above regulatory thresholds.

The Group's CET1 ratio of 14.4 per cent was 9 basis points higher than as at 30 June 2020, over four percentage points above the Group's latest regulatory minimum of 10.0 per cent and above the top of the 13-14 per cent medium-term target range. The impact on credit RWAs from negative credit migration was a 29 basis point reduction in the CET1 ratio. This was more than offset by the impact of other movements including profit accretion in the quarter, the favourable impact of FX on reserves as well as lower RWA on derivatives and revolving credit facilities. Excluding the impact of IFRS 9 or analogous ECLs transitional arrangements, the Group's CET1 ratio is 14.3 per cent.

The Group's UK leverage ratio of 5.2 per cent is flat to the ratio at 30 June 2020. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.

The Group continues to target a CET1 ratio of 13-14 per cent in the medium-term.

Outlook

We expect similar fourth quarter seasonality to last year, and anticipate client demand to increase over the course of 2021 as more of the markets in which we operate start to come out of recession. The impact of the significant reduction in interest rates that occurred earlier this year should be fully reflected over the next two quarters with the net interest margin stabilising slightly below the current level in that timeframe.

In this protracted low interest rate environment, we will continue to optimise the drivers of our net interest income and are increasingly focusing on generating more fee-based income, particularly from our Financial Markets and Wealth Management businesses that have good momentum. We will continue to reduce operating expenses wherever possible so that we can maximise our investment in digital capabilities; as previously guided we expect expenses to be below $10 billion in both 2020 and 2021.

Our third quarter credit impairment outcome reinforces our previous view that our impairment costs should be lower in the second half of 2020 than in the first half. The expected economic recovery next year would support asset quality improvement, although we anticipate some sectors and markets will face continuing challenges.

On 25 February 2021 we will release our full-year 2020 results and will provide an update on the progress we are making on our strategic priorities in the context of the prevailing macroeconomic outlook. Given our strong capital position the Board will consider at that time resuming shareholder returns, subject to consultation with our regulators.

Andy Halford

Group Chief Financial Officer

29 October 2020

Supplementary financial information

Underlying performance by client segment

 
                                                                    3Q'20 
---------------------------------  ------------------------------------------------------------------------ 
                                                                                         Central 
                                          Corporate                                            & 
                                    & Institutional     Retail  Commercial    Private      other 
                                            Banking    Banking     Banking    Banking      items      Total 
                                           $million   $million    $million   $million   $million   $million 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating income                              1,735      1,301         341        129         13      3,519 
                                   ----------------  ---------  ----------  ---------  ---------  --------- 
  External                                    1,680      1,148         320         93        278      3,519 
  Inter-segment                                  55        153          21         36      (265)          - 
                                   ----------------  ---------  ----------  ---------  ---------  --------- 
Operating expenses                          (1,066)      (915)       (225)      (114)      (160)    (2,480) 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating profit/(loss) 
 before impairment losses 
 and taxation                                   669        386         116         15      (147)      1,039 
Credit impairment                             (132)      (129)        (97)          2          3      (353) 
Other impairment                               (12)          -           -          -        (3)       (15) 
Profit from associates 
 and joint ventures                               -          -           -          -         74         74 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                                525        257          19         17       (73)        745 
Restructuring                                  (12)       (11)         (6)        (1)       (14)       (44) 
Goodwill impairment & 
 other items                                      -          -           -          -      (266)      (266) 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                                513        246          13         16      (353)        435 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Total assets                                338,690    111,275      32,845     13,626    257,993    754,429 
  Of which: loans and advances 
   to customers(1)                          167,015    108,828      27,353     13,528     19,087    335,811 
Total liabilities                           402,786    153,278      44,518     18,641     84,636    703,859 
  Of which: customer accounts(2)            255,631    149,793      41,420     18,507      6,694    472,045 
Risk-weighted assets                        138,412     44,845      30,495      6,251     46,661    266,664 
Underlying return on tangible 
 equity (%)                                     7.4       11.3         1.3        5.3      (9.3)        4.4 
Cost to income ratio (%)                       61.4       70.3        66.0       88.4         nm       70.5 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                                    3Q'19 
---------------------------------  ------------------------------------------------------------------------ 
                                                                                         Central 
                                          Corporate                                            & 
                                    & Institutional     Retail  Commercial    Private      other 
                                            Banking    Banking     Banking    Banking      items      Total 
                                           $million   $million    $million   $million   $million   $million 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating income                              1,848      1,323         388        145        274      3,978 
                                   ----------------  ---------  ----------  ---------  ---------  --------- 
  External                                    1,892      1,074         395         86        531      3,978 
  Inter-segment                                (44)        249         (7)         59      (257)          - 
                                   ----------------  ---------  ----------  ---------  ---------  --------- 
Operating expenses                          (1,098)      (941)       (244)      (134)       (84)    (2,501) 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating profit before 
 impairment losses 
 and taxation                                   750        382         144         11        190      1,477 
Credit impairment                             (153)       (82)        (28)       (14)        (2)      (279) 
Other impairment                                (8)          -           -          -          3        (5) 
Profit from associates 
 and joint ventures                               -          -           -          -         45         45 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                                589        300         116        (3)        236      1,238 
Restructuring                                 (105)        (8)           -        (4)        (6)      (123) 
Other items                                       -          -           -          -       (10)       (10) 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                                484        292         116        (7)        220      1,105 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Total assets                                351,672    105,467      34,048     15,143    228,470    734,800 
  Of which: loans and advances 
   to customers(1)                          157,380    103,369      29,057     15,007     13,757    318,570 
Total liabilities                           401,954    143,390      39,300     18,696     80,764    684,104 
  Of which: customer accounts(2)            241,811    139,875      36,634     18,547     11,367    448,234 
Risk-weighted assets                        134,388     42,777      32,152      6,649     52,702    268,668 
Underlying return on tangible 
 equity (%)                                     8.6       13.9         7.0      (0.9)        7.7        8.9 
Cost to income ratio (%)                       59.4       71.1        62.9       92.4       30.7       62.9 
---------------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 

1 Loans and advances to customers includes FVTPL

2 Customer accounts includes FVTPL and repurchase agreements

Corporate & Institutional Banking

 
                                                        Constant                          Constant                                      Constant 
                                                        currency                          currency                                      currency 
                         3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                      $million    $million          %          %    $million          %          %    $million    $million          %          % 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating income         1,735       1,848        (6)        (5)       1,833        (5)        (6)       5,722       5,382          6          8 
  Transaction 
   Banking                 484         662       (27)       (26)         531        (9)        (9)       1,604       1,985       (19)       (18) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Trade                 162         181       (10)        (9)         146         11         13         472         533       (11)       (11) 
     Cash 
      Management           322         481       (33)       (33)         385       (16)       (17)       1,132       1,452       (22)       (21) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Financial 
   Markets                 830         801          4          5         897        (7)        (9)       2,911       2,280         28         30 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Foreign 
      Exchange             228         217          5          6         302       (25)       (25)         892         720         24         26 
     Rates                 197         168         17         20         328       (40)       (41)         892         506         76         81 
     Commodities            53          34         56         51          76       (30)       (30)         164         107         53         53 
     Credit and 
      Capital 
      Markets              179         163         10         11         245       (27)       (27)         439         426          3          4 
     Capital 
      Structuring 
      Distribution 
      Group                 76          79        (4)        (3)          47         62         64         180         220       (18)       (16) 
     DVA                  (22)          14         nm         nm       (201)         89         89          82        (28)         nm         nm 
     Securities 
      Services              79          88       (10)        (8)          79          -          -         242         258        (6)        (4) 
     Other 
      Financial 
      Markets               40          38          5         11          21         90         86          20          71       (72)       (71) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Corporate 
   Finance                 256         248          3          5         245          4          3         752         726          4          6 
  Lending and 
   Portfolio 
   Management              161         143         13         12         168        (4)        (7)         465         408         14         16 
  Other                      4         (6)        167        180         (8)        150        150        (10)        (17)         41         29 
Operating expenses     (1,066)     (1,098)          3          2     (1,004)        (6)        (5)     (3,051)     (3,200)          5          3 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating profit 
 before 
 impairment losses 
 and taxation              669         750       (11)       (10)         829       (19)       (20)       2,671       2,182         22         23 
Credit impairment        (132)       (153)         14          7       (315)         58         57     (1,117)       (269)         nm         nm 
Other impairment          (12)         (8)       (50)       (71)        (38)         68         68         103        (27)         nm         nm 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying profit 
 before taxation           525         589       (11)       (12)         476         10          8       1,657       1,886       (12)       (12) 
Restructuring             (12)       (105)         89         89           6         nm         nm        (68)        (82)         17         15 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory profit 
 before 
 taxation                  513         484          6          5         482          6          4       1,589       1,804       (12)       (12) 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets           338,690     351,672        (4)        (3)     336,623          1          -     338,690     351,672        (4)        (3) 
  Of which: loans 
   and 
   advances to 
   customers(5)        167,015     157,380          6          7     164,392          2          1     167,015     157,380          6          7 
Total liabilities      402,786     401,954          -          1     402,920          -        (1)     402,786     401,954          -          1 
  Of which: 
   customer 
   accounts(6)         255,631     241,811          6          7     257,512        (1)        (2)     255,631     241,811          6          7 
Risk-weighted 
 assets                138,412     134,388          3         nm     137,150          1         nm     138,412     134,388          3         nm 
Underlying return 
 on risk-weighted 
 assets 
 (%)(3)                    1.5         1.7    (20)bps         nm         1.4      10bps         nm         1.6         1.9    (30)bps         nm 
Underlying return 
 on tangible 
 equity 
 (%)(3)                    7.4         8.6   (120)bps         nm         6.8      60bps         nm         8.0         9.4   (140)bps         nm 
Cost to income 
 ratio 
 (%)(4)                   61.4        59.4      (2.0)      (2.2)        54.8      (6.6)      (6.6)        53.3        59.5        6.2        5.7 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Loans and advances to customers includes FVTPL

6 Customer accounts includes FVTPL and repurchase agreements

7 Not meaningful

Performance highlights

-- Underlying profit before taxation of $525 million was down 11 per cent driven by lower income, partially offset by lower expenses and lower impairments

-- Operating income of $1,735 million was down 6 per cent (down 3 per cent on a constant currency basis excluding the debit valuation adjustment) primarily as a result of lower Cash Management income due to the low interest rate environment

-- Good balance sheet momentum with loans and advances to customers up 2 per cent since 30 June 2020

-- Risk-weighted assets up $1 billion since 30 June 2020 as a result of increased Credit RWA

-- RoTE decreased 120 basis points to 7.4 per cent

Retail Banking

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income               1,301       1,323        (2)        (1)       1,216          7          6       3,838       3,926        (2)        (1) 
  Transaction 
   Banking                5           5          -          -           4         25          -          14          14          -          - 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Trade                5           5          -          -           4         25          -          14          14          -          - 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Wealth 
   Management           471         395         19         19         346         36         35       1,231       1,175          5          5 
  Retail 
   Products             825         921       (10)       (10)         862        (4)        (5)       2,585       2,736        (6)        (4) 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     CCPL and 
      other 
      unsecured 
      lending           309         315        (2)        (1)         295          5          3         908         940        (3)        (2) 
     Deposits           276         464       (41)       (40)         372       (26)       (26)       1,079       1,364       (21)       (19) 
     Mortgage 
      and Auto          202         115         76         75         159         27         25         490         356         38         40 
     Other 
      Retail 
      Products           38          27         41         48          36          6         11         108          76         42         45 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Other                   -           2      (100)      (133)           4      (100)      (125)           8           1         nm         nm 
Operating 
 expenses             (915)       (941)          3          2       (889)        (3)        (2)     (2,695)     (2,766)          3          1 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation           386         382          1          -         327         18         17       1,143       1,160        (1)        (1) 
Credit 
 impairment           (129)        (82)       (57)       (56)       (233)         45         46       (559)       (236)      (137)      (141) 
Other 
 impairment               -           -         nm         nm         (1)        100        100         (1)           -         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit 
 before 
 taxation               257         300       (14)       (15)          93        176        177         583         924       (37)       (37) 
Restructuring          (11)         (8)       (38)       (57)           -         nm         nm        (14)         (9)       (56)       (88) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit before 
 taxation               246         292       (16)       (17)          93        165        166         569         915       (38)       (38) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        111,275     105,467          6          4     107,327          4          2     111,275     105,467          6          4 
  Of which: 
   loans and 
   advances to 
   customers(5)     108,828     103,369          5          4     105,085          4          2     108,828     103,369          5          4 
Total 
 liabilities        153,278     143,390          7          6     149,422          3          1     153,278     143,390          7          6 
  Of which: 
   customer 
   accounts(6)      149,793     139,875          7          6     146,088          3          1     149,793     139,875          7          6 
Risk-weighted 
 assets              44,845      42,777          5         nm      44,186          1         nm      44,845      42,777          5         nm 
Underlying 
 return 
 on 
 risk-weighted 
 assets 
 (%)(3)                 2.3         2.8    (50)bps         nm         0.8     150bps         nm         1.7         2.9   (120)bps         nm 
Underlying 
 return 
 on tangible 
 equity 
 (%)(3)                11.3        13.9   (260)bps         nm         4.2     710bps         nm         8.7        14.5   (580)bps         nm 
Cost to income 
 ratio 
 (%)(4)                70.3        71.1        0.8        0.4        73.1        2.8        2.9        70.2        70.5        0.3      (0.1) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Loans and advances to customers includes FVTPL

6 Customer accounts includes FVTPL and repurchase agreements

7 Not meaningful

Performance highlights

-- Underlying profit before taxation of $257 million was down 14 per cent predominantly driven by lower income and higher impairments, including a management overlay of $48 million, partially offset by lower expenses

-- Operating income of $1,301 million was down 2 per cent, and was down 1 per cent on a constant currency basis, in challenging conditions, with a 2 per cent increase in Greater China & North Asia more than offset by a 10 per cent decline (down 5 per cent on a constant currency basis) in Africa & Middle East and a 4 per cent decline in ASEAN & South Asia

-- Good balance sheet momentum with loans and advances to customers up 4 per cent and customer accounts up 3 per cent since 30 June 2020

-- RoTE decreased from 13.9 per cent to 11.3 per cent, but was up 710 basis points since 30 June 2020

Commercial Banking

 
                                                        Constant                          Constant                                      Constant 
                                                        currency                          currency                                      currency 
                         3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                      $million    $million          %          %    $million          %          %    $million    $million          %          % 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating income           341         388       (12)       (11)         350        (3)        (3)       1,081       1,199       (10)        (8) 
  Transaction 
   Banking                 175         220       (20)       (20)         186        (6)        (6)         567         666       (15)       (14) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Trade                  87          96        (9)        (7)          80          9          7         258         294       (12)       (11) 
     Cash 
      Management            88         124       (29)       (29)         106       (17)       (17)         309         372       (17)       (16) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Financial 
   Markets                  79          76          4          5          73          8          7         246         262        (6)        (4) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Foreign 
      Exchange              38          44       (14)        (9)          41        (7)        (5)         132         143        (8)        (5) 
     Rates                   4           8       (50)       (44)          11       (64)       (55)          26          27        (4)        (4) 
     Commodities             7           5         40         40           6         17         17          22          21          5          - 
     Credit and 
      Capital 
      Markets                9           4        125        200           5         80         80          25          26        (4)          - 
     Capital 
      Structuring 
      Distribution 
      Group                 15           8         88         88           5        200        200          24          23          4          4 
     Other 
      Financial 
      Markets                6           7       (14)       (43)           5         20       (33)          17          22       (23)       (15) 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Corporate 
   Finance                  28          33       (15)       (15)          24         17          8          79          87        (9)        (7) 
  Lending and 
   Portfolio 
   Management               61          58          5         11          64        (5)          -         184         177          4          6 
  Wealth 
   Management                1           -         nm      (100)           -         nm         nm           1           1          -      (100) 
  Retail Products            1           2       (50)       (50)           1          -          -           4           5       (20)          - 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Deposits                1           2       (50)       (50)           1          -          -           4           5       (20)          - 
                    ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Other                    (4)         (1)         nm         nm           2         nm         nm           -           1      (100)         nm 
Operating expenses       (225)       (244)          8          6       (212)        (6)        (4)       (646)       (689)          6          4 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating profit 
 before 
 impairment losses 
 and taxation              116         144       (19)       (20)         138       (16)       (14)         435         510       (15)       (14) 
Credit impairment         (97)        (28)         nm         nm        (58)       (67)       (67)       (234)        (57)         nm         nm 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying profit 
 before taxation            19         116       (84)       (84)          80       (76)       (75)         201         453       (56)       (55) 
Restructuring              (6)           -         nm         nm         (4)       (50)       (75)        (24)           -         nm         nm 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory profit 
 before 
 taxation                   13         116       (89)       (90)          76       (83)       (84)         177         453       (61)       (61) 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets            32,845      34,048        (4)        (4)      33,158        (1)        (2)      32,845      34,048        (4)        (4) 
  Of which: loans 
   and 
   advances to 
   customers(5)         27,353      29,057        (6)        (6)      28,151        (3)        (4)      27,353      29,057        (6)        (6) 
Total liabilities       44,518      39,300         13         12      43,578          2          1      44,518      39,300         13         12 
  Of which: 
   customer 
   accounts(6)          41,420      36,634         13         12      40,507          2          1      41,420      36,634         13         12 
Risk-weighted 
 assets                 30,495      32,152        (5)         nm      30,856        (1)         nm      30,495      32,152        (5)         nm 
Underlying return 
 on risk-weighted 
 assets 
 (%)(3)                    0.2         1.4   (120)bps         nm         1.0    (80)bps         nm         0.9         1.8    (90)bps         nm 
Underlying return 
 on tangible 
 equity 
 (%)(3)                    1.3         7.0   (570)bps         nm         5.1   (380)bps         nm         4.3         8.8   (450)bps         nm 
Cost to income 
 ratio 
 (%)(4)                   66.0        62.9      (3.1)      (3.8)        60.6      (5.4)      (4.3)        59.8        57.5      (2.3)      (2.5) 
------------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Loans and advances to customers includes FVTPL

6 Customer accounts includes FVTPL and repurchase agreements

7 Not meaningful

Performance highlights

-- Underlying profit before taxation of $19 million was down 84 per cent mainly due to lower income and impairments more than tripling, partially offset by lower expenses

-- Operating income of $341 million was down 12 per cent predominantly driven by Transaction Banking due to the low interest rate environment and a slowdown in global trade volumes. Income was down 16 per cent in Africa & Middle East, down 12 per cent in Greater China & North Asia and down 10 per cent in ASEAN & South Asia

-- RoTE decreased from 7.0 per cent to 1.3 per cent

Private Banking

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income                 129         145       (11)       (11)         138        (7)        (8)         429         451        (5)        (5) 
  Transaction 
   Banking                1           -         nm         nm           -         nm         nm           1           -         nm         nm 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Trade                1           -         nm         nm           -         nm         nm           1           -         nm         nm 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Corporate 
   Finance                -           -         nm         nm           -         nm         nm           -           2      (100)      (100) 
  Wealth 
   Management            96          93          3          4          88          9          8         300         288          4          5 
  Retail 
   Products              33          52       (37)       (38)          50       (34)       (36)         129         161       (20)       (20) 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
     Deposits            24          44       (45)       (45)          40       (40)       (40)         103         136       (24)       (24) 
     Mortgage 
      and Auto            9           8         13          -          10       (10)       (10)          26          25          4          - 
                 ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Other                 (1)           -         nm         nm           -         nm         nm         (1)           -         nm         nm 
Operating 
 expenses             (114)       (134)         15         16       (115)          1          3       (353)       (387)          9          8 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation            15          11         36         67          23       (35)       (32)          76          64         19         17 
Credit 
 impairment               2        (14)        114        114         (4)        150        150         (3)          33      (109)      (109) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit/(loss) 
 before 
 taxation                17         (3)         nm         nm          19       (11)        (6)          73          97       (25)       (26) 
Restructuring           (1)         (4)         75        100         (1)          -        100         (4)         (5)         20         50 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit/(loss) 
 before 
 taxation                16         (7)         nm         nm          18       (11)          6          69          92       (25)       (24) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets         13,626      15,143       (10)       (11)      13,202          3          2      13,626      15,143       (10)       (11) 
  Of which: 
   loans and 
   advances to 
   customers(5)      13,528      15,007       (10)       (11)      13,097          3          2      13,528      15,007       (10)       (11) 
Total 
 liabilities         18,641      18,696          -        (2)      18,842        (1)        (2)      18,641      18,696          -        (2) 
  Of which: 
   customer 
   accounts(6)       18,507      18,547          -        (2)      18,725        (1)        (2)      18,507      18,547          -        (2) 
Risk-weighted 
 assets               6,251       6,649        (6)         nm       6,128          2         nm       6,251       6,649        (6)         nm 
Underlying 
 return 
 on 
 risk-weighted 
 assets 
 (%)(3)                 1.1       (0.2)     130bps         nm         1.2    (10)bps         nm         1.5         2.0    (50)bps         nm 
Underlying 
 return 
 on tangible 
 equity 
 (%)(3)                 5.3       (0.9)     620bps         nm         5.9    (60)bps         nm         7.4        10.0   (260)bps         nm 
Cost to income 
 ratio 
 (%)(4)                88.4        92.4        4.0        5.5        83.3      (5.1)      (4.1)        82.3        85.8        3.5        3.3 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Loans and advances to customers includes FVTPL

6 Customer accounts includes FVTPL and repurchase agreements

7 Not meaningful

Performance highlights

-- Underlying profit before taxation of $17 million was up $20 million, with lower income more than offset by lower expenses and one-off credit impairment provision included in the previous year

-- Operating income of $129 million was down 11 per cent, primarily due to a decline in Retail Deposits partly mitigated by continued resilient performance from Wealth Management

-- Assets under management at $67 billion was up 6 per cent since 30 June 2020 mainly from Net New Money inflow and positive market valuation

-- RoTE increased from (0.9) per cent to 5.3 per cent following the return to profitability

Central & other items (segment)

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income                  13         274       (95)       (96)         183       (93)       (95)         496         716       (31)       (30) 
  Treasury               40         335       (88)       (88)         178       (78)       (78)         543         894       (39)       (39) 
  Other                (27)        (61)         56         43           5         nm         nm        (47)       (178)         74         73 
Operating 
 expenses             (160)        (84)       (90)      (104)       (135)       (19)        (6)       (448)       (428)        (5)       (13) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit/(loss) 
 before 
 impairment 
 losses and 
 taxation             (147)         190      (177)      (170)          48         nm         nm          48         288       (83)       (85) 
Credit 
 impairment               3         (2)         nm        200         (1)         nm         nm         (7)         (4)       (75)      (133) 
Other 
 impairment             (3)           3      (200)      (200)         (3)          -          -         (5)           1         nm         nm 
Profit from 
 associates 
 and joint 
 ventures                74          45         64         61          21         nm         nm         150         202       (26)       (26) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit/(loss) 
 before 
 taxation              (73)         236      (131)      (128)          65         nm         nm         186         487       (62)       (64) 
Restructuring          (14)         (6)      (133)      (114)           1         nm         nm        (24)        (41)         41         41 
Goodwill 
 impairment 
 & other items        (266)        (10)         nm         nm           6         nm         nm       (504)       (191)      (164)      (163) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit/(loss) 
 before 
 taxation             (353)         220         nm         nm          72         nm         nm       (342)         255         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        257,993     228,470         13         12     251,275          3          2     257,993     228,470         13         12 
  Of which: 
   loans and 
   advances to 
   customers(5)      19,087      13,757         39         37      17,440          9          7      19,087      13,757         39         37 
Total 
 liabilities         84,636      80,764          5          4      76,926         10          9      84,636      80,764          5          4 
  Of which: 
   customer 
   accounts(6)        6,694      11,367       (41)       (41)       6,632          1        (1)       6,694      11,367       (41)       (41) 
Risk-weighted 
 assets              46,661      52,702       (11)         nm      44,232          5         nm      46,661      52,702       (11)         nm 
Underlying 
 return 
 on 
 risk-weighted 
 assets (%)(3)        (0.6)         1.8   (240)bps         nm         0.6   (120)bps         nm         0.5         1.2    (70)bps         nm 
Underlying 
 return 
 on tangible 
 equity 
 (%)(3)               (9.3)         7.7         nm         nm       (9.9)      60bps         nm       (5.0)         1.1   (610)bps         nm 
Cost to income 
 ratio 
 (%) (excluding 
 UK 
 bank levy)(4)           nm        30.7         nm         nm        73.8         nm         nm        90.3        59.8     (30.5)     (34.8) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Loans and advances to customers includes FVTPL

6 Customer accounts includes FVTPL and repurchase agreements

7 Not meaningful

Performance highlights

-- Treasury income declined 88 per cent broadly split equally across net interest income and other income. The decline in net interest income reflects reduced returns on deployed assets within Treasury Markets. The reduction in other income is due to a $67 million negative movement in hedging ineffectiveness, including hedge mark-to-market losses incurred in 3Q'20, reduced FX swap income and lower realisation gains

-- Expenses increased $76 million mainly as a result of several one-off costs including leave encashment provisions and regulatory related costs

-- Profit from associates and joint ventures was up 64 per cent to $74 million. The Group now recognises its share of profits of its associate China Bohai Bank based upon its most recently available quarterly results: for 3Q'20 reporting purposes this was based on a 19.99 per cent share of China Bohai Bank's 2Q'20 performance, historically the strongest quarter of the year. The Group's share of China Bohai Bank reduced to 16.26 per cent in the third quarter and this will be the share that is reported in future quarters

Underlying performance by region

 
                                                                  3Q'20 
---------------------------------  ------------------------------------------------------------------- 
                                                               Africa               Central 
                                       Greater    ASEAN &           &     Europe          & 
                                       China &      South      Middle          &      other 
                                    North Asia       Asia        East   Americas      items      Total 
                                      $million   $million    $million   $million   $million   $million 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating income                         1,471      1,034         590        423          1      3,519 
Operating expenses                       (938)      (663)       (426)      (360)       (93)    (2,480) 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating profit/(loss) 
 before impairment losses 
 and taxation                              533        371         164         63       (92)      1,039 
Credit impairment                         (29)      (128)       (154)       (37)        (5)      (353) 
Other impairment                             -          -           1         11       (27)       (15) 
Profit from associates 
 and joint ventures                         74          -           -          -          -         74 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                           578        243          11         37      (124)        745 
Restructuring                             (15)        (7)        (11)        (8)        (3)       (44) 
Goodwill impairment & 
 other items                              (35)          -           -          -      (231)      (266) 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                           528        236           -         29      (358)        435 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Total assets                           298,430    150,651      61,472    233,772     10,104    754,429 
  Of which: loans and advances 
   to customers(1)                     150,598     86,540      31,408     67,265          -    335,811 
Total liabilities                      266,617    130,794      40,275    225,332     40,841    703,859 
  Of which: customer accounts(2)       215,291    101,376      32,630    122,748          -    472,045 
Risk-weighted assets                    92,863     80,123      52,524     43,818    (2,664)    266,664 
Cost to income ratio (%)                  63.8       64.1        72.2       85.1         nm       70.5 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                                  3Q'19 
---------------------------------  ------------------------------------------------------------------- 
                                                               Africa               Central 
                                       Greater    ASEAN &           &     Europe          & 
                                       China &      South      Middle          &      other 
                                    North Asia       Asia        East   Americas      items      Total 
                                      $million   $million    $million   $million   $million   $million 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating income                         1,578      1,085         617        467        231      3,978 
Operating expenses                       (944)      (671)       (443)      (390)       (53)    (2,501) 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating profit before 
 impairment losses 
 and taxation                              634        414         174         77        178      1,477 
Credit impairment                         (70)      (172)        (27)       (15)          5      (279) 
Other impairment                             3          -           -          -        (8)        (5) 
Profit from associates 
 and joint ventures                         43          -           -          -          2         45 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying profit before 
 taxation                                  610        242         147         62        177      1,238 
Restructuring                             (51)          1         (5)        (6)       (62)      (123) 
Other items                                  -         12           -          -       (22)       (10) 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory profit before 
 taxation                                  559        255         142         56         93      1,105 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Total assets                           273,854    150,947      57,696    240,925     11,378    734,800 
  Of which: loans and advances 
   to customers(1)                     134,775     83,866      29,243     70,686          -    318,570 
Total liabilities                      237,881    127,451      35,995    244,799     37,978    684,104 
  Of which: customer accounts(2)       190,716     97,478      28,958    131,082          -    448,234 
Risk-weighted assets                    86,367     91,668      49,865     44,423    (3,655)    268,668 
Cost to income ratio (%)                  59.8       61.8        71.8       83.5       22.9       62.9 
---------------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 

1 Loans and advances to customers includes FVTPL

2 Customer accounts includes FVTPL and repurchase agreements

Greater China & North Asia

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(3)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income               1,471       1,578        (7)        (8)       1,448          2          -       4,615       4,658        (1)        (1) 
Operating 
 expenses             (938)       (944)          1          2       (880)        (7)        (6)     (2,718)     (2,770)          2          2 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation           533         634       (16)       (17)         568        (6)        (8)       1,897       1,888          -          1 
Credit 
 impairment            (29)        (70)         59         60        (91)         68         70       (318)       (140)      (127)      (127) 
Other 
 impairment               -           3      (100)      (100)        (14)        100        100        (15)         (5)      (200)         nm 
Profit from 
 associates 
 and joint 
 ventures                74          43         72         70          21         nm         nm         148         196       (24)       (25) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit 
 before 
 taxation               578         610        (5)        (6)         484         19         18       1,712       1,939       (12)       (11) 
Restructuring          (15)        (51)         71         71           7         nm         nm        (58)        (54)        (7)        (9) 
Other items            (35)           -         nm         nm           -         nm         nm        (35)           -         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit before 
 taxation               528         559        (6)        (6)         491          8          7       1,619       1,885       (14)       (14) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        298,430     273,854          9          7     289,352          3          2     298,430     273,854          9          7 
  Of which: 
   loans and 
   advances to 
   customers(4)     150,598     134,775         12         10     144,794          4          3     150,598     134,775         12         10 
Total 
 liabilities        266,617     237,881         12         10     258,322          3          2     266,617     237,881         12         10 
  Of which: 
   customer 
   accounts(5)      215,291     190,716         13         11     214,586          -        (1)     215,291     190,716         13         11 
Risk-weighted 
 assets              92,863      86,367          8         nm      89,139          4         nm      92,863      86,367          8         nm 
Cost to income 
 ratio 
 (%)(3)                63.8        59.8      (4.0)      (3.9)        60.8      (0.1)      (3.2)        58.9        59.5        0.6        0.7 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Loans and advances to customers includes FVTPL

5 Customer accounts includes FVTPL and repurchase agreements

6 Not meaningful

Performance highlights

-- Underlying profit before taxation of $578 million was down 5 per cent driven by lower income, partly offset by a near two-thirds reduction in impairments and lower expenses

-- Operating income of $1,471 million was down 7 per cent, predominantly driven by a weaker performance in Cash Management and Retail Deposits due to the low interest rate environment, partially offsetting by strong performance in Wealth Management and Financial Markets

-- Loans and advances to customers were up 4 per cent since 30 June 2020, predominantly driven by Corporate Lending in Hong Kong and Retail Mortgages in Korea and Hong Kong

-- Risk-weighted assets were up $4 billion since 30 June 2020, driven by Credit RWA (predominantly Corporate & Institutional Banking) broadly in line with asset growth

ASEAN & South Asia

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income               1,034       1,085        (5)        (3)       1,099        (6)        (8)       3,410       3,221          6          8 
Operating 
 expenses             (663)       (671)          1        (1)       (622)        (7)        (4)     (1,910)     (1,963)          3          - 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation           371         414       (10)        (9)         477       (22)       (24)       1,500       1,258         19         21 
Credit 
 impairment           (128)       (172)         26         24       (387)         67         68       (966)       (256)         nm         nm 
Other 
 impairment               -           -         nm         nm         (1)        100        100         165           -         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit 
 before 
 taxation               243         242          -          1          89        173        160         699       1,002       (30)       (30) 
Restructuring           (7)           1         nm         nm         (7)          -       (14)        (14)        (15)          7          - 
Other items               -          12      (100)      (100)           -         nm         nm           -          35      (100)      (100) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit before 
 taxation               236         255        (7)        (7)          82        188        171         685       1,022       (33)       (33) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        150,651     150,947          -          -     154,508        (2)        (4)     150,651     150,947          -          - 
  Of which: 
   loans and 
   advances to 
   customers(4)      86,540      83,866          3          3      84,949          2          -      86,540      83,866          3          3 
Total 
 liabilities        130,794     127,451          3          3     131,993        (1)        (2)     130,794     127,451          3          3 
  Of which: 
   customer 
   accounts(5)      101,376      97,478          4          4     100,324          1          -     101,376      97,478          4          4 
Risk-weighted 
 assets              80,123      91,668       (13)         nm      80,040          -         nm      80,123      91,668       (13)         nm 
Cost to income 
 ratio(%)(3)           64.1        61.8      (2.3)      (2.4)        56.6          -      (7.4)        56.0        60.9        4.9        4.6 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Loans and advances to customers includes FVTPL

5 Customer accounts includes FVTPL and repurchase agreements

6 Not meaningful

Performance highlights

-- Underlying profit before taxation of $243 million was broadly flat year-on-year, with lower income offset by reduced credit impairment and lower expenses

-- Operating income of $1,034 million was 5 per cent lower (down 2 per cent on a constant currency basis excluding the debit valuation adjustment), predominantly driven by declines across Private Banking, Commercial Banking and Retail Banking due to margin compression partially offset by an increase in Corporate & Institutional Banking due to a strong performance in Financial Markets

-- Loans and advances to customers grew 2 per cent since 30 June 2020 and customer accounts were up 1 per cent. Risk-weighted assets remained flat since 30 June 2020

Africa & Middle East

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income                 590         617        (4)          1         594        (1)          -       1,845       1,957        (6)        (1) 
Operating 
 expenses             (426)       (443)          4        (3)       (390)        (9)        (9)     (1,219)     (1,293)          6          - 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation           164         174        (6)        (5)         204       (20)       (17)         626         664        (6)        (3) 
Credit 
 impairment           (154)        (27)         nm         nm       (159)          3        (2)       (524)        (76)         nm         nm 
Other 
 impairment               1           -         nm         nm         (2)        150        150         (1)           -         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit 
 before 
 taxation                11         147       (93)       (94)          43       (74)       (80)         101         588       (83)       (82) 
Restructuring          (11)         (5)      (120)       (67)         (2)         nm         nm        (20)         (7)      (186)      (171) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit before 
 taxation                 -         142      (100)      (101)          41      (100)      (102)          81         581       (86)       (86) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets         61,472      57,696          7         10      63,927        (4)        (4)      61,472      57,696          7         10 
  Of which: 
   loans and 
   advances to 
   customers(4)      31,408      29,243          7         10      33,083        (5)        (5)      31,408      29,243          7         10 
Total 
 liabilities         40,275      35,995         12         14      40,740        (1)        (2)      40,275      35,995         12         14 
  Of which: 
   customer 
   accounts(5)       32,630      28,958         13         15      32,530          -          -      32,630      28,958         13         15 
Risk-weighted 
 assets              52,524      49,865          5         nm      52,009          1         nm      52,524      49,865          5         nm 
Cost to income 
 ratio(%)(3)           72.2        71.8      (0.4)      (1.6)        65.7      (6.5)      (5.8)        66.1        66.1          -      (0.7) 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Loans and advances to customers includes FVTPL

5 Customer accounts includes FVTPL and repurchase agreements

6 Not meaningful

Performance highlights

-- Underlying profit before taxation of $11 million was 93 per cent lower year-on-year reflecting the impact of a $127 million increase in credit impairments, of which over half was the result of a management overlay in response to continued difficult macroeconomic conditions

-- Operating income of $590 million was down 4 per cent but up 1 per cent on a constant currency basis impacted by the low interest rate environment while continued cost discipline has resulted in expenses down 4 per cent, reflecting the gains from the digital strategy

-- Customer accounts remained flat since 30 June 2020 and loans and advances to customers reduced 5 per cent

Europe & Americas

 
                                                     Constant                          Constant                                      Constant 
                                                     currency                          currency                                      currency 
                      3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                   $million    $million          %          %    $million          %          %    $million    $million          %          % 
---------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income                 423         467        (9)       (13)         549       (23)       (24)       1,518       1,261         20         19 
Operating 
 expenses             (360)       (390)          8          9       (318)       (13)       (11)     (1,021)     (1,105)          8          7 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit before 
 impairment 
 losses 
 and taxation            63          77       (18)       (30)         231       (73)       (72)         497         156         nm        184 
Credit 
 impairment            (37)        (15)      (147)      (164)          22         nm         nm       (117)        (81)       (44)       (48) 
Other 
 impairment              11           -         nm         nm           2         nm         nm          13           -         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit 
 before 
 taxation                37          62       (40)       (50)         255       (85)       (85)         393          75         nm         nm 
Restructuring           (8)         (6)       (33)       (29)           4         nm         nm        (18)        (21)         14         19 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit before 
 taxation                29          56       (48)       (58)         259       (89)       (89)         375          54         nm         nm 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        233,772     240,925        (3)        (2)     223,226          5          4     233,772     240,925        (3)        (2) 
  Of which: 
   loans and 
   advances to 
   customers(4)      67,265      70,686        (5)        (4)      65,339          3          2      67,265      70,686        (5)        (4) 
Total 
 liabilities        225,332     244,799        (8)        (6)     217,300          4          3     225,332     244,799        (8)        (6) 
  Of which: 
   customer 
   accounts(5)      122,748     131,082        (6)        (3)     122,024          1          -     122,748     131,082        (6)        (3) 
Risk-weighted 
 assets              43,818      44,423        (1)         nm      44,326        (1)         nm      43,818      44,423        (1)         nm 
Cost to income 
 ratio 
 (%)(3)                85.1        83.5      (1.6)      (3.7)        57.9     (27.2)     (26.6)        67.3        87.6       20.3       18.9 
---------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Loans and advances to customers includes FVTPL

5 Customer accounts includes FVTPL and repurchase agreements

6 Not meaningful

Performance highlights

-- Underlying profit before taxation of $37 million was down 50 per cent on a constant currency basis (28 per cent on a constant currency basis excluding the debit valuation adjustment) driven by Cash Management and Retail Products due to the low interest rate environment, partially offset by an expense reduction of 8 per cent and income growth in Financial Markets and Corporate Finance

-- Loans and advances to customers grew 3 per cent since 30 June 2020 and customer accounts grew 1 per cent

Central & other items (region)

 
                                                    Constant                          Constant                                      Constant 
                                                    currency                          currency                                      currency 
                     3Q'20       3Q'19  Change(2)  change(1)       2Q'20  Change(2)  change(1)      YTD'20      YTD'19  Change(2)  change(1) 
                  $million    $million          %          %    $million          %          %    $million    $million          %          % 
--------------  ----------  ----------  ---------             ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 income                  1         231      (100)      (100)          30       (97)       (97)         178         577       (69)       (69) 
Operating 
 expenses             (93)        (53)       (75)       (84)       (145)         36         42       (325)       (339)          4        (5) 
--------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Operating 
 profit/(loss) 
 before 
 impairment 
 losses and 
 taxation             (92)         178      (152)      (148)       (115)         20         29       (147)         238      (162)      (158) 
Credit 
 impairment            (5)           5      (200)         nm           4         nm         nm           5          20       (75)       (75) 
Other 
 impairment           (27)         (8)         nm         nm        (27)          -        (4)        (65)        (21)         nm         nm 
Profit from 
 associates 
 and joint 
 ventures                -           2      (100)      (150)           -         nm         nm           2           6       (67)       (80) 
--------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Underlying 
 profit/(loss) 
 before 
 taxation            (124)         177      (170)      (168)       (138)         10         17       (205)         243      (184)      (179) 
Restructuring          (3)        (62)         95         95           -         nm         nm        (24)        (40)         40         36 
Goodwill 
 impairment 
 & other items       (231)        (22)         nm         nm           6         nm         nm       (469)       (226)      (108)      (108) 
--------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Statutory 
 profit/(loss) 
 before 
 taxation            (358)          93         nm         nm       (132)      (171)      (150)       (698)        (23)         nm         nm 
--------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
Total assets        10,104      11,378       (11)       (12)      10,572        (4)        (5)      10,104      11,378       (11)       (12) 
Total 
 liabilities        40,841      37,978          8          8      43,333        (6)        (6)      40,841      37,978          8          8 
Risk-weighted 
 assets            (2,664)     (3,655)         27         nm     (2,962)         10         nm     (2,664)     (3,655)         27         nm 
Cost to income 
 ratio 
 (%) 
 (excluding UK 
 bank levy)(3)          nm        22.9         nm         nm       483.3         nm         nm       182.6        58.8    (123.8)    (132.2) 
--------------  ----------  ----------  ---------  ---------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
 

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Not meaningful

Performance highlights

-- Underlying loss before taxation of $124 million down from a $177 million profit in 3Q'19, driven by lower net interest income in Treasury Capital due to the low interest rate environment, higher expenses and higher other impairments primarily driven by impairment relating to aircraft

Retail Banking

 
                                                              3Q'20 
-----------------------------------  ------------------------------------------------------- 
                                                                Africa 
                                         Greater    ASEAN &          &     Europe 
                                         China &      South     Middle          & 
                                      North Asia       Asia       East   Americas      Total 
                                        $million   $million   $million   $million   $million 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Operating income                             785        353        157          6      1,301 
Operating expenses                         (511)      (261)      (138)        (5)      (915) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Operating profit before impairment 
 losses and taxation                         274         92         19          1        386 
Credit impairment                           (15)       (63)       (48)        (3)      (129) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Underlying profit/(loss) before 
 taxation                                    259         29       (29)        (2)        257 
Restructuring                                (1)        (2)        (8)          -       (11) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Statutory profit/(loss) before 
 taxation                                    258         27       (37)        (2)        246 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Loans and advances to customers 
 including FVTPL                          76,315     27,244      4,748        521    108,828 
Customer accounts including FVTPL 
 and repurchase agreements               102,864     36,640      9,283      1,006    149,793 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
 
 
                                                              3Q'19 
-----------------------------------  ------------------------------------------------------- 
                                                                Africa 
                                         Greater    ASEAN &          &     Europe 
                                         China &      South     Middle          & 
                                      North Asia       Asia       East   Americas      Total 
                                        $million   $million   $million   $million   $million 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Operating income                             770        369        175          9      1,323 
Operating expenses                         (497)      (276)      (163)        (5)      (941) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Operating profit before impairment 
 losses and taxation                         273         93         12          4        382 
Credit impairment                           (43)       (29)       (10)          -       (82) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Underlying profit before taxation            230         64          2          4        300 
Restructuring                                (4)          -        (4)          -        (8) 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Statutory profit/(loss) before 
 taxation                                    226         64        (2)          4        292 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
Loans and advances to customers 
 including FVTPL                          69,808     27,714      5,337        510    103,369 
Customer accounts including FVTPL 
 and repurchase agreements                96,000     34,455      8,387      1,033    139,875 
-----------------------------------  -----------  ---------  ---------  ---------  --------- 
 

Commercial Banking

 
                                                               3Q'20 
------------------------------------------  -------------------------------------------- 
                                                                       Africa 
                                                Greater    ASEAN &          & 
                                                China &      South     Middle 
                                             North Asia       Asia       East      Total 
                                               $million   $million   $million   $million 
------------------------------------------  -----------  ---------  ---------  --------- 
Operating income                                    123        149         69        341 
Operating expenses                                 (85)       (90)       (50)      (225) 
------------------------------------------  -----------  ---------  ---------  --------- 
Operating profit before impairment losses 
 and taxation                                        38         59         19        116 
Credit impairment                                   (9)       (46)       (42)       (97) 
------------------------------------------  -----------  ---------  ---------  --------- 
Underlying profit/(loss) before taxation             29         13       (23)         19 
Restructuring                                       (5)        (1)          -        (6) 
------------------------------------------  -----------  ---------  ---------  --------- 
Statutory profit/(loss) before taxation              24         12       (23)         13 
------------------------------------------  -----------  ---------  ---------  --------- 
Loans and advances to customers including 
 FVTPL                                           13,428      9,757      4,168     27,353 
Customer accounts including FVTPL and 
 repurchase agreements                           23,796     13,880      3,744     41,420 
------------------------------------------  -----------  ---------  ---------  --------- 
 
 
                                                               3Q'19 
------------------------------------------  -------------------------------------------- 
                                                                       Africa 
                                                Greater    ASEAN &          & 
                                                China &      South     Middle 
                                             North Asia       Asia       East      Total 
                                               $million   $million   $million   $million 
------------------------------------------  -----------  ---------  ---------  --------- 
Operating income                                    140        166         82        388 
Operating expenses                                 (97)       (91)       (56)      (244) 
------------------------------------------  -----------  ---------  ---------  --------- 
Operating profit before impairment losses 
 and taxation                                        43         75         26        144 
Credit impairment                                   (7)       (15)        (6)       (28) 
------------------------------------------  -----------  ---------  ---------  --------- 
Underlying profit before taxation                    36         60         20        116 
Restructuring                                       (2)          2          -          - 
------------------------------------------  -----------  ---------  ---------  --------- 
Statutory profit before taxation                     34         62         20        116 
------------------------------------------  -----------  ---------  ---------  --------- 
Loans and advances to customers including 
 FVTPL                                           13,388     10,723      4,946     29,057 
Customer accounts including FVTPL and 
 repurchase agreements                           20,130     13,136      3,368     36,634 
------------------------------------------  -----------  ---------  ---------  --------- 
 

Underlying performance by key market

 
                                                                   3Q'20 
-------------------  ------------------------------------------------------------------------------------------------- 
                          Hong 
                          Kong      Korea      China  Singapore      India  Indonesia        UAE         UK         US 
                      $million   $million   $million   $million   $million   $million   $million   $million   $million 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating income           842        243        231        380        287         59        137        203        174 
Operating expenses       (483)      (183)      (163)      (241)      (174)       (39)      (103)      (184)      (135) 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating profit 
 before impairment 
 losses and 
 taxation                  359         60         68        139        113         20         34         19         39 
Credit impairment         (27)        (8)          1       (12)       (18)       (11)       (73)       (46)         11 
Other impairment             -          -          -          -          -          -          -         12          - 
Profit from 
 associates 
 and joint ventures          -          -         74          -          -          -          -          -          - 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Underlying 
 profit/(loss) 
 before taxation           332         52        143        127         95          9       (39)       (15)         50 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Total assets 
 employed              167,971     60,223     36,614     84,548     28,139      5,081     21,940    157,167     62,079 
  Of which: loans 
   and 
   advances to 
   customers(1)         81,175     38,908     16,562     51,674     15,348      2,394     11,074     43,804     19,699 
Total liabilities 
 employed              157,611     52,560     30,394     81,822     19,629      3,449     14,224    150,049     64,411 
  Of which: 
   customer 
   accounts(2)         128,328     40,715     23,727     62,976     14,860      2,513     11,488     79,203     37,350 
Cost to income 
 ratio 
 (%)                      57.4       75.3       70.6       63.4       60.6       66.1       75.2       90.6       77.6 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 
 
                                                                   2Q'20 
-------------------  ------------------------------------------------------------------------------------------------- 
                          Hong 
                          Kong      Korea      China  Singapore      India  Indonesia        UAE         UK         US 
                      $million   $million   $million   $million   $million   $million   $million   $million   $million 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating income           873        227        199        415        315         52        159        237        260 
Operating expenses       (466)      (171)      (148)      (236)      (155)       (41)       (95)      (158)      (120) 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating profit 
 before impairment 
 losses and 
 taxation                  407         56         51        179        160         11         64         79        140 
Credit impairment         (66)        (4)       (19)      (151)       (72)       (50)       (76)         10         14 
Other impairment          (14)          -          -          -          -          -          -          2          - 
Profit from 
 associates 
 and joint ventures          -          -         21          -          -          -          -          -          - 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Underlying 
 profit/(loss) 
 before taxation           327         52         53         28         88       (39)       (12)         91        154 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Total assets 
 employed              161,959     59,516     35,142     86,599     28,907      5,154     23,331    149,632     62,010 
  Of which: loans 
   and 
   advances to 
   customers(1)         77,549     37,347     16,240     49,959     15,057      2,398     11,737     41,611     19,270 
Total liabilities 
 employed              150,645     52,033     29,938     82,231     19,631      3,537     15,835    142,100     65,853 
  Of which: 
   customer 
   accounts(2)         126,463     42,937     23,125     62,667     13,906      2,324     12,223     81,179     36,043 
Cost to income 
 ratio 
 (%)                      53.4       75.3       74.4       56.9       49.2       78.8       59.7       66.7       46.2 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 
 
                                                                   3Q'19 
-------------------  ------------------------------------------------------------------------------------------------- 
                          Hong 
                          Kong      Korea      China  Singapore      India  Indonesia        UAE         UK         US 
                      $million   $million   $million   $million   $million   $million   $million   $million   $million 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating income           958        247        221        421        264         73        150        218        194 
Operating expenses       (486)      (189)      (172)      (242)      (169)       (47)      (111)      (200)      (150) 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Operating profit 
 before impairment 
 losses and 
 taxation                  472         58         49        179         95         26         39         18         44 
Credit impairment         (22)       (19)       (24)       (37)       (68)       (57)         10       (20)          6 
Other impairment             3          -          -          -          -          -          -          -          - 
Profit from 
 associates 
 and joint ventures          -          -         44          -          -          -          -          -          - 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Underlying 
 profit/(loss) 
 before taxation           453         39         69        142         27       (31)         49        (2)         50 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Total assets 
 employed              159,317     51,915     30,602     85,587     29,562      4,781     20,193    177,142     54,311 
  Of which: loans 
   and 
   advances to 
   customers(1)         73,773     33,460     15,029     48,540     15,911      2,343     10,509     52,699     15,742 
Total liabilities 
 employed              142,076     44,934     25,347     80,918     19,815      3,153     13,191    180,704     54,721 
  Of which: 
   customer 
   accounts(2)         116,110     34,829     20,028     61,221     14,935      2,113     10,065     99,662     26,781 
Cost to income 
 ratio 
 (%)                      50.7       76.5       77.8       57.5       64.0       64.4       74.0       91.7       77.3 
-------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  --------- 
 

1 Loans and advances to customers includes FVTPL

2 Customer accounts includes FVTPL and repurchase agreements

Quarterly underlying operating income by product

 
                             3Q'20       2Q'20       1Q'20    4Q'19(1)    3Q'19(1)    2Q'19(1)    1Q'19(1)       4Q'18 
                          $million    $million    $million    $million    $million    $million    $million    $million 
----------------------  ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Transaction Banking            665         721         800         834         887         901         877         861 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
  Trade                        255         230         260         259         282         282         277         257 
  Cash Management              410         491         540         575         605         619         600         604 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Financial Markets              909         970       1,278         716         877         834         831         661 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
  Foreign Exchange             266         343         415         264         261         304         298         232 
  Rates                        201         339         378         163         176         136         221          63 
  Commodities                   60          82          44          37          39          44          45          50 
  Credit and Capital 
   Markets                     188         250          26         125         167         145         140          83 
  Capital Structuring 
   Distribution 
   Group                        91          52          61          86          87          74          82          91 
  DVA                         (22)       (201)         305        (72)          14          11        (53)          46 
  Securities Services           79          79          84          85          88          87          83          81 
  Other Financial 
   Markets                      46          26        (35)          28          45          33          15          15 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Corporate Finance              284         269         278         328         281         272         262         370 
Lending and Portfolio 
 Management                    222         232         195         201         201         197         187         181 
Wealth Management              568         434         530         415         488         511         465         343 
Retail Products                859         913         946         960         975         976         951         925 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
  CCPL and other 
   unsecured 
   lending                     309         295         304         311         315         320         305         294 
  Deposits                     301         413         472         484         510         501         494         481 
  Mortgage and Auto            211         169         136         130         123         129         129         127 
  Other Retail 
   Products                     38          36          34          35          27          26          23          23 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Treasury                        40         178         325         196         335         251         308         253 
Other                         (28)           3        (25)        (53)        (66)        (59)        (68)           1 
----------------------  ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Total underlying 
 operating 
 income                      3,519       3,720       4,327       3,597       3,978       3,883       3,813       3,595 
----------------------  ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
 

1 Following a reorganisation of certain clients, there has been a reclassification of balances across products. Prior periods have been restated from 1Q'19

Earnings per ordinary share

 
                                      3Q'20       3Q'19  Change       2Q'20  Change      YTD'20      YTD'19  Change 
                                   $million    $million       %    $million       %    $million    $million       % 
-------------------------------  ----------  ----------          ----------  ------  ----------  ----------  ------ 
Profit for the period 
 attributable to equity 
 holders                                161         772    (79)         549    (71)       1,227       2,268    (46) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Non-controlling interest                (7)        (11)      36        (11)      36        (25)        (30)      17 
Dividend payable on preference 
 shares and AT1 classified 
 as equity                             (31)        (36)      14       (199)      84       (263)       (257)     (2) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Profit for the period 
 attributable to ordinary 
 shareholders                           123         725    (83)         339    (64)         939       1,981    (53) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
Items normalised: 
Provision for regulatory 
 matters                                  -          22   nm(1)           -   nm(1)        (14)         226   nm(1) 
Restructuring                            44         123    (64)         (2)   nm(1)         134         137     (2) 
Profit from associates 
 and joint ventures                       -        (12)   nm(1)           -   nm(1)           -        (35)   nm(1) 
Gains arising on repurchase 
 of subordinated liabilities              -           -   nm(1)           -   nm(1)           -           -   nm(1) 
Goodwill impairment                     231           -   nm(1)           -   nm(1)         489           -   nm(1) 
Net loss on sale of businesses           35           -   nm(1)         (6)   nm(1)          29           -   nm(1) 
Tax on normalised items                 (5)         (1)   nm(1)         (3)    (67)        (11)         171   nm(1) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Underlying profit                       428         857    (50)         328      30       1,566       2,480    (37) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
Basic - Weighted average 
 number of shares (millions)          3,151       3,220   nm(1)       3,150   nm(1)       3,162       3,275   nm(1) 
Diluted - Weighted average 
 number of shares (millions)          3,192       3,258   nm(1)       3,190   nm(1)       3,200       3,312   nm(1) 
 
Basic earnings per ordinary 
 share (cents) (2)                      3.9        22.5  (18.6)        10.8   (6.9)        29.7        60.5  (30.8) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Diluted earnings per ordinary 
 share (cents) (2)                      3.9        22.3  (18.4)        10.6   (6.7)        29.3        59.8  (30.5) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Underlying basic earnings 
 per ordinary share (cents) 
 (2)                                   13.6        26.6  (13.0)        10.4     3.2        49.5        75.7  (26.2) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Underlying diluted earnings 
 per ordinary share (cents) 
 (2)                                   13.4        26.3  (12.9)        10.3     3.1        48.9        74.9  (26.0) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
   1     Not meaningful 

2 Change is the percentage points difference between the two periods rather than the percentage change

Return on Tangible Equity

 
                                      3Q'20       3Q'19  Change       2Q'20  Change      YTD'20      YTD'19  Change 
                                   $million    $million       %    $million       %    $million    $million       % 
-------------------------------  ----------  ----------          ----------  ------  ----------  ----------  ------ 
Average parent company 
 shareholders' equity                45,400      44,970       1      44,623     (2)      44,845      45,298     (1) 
Less Preference share 
 premium                            (1,494)     (1,494)       -     (1,494)       -     (1,494)     (1,494)       - 
Less Average intangible 
 assets                             (4,972)     (5,097)       2     (4,960)       -     (5,008)     (5,097)       2 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Average Ordinary Shareholders' 
 Tangible Equity                     38,934      38,379       1      38,169     (2)      38,343      38,707     (1) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
Profit for the period 
 attributable to equity 
 holders                                161         772    (79)         549   nm(1)       1,227       2,268    (46) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Non-controlling interests               (7)        (11)      36        (11)    (57)        (25)        (30)      17 
Dividend payable on preference 
 shares and AT1 classified 
 as equity                             (31)        (36)      14       (199)   nm(1)       (263)       (257)     (2) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Profit for the period 
 attributable to ordinary 
 shareholders                           123         725    (83)         339     176         939       1,981    (53) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
Items normalised: 
Provision for regulatory 
 matters                                  -          22   nm(1)           -   nm(1)        (14)         226   nm(1) 
Restructuring                            44         123    (64)         (2)   nm(1)         134         137     (2) 
Profit from associates 
 and joint ventures                       -        (12)   nm(1)           -   nm(1)           -        (35)   nm(1) 
Goodwill Impairment                     231           -   nm(1)           -   nm(1)         489           -   nm(1) 
Net loss on sale of businesses           35           -   nm(1)         (6)   nm(1)          29           -   nm(1) 
Tax on normalised items                 (5)         (1)   nm(1)         (3)      40        (11)         171   nm(1) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Underlying profit for 
 the period attributable 
 to ordinary shareholders               428         857    (50)         328    (23)       1,566       2,480    (37) 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 
Underlying return on tangible                             (450)                                               (310) 
 equity                                4.4%        8.9%     bps        3.5%  90 bps        5.5%        8.6%     bps 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
Statutory return on tangible                              (620)               (230)                           (350) 
 equity                                1.3%        7.5%     bps        3.6%     bps        3.3%        6.8%     bps 
-------------------------------  ----------  ----------  ------  ----------  ------  ----------  ----------  ------ 
 

1 Not meaningful

Net Tangible Asset Value per Share

 
                                        30.09.20    30.09.19  Change    30.06.20  Change    31.12.19  Change 
                                        $million    $million       %    $million       %    $million       % 
------------------------------------  ----------  ----------          ----------  ------  ----------  ------ 
Parent company shareholders' 
 equity                                   45,743      44,872       2      45,058       2      44,835       2 
Less Preference share premium            (1,494)     (1,494)       -     (1,494)       -     (1,494)       - 
Less Intangible assets                   (4,916)     (5,083)       3     (5,029)       2     (5,290)       7 
------------------------------------  ----------  ----------  ------  ----------  ------  ----------  ------ 
Net shareholders tangible equity          39,333      38,295       3      38,535       2      38,051       3 
------------------------------------  ----------  ----------  ------  ----------  ------  ----------  ------ 
 
Ordinary shares in issue, excluding 
 own shares (millions)                     3,149       3,195     (1)       3,148       -       3,191     (1) 
------------------------------------  ----------  ----------  ------  ----------  ------  ----------  ------ 
Net Tangible Asset Value per 
 share (cents)                             1,249       1,199    50.0       1,224    25.0       1,192       5 
------------------------------------  ----------  ----------  ------  ----------  ------  ----------  ------ 
 

Underlying versus statutory results reconciliations

Reconciliations between underlying and statutory results are set out in the tables below:

Operating income by client segment

 
                                                               3Q'20 
----------------------------  ------------------------------------------------------------------------ 
                                                                                    Central 
                                     Corporate                                            & 
                               & Institutional     Retail  Commercial    Private      other 
                                       Banking    Banking     Banking    Banking      items      Total 
                                      $million   $million    $million   $million   $million   $million 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying operating income              1,735      1,301         341        129         13      3,519 
Restructuring                               14          -           7          -          1         22 
Other items                                  -          -           -          -       (35)       (35) 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory operating income               1,749      1,301         348        129       (21)      3,506 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                               3Q'19 
----------------------------  ------------------------------------------------------------------------ 
                                                                                    Central 
                                     Corporate                                            & 
                               & Institutional     Retail  Commercial    Private      other 
                                       Banking    Banking     Banking    Banking      items      Total 
                                      $million   $million    $million   $million   $million   $million 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying operating income              1,848      1,323         388        145        274      3,978 
Restructuring                             (20)          -           1          -          -       (19) 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory operating income               1,828      1,323         389        145        274      3,959 
----------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 

Operating income by region

 
                                                             3Q'20 
----------------------------  ------------------------------------------------------------------- 
                                                          Africa               Central 
                                  Greater    ASEAN &           &     Europe          & 
                                  China &      South      Middle          &      other 
                               North Asia       Asia        East   Americas      items      Total 
                                 $million   $million    $million   $million   $million   $million 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying operating income         1,471      1,034         590        423          1      3,519 
Restructuring                          19          -           3          -          -         22 
Other items                          (35)          -           -          -          -       (35) 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory operating income          1,455      1,034         593        423          1      3,506 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                             3Q'19 
----------------------------  ------------------------------------------------------------------- 
                                                          Africa               Central 
                                  Greater    ASEAN &           &     Europe          & 
                                  China &      South      Middle          &      other 
                               North Asia       Asia        East   Americas      items      Total 
                                 $million   $million    $million   $million   $million   $million 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying operating income         1,578      1,085         617        467        231      3,978 
Restructuring                          20          1           -          -       (40)       (19) 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory operating income          1,598      1,086         617        467        191      3,959 
----------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 

Profit before taxation (PBT)

 
                                                                    3Q'20 
---------------------  ----------------------------------------------------------------------------------------------- 
                                                                                                      Share 
                                                                                                 of profits 
                                                                         Net loss                        of 
                                                                    on businesses                   PT Bank 
                                         Provision                      disposed/                   Permata 
                                    for regulatory                           held     Goodwill    Tbk joint 
                       Underlying          matters  Restructuring        for sale   impairment      venture  Statutory 
                         $million         $million       $million        $million     $million     $million   $million 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Operating income            3,519                -             22            (35)            -            -      3,506 
Operating expenses        (2,480)                -           (35)               -            -            -    (2,515) 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Operating 
 profit/(loss) before 
 impairment losses 
 and taxation               1,039                -           (13)            (35)            -            -        991 
Credit impairment           (353)                -            (5)               -            -            -      (358) 
Other impairment             (15)                -           (18)               -        (231)            -      (264) 
Profit from 
 associates and joint 
 ventures                      74                -            (8)               -            -            -         66 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Profit/(loss) before 
 taxation                     745                -           (44)            (35)        (231)            -        435 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
 
 
                                                                    3Q'19 
---------------------  ----------------------------------------------------------------------------------------------- 
                                                                                                      Share 
                                                                                                 of profits 
                                                                         Net loss                        of 
                                                                    on businesses                   PT Bank 
                                         Provision                      disposed/                   Permata 
                                    for regulatory                           held     Goodwill    Tbk joint 
                       Underlying          matters  Restructuring        for sale   impairment      venture  Statutory 
                         $million         $million       $million        $million     $million     $million   $million 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Operating income            3,978                -           (19)               -            -            -      3,959 
Operating expenses        (2,501)             (22)           (44)               -            -            -    (2,567) 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Operating 
 profit/(loss) before 
 impairment losses 
 and taxation               1,477             (22)           (63)               -            -            -      1,392 
Credit impairment           (279)                -            (1)               -            -            -      (280) 
Other impairment              (5)                -           (55)               -            -            -       (60) 
Profit from 
 associates and joint 
 ventures                      45                -            (4)               -            -           12         53 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
Profit/(loss) before 
 taxation                   1,238             (22)          (123)               -            -           12      1,105 
---------------------  ----------  ---------------  -------------  --------------  -----------  -----------  --------- 
 

Profit before taxation (PBT) by client segment

 
                                                             3Q'20 
--------------------------  ------------------------------------------------------------------------ 
                                                                                  Central 
                                   Corporate                                            & 
                             & Institutional     Retail  Commercial    Private      other 
                                     Banking    Banking     Banking    Banking      items      Total 
                                    $million   $million    $million   $million   $million   $million 
--------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating income                       1,735      1,301         341        129         13      3,519 
                            ----------------  ---------  ----------  ---------  ---------  --------- 
  External                             1,680      1,148         320         93        278      3,519 
  Inter-segment                           55        153          21         36      (265)          - 
                            ----------------  ---------  ----------  ---------  ---------  --------- 
Operating expenses                   (1,066)      (915)       (225)      (114)      (160)    (2,480) 
--------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating profit/(loss) 
 before impairment losses 
 and taxation                            669        386         116         15      (147)      1,039 
Credit impairment                      (132)      (129)        (97)          2          3      (353) 
Other impairment                        (12)          -           -          -        (3)       (15) 
Profit from associates 
 and joint ventures                        -          -           -          -         74         74 
--------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                         525        257          19         17       (73)        745 
Restructuring                           (12)       (11)         (6)        (1)       (14)       (44) 
Goodwill impairment & 
 other items                               -          -           -          -      (266)      (266) 
--------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                         513        246          13         16      (353)        435 
--------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                            3Q'19 
-------------------------  ------------------------------------------------------------------------ 
                                                                                 Central 
                                  Corporate                                            & 
                            & Institutional     Retail  Commercial    Private      other 
                                    Banking    Banking     Banking    Banking      items      Total 
                                   $million   $million    $million   $million   $million   $million 
-------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating income                      1,848      1,323         388        145        274      3,978 
                           ----------------  ---------  ----------  ---------  ---------  --------- 
  External                            1,892      1,074         395         86        531      3,978 
  Inter-segment                        (44)        249         (7)         59      (257)          - 
                           ----------------  ---------  ----------  ---------  ---------  --------- 
Operating expenses                  (1,098)      (941)       (244)      (134)       (84)    (2,501) 
-------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Operating profit before 
 impairment losses and 
 taxation                               750        382         144         11        190      1,477 
Credit impairment                     (153)       (82)        (28)       (14)        (2)      (279) 
Other impairment                        (8)          -           -          -          3        (5) 
Profit from associates 
 and joint ventures                       -          -           -          -         45         45 
-------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                        589        300         116        (3)        236      1,238 
Restructuring                         (105)        (8)           -        (4)        (6)      (123) 
Other items                               -          -           -          -       (10)       (10) 
-------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                        484        292         116        (7)        220      1,105 
-------------------------  ----------------  ---------  ----------  ---------  ---------  --------- 
 

Profit before taxation (PBT) by region

 
                                                           3Q'20 
--------------------------  ------------------------------------------------------------------- 
                                                        Africa               Central 
                                Greater    ASEAN &           &     Europe          & 
                                China &      South      Middle          &      other 
                             North Asia       Asia        East   Americas      items      Total 
                               $million   $million    $million   $million   $million   $million 
--------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating income                  1,471      1,034         590        423          1      3,519 
Operating expenses                (938)      (663)       (426)      (360)       (93)    (2,480) 
--------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating profit/(loss) 
 before impairment losses 
 and taxation                       533        371         164         63       (92)      1,039 
Credit impairment                  (29)      (128)       (154)       (37)        (5)      (353) 
Other impairment                      -          -           1         11       (27)       (15) 
Profit from associates 
 and joint ventures                  74          -           -          -          -         74 
--------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying profit/(loss) 
 before taxation                    578        243          11         37      (124)        745 
Restructuring                      (15)        (7)        (11)        (8)        (3)       (44) 
Goodwill impairment & 
 other items                       (35)          -           -          -      (231)      (266) 
--------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory profit/(loss) 
 before taxation                    528        236           -         29      (358)        435 
--------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 
 
                                                          3Q'19 
-------------------------  ------------------------------------------------------------------- 
                                                       Africa               Central 
                               Greater    ASEAN &           &     Europe          & 
                               China &      South      Middle          &      other 
                            North Asia       Asia        East   Americas      items      Total 
                              $million   $million    $million   $million   $million   $million 
-------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating income                 1,578      1,085         617        467        231      3,978 
Operating expenses               (944)      (671)       (443)      (390)       (53)    (2,501) 
-------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Operating profit before 
 impairment losses and 
 taxation                          634        414         174         77        178      1,477 
Credit impairment                 (70)      (172)        (27)       (15)          5      (279) 
Other impairment                     3          -           -          -        (8)        (5) 
Profit from associates 
 and joint ventures                 43          -           -          -          2         45 
-------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Underlying profit before 
 taxation                          610        242         147         62        177      1,238 
Restructuring                     (51)          1         (5)        (6)       (62)      (123) 
Other items                          -         12           -          -       (22)       (10) 
-------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
Statutory profit before 
 taxation                          559        255         142         56         93      1,105 
-------------------------  -----------  ---------  ----------  ---------  ---------  --------- 
 

Return on tangible equity (RoTE)

 
                                                                   3Q'20 
------------------------------------  ---------------------------------------------------------------- 
                                                                                        Central 
                                             Corporate                                        & 
                                       & Institutional    Retail  Commercial   Private    other 
                                               Banking   Banking     Banking   Banking    items  Total 
                                                     %         %           %         %        %      % 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
Underlying RoTE                                    7.4      11.3         1.3       5.3    (9.3)    4.4 
  Restructuring 
     Of which: Income                              0.3         -         0.6         -        -    0.2 
     Of which: Expenses                          (0.2)     (0.7)       (0.8)         -    (0.4)  (0.4) 
     Of which: Credit impairment                     -         -       (0.4)         -        -  (0.1) 
     Of which: Other impairment                  (0.3)         -       (0.1)         -        -  (0.2) 
     Of which: Profit from 
      associates and joint ventures                  -         -           -         -    (0.5)  (0.1) 
  Net loss on businesses 
   disposed/held for sale                            -         -           -         -    (2.0)  (0.4) 
  Goodwill impairment                                -         -           -         -   (13.4)  (2.4) 
  Tax on normalised items                          0.1       0.3         0.2     (0.1)    (0.1)    0.3 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
Statutory RoTE                                     7.3      10.9         0.8       5.2   (25.7)    1.3 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
 
 
                                                                   3Q'19 
------------------------------------  ---------------------------------------------------------------- 
                                                                                        Central 
                                             Corporate                                        & 
                                       & Institutional    Retail  Commercial   Private    other 
                                               Banking   Banking     Banking   Banking    items  Total 
                                                     %         %           %         %        %      % 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
Underlying RoTE                                    8.6      13.9         7.0     (0.9)      7.7    8.9 
  Provision for regulatory 
   matters                                           -         -           -         -    (1.3)  (0.2) 
  Restructuring 
     Of which: Income                            (0.4)         -         0.1         -        -  (0.2) 
     Of which: Expenses                          (0.5)     (0.5)       (0.3)     (2.1)    (0.2)  (0.5) 
     Of which: Credit impairment                 (0.1)         -         0.2         -        -      - 
     Of which: Other impairment                  (1.1)         -           -         -        -  (0.6) 
     Of which: Profit from 
      associates and joint ventures                  -         -           -         -    (0.2)      - 
  Share of profits of PT 
   Bank Permata Tbk joint 
   venture                                           -         -           -         -      0.7    0.1 
  Tax on normalised items                          0.6       0.1           -       0.4    (1.7)      - 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
Statutory RoTE                                     7.1      13.5         7.0     (2.6)      5.0    7.5 
------------------------------------  ----------------  --------  ----------  --------  -------  ----- 
 

Earnings per ordinary share (EPS)

 
                                                                   3Q'20 
-------------  ------------------------------------------------------------------------------------------------------------- 
                                                                        Gains 
                                                                      arising 
                                                                           on 
                                                                   repurchase 
                            Provision                    Profit     of senior    Net loss 
                                  for                      from           and     on sale                  Tax on 
                           regulatory                     joint  subordinated          of    Goodwill  normalised 
               Underlying     matters  Restructuring    venture   liabilities  businesses  impairment       items  Statutory 
                $ million   $ million      $ million  $ million     $ million   $ million   $ million   $ million  $ million 
-------------  ----------  ----------  -------------  ---------  ------------  ----------  ----------  ----------  --------- 
Profit for 
 the year 
 attributable 
 to ordinary 
 shareholders         428           -           (44)          -             -        (35)       (231)           5        123 
Basic - 
 Weighted 
 average 
 number of 
 shares 
 (millions)         3,151                                                                                              3,151 
Basic 
 earnings per 
 ordinary 
 share 
 (cents)             13.6                                                                                                3.9 
-------------  ----------  ----------  -------------  ---------  ------------  ----------  ----------  ----------  --------- 
 
 
                                                                   3Q'19 
-------------  ------------------------------------------------------------------------------------------------------------- 
                                                                        Gains 
                                                                      arising 
                                                                           on 
                                                                   repurchase 
                            Provision                    Profit     of senior    Net loss 
                                  for                      from           and     on sale                  Tax on 
                           regulatory                     joint  subordinated          of    Goodwill  normalised 
               Underlying     matters  Restructuring    venture   liabilities  businesses  impairment       items  Statutory 
                $ million   $ million      $ million  $ million     $ million   $ million   $ million   $ million  $ million 
-------------  ----------  ----------  -------------  ---------  ------------  ----------  ----------  ----------  --------- 
Profit for 
 the year 
 attributable 
 to ordinary 
 shareholders         857        (22)          (123)         12             -           -           -           1        725 
Basic - 
 Weighted 
 average 
 number of 
 shares 
 (millions)         3,220                                                                                              3,220 
Basic 
 earnings per 
 ordinary 
 share 
 (cents)             26.6                                                                                               22.5 
-------------  ----------  ----------  -------------  ---------  ------------  ----------  ----------  ----------  --------- 
 

Risk review

Credit quality by client segment

 
                                                                30.09.20 
----------------  ---------------------------------------------------------------------------------------------------- 
                                                        Customers 
                  --------  ------------------------------------------------------------------  ----------  ---------- 
                                Corporate 
                                        &                                   Central 
                            Institutional    Retail  Commercial   Private   & other   Customer     Undrawn   Financial 
                     Banks        Banking   Banking     Banking   Banking     items      Total  commitment  Guarantees 
Amortised cost    $million       $million  $million    $million  $million  $million   $million    $million    $million 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1             48,225         93,532   106,043      19,351    13,064    19,123    251,113     136,868      42,351 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong          38,906         57,098   104,900       5,247     8,940    18,751    194,936     117,931      29,759 
  - Satisfactory     9,319         36,434     1,143      14,104     4,124       372     56,177      18,937      12,592 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2                828         19,956     2,739       4,693       209         -     27,597      13,504       4,635 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong             206          4,768     1,975         421       205         -      7,369       6,446       1,005 
  - Satisfactory       622         13,795       346       3,711         4         -     17,856       6,569       3,261 
  - Higher risk          -          1,393       418         561         -         -      2,372         489         369 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due              -             60       346          45         -         -        451           -           - 
  - More than 30 
   days 
   past due             25            121       418          88        13         -        640           -           - 
Stage 3, 
 credit-impaired 
 financial 
 assets                  -          5,796     1,114       2,077       347         2      9,336          10         666 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Gross balance(1)    49,053        119,284   109,896      26,121    13,620    19,125    288,046     150,382      47,652 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1                (7)          (102)     (430)        (28)      (11)         -      (571)        (47)        (20) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong             (3)           (44)     (229)         (2)       (8)         -      (283)        (23)        (11) 
  - Satisfactory       (4)           (58)     (201)        (26)       (3)         -      (288)        (24)         (9) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2                (6)          (399)     (205)       (101)       (1)         -      (706)        (94)        (33) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong             (2)           (86)      (85)         (6)       (1)         -      (178)        (27)         (6) 
  - Satisfactory       (4)          (232)      (69)        (73)         -         -      (374)        (56)        (21) 
  - Higher risk          -           (81)      (51)        (22)         -         -      (154)        (11)         (6) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due              -           (13)      (69)         (8)         -         -       (90)           -           - 
  - More than 30 
   days 
   past due              -            (5)      (51)         (2)         -         -       (58)           -           - 
Stage 3, 
 credit-impaired 
 financial 
 assets                  -        (3,210)     (512)     (1,508)     (157)       (2)    (5,389)           -       (169) 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Total credit 
 impairment           (13)        (3,711)   (1,147)     (1,637)     (169)       (2)    (6,666)       (141)       (222) 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Net carrying 
 value              49,040        115,573   108,749      24,484    13,451    19,123    281,380 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1               0.0%           0.1%      0.4%        0.1%      0.1%      0.0%       0.2%        0.0%        0.0% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong            0.0%           0.1%      0.2%        0.0%      0.1%      0.0%       0.1%        0.0%        0.0% 
  - Satisfactory      0.0%           0.2%     17.6%        0.2%      0.1%      0.0%       0.5%        0.1%        0.1% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2               0.7%           2.0%      7.5%        2.2%      0.5%      0.0%       2.6%        0.7%        0.7% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong            1.0%           1.8%      4.3%        1.4%      0.5%      0.0%       2.4%        0.4%        0.6% 
  - Satisfactory      0.6%           1.7%     19.9%        2.0%      0.0%      0.0%       2.1%        0.9%        0.6% 
  - Higher risk       0.0%           5.8%     12.2%        3.9%      0.0%      0.0%       6.5%        2.2%        1.6% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due           0.0%          21.7%     19.9%       17.8%      0.0%      0.0%      20.0%        0.0%        0.0% 
  - More than 30 
   days 
   past due           0.0%           4.1%     12.2%        2.3%      0.0%      0.0%       9.1%        0.0%        0.0% 
Stage 3, 
 credit-impaired 
 financial 
 assets               0.0%          55.4%     46.0%       72.6%     45.2%    100.0%      57.7%        0.0%       25.4% 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Cover ratio           0.0%           3.1%      1.0%        6.3%      1.2%      0.0%       2.3%        0.1%        0.5% 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Fair value 
through 
profit or loss 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Performing          20,734         51,285       160       2,929         -        12     54,386           -           - 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong          17,365         25,637       158       2,207         -         7     28,009           -           - 
  - Satisfactory     3,369         25,607         1         703         -         5     26,316           -           - 
  - Higher risk          -             41         1          19         -         -         61           -           - 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Defaulted 
 (CG13-14)               -             36         -           9         -         -         45           -           - 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Gross balance 
 (FVTPL)(2)         20,734         51,321       160       2,938         -        12     54,431           -           - 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Net carrying 
 value 
 (incl FVTPL)       69,774        166,894   108,909      27,422    13,451    19,135    335,811 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
 

1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $4,330 million under Customers and of $783 million under Banks, held at amortised cost

2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $45,168 million under Customers and of $18,005 million under Banks, held at fair value through profit or loss

 
                                                                30.06.20 
----------------  ---------------------------------------------------------------------------------------------------- 
                                                        Customers 
                  --------  ------------------------------------------------------------------  ----------  ---------- 
                                Corporate                                   Central 
                                        &                                         & 
                            Institutional    Retail  Commercial   Private     other   Customer     Undrawn   Financial 
                     Banks        Banking   Banking     Banking   Banking     items      Total  commitment  Guarantees 
Amortised cost    $million       $million  $million    $million  $million  $million   $million    $million    $million 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1             50,146         97,794   101,523      20,916    12,599    17,446    250,278     134,605      37,408 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong          41,317         61,090   100,456       6,097     9,232    17,213    194,088     115,218      25,727 
  - Satisfactory     8,829         36,704     1,067      14,819     3,367       233     56,190      19,387      11,681 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2                349         15,765     3,515       4,256       199         4     23,739       9,280       4,205 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong              31          4,347     2,630         307       195         -      7,479       3,682       1,065 
  - Satisfactory       301         10,469       406       3,400         4         -     14,279       5,255       2,845 
  - Higher risk         17            949       479         549         -         4      1,981         343         295 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due              -            272       406         119         -         -        797           -           - 
  - More than 30 
   days 
   past due             35             58       479          34         4         -        575           -           - 
Stage 3, 
 credit-impaired 
 financial 
 assets                 13          5,364     1,067       2,004       372         2      8,809          28         621 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Gross balance(1)    50,508        118,923   106,105      27,176    13,170    17,452    282,826     143,913      42,234 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1                (3)           (62)     (371)        (31)      (11)       (1)      (476)        (44)        (16) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong               -           (37)     (228)         (4)       (8)         -      (277)        (22)         (9) 
  - Satisfactory       (3)           (25)     (143)        (27)       (3)       (1)      (199)        (22)         (7) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2                (2)          (424)     (242)       (114)         -         -      (780)        (72)        (39) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong               -           (74)      (99)         (8)         -         -      (181)        (24)         (7) 
  - Satisfactory       (2)          (312)      (74)        (83)         -         -      (469)        (41)        (27) 
  - Higher risk          -           (38)      (69)        (23)         -         -      (130)         (7)         (5) 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due              -           (13)      (74)         (8)         -         -       (95)           -           - 
  - More than 30 
   days 
   past due              -           (22)      (69)        (16)         -         -      (107)           -           - 
Stage 3, 
 credit-impaired 
 financial 
 assets                (4)        (3,129)     (492)     (1,476)     (158)       (2)    (5,257)         (1)       (182) 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Total credit 
 impairment            (9)        (3,615)   (1,105)     (1,621)     (169)       (3)    (6,513)       (117)       (237) 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Net carrying 
 value              50,499        115,308   105,000      25,555    13,001    17,449    276,313 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 1               0.0%           0.1%      0.4%        0.1%      0.1%      0.0%       0.2%        0.0%        0.0% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong            0.0%           0.1%      0.2%        0.1%      0.1%      0.0%       0.1%        0.0%        0.0% 
  - Satisfactory      0.0%           0.1%     13.4%        0.2%      0.1%      0.4%       0.4%        0.1%        0.1% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Stage 2               0.6%           2.7%      6.9%        2.7%      0.0%      0.0%       3.3%        0.8%        0.9% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong            0.0%           1.7%      3.8%        2.6%      0.0%      0.0%       2.4%        0.7%        0.7% 
  - Satisfactory      0.7%           3.0%     18.2%        2.4%      0.0%      0.0%       3.3%        0.8%        0.9% 
  - Higher risk       0.0%           4.0%     14.4%        4.2%      0.0%      0.0%       6.6%        2.0%        1.7% 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Of which (stage 
2): 
  - Less than 30 
   days 
   past due           0.0%           4.8%     18.2%        6.7%      0.0%      0.0%      11.9%        0.0%        0.0% 
  - More than 30 
   days 
   past due           0.0%          37.9%     14.4%       47.1%      0.0%      0.0%      18.6%        0.0%        0.0% 
Stage 3, 
 credit-impaired 
 financial 
 assets              30.8%          58.3%     46.1%       73.7%     42.5%    100.0%      59.7%        3.6%       29.3% 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Cover ratio           0.0%           3.0%      1.0%        6.0%      1.3%      0.0%       2.3%        0.1%        0.6% 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Fair value 
through 
profit or loss 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Performing          19,939         48,951       182       2,650         -        15     51,798           -           - 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
  - Strong          16,807         26,961       179       2,008         -         9     29,157           -           - 
  - Satisfactory     3,132         21,988         2         615         -         6     22,611           -           - 
  - Higher risk          -              2         1          27         -         -         30           -           - 
                  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Defaulted 
 (CG13-14)               -             45         -           9         -         -         54           -           - 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Gross balance 
 (FVTPL)(2)         19,939         48,996       182       2,659         -        15     51,852           -           - 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
Net carrying 
 value 
 (incl FVTPL)       70,438        164,304   105,182      28,214    13,001    17,464    328,165 
----------------  --------  -------------  --------  ----------  --------  --------  ---------  ----------  ---------- 
 

1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $4,383 million under Customers and of $1,893 million under Banks, held at amortised cost

2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $41,399 million under Customers and of $17,603 million under Banks, held at fair value through profit or loss

Credit impairment charge

 
                                  9 months ended 30.09.20             9 months ended 30.09.19 
---------------------------  ----------------------------------  ---------------------------------- 
                                Stage 1                             Stage 1 
                                    & 2     Stage 3       Total         & 2     Stage 3    Total(1) 
                               $million    $million    $million    $million    $million    $million 
---------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
Ongoing business portfolio 
Corporate & Institutional 
 Banking                            364         753       1,117          11         258         269 
Retail Banking                      324         235         559         129         107         236 
Commercial Banking                   81         153         234         (8)          65          57 
Private Banking                     (1)           4           3           1        (34)        (33) 
Central & Others                      9         (2)           7           4           -           4 
---------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
Credit impairment charge            777       1,143       1,920         137         396         533 
Restructuring business 
 portfolio 
Liquidation portfolio                 -           -           -           -           -           - 
Others                                -          14          14           -           1           1 
---------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
Credit impairment charge              -          14          14           -           1           1 
---------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
Total credit impairment 
 charge                             777       1,157       1,934         137         397         534 
---------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
 

COVID-19 relief measures

 
                                                       Greater China 
                                                              &                ASEAN & South              Africa &                Europe & 
                         Applications(1)                 North Asia                 Asia                 Middle East              Americas 
--------------  ---------------------------------  ----------------------  ----------------------  ----------------------  ---------------------- 
                Received  Approved           % of  Approved          % of  Approved          % of  Approved          % of  Approved          % of 
Segment         $million  $million   portfolio(2)  $million  portfolio(2)  $million  portfolio(2)  $million  portfolio(2)  $million  portfolio(2) 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Credit Card           91        91             2%         1            0%        63            3%        27           10% 
Personal loans       441       347             4%        23            0%        56            5%       267           16% 
Mortgages & 
 auto              3,251     2,358             3%       547            1%     1,344            8%       468           19% 
Business 
 banking             756       558             7%       175            5%       373            9%        10            7% 
Wealth 
 management            2         2             0%         -             -         2             -         -             - 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Total Retail 
 Banking           4,541     3,355             3%       746            1%     1,838            7%       771           15% 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Corporate & 
 Institutional 
 Banking                     2,286             1%       119                   1,244                     670                     253 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Commercial 
 Banking                     4,179            16%     1,608                   1,864                     619                      88 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Total at 30 
 September 
 2020                        9,820             3%     2,473                   4,946                   2,060                     341 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
 
Retail Banking               8,879             8%       584            1%     7,386           28%       909           17% 
Corporate & 
 Institutional 
 Banking                     1,802             1%       389                     991                     155                     268 
Commercial 
 Banking                     3,804            14%     1,573                   1,601                     542                      88 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
Total at 30 
 June 
 2020                       14,485             4%     2,546                   9,978                   1,606                     356 
--------------  --------  --------  -------------  --------  ------------  --------  ------------  --------  ------------  --------  ------------ 
 

1 The difference between applications received and approved primarily relates to those markets that have compulsory relief schemes in place where customers have chosen to opt out

2 Percentage of portfolio represents the approved amounts as a percentage of gross loans and advances to banks and customers by product segment and total loans and advances to banks and customers at 30 September 2020 and 30 June 2020

Vulnerable sectors

Maximum Exposure

 
                                                                   30.09.20 
-----------------------  --------------------------------------------------------------------------------------------- 
                              Maximum 
                           On Balance                                                                            Total 
                                Sheet                                              Financial                      On & 
                             Exposure                 Net On           Undrawn    Guarantees    Net Off            Off 
                                 (net                Balance   Commitments(net          (net    Balance        Balance 
                            of credit                  Sheet         of credit     of credit      Sheet          Sheet 
                          impairment)  Collateral   Exposure       impairment)   impairment)   Exposure   Net Exposure 
Amortised Cost               $million    $million   $million          $million      $million   $million       $million 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
Industry: 
Aviation                        4,347       2,169      2,178               955           555      1,510          3,688 
Commodity Traders               8,786         519      8,267             2,791         3,123      5,914         14,181 
Metals & Mining                 5,031         898      4,133             2,075         1,853      3,928          8,061 
Commercial Real Estate         18,186       7,672     10,514             4,726           345      5,071         15,585 
Hotels & Tourism                2,560       1,072      1,488             1,230           141      1,371          2,859 
Oil & Gas                       8,703       1,180      7,523             9,387         4,865     14,252         21,775 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
Total                          47,613      13,510     34,103            21,164        10,882     32,046         66,149 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
Total Corporate & 
 Institutional 
 Banking and Commercial 
 Banking                      140,057      29,234    110,823            90,732        40,930    131,662        242,485 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
Total Retail, Private 
 Banking 
 and Other Segments           190,363      97,039     93,324            59,509         6,500     66,009        159,333 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
Total Group                   330,420     126,273    204,147           150,241        47,430    197,671        401,818 
-----------------------  ------------  ----------  ---------  ----------------  ------------  ---------  ------------- 
 
 
                                                                     30.06.20 
---------------------------  ----------------------------------------------------------------------------------------- 
                                  Maximum 
                               On Balance                                                                        Total 
                                    Sheet                              Undrawn     Financial                      On & 
                                 Exposure                 Net On   Commitments    Guarantees    Net Off            Off 
                                     (net                Balance          (net          (net    Balance        Balance 
                                of credit                  Sheet     of credit     of credit      Sheet          Sheet 
                              impairment)  Collateral   Exposure   impairment)   impairment)   Exposure   Net Exposure 
Amortised Cost                   $million    $million   $million      $million      $million   $million       $million 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
Industry: 
Aviation                            4,509       2,213      2,296           602           509      1,111          3,407 
Commodity Traders                   9,610         631      8,979         2,963         3,132      6,095         15,074 
Metals & Mining                     5,260         831      4,429         2,529           632      3,161          7,590 
Commercial Real Estate             18,265       7,413     10,852         5,911           384      6,295         17,147 
Hotels & Tourism                    2,873       1,135      1,738         1,550           146      1,696          3,434 
Oil & Gas                           8,782       2,794      5,988         8,044         5,642     13,686         19,674 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
Total                              49,299      15,017     34,282        21,599        10,445     32,044         66,326 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
Total Corporate & 
 Institutional 
 Banking and Commercial 
 Banking                          140,863      29,789    111,074        85,112        35,679    120,791        231,865 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
Total Retail, Private 
 Banking 
 and Other Segments               185,949      98,775     87,174        58,684         6,318     65,002        152,176 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
Total Group                       326,812     128,564    198,248       143,796        41,997    185,793        384,041 
---------------------------  ------------  ----------  ---------  ------------  ------------  ---------  ------------- 
 

Loans and advances by stage

 
                                                                      30.09.20 
--------------  -------------------------------------------------------------------------------------------------------------------- 
                      Stage 1                    Stage 2                         Stage 3                          Total 
                --------------------  ------------------------------  ------------------------------  ------------------------------  -------- 
                               Total       Net                 Total       Net                 Total       Net                 Total       Net 
                   Gross      Credit  Carrying     Gross      Credit  Carrying     Gross      Credit  Carrying     Gross      Credit  Carrying 
Amortised        Balance  Impairment    Amount   Balance  Impairment    Amount   Balance  Impairment    Amount   Balance  Impairment    Amount 
 Cost           $million    $million  $million  $million    $million  $million  $million    $million  $million  $million    $million  $million 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Industry: 
Aviation           2,118         (1)     2,117     1,993        (12)     1,981       294        (45)       249     4,405        (58)     4,347 
Commodity 
 Traders           8,204        (15)     8,189       428        (10)       418       937       (758)       179     9,569       (783)     8,786 
Metals & 
 Mining            3,730         (4)     3,726     1,194         (9)     1,185       263       (143)       120     5,187       (156)     5,031 
Commercial 
 Real Estate      13,559        (18)    13,541     4,443        (41)     4,402       402       (159)       243    18,404       (218)    18,186 
Hotels & 
 Tourism           1,123         (2)     1,121     1,373        (33)     1,340       134        (35)        99     2,630        (70)     2,560 
Oil & Gas          6,903         (8)     6,895     1,663        (80)     1,583       468       (243)       225     9,034       (331)     8,703 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total             35,637        (48)    35,589    11,094       (185)    10,909     2,498     (1,383)     1,115    49,229     (1,616)    47,613 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total 
 Corporate 
 & 
 Institutional 
 Banking and 
 Commercial 
 Banking         111,283       (130)   112,753    24,649       (500)    24,149     7,873     (4,718)     3,155   145,405     (5,348)   140,057 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total Retail, 
 Private 
 Banking 
 and Other 
 Segments        186,455       (450)   186,005     3,776       (208)     3,568     1,463       (673)       790   191,694     (1,331)   190,363 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total Group      299,338       (580)   298,758    28,425       (708)    27,717     9,336     (5,391)     3,945   337,099     (6,679)   330,420 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
 
 
 
                                                                           30.06.20 
--------------  ------------------------------------------------------------------------------------------------------------------------------ 
                           Stage 1                         Stage 2                         Stage 3                          Total 
                ------------------------------  ------------------------------  ------------------------------  ------------------------------ 
                               Total       Net                 Total       Net                 Total       Net                 Total       Net 
                   Gross      Credit  Carrying     Gross      Credit  Carrying     Gross      Credit  Carrying     Gross      Credit  Carrying 
                 Balance  Impairment    Amount   Balance  Impairment    Amount   Balance  Impairment    Amount   Balance  Impairment    Amount 
Amortised Cost  $million    $million  $million  $million    $million  $million  $million    $million  $million  $million    $million  $million 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Industry: 
Aviation           2,216           -     2,216     2,100        (25)     2,075       256        (38)       218     4,572        (63)     4,509 
Commodity 
 Traders           8,890        (14)     8,876       525        (11)       514       760       (540)       220    10,175       (565)     9,610 
Metals & 
 Mining            4,193         (4)     4,189     1,003        (31)       972       240       (141)        99     5,436       (176)     5,260 
Commercial 
 Real Estate      16,154        (22)    16,132     1,932        (40)     1,892       397       (156)       241    18,483       (218)    18,265 
Hotels & 
 Tourism           1,926         (2)     1,924       927        (45)       882        92        (25)        67     2,945        (72)     2,873 
Oil & Gas          6,750         (5)     6,745     1,773        (80)     1,693       574       (230)       344     9,097       (315)     8,782 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total             40,129        (47)    40,082     8,260       (232)     8,028     2,319     (1,130)     1,189    50,708     (1,409)    49,299 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total 
 Corporate 
 & 
 Institutional 
 Banking and 
 Commercial 
 Banking         118,710        (93)   118,617    20,021       (538)    19,483     7,368     (4,605)     2,763   146,099     (5,236)   140,863 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total Retail, 
 Private 
 Banking 
 and Other 
 Segments        181,714       (386)   181,328     4,067       (244)     3,823     1,454       (656)       798   187,235     (1,286)   185,949 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
Total Group      300,424       (479)   299,945    24,088       (782)    23,306     8,822     (5,261)     3,561   333,334     (6,522)   326,812 
--------------  --------  ----------  --------  --------  ----------  --------  --------  ----------  --------  --------  ----------  -------- 
 

Capital review

Capital ratios

 
                 30.09.20  30.06.20  31.12.19 
---------------  --------  --------  -------- 
CET1                14.4%     14.3%     13.8% 
Tier 1 capital      16.5%     16.5%     16.5% 
Total capital       21.4%     21.5%     21.2% 
---------------  --------  --------  -------- 
 

CRD IV Capital base(1)

 
                                                          30.09.20    30.06.20    31.12.19 
                                                          $million    $million    $million 
------------------------------------------------------  ----------  ----------  ---------- 
CET1 instruments and reserves 
Capital instruments and the related share premium 
 accounts                                                    5,564       5,564       5,584 
Of which: share premium accounts                             3,989       3,989       3,989 
Retained earnings(2)                                        25,748      25,798      24,044 
Accumulated other comprehensive income (and other 
 reserves)                                                  12,037      11,431      11,685 
Non-controlling interests (amount allowed in 
 consolidated CET1)                                            170         170         723 
Independently reviewed interim and year-end profits          1,203       1,050       2,301 
Foreseeable dividends                                        (228)       (163)       (871) 
------------------------------------------------------  ----------  ----------  ---------- 
CET1 capital before regulatory adjustments                  44,494      43,850      43,466 
------------------------------------------------------  ----------  ----------  ---------- 
CET1 regulatory adjustments 
Additional value adjustments (prudential valuation 
 adjustments)                                                (508)       (527)       (615) 
Intangible assets (net of related tax liability)           (4,821)     (4,938)     (5,318) 
Deferred tax assets that rely on future profitability 
 (excludes those arising from temporary differences)          (76)       (129)       (129) 
Fair value reserves related to net losses on 
 cash flow hedges                                               71         121          59 
Deduction of amounts resulting from the calculation 
 of excess expected loss                                     (553)       (572)       (822) 
Net gains on liabilities at fair value resulting 
 from changes in own credit risk                              (15)        (15)         (2) 
Defined-benefit pension fund assets                            (6)         (7)        (26) 
Fair value gains arising from the institution's 
 own credit risk related to derivative liabilities           (110)       (128)        (38) 
Exposure amounts which could qualify for risk 
 weighting of 1250%                                           (27)        (30)        (62) 
------------------------------------------------------  ----------  ----------  ---------- 
Total regulatory adjustments to CET1                       (6,045)     (6,225)     (6,953) 
------------------------------------------------------  ----------  ----------  ---------- 
CET1 capital                                                38,449      37,625      36,513 
------------------------------------------------------  ----------  ----------  ---------- 
Additional Tier 1 capital (AT1) instruments                  5,631       5,632       7,184 
------------------------------------------------------  ----------  ----------  ---------- 
AT1 regulatory adjustments                                    (20)        (20)        (20) 
------------------------------------------------------  ----------  ----------  ---------- 
Tier 1 capital                                              44,060      43,237      43,677 
------------------------------------------------------  ----------  ----------  ---------- 
 
Tier 2 capital instruments                                  13,021      13,261      12,318 
Tier 2 regulatory adjustments                                 (30)        (30)        (30) 
Tier 2 capital                                              12,991      13,231      12,288 
------------------------------------------------------  ----------  ----------  ---------- 
Total capital                                               57,051      56,468      55,965 
------------------------------------------------------  ----------  ----------  ---------- 
Total risk-weighted assets (unaudited)                     266,664     262,552     264,090 
------------------------------------------------------  ----------  ----------  ---------- 
 

1 CRD IV capital is prepared on the regulatory scope of consolidation

2 Retained earnings includes IFRS9 capital relief (transitional) of $388 million, including dynamic relief of $92 million

Movement in total capital

 
                                                                        9 months  Year ended 
                                                                  ended 30.09.20    31.12.19 
                                                                        $million    $million 
---------------------------------------------------------------  ---------------  ---------- 
CET1 at 1 January                                                         36,513      36,717 
Ordinary shares issued in the period and share premium                         -          25 
Share buy-back                                                             (242)     (1,006) 
Profit for the period                                                      1,203       2,301 
Foreseeable dividends deducted from CET1                                   (228)       (871) 
Difference between dividends paid and foreseeable dividends                  608       (641) 
Movement in goodwill and other intangible assets                             497       (172) 
Foreign currency translation differences                                      75       (180) 
Non-controlling interests                                                  (553)          37 
Movement in eligible other comprehensive income                              148         284 
Deferred tax assets that rely on future profitability                         53        (14) 
Decrease/(increase) in excess expected loss                                  269          53 
Additional value adjustments (prudential valuation adjustment)               107        (51) 
IFRS 9 day one transitional impact on regulatory reserves                     29        (43) 
Exposure amounts which could qualify for risk weighting                       35          61 
Fair value gains arising from the institution's own 
 Credit Risk related to derivative liabilities                              (72)           - 
Other                                                                          7          13 
---------------------------------------------------------------  ---------------  ---------- 
CET1 at 30 September/31 December                                          38,449      36,513 
---------------------------------------------------------------  ---------------  ---------- 
 
AT1 at 1 January                                                           7,164       6,684 
Issuances net of redemptions                                               (995)         552 
Foreign currency translation difference                                      (6)           9 
Excess on AT1 grandfathered limit (ineligible)                             (552)        (81) 
---------------------------------------------------------------  ---------------  ---------- 
AT1 at 30 September/31 December                                            5,611       7,164 
---------------------------------------------------------------  ---------------  ---------- 
 
Tier 2 capital at 1 January                                               12,288      12,295 
Regulatory amortisation                                                    (160)     (1,111) 
Issuances net of redemptions                                                  83       1,000 
Foreign currency translation difference                                      158        (12) 
Tier 2 ineligible minority interest                                           70          31 
Recognition of ineligible AT1                                                552          81 
Other                                                                          -           4 
---------------------------------------------------------------  ---------------  ---------- 
Tier 2 capital at 30 September/31 December                                12,991      12,288 
---------------------------------------------------------------  ---------------  ---------- 
Total capital at 30 September/31 December                                 57,051      55,965 
---------------------------------------------------------------  ---------------  ---------- 
 

Risk-weighted assets by business

 
                                                      30.09.20 
----------------------------------  --------------------------------------------- 
                                       Credit  Operational     Market 
                                         risk         risk       risk  Total risk 
                                     $million     $million   $million    $million 
----------------------------------  ---------  -----------  ---------  ---------- 
Corporate & Institutional Banking     103,116       13,153     22,143     138,412 
Retail Banking                         37,270        7,575          -      44,845 
Commercial Banking                     27,685        2,810          -      30,495 
Private Banking                         5,488          763          -       6,251 
Central & other items                  44,161        2,499          1      46,661 
----------------------------------  ---------  -----------  ---------  ---------- 
Total risk-weighted assets            217,720       26,800     22,144     266,664 
----------------------------------  ---------  -----------  ---------  ---------- 
 
 
                                                      30.06.20 
----------------------------------  --------------------------------------------- 
                                       Credit  Operational     Market 
                                         risk         risk       risk  Total risk 
                                     $million     $million   $million    $million 
----------------------------------  ---------  -----------  ---------  ---------- 
Corporate & Institutional Banking     101,651       13,153     22,346     137,150 
Retail Banking                         36,611        7,575          -      44,186 
Commercial Banking                     28,046        2,810          -      30,856 
Private Banking                         5,365          763          -       6,128 
Central & other items                  41,463        2,499        270      44,232 
----------------------------------  ---------  -----------  ---------  ---------- 
Total risk-weighted assets            213,136       26,800     22,616     262,552 
----------------------------------  ---------  -----------  ---------  ---------- 
 
 
                                                      31.12.19 
----------------------------------  --------------------------------------------- 
                                       Credit  Operational     Market 
                                         risk         risk       risk  Total risk 
                                     $million     $million   $million    $million 
----------------------------------  ---------  -----------  ---------  ---------- 
Corporate & Institutional Banking      95,261       13,261     20,562     129,084 
Retail Banking                         37,194        7,314          -      44,508 
Commercial Banking                     28,350        2,626          -      30,976 
Private Banking                         5,681          728          -       6,409 
Central & other items                  49,178        3,691        244      53,113 
----------------------------------  ---------  -----------  ---------  ---------- 
Total risk-weighted assets            215,664       27,620     20,806     264,090 
----------------------------------  ---------  -----------  ---------  ---------- 
 

Risk-weighted assets by geographic region

 
                               30.09.20    30.06.20    31.12.19 
                               $million    $million    $million 
---------------------------  ----------  ----------  ---------- 
Greater China & North Asia       92,863      89,139      85,695 
ASEAN & South Asia               80,123      80,040      88,942 
Africa & Middle East             52,524      52,009      49,244 
Europe & Americas                43,818      44,326      43,945 
Central & other items           (2,664)     (2,962)     (3,736) 
---------------------------  ----------  ----------  ---------- 
Total risk-weighted assets      266,664     262,552     264,090 
---------------------------  ----------  ----------  ---------- 
 

Movement in risk-weighted assets

 
                                              Credit risk 
-----------------  -----------------------------------------------------------------  -----------  --------  --------- 
                       Corporate                                   Central 
                               &                                         & 
                   Institutional    Retail  Commercial   Private     other            Operational    Market      Total 
                         Banking   Banking     Banking   Banking     items     Total         risk      risk       risk 
                        $million  $million    $million  $million  $million  $million     $million  $million   $million 
-----------------  -------------  --------  ----------  --------  --------  --------  -----------  --------  --------- 
At 01 January 
 2019                     96,954    35,545      27,711     5,103    45,825   211,138       28,050    19,109    258,297 
Assets 
 (decline)/growth          1,303     1,020       (557)       528     4,093     6,387            -         -      6,387 
Net credit 
 migration                 2,565       832       (642)         8       607     3,370            -         -      3,370 
Risk-weighted 
 assets 
 efficiencies            (1,112)      (33)       (403)         -   (2,404)   (3,952)            -         -    (3,952) 
Model, 
 methodology 
 and policy 
 changes                   (904)       (7)           -         -     1,400       489            -       500        989 
Disposals                  (397)         -       (441)         -         -     (838)            -         -      (838) 
Foreign currency 
 translation               (182)     (219)       (228)        42     (343)     (930)            -         -      (930) 
Other non-credit 
 risk movements                -         -           -         -         -         -        (430)     1,197        767 
-----------------  -------------  --------  ----------  --------  --------  --------  -----------  --------  --------- 
At 31 December 
 2019                     98,227    37,138      25,440     5,681    49,178   215,664       27,620    20,806    264,090 
-----------------  -------------  --------  ----------  --------  --------  --------  -----------  --------  --------- 
At 01 January 
 2020(1)                  95,261    37,194      28,350     5,681    49,178   215,664       27,620    20,806    264,090 
Assets 
 (decline)/growth        (3,348)       265     (1,231)     (185)     2,832   (1,667)            -         -    (1,667) 
Net credit 
 migration                10,884     (191)         665       (1)       823    12,180            -         -     12,180 
Risk-weighted 
 assets 
 efficiencies              (230)         -          89         -         -     (141)            -         -      (141) 
Model, 
 methodology 
 and policy 
 changes                     667       241           -         -         -       908            -   (1,400)      (492) 
Disposals                      -         -           -         -   (7,859)   (7,859)      (1,003)     (159)    (9,021) 
Foreign currency 
 translation               (118)     (239)       (188)       (7)     (813)   (1,365)            -         -    (1,365) 
Other non-credit 
 risk movements                -         -           -         -         -         -          183     2,897      3,080 
-----------------  -------------  --------  ----------  --------  --------  --------  -----------  --------  --------- 
At 30 September 
 2020                    103,116    37,270      27,685     5,488    44,161   217,720       26,800    22,144    266,664 
-----------------  -------------  --------  ----------  --------  --------  --------  -----------  --------  --------- 
 

1 Following a reorganisation of certain clients, there has been a reclassification of balances across client segments. 1 January 2020 balances have been restated.

UK leverage ratio

 
                                                    30.09.20    30.06.20    31.12.19 
                                                    $million    $million    $million 
------------------------------------------------  ----------  ----------  ---------- 
Tier 1 capital (transitional)                         44,060      43,237      43,677 
Additional Tier 1 capital subject to phase out       (1,114)     (1,114)     (1,671) 
------------------------------------------------  ----------  ----------  ---------- 
Tier 1 capital (end point)                            42,946      42,123      42,006 
------------------------------------------------  ----------  ----------  ---------- 
Derivative financial instruments                      52,961      52,227      47,212 
Derivative cash collateral                             8,682       9,716       9,169 
Securities financing transactions (SFTs)              68,286      65,278      60,414 
Loans and advances and other assets                  624,500     614,364     603,603 
------------------------------------------------  ----------  ----------  ---------- 
Total on-balance sheet assets                        754,429     741,585     720,398 
Regulatory consolidation adjustments(1)             (51,768)    (47,271)    (31,485) 
Derivatives adjustments 
                                                  ----------  ----------  ---------- 
Derivatives netting                                 (30,799)    (29,949)    (32,852) 
Adjustments to cash collateral                      (17,179)    (18,212)    (11,853) 
Net written credit protection                          1,724       1,711       1,650 
Potential future exposure on derivatives              38,434      37,606      32,961 
                                                  ----------  ----------  ---------- 
Total derivatives adjustments                        (7,820)     (8,844)    (10,094) 
Counterparty risk leverage exposure measure for 
 SFTs                                                  6,660       6,414       7,005 
Off-balance sheet items                              123,628     120,725     122,341 
Regulatory deductions from Tier 1 capital            (5,829)     (6,013)     (6,913) 
------------------------------------------------  ----------  ----------  ---------- 
UK leverage exposure (end point)                     819,300     806,596     801,252 
UK leverage ratio (end point)                           5.2%        5.2%        5.2% 
------------------------------------------------  ----------  ----------  ---------- 
UK leverage exposure quarterly average               820,387     810,591     816,244 
UK leverage ratio quarterly average                     5.2%        5.0%        5.2% 
------------------------------------------------  ----------  ----------  ---------- 
Countercyclical leverage ratio buffer                   0.1%        0.0%        0.1% 
G-SII additional leverage ratio buffer                  0.4%        0.4%        0.4% 
------------------------------------------------  ----------  ----------  ---------- 
 

1 Includes adjustment for qualifying central bank claims

Financial statements

Condensed consolidated interim income statement

For the nine months ended 30 September 2020

 
                                                                               restated(1) 
                                                                9 months          9 months 
                                                          ended 30.09.20    ended 30.09.19 
                                                                $million          $million 
-------------------------------------------------------  ---------------  ---------------- 
Interest income                                                    9,604            12,464 
Interest expense                                                 (4,507)           (6,704) 
-------------------------------------------------------  ---------------  ---------------- 
Net interest income                                                5,097             5,760 
Fees and commission income                                         2,941             3,169 
Fees and commission expense                                        (465)             (443) 
Net fee and commission income                                      2,476             2,726 
Net trading income                                                 3,003             2,695 
Other operating income                                             1,029               608 
-------------------------------------------------------  ---------------  ---------------- 
Operating income                                                  11,605            11,789 
Staff costs                                                      (5,094)           (5,330) 
Premises costs                                                     (274)             (291) 
General administrative expenses                                    (992)           (1,343) 
Depreciation and amortisation                                      (903)             (901) 
Operating expenses                                               (7,263)           (7,865) 
-------------------------------------------------------  ---------------  ---------------- 
Operating profit before impairment losses and taxation             4,342             3,924 
Credit impairment                                                (1,934)             (534) 
Goodwill impairment                                                (489)                 - 
Other impairment                                                       2             (104) 
Profit from associates and joint ventures                            141               233 
-------------------------------------------------------  ---------------  ---------------- 
Profit before taxation                                             2,062             3,519 
Taxation                                                           (835)           (1,251) 
-------------------------------------------------------  ---------------  ---------------- 
Profit for the period                                              1,227             2,268 
-------------------------------------------------------  ---------------  ---------------- 
 
Profit attributable to: 
Non-controlling interests                                             25                30 
Parent company shareholders                                        1,202             2,238 
-------------------------------------------------------  ---------------  ---------------- 
Profit for the period                                              1,227             2,268 
-------------------------------------------------------  ---------------  ---------------- 
 
 
                                      cents  cents 
------------------------------------  -----  ----- 
Earnings per share: 
Basic earnings per ordinary share      29.7   60.5 
Diluted earnings per ordinary share    29.3   59.8 
------------------------------------  -----  ----- 
 

1 Comparatives have been restated due to the Group changing its accounting policies for net interest income and net trading income for the year ended 31 December 2019. Refer to Note 1 in the Group's 2019 annual report.

Condensed consolidated interim statement of comprehensive income

For the nine months ended 30 September 2020

 
                                                                         9 months         9 months 
                                                                   ended 30.09.20   ended 30.09.19 
                                                                         $million         $million 
----------------------------------------------------------------  ---------------  --------------- 
Profit for the period                                                       1,227            2,268 
Other comprehensive income/(loss) 
  Items that will not be reclassified to income statement:                      1            (420) 
                                                                  ---------------  --------------- 
  Own credit gains/(losses) on financial liabilities designated 
   at fair value through profit or loss                                        21            (386) 
  Equity instruments at fair value through other comprehensive 
   income                                                                      65                7 
  Actuarial losses on retirement benefit obligations                         (52)             (89) 
  Taxation relating to components of other comprehensive 
   income                                                                    (33)               48 
                                                                  ---------------  --------------- 
 
  Items that may be reclassified subsequently to income 
   statement:                                                                 192            (328) 
  Exchange differences on translation of foreign operations: 
                                                                  ---------------  --------------- 
     Net losses taken to equity                                             (248)            (787) 
     Net (losses)/gains on net investment hedges                             (20)              209 
     Reclassified to income statement on sale of joint venture                246                - 
  Share of other comprehensive (loss)/income from associates 
   and joint ventures                                                        (20)               16 
  Debt instruments at fair value through other comprehensive 
   income: 
     Net valuation gains taken to equity                                      852              484 
     Reclassified to income statement                                       (562)            (140) 
     Net impact of expected credit losses                                       8                9 
  Cash flow hedges: 
     Net losses taken to equity                                              (45)            (113) 
     Reclassified to income statement                                          14               14 
  Taxation relating to components of other comprehensive 
   income                                                                    (33)             (20) 
                                                                  ---------------  --------------- 
Other comprehensive income/(loss) for the period, net 
 of taxation                                                                  193            (748) 
----------------------------------------------------------------  ---------------  --------------- 
Total comprehensive income for the period                                   1,420            1,520 
----------------------------------------------------------------  ---------------  --------------- 
 
Total comprehensive income attributable to: 
Non-controlling interests                                                      19               16 
Parent company shareholders                                                 1,401            1,504 
----------------------------------------------------------------  ---------------  --------------- 
Total comprehensive income for the period                                   1,420            1,520 
----------------------------------------------------------------  ---------------  --------------- 
 

Condensed consolidated interim balance sheet

As at 30 September 2020

 
                                                              30.09.20    31.12.19 
                                                              $million    $million 
----------------------------------------------------------  ----------  ---------- 
Assets 
Cash and balances at central banks                              59,238      52,728 
Financial assets held at fair value through profit or 
 loss                                                          102,354      92,818 
Derivative financial instruments(1)                             52,961      47,212 
Loans and advances to banks                                     49,040      53,549 
Loans and advances to customers                                281,380     268,523 
Investment securities                                          145,124     143,731 
Other assets(1)                                                 46,405      42,022 
Current tax assets                                                 752         539 
Prepayments and accrued income                                   2,197       2,700 
Interests in associates and joint ventures                       2,083       1,908 
Goodwill and intangible assets                                   4,916       5,290 
Property, plant and equipment                                    6,606       6,220 
Deferred tax assets                                                777       1,105 
Assets classified as held for sale                                 596       2,053 
----------------------------------------------------------  ----------  ---------- 
Total assets                                                   754,429     720,398 
----------------------------------------------------------  ----------  ---------- 
 
Liabilities 
Deposits by banks                                               28,138      28,562 
Customer accounts                                              417,517     405,357 
Repurchase agreements and other similar secured borrowing        2,346       1,935 
Financial liabilities held at fair value through profit 
 or loss                                                        74,785      66,974 
Derivative financial instruments(1)                             52,376      48,484 
Debt securities in issue                                        53,087      53,025 
Other liabilities(1)                                            52,210      41,583 
Current tax liabilities                                            683         703 
Accruals and deferred income                                     4,309       5,369 
Subordinated liabilities and other borrowed funds               16,737      16,207 
Deferred tax liabilities                                           676         611 
Provisions for liabilities and charges                             440         449 
Retirement benefit obligations                                     553         469 
Liabilities included in disposal groups held for sale                2           9 
----------------------------------------------------------  ----------  ---------- 
Total liabilities                                              703,859     669,737 
----------------------------------------------------------  ----------  ---------- 
 
Equity 
Share capital and share premium account                          7,058       7,078 
Other reserves                                                  12,037      11,685 
Retained earnings                                               26,648      26,072 
----------------------------------------------------------  ----------  ---------- 
Total parent company shareholders' equity                       45,743      44,835 
Other equity instruments                                         4,518       5,513 
----------------------------------------------------------  ----------  ---------- 
Total equity excluding non-controlling interests                50,261      50,348 
Non-controlling interests                                          309         313 
----------------------------------------------------------  ----------  ---------- 
Total equity                                                    50,570      50,661 
----------------------------------------------------------  ----------  ---------- 
Total equity and liabilities                                   754,429     720,398 
----------------------------------------------------------  ----------  ---------- 
 

1 The Group has met the criteria to offset its derivative assets and liabilities and the related variation margin for trades cleared on behalf of clients with LCH SwapClear. This applies to both trades between the Group and the clients and between the Group and LCH SwapClear. The impact of this as at 30 September 2020 is a decrease in the derivative assets and derivative liabilities of $18.8bn. Prior periods have not been restated as the effect would not be material. The impact at 31 December 2019 would have been a decrease in the derivative assets and derivative liabilities of $8.7bn.

The Group has also met the criteria to derecognise initial margin for trades cleared on behalf of clients with LCH SwapClear. The impact of this as at 30 September 2020 is a decrease in other assets and other liabilities of $1.5bn. Prior periods have not been restated as the effect would not be material. The impact at 31 December 2019 would have been a decrease in other assets and other liabilities of $3.2bn.

Condensed consolidated statement of changes in equity

For the nine months ended 30 September 2020

 
                                                                        Fair            Fair 
                Ordinary  Preference                                   value           value 
                   share       share                                 through         through 
                 capital     capital                                   other           other 
                     and         and    Capital          Own  compre-hensive  compre-hensive      Cash                                  Parent 
                   share       share        and       credit          income          income      flow                                 company          Other 
                 premium     premium     merger  adjust-ment         reserve         reserve     hedge  Translation   Retained  share-holders'         equity  Non-controlling 
                 account     account   reserves      reserve          - debt        - equity   reserve      reserve   earnings          equity  instru--ments        interests     Total 
                $million    $million   $million     $million        $million        $million  $million     $million   $million        $million       $million         $million  $million 
--------------  --------  ----------  ---------  -----------  --------------  --------------  --------  -----------  ---------  --------------  -------------  ---------------  -------- 
As at 01 
 January 
 2019              5,617       1,494  17,129(1)          412           (161)             120      (10)      (5,612)     26,129          45,118          4,961              273    50,352 
Profit for the 
 period                -           -          -            -               -               -         -            -      2,303           2,303              -               37     2,340 
Other 
 comprehensive 
 (loss)/income         -           -          -        (410)             358              30      (49)        (180)   (132)(2)           (383)              -             (17)     (400) 
Distributions          -           -          -            -               -               -         -            -          -               -              -             (35)      (35) 
Shares issued, 
 net of 
 expenses(3)       25(3)           -          -            -               -               -         -            -          -              25              -                -        25 
Other equity 
 instruments 
 issued, net 
 of 
 expenses              -           -          -            -               -               -         -            -          -               -            552                -       552 
Treasury 
 shares 
 net movement          -           -          -            -               -               -         -            -      (199)           (199)              -                -     (199) 
Share option 
 expense, 
 net of 
 taxation              -           -          -            -               -               -         -            -        139             139              -                -       139 
Dividends on 
 ordinary 
 shares                -           -          -            -               -               -         -            -      (720)           (720)              -                -     (720) 
Dividends on 
 preference 
 shares and 
 AT1 
 securities            -           -          -            -               -               -         -            -      (448)           (448)              -                -     (448) 
Share 
 buy-back(4)        (58)           -         58            -               -               -         -            -    (1,006)         (1,006)              -                -   (1,006) 
Other 
 movements             -           -          -            -               -               -         -            -       6(5)               6              -            55(6)        61 
--------------  --------  ----------  ---------  -----------  --------------  --------------  --------  -----------  ---------  --------------  -------------  ---------------  -------- 
As at 31 
 December 
 2019              5,584       1,494     17,187            2             197             150      (59)      (5,792)     26,072          44,835          5,513              313    50,661 
Profit for the 
 period                -           -          -            -               -               -         -            -      1,202           1,202              -               25     1,227 
Other 
 comprehensive 
 income/(loss)         -           -          -           13             241              17      (12)         (22)    (38)(2)             199              -              (6)       193 
Distributions          -           -          -            -               -               -         -            -          -               -              -             (23)      (23) 
Other equity 
 instruments 
 issued, net 
 of 
 expenses              -           -          -            -               -               -         -            -          -               -            992                -       992 
Redemption of 
 other equity 
 instruments           -           -          -            -               -               -         -            -       (13)            (13)        (1,987)                -   (2,000) 
Treasury 
 shares 
 net movement          -           -          -            -               -               -         -            -       (91)            (91)              -                -      (91) 
Share option 
 expense, 
 net of 
 taxation              -           -          -            -               -               -         -            -        110             110              -                -       110 
Dividends on 
 preference 
 shares and 
 AT1 
 securities            -           -          -            -               -               -         -            -      (263)           (263)              -                -     (263) 
Share 
 buy-back(7)        (20)           -         20            -               -               -         -            -      (242)           (242)              -                -     (242) 
Other 
 movements             -           -          -            -             (2)               -         -     97 (8,9)  (89)(8,9)               6              -                -         6 
--------------  --------  ----------  ---------  -----------  --------------  --------------  --------  -----------  ---------  --------------  -------------  ---------------  -------- 
As at 30 
 September 
 2020              5,564       1,494     17,207           15             436             167      (71)      (5,717)     26,648          45,743          4,518              309    50,570 
--------------  --------  ----------  ---------  -----------  --------------  --------------  --------  -----------  ---------  --------------  -------------  ---------------  -------- 
 

1 Includes capital reserve of $5 million, capital redemption reserve of $13 million and merger reserve of $17,111 million

2 Comprises actuarial loss, net of taxation, and share from associates and joint ventures $(38) million ($(132) million for the year ended 31 December 2019)

3 Comprises share capital of shares issued to fulfil discretionary awards $1 million, share capital of shares issued to fulfil employee share save options $1 million and share premium of shares issued to fulfil employee share save options exercised $23 million (nil for nine months ended 30 September 2020)

4 On 1 May 2019, the Group commenced a share buy-back of its ordinary shares of $0.50 each up to a maximum consideration of $1,000 million. Nominal value of share purchases is $58 million for the year ended 31 December 2019 and the total consideration paid was $1,006 million which includes share buy-back expenses of $6 million. The total number of shares purchased was 116,103,483 representing 3.51% of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account.

5 Comprises $10 million disposal of non-controlling interest of Phoon Huat Pte Ltd offset by $4 million withholding tax on capitalisation of revenue reserves for Standard Chartered Bank Ghana Limited

6 Comprises $72 million of non-controlling interest in SC Digital Solutions offset by $17 million disposal of non-controlling interest in Phoon Huat Pte Ltd, Sirat Holdings Limited and Ori Private Limited.

7 On 28 Feb 2020, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 million, and the total consideration paid was $242 million. The total number of shares purchased was 40,029,585 representing 1.25% of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. On the 1 April 2020, the Group announced that in response to a request from the Prudential Regulation Authority and as a consequence of the unprecedented challenges facing the world due to the COVID-19 pandemic, its board had decided after careful consideration to withdraw the recommendation to pay a final dividend for 2019 of 20 cents per ordinary share and to suspend the buy-back programme

8 Includes the foreign exchange movements for monetary items, which were considered structural positions, that were recognised in the translation reserve within equity rather than profit or loss. This adjustment amounting to $24 million relates to foreign exchange movements for periods prior to the comparative periods in these financial statements (2012 to 2017) and has been corrected by reclassifying the related translation reserve to retained earnings, all within equity

9 Includes the foreign exchange movements of the hedging instruments for net investment hedges that were overstated in the translation reserves within equity as opposed to being recorded in profit or loss. This adjustment amounting to $45m relates to foreign exchange movements for periods prior to the comparative periods in these financial statements (2010 to 2013) and has been corrected by reclassifying the related translation reserve to retained earnings, all within equity

Basis of preparation

This statement covers the results of Standard Chartered PLC together with its subsidiaries and equity accounted interest in associates and jointly controlled entities (the Group) for the nine months ended 30 September 2020. The financial information on which this statement is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with Standard Chartered's accounting policies. The Group's significant accounting policies are described in the Annual Report 2019.

The interim financial information does not constitute a full set of financial statements under IAS 34 Interim Financial Reporting. The interim financial information has been prepared in accordance with the recognition and measurement principles, but not the disclosure requirements under International Financial Reporting Standards as adopted by the European Union. The interim financial information does not constitute a full set of financial statements under IAS 34 Interim Financial Reporting.

The information in this document does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2019, which contained an unqualified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

Going concern

The Directors made an assessment of the Group's ability to continue as a going concern, including the impact of COVID-19, and confirm they are satisfied that the Group has adequate resources to continue in business for a period at least twelve months from the date of signing of the interim financial information. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the interim financial information.

Other supplementary financial information

Average balance sheets and yields

Average assets

 
                                                           9 months ended 30.09.20 
---------------------------------------------  ------------------------------------------------ 
                                                     Average    Average 
                                                non-interest   interest 
                                                     earning    earning   Interest 
                                                     balance    balance     income  Gross yield 
                                                    $million   $million   $million            % 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Cash and balances at central banks                    17,051     41,386         93         0.30 
Gross loans and advances to banks                     28,221     54,750        646         1.58 
Gross loans and advances to customers                 50,504    289,387      6,663         3.08 
Impairment provisions against loans and 
 advances to banks and customers                           -    (6,341)          -            - 
Investment securities                                 27,775    143,069      2,202         2.06 
Property, plant and equipment and intangible 
 assets                                               10,235          -          -            - 
Prepayments, accrued income and other 
 assets                                              113,718          -          -            - 
Investment associates and joint ventures               2,118          -          -            - 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Total average assets                                 249,622    522,251      9,604         2.46 
---------------------------------------------  -------------  ---------  ---------  ----------- 
 
 
                                                           6 months ended 30.06.20 
---------------------------------------------  ------------------------------------------------ 
                                                     Average    Average 
                                                non-interest   interest 
                                                     earning    earning   Interest 
                                                     balance    balance     income  Gross yield 
                                                    $million   $million   $million            % 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Cash and balances at central banks                    16,378     40,718         77         0.38 
Gross loans and advances to banks                     27,489     56,444        479         1.71 
Gross loans and advances to customers                 49,747    287,800      4,755         3.32 
Impairment provisions against loans and 
 advances to banks and customers                           -    (5,924)          -            - 
Investment securities                                 27,897    141,864      1,564         2.22 
Property, plant and equipment and intangible 
 assets                                               10,061          -          -            - 
Prepayments, accrued income and other 
 assets                                              108,905          -          -            - 
Investment associates and joint ventures               2,140          -          -            - 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Total average assets                                 242,617    520,902      6,875         2.65 
---------------------------------------------  -------------  ---------  ---------  ----------- 
 
 
                                                           9 months ended 30.09.19 
---------------------------------------------  ------------------------------------------------ 
                                                     Average    Average 
                                                non-interest   interest 
                                                     earning    earning   Interest 
                                                     balance    balance     income  Gross yield 
                                                    $million   $million   $million            % 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Cash and balances at central banks                    17,739     29,366        266         1.21 
Gross loans and advances to banks                     26,286     61,850      1,385         2.99 
Gross loans and advances to customers                 49,503    272,217      8,125         3.99 
Impairment provisions against loans and 
 advances to banks and customers                           -    (4,739)          -            - 
Investment securities                                 29,721    131,599      2,688         2.73 
Property, plant and equipment and intangible 
 assets                                               11,290          -          -            - 
Prepayments, accrued income and other 
 assets                                               84,303          -          -            - 
Investment associates and joint ventures               2,575          -          -            - 
---------------------------------------------  -------------  ---------  ---------  ----------- 
Total average assets                                 221,417    490,293     12,464         3.40 
---------------------------------------------  -------------  ---------  ---------  ----------- 
 

Average liabilities

 
                                                             9 months ended 30.09.20 
------------------------------------------------  ---------------------------------------------- 
                                                        Average    Average 
                                                   non-interest   interest 
                                                        bearing    bearing   Interest 
                                                        balance    balance    expense  Rate paid 
                                                       $million   $million   $million          % 
------------------------------------------------  -------------  ---------  ---------  --------- 
Deposits by banks                                        18,435     26,206        271       1.38 
Customer accounts: 
  Current accounts and savings deposits                  42,123    219,054        995       0.61 
  Time and other deposits                                58,750    158,579      2,028       1.71 
Debt securities in issue                                  7,083     52,493        670       1.70 
Accruals, deferred income and other liabilities         119,134      1,204         45       4.99 
Subordinated liabilities and other borrowed 
 funds                                                        -     16,242        498       4.10 
Non-controlling interests                                   309          -          -          - 
Shareholders' funds                                      50,306          -          -          - 
------------------------------------------------  -------------  ---------  ---------  --------- 
                                                        296,140    473,778      4,507       1.27 
------------------------------------------------  -------------  ---------  ---------  --------- 
Adjustment for Financial Markets funding 
 costs                                                                          (148) 
------------------------------------------------  -------------  ---------  ---------  --------- 
Total average liabilities and shareholders' 
 funds                                                  296,140    473,778      4,359       1.23 
------------------------------------------------  -------------  ---------  ---------  --------- 
 
 
                                                             6 months ended 30.06.20 
------------------------------------------------  ---------------------------------------------- 
                                                        Average    Average 
                                                   non-interest   interest 
                                                        bearing    bearing   Interest 
                                                        balance    balance    expense  Rate paid 
                                                       $million   $million   $million          % 
------------------------------------------------  -------------  ---------  ---------  --------- 
Deposits by banks                                        17,764     26,055        235       1.81 
Customer accounts: 
  Current accounts and savings deposits                  41,519    211,961        767       0.73 
  Time and other deposits                                58,439    163,409      1,509       1.86 
Debt securities in issue                                  7,535     53,141        485       1.84 
Accruals, deferred income and other liabilities         114,116      1,204         31       5.18 
Subordinated liabilities and other borrowed 
 funds                                                        -     16,031        350       4.39 
Non-controlling interests                                   317          -          -          - 
Shareholders' funds                                      49,963          -          -          - 
------------------------------------------------  -------------  ---------  ---------  --------- 
                                                        289,653    471,801      3,377       1.44 
------------------------------------------------  -------------  ---------  ---------  --------- 
Adjustment for Financial Markets funding 
 costs                                                                          (121) 
------------------------------------------------  -------------  ---------  ---------  --------- 
Total average liabilities and shareholders' 
 funds                                                  289,653    471,801      3,256       1.39 
------------------------------------------------  -------------  ---------  ---------  --------- 
 
 
                                                             9 months ended 30.09.19 
------------------------------------------------  ---------------------------------------------- 
                                                        Average    Average 
                                                   non-interest   interest 
                                                        bearing    bearing   Interest 
                                                        balance    balance    expense  Rate paid 
                                                       $million   $million   $million          % 
------------------------------------------------  -------------  ---------  ---------  --------- 
Deposits by banks                                        16,819     28,303        570       2.69 
Customer accounts: 
  Current accounts and savings deposits                  38,353    179,311      1,560       1.16 
  Time and other deposits                                59,207    168,421      3,114       2.47 
Debt securities in issue                                  9,192     48,733        843       2.31 
Accruals, deferred income and other liabilities          95,492      1,356         39       3.85 
Subordinated liabilities and other borrowed 
 funds                                                        -     14,905        578       5.18 
Non-controlling interests                                   298          -          -          - 
Shareholders' funds                                      50,228          -          -          - 
------------------------------------------------  -------------  ---------  ---------  --------- 
                                                        269,589    441,029      6,704       2.03 
------------------------------------------------  -------------  ---------  ---------  --------- 
Adjustment for Financial Markets funding 
 costs                                                                          (269) 
------------------------------------------------  -------------  ---------  ---------  --------- 
Total average liabilities and shareholders' 
 funds                                                  269,589    441,029      6,435       1.95 
------------------------------------------------  -------------  ---------  ---------  --------- 
 

CONTACT INFORMATION

Global headquarters

Standard Chartered Group

1 Basinghall Avenue

London, EC2V 5DD

United Kingdom

telephone: +44 (0)20 7885 8888

facsimile: +44 (0)20 7885 9999

Shareholder enquiries

ShareCare information

website: sc.com/shareholders

helpline: 0370 702 0138

ShareGift information

website: ShareGift.org

helpline: +44 (0)20 7930 3737

Registrar information

UK

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol, BS99 6ZZ

Helpline: 0370 702 0138

Hong Kong

Computershare Hong Kong Investor Services Limited

17M Floor, Hopewell Centre

183 Queen's Road East

Wan Chai

Hong Kong

website: computershare.com/hk/investors

Chinese translation

Computershare Hong Kong Investor Services Limited

17M Floor, Hopewell Centre

183 Queen's Road East

Wan Chai

Hong Kong

Register for electronic communications website: investorcentre.co.uk

For further information, please contact:

Mark Stride, Head of Investor Relations

+44 (0) 20 7885 8596

LSE Stock code: STAN.LN

HKSE Stock code: 02888

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