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HSBC Holdings statement of changes in equity - USD ($)
$ in Millions
Total
Other equity interest
Retained earnings
 [1],[2]
Merger and other reserves
 [2],[3]
Issued by HSBC Holdings
Issued by HSBC Holdings
Called up share capital
Issued by HSBC Holdings
Share premium
Issued by HSBC Holdings
Other equity interest
Issued by HSBC Holdings
Retained earnings
 [4]
Issued by HSBC Holdings
Merger and other reserves
Equity beginning of period at Dec. 31, 2018 $ 194,249 $ 22,367 $ 138,191 $ 29,777 $ 147,353 $ 10,180 $ 13,609 $ 22,231 $ 61,434 $ 39,899
Profit for the year 8,708   7,383   9,041       9,041  
Other comprehensive income/(expense) for the year, net of tax 1,017   (1,759)   (396)       (396)  
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk (2,002)   (2,002)   (396)       (396)  
Total comprehensive income for the year 9,725   5,624   8,645       8,645  
Shares issued under employee share plans 62   (495)   501 36 521   (56)  
Shares issued in lieu of dividends and amounts arising thereon 2,687   2,687   2,687 171 (171)   2,687  
Capital securities issued         0          
Cancellation of shares (1,000) [5]   (1,000) [5] 68 [5] (1,000) (68)     (1,000) 68
Dividends to shareholders (12,460)   (11,683)   (11,683)       (11,683)  
Redemption of capital securities (1,508) [6] (1,496) [6] (12) [6]   (1,508)     (1,488) (20)  
Transfers 0 [7]   2,475 [7] (2,475) [7] 0 [8]       2,475 [8] (2,475) [8]
Other movements 435   414   49       2 47
Equity end of period at Dec. 31, 2019 192,668 20,871 136,679 27,370 145,044 10,319 13,959 20,743 62,484 37,539
Profit for the year 6,099   5,229   4,085       4,085  
Other comprehensive income/(expense) for the year, net of tax 8,409   1,118   176       176  
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk 167   167   176       176  
Total comprehensive income for the year 14,508   6,347   4,261       4,261  
Shares issued under employee share plans 7   (339)   539 28 318   2,540 (2,347)
Capital securities issued 1,497 [9] 1,500 [9] (3) [9]   1,485     1,500 (15)  
Dividends to shareholders (2,023)   (1,331)   (1,331)       (1,331)  
Redemption of capital securities (1,450) [6]   (1,450) [6]   (1,450)       (1,450)  
Transfers 0 [7]   435 [7] (435) [7] 0 [8]       435 [8] (435) [8]
Other movements (646) 43 (200)   (1,748)     171 (1,919)  
Equity end of period at Dec. 31, 2020 204,995 22,414 140,572 26,935 146,800 10,347 14,277 22,414 65,005 34,757
Profit for the year 14,693   13,917   10,834       10,834  
Other comprehensive income/(expense) for the year, net of tax (4,967)   661   267       267  
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk 531   531   267       267  
Total comprehensive income for the year 9,726   14,578   11,101       11,101  
Shares issued under employee share plans 18   (336)   251 29 325   (103)  
Capital securities issued 1,996 [9] 2,000 [9] (4) [9]   1,980     2,000 (20)  
Cancellation of shares (2,004) [5]   (2,004) [5] 60 [5] (2,004) [10] (60) [10]     (2,004) [10] 60 [10]
Dividends to shareholders (6,383)   (5,790)   (5,790)       (5,790)  
Redemption of capital securities (2,000) [6] (2,000) [6]     (2,000)     (2,000)    
Transfers 0 [7]   (3,065) [7] 3,065 [7] 0 [8]       (3,065) [8] 3,065 [8]
Other movements (38)   40   (8)       (8)  
Equity end of period at Dec. 31, 2021 $ 206,777 $ 22,414 $ 144,458 $ 30,060 $ 150,330 $ 10,316 $ 14,602 $ 22,414 $ 65,116 $ 37,882
[1] At 31 December 2021, retained earnings included 558,397,704 treasury shares (2020: 509,825,249; 2019: 432,108,782). In addition, treasury shares are also held within HSBC’s Insurance business retirement funds for the benefit of policyholders or beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or bonus plans, and the market-making activities in Markets and Security Services.
[2] Cumulative goodwill amounting to $5,138m has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including $3,469m charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of $1,669m has been charged against retained earnings.
[3] Statutory share premium relief under section 131 of the Companies Act 1985 (the ‘Act’) was taken in respect of the acquisition of HSBC Bank plc in 1992, HSBC Continental Europe in 2000 and HSBC Finance Corporation in 2003, and the shares issued were recorded at their nominal value only. In HSBC’s consolidated financial statements, the fair value differences of $8,290m in respect of HSBC Continental Europe and $12,768m in respect of HSBC Finance Corporation were recognised in the merger reserve. The merger reserve created on the acquisition of HSBC Finance Corporation subsequently became attached to HSBC Overseas Holdings (UK) Limited (‘HOHU’), following a number of intra-Group reorganisations. During 2009, pursuant to section 131 of the Companies Act 1985, statutory share premium relief was taken in respect of the rights issue and $15,796m was recognised in the merger reserve.
[4] At 31 December 2021, retained earnings included 329,871,829 ($2,542m) treasury shares (2020: 326,766,253 ($2,521m); 2019: 326,191,804 ($2,543m)).
[5] For further details, see Note 31 in the Annual Report and Accounts 2021. In October 2021, HSBC announced a share buy-back of up to $2.0bn, which will be completed no later than April 2022. At 31 December 2021, 120,366,714 ordinary shares had been purchased and cancelled representing a nominal value of $60m, which has been transferred from share capital to capital redemption reserve within merger and other reserves. In August 2019, HSBC announced a share buy-back of up to $1.0bn, which was completed in September 2019.
[6] During 2021, HSBC Holdings redeemed $2,000m 6.875% perpetual subordinated contingent convertible capital securities. For further details, see Note 31 in the Annual Report and Accounts 2021. In 2020, HSBC Holdings called and later redeemed $1,450m 6.20% non-cumulative US dollar preference shares. In 2019, HSBC Holdings redeemed $1,500m 5.625% perpetual subordinated capital securities on which there were $12m of external issuance costs. Under IFRSs external issuance costs are classified as equity.
[7] Permitted transfers from the merger reserve to retained earnings were made when the investment in HSBC Overseas Holdings (UK) Limited was previously impaired. In the comparative periods, impairments (2020: $435m; 2019: $2,475m) were recognised and a permitted transfer of these amounts was made from the merger reserve to retained earnings. During 2021, a part reversal of these impairments resulted in a transfer from retained earnings back to the merger reserve of $3,065m.
[8] Permitted transfers from the merger reserve to retained earnings were made when the investment in HSBC Overseas Holdings (UK) Limited was previously impaired. In 2021, a part reversal of this impairment resulted in a transfer from retained earnings back to the merger reserve of $3,065m. At 31 December 2020, an additional impairment of $435m (2019: $2,475m) was recognised and a permitted transfer of this amount was made from the merger reserve to retained earnings.
[9] During 2021, HSBC Holdings issued $2,000m of additional tier 1 instruments on which there were $4m of external issue costs. In 2020, HSBC Holdings issued $1,500m of perpetual subordinated contingent convertible capital securities.
[10] October 2021, HSBC announced a share buy-back of up to $2.0bn, which is to be completed no later than 20 April 2022.