AmazonScience/document-haystack

1Strategic report2accrual and the impact of inflation. Reported 3ECL of $3.4bn decreased by $0.1bn and 4included charges of $1.0bn relating to 5exposures in the commercial real estate sector 6in mainland China.7Reported profit after tax of $24.6bn was 8$8.3bn higher than in 2022. This included a 9higher tax expense, in part from the non-10recurrence of a $2.2bn gain in 2022 resulting 11from the recognition of a deferred tax asset 12from historical tax losses in HSBC Holdings.13Reported revenue14Reported revenue of $66.1bn was $15.4bn or 1530% higher, which included a $2.5bn year-16on-year favourable impact relating to the sale 17of our retail banking operations in France, 18and the recognition of a $1.6bn provisional 19gain on the acquisition of SVB UK in 2023, as 20mentioned above.21The remaining growth primarily reflected the 22impact of interest rate rises, mainly in Global 23Payments Solutions (‘GPS’) in CMB and GBM, 24Personal Banking and Global Private Banking 25in WPB, as well as Securities Services in 26GBM. There were also good performances in 27Capital Markets and Advisory and Securities 28Financing in GBM, as well as in life insurance 29and asset management in WPB. An increase 30in revenue in Corporate Centre was driven 31by Central Treasury, mainly due to the non-32recurrence of adverse fair value movements 33on financial instruments, and valuation gains 34on structural hedging. 35Reported results (vs 2022)36Reported profit37Reported profit before tax of $30.3bn was 38$13.3bn higher. This was driven by a $15.4bn 39increase in revenue, primarily due to growth 40in net interest income, reflecting the impact of 41interest rate rises. The increase also included 42a provisional gain of $1.6bn recognised on 43the acquisition of SVB UK in 2023, as well as 44a year-on-year favourable impact of $2.5bn 45associated with the sale of our retail banking 46operations in France. This reflected an initial 47impairment loss of $2.3bn following the initial 48classification of these operations as held 49for sale in 2022, a reversal of $2.1bn in the 50first quarter of 2023 as the sale became less 51certain, and a subsequent impairment loss of 52$2.0bn as we reclassified these operations as 53held for sale in the fourth quarter of 2023. 54These increases were in part offset by an 55impairment charge in 2023 of $3.0bn relating 56to our investment in BoCom. This impairment 57reflected a reduction to the accounting 58value-in-use in line with recent market-wide 59developments in mainland China. For further 60details, see page 101. This impairment will 61have no material impact on HSBC’s capital, 62capital ratios or distribution capacity and 63therefore no impact on dividends or share 64buy-backs. Reported operating expenses 65decreased, primarily reflecting a reduction in 66restructuring and other related costs following 67the completion of our cost-saving programme 68at the end of 2022, which mitigated growth 69notably from higher technology spend, an 70increase in the performance-related pay 71These increases were partly offset by lower 72Credit and Lending revenue in CMB and 73GBM, mainly driven by a fall in balances and 74margin compression, and a decline in revenue 75in Equities in GBM, reflecting weaker client 76demand and softer market conditions. 77Revenue reduced in Markets Treasury due 78to the impact of rising interest rates on our 79funding costs and flattening yield curves, 80partly offset by increases from dynamic risk 81management and redeployment of asset 82disposals. We incurred losses on asset 83disposals of $1.0bn relating to repositioning 84and risk management activities in our hold-to-85collect-and-sell portfolio in certain key legal 86entities. These actions are accretive to net 87interest income and reduce the consumption 88of the Group‘s financial resources. This 89revenue is allocated to our global businesses.90Revenue in 2023 was also adversely affected 91by a $1.4bn impact of hyperinflationary 92accounting in Argentina, including the 93devaluation of the Argentinian peso, compared 94with a $0.4bn adverse impact in 2022.95Basis of presentation96IFRS 17 ‘Insurance Contracts’97On 1 January 2023, HSBC adopted IFRS 17 98‘Insurance Contracts’. As required by the 99standard, the Group applied the requirements 100retrospectively with comparative data 101previously published under IFRS 4 ‘Insurance 102Contracts’ restated from the 1 January 2022 103transition date.104 For further details, see ‘Changes to presentation 105from 1 January 2023’ on page 100.106Changes to our reporting framework107On 1 January 2023, we updated our financial 108reporting framework. We no longer report 109‘adjusted’ results, which excluded the 110impact of both foreign currency translation 111differences and significant items. Instead, we 112compute constant currency performance by 113adjusting comparative reported results only 114for the effects of foreign currency translation 115differences between the relevant periods. 116Constant currency performance117Constant currency performance is computed 118by adjusting reported results of comparative 119periods for the effects of foreign currency 120translation differences, which distort period-121on-period comparisons.122We consider constant currency performance 123to provide useful information for investors by 124aligning internal and external reporting, and 125reflecting how management assesses period-126on-period performance.127The results of our global businesses are 128presented on a constant currency basis, which 129is consistent with how we manage and assess 130global business performance.131Notable items132We separately disclose ‘notable items‘, which 133are components of our income statement that 134management would consider as outside the 135normal course of business and generally  136non-recurring in nature.137The tables on pages 112 to 113 and pages 138123 to 128 detail the effects of notable items 139on each of our global business segments and 140legal entities during 2023, 2022 and 2021.141Material notable items are a subset of 142notable items, which are excluded from our 143earnings per share measure for the purposes 144of calculating our dividend payout ratio, and 145from 2024 will be referred to as on a ‘dividend 146payout ratio target basis’. Categorisation as a 147material notable is dependent on the nature 148of each item in conjunction with the financial 149impact on the Group’s income statement.150Management view of revenue  151on a constant currency basis152Our global business segment commentary 153includes tables that provide breakdowns of 154revenue on a constant currency basis by major 155product. These reflect the basis on which 156revenue performance of the businesses is 157assessed and managed.158Comparative periods159Unless otherwise stated, all performance 160commentary that follows compares our results 161in 2023 with those of 2022.162HSBC Holdings plc Annual Report and Accounts 2023 27163Financial overview164The secret landmark is "Big Ben".