HSBC : Statement on the Bank of England 2016 stress test results - Announcement made to the HK stock exchange (3-page PDF 157KB)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

The attached announcement has been released to the other stock exchanges on which HSBC Holdings plc is listed.

The Board of Directors of HSBC Holdings plc as at the date of this announcement are: Douglas Flint, Stuart Gulliver, Phillip Ameen† , Kathleen Casey† , Laura Cha† , Henri de Castries† , Lord Evans of Weardale† , Joachim Faber† , Sam Laidlaw† , Irene Lee† , John Lipsky† , Rachel Lomax† , Iain Mackay, Heidi Miller† , Marc Moses, David Nish† , Jonathan Symonds† , Jackson Tai† , Pauline van der Meer Mohr† and Paul Walsh† .

† Independent non-executive Director Hong Kong Stock Code: 5

Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Incorporated in England with limited liability. Registered in England: number 617987

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30 November 2016

HSBC Holdings plc ('HSBC') notes the publication today of the results of the Bank of England's 2016 concurrent stress test exercise. The Bank of England's results show that, under the hypothetical stress scenario, HSBC's common equity tier 1 ('CET1') ratio would fall to a low point of 9.1%, well above HSBC's CET1 hurdle rate and systemic reference point ratios of 6.1% and 7.3%, respectively.

The Bank of England's stress scenario has been designed under the new annual cyclical scenario framework and modelled a hypothetical synchronised global downturn with growth in Hong Kong and China and other emerging market economies in which HSBC operates being particularly adversely affected. Under this severe scenario, the results demonstrate the impact of our strategic actions and the Group's continued capital strength.

The results incorporate management actions that have been accepted by the Bank of England for the purposes of this exercise and CRD IV restrictions in the year of low point CET1 ratio. Under adverse economic circumstances, we would in practice consider a variety of management actions depending on the particular prevailing circumstances. Our intention, as evidenced by past actions, is to maintain a conservative and prudent stance on capital management.

The Bank of England's 2016 stress test results are available to view in full on the Bank of England's website at: http://www.bankofengland.co.uk/financialstability/Documents/fpc/results301116.pdf

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Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Incorporated in England with limited liability. Registered number 617987

1. HSBC's results reflect the sale of our entire business in Brazil, comprising HSBC Bank Brasil S.A

   - Banco Multiplo and HSBC Servicios e Participacoes Ltda, on 1 July 2016.

2. The regulatory treatment of our investment in Bank of Communications Co., Limited ('BoCom') changed from proportional consolidation of BoCom's risk-weighted assets ('RWAs') to a deduction from capital (subject to regulatory thresholds) at 30 September 2016. Our results do not reflect this change in the regulatory treatment. We have included the proportional consolidation of BoCom's RWAs in our results.

3. HSBC's CET1 hurdle rate of 6.1% is the sum of the CRD IV minimum CET1 ratio of 4.5% and our Pillar 2A CET1 capital requirement of 1.6%.

4. HSBC's CET1 systemic reference point of 7.3% is the sum of our hurdle rate and current phased- in G-SIB buffer in the year of our low point CET1 ratio (1.25%). Our current G-SIB buffer is being phased in from 1 January 2016 (0.625%) to 1 January 2019 (2.5%).

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 4,400 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,557bn at

30 September 2016, HSBC is one of the world's largest banking and financial services organisations.

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