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Derivatives (Tables)
 12 Months Ended
Dec. 31, 2018
Financial Instruments [Abstract]  
Disclosure of detailed information about hedging instruments
Notional contract amounts and fair values of derivatives by product contract type held by HSBC

Notional contract amount
Fair value – Assets
Fair value – Liabilities

Trading

Hedging

Trading

Hedging

Total

Trading

Hedging

Total


$m

$m

$m

$m

$m

$m

$m

$m

Foreign exchange
7,552,462

29,969

85,959

458

86,417

82,494

653

83,147

Interest rate
24,589,916

163,271

155,293

1,080

156,373

154,257

2,261

156,518

Equities
1,256,550

—

10,198

—

10,198

10,750

—

10,750

Credit
346,596

—

3,414

—

3,414

3,776

—

3,776

Commodity and other
74,159

—

1,134

—

1,134

1,355

—

1,355

Gross total fair values
33,819,683

193,240

255,998

1,538

257,536

252,632

2,914

255,546

Offset (Note 30)








(49,711
)




(49,711
)
At 31 Dec 2018
33,819,683

193,240

255,998

1,538

207,825

252,632

2,914

205,835

 
 
 
 
 
 
 
 
 
Foreign exchange
6,215,518

28,768

78,089

428

78,517

74,915

853

75,768

Interest rate
19,751,577

178,289

235,430

1,365

236,795

229,989

3,042

233,031

Equities
590,156

—

9,353

—

9,353

11,845

—

11,845

Credit
391,798

—

4,692

—

4,692

5,369

—

5,369

Commodity and other
59,716

—

886

—

886

1,233

—

1,233

Gross total fair values
27,008,765

207,057

328,450

1,793

330,243

323,351

3,895

327,246

Offset (Note 30)
 
 
 
 
(110,425
)
 
 
(110,425
)
At 31 Dec 2017
27,008,765

207,057

328,450

1,793

219,818

323,351

3,895

216,821

Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries
 
Notional contract amount
Assets
Liabilities
 
Trading

Hedging

Trading

Hedging

Total

Trading

Hedging

Total

 
$m

$m

$m

$m

$m

$m

$m

$m

Foreign exchange
16,623

1,120

207

—

207

628

155

783

Interest rate
44,059

38,148

283

217

500

538

838

1,376

At 31 Dec 2018
60,682

39,268

490

217

707

1,166

993

2,159

 
 
 
 
 
 
 
 
 
Foreign exchange
20,484

1,120

588

—

588

1,330

110

1,440

Interest rate
41,061

25,294

1,364

436

1,800

678

964

1,642

At 31 Dec 2017
61,545

26,414

1,952

436

2,388

2,008

1,074

3,082

HSBC hedging instrument by hedged risk

Hedging instrument



Carrying amount




Notional amount1

Assets

Liabilities

Balance sheet
Change in fair value2

Hedged risk
$m

$m

$m

presentation
$m

Interest rate3
123,551

915

2,123

Derivatives
283

At 31 Dec 2018
123,551

915

2,123


283

1
The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
2
Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3
The hedged risk ‘interest rate’ includes inflation risk.
HSBC hedged item by hedged risk

Hedged item
Ineffectiveness

Carrying amount
 
Accumulated fair value hedge adjustments included in carrying amount2
Change in fair value1

Recognised in profit and loss



Assets

Liabilities

Assets

Liabilities

Balance sheet presentation
Profit and loss presentation
Hedged risk
$m

$m

$m

$m

$m

$m

Interest rate3
93,469



231



Financial assets designated and otherwise mandatorily measured at fair value through other comprehensive income
(425
)
(37
)
Net income from financial instruments held for trading or managed on a fair value basis
1,455



(6
)


Loans and advances to customers
(4
)


14,171



(155
)
Debt securities in issue
124



4,780



45

Deposits by banks
(15
)
At 31 Dec 2018
94,924

18,951

225

(110
)

(320
)
(37
)


HSBC Holdings hedging instrument by hedged risk
 
Hedging instrument
 
 
Carrying amount
 
 
 
Notional amount1,4


Assets

Liabilities

Balance sheet presentation
Change in fair value2

Hedged risk
$m

$m

$m

$m

Interest rate3
39,538

217

993

Derivatives
(231
)
At 31 Dec 2018
39,538

217

993

 
(231
)

1
The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
2
Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3
The hedged risk ‘interest rate’ includes foreign exchange risk.
4
The notional amount of non-dynamic fair value hedges is equal to $39,538m, of which the weighted-average maturity date is December 2026 and the weighted-average swap rate is 1.34%. The majority of these hedges are internal to HSBC Group.
Hedging instrument by hedged risk
 
 
 

Hedging instrument
Hedged item
Ineffectiveness



Carrying amount

Change in fair value2

Change in fair value3

Recognised in profit and loss

Profit and loss presentation

Notional amount1

Assets

Liabilities

Balance sheet presentation
Hedged risk
$m

$m

$m

$m

$m

$m

Foreign currency
24,954

295

653

Derivatives
(198
)
(200
)
2

Net income from financial instruments held for trading or managed on a fair value basis
Interest rate
39,720

165

138

Derivatives
(77
)
(67
)
(10
)
At 31 Dec 2018
64,674

460

791


(275
)
(267
)
(8
)

1
The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
2
Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3
Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
Disclosure of detailed information about financial instruments
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
(Audited)
 
 
 
 
 
 
 
31 Dec 2018
 At 1 Jan 2018
 
 
Gross carrying/nominal amount

Allowance for
ECL5

Gross carrying/nominal amount

Allowance for ECL5

 
Footnotes
$m

$m

$m

$m

Loans and advances to customers at amortised cost
 
990,321

(8,625
)
959,080

(9,343
)
– personal
 
394,337

(2,947
)
375,069

(3,047
)
– corporate and commercial
 
534,577

(5,552
)
520,137

(6,053
)
– non-bank financial institutions
 
61,407

(126
)
63,874

(243
)
Loans and advances to banks at amortised cost
 
72,180

(13
)
82,582

(23
)
Other financial assets measured at amortised cost
 
582,917

(55
)
557,864

(114
)
– cash and balances at central banks
 
162,845

(2
)
180,624

(3
)
– items in the course of collection from other banks
 
5,787

—

6,628

—

– Hong Kong Government certificates of indebtedness
 
35,859

—

34,186

—

– reverse repurchase agreements – non-trading
 
242,804

—

201,553

—

– financial investments
 
62,684

(18
)
59,539

(16
)
– prepayments, accrued income and other assets
6
72,938

(35
)
75,334

(95
)
Total gross carrying amount on-balance sheet
 
1,645,418

(8,693
)
1,599,526

(9,480
)
Loans and other credit-related commitments
 
592,008

(325
)
545,258

(376
)
– personal
 
207,351

(13
)
196,093

(14
)
– corporate and commercial
 
271,022

(305
)
262,391

(355
)
– non-bank financial institutions
7
113,635

(7
)
86,774

(7
)
Financial guarantees
 
8
23,518

(93
)
25,849

(97
)
– personal
 
927

(1
)
718

(4
)
– corporate and commercial
 
17,355

(85
)
19,965

(89
)
– non-bank financial institutions
 
5,236

(7
)
5,166

(4
)
Total nominal amount off-balance sheet
9
615,526

(418
)
571,107

(473
)
 
 
2,260,944

(9,111
)
2,170,633

(9,953
)
 
 
 
 
 
 
 
 
Fair value

Memorandum allowance for ECL10

Fair value

Memorandum allowance for
ECL10

 
 
$m

$m

$m

$m

Debt instruments measured at fair value through other comprehensive income (‘FVOCI’)

 
343,110

(84
)
322,163

(184
)
For footnotes, see page 192.
Maximum exposure to credit risk
(Audited)
 
2018
 
Maximum
exposure

Offset

Net

 
$m

$m

$m

Loans and advances to customers held at amortised cost
981,696

(29,534
)
952,162

– personal
391,390

(3,679
)
387,711

– corporate and commercial
529,025

(23,421
)
505,604

– non-bank financial institutions
61,281

(2,434
)
58,847

Loans and advances to banks at amortised cost
72,167

—

72,167

Other financial assets held at amortised cost
585,600

(21,788
)
563,812

– cash and balances at central banks
162,843

—

162,843

– items in the course of collection from other banks
5,787

—

5,787

– Hong Kong Government certificates of indebtedness
35,859

—

35,859

– reverse repurchase agreements – non-trading
242,804

(21,788
)
221,016

– financial investments
62,666

—

62,666

– prepayments, accrued income and other assets
75,641

—

75,641

Derivatives
207,825

(194,306
)
13,519

Total on-balance sheet exposure to credit risk
1,847,288

(245,628
)
1,601,660

Total off-balance sheet
874,751

—

874,751

– financial and other guarantees
94,810

—

94,810

– loan and other credit-related commitments
779,941

—

779,941

At 31 Dec 2018
2,722,039

(245,628
)
2,476,411

Maximum exposure to credit risk
(Audited)

2017
 
Maximum
exposure

Offset

Net

 
$m

$m

$m

Derivatives
219,818

(204,829
)
14,989

Loans and advances to customers held at amortised cost
962,964

(35,414
)
927,550

– personal
374,762

(2,946
)
371,816

– corporate and commercial
516,754

(29,459
)
487,295

– non-bank financial institutions
71,448

(3,009
)
68,439

Loans and advances to banks at amortised cost
90,393

(273
)
90,120

Reverse repurchase agreements – non-trading
201,553

(3,724
)
197,829

Total on–balance sheet exposure to credit risk
2,305,592

(244,240
)
2,061,352

Total off–balance sheet
771,908

—

771,908

– financial guarantees and similar contracts23
41,422

—

41,422

– loan and other credit-related commitments7
730,486

—

730,486

At 31 Dec 2017
3,077,500

(244,240
)
2,833,260

For footnotes, see page 192
Unamortised balance of derivatives valued using models with significant unobservable inputs


2018

2017


Footnotes
$m

$m

Unamortised balance at 1 Jan

106

99

Deferral on new transactions

161

191

Recognised in the income statement during the year:

(158
)
(187
)
– amortisation

(96
)
(85
)
– subsequent to unobservable inputs becoming observable

(2
)
(2
)
– maturity, termination or offsetting derivative

(60
)
(100
)
Exchange differences

(4
)
10

Other

(19
)
(7
)
Unamortised balance at 31 Dec
1
86

106

1
This amount is yet to be recognised in the consolidated income statement.
Disclosure of detailed information about hedged items
HSBC Holdings hedged item by hedged risk
 
Hedged item
Ineffectiveness
 
Carrying amount
Accumulated fair value hedge adjustments included in carrying amount2
 
 
Change in fair value1

Recognised in profit and loss

 
 
Assets

Liabilities

Assets

Liabilities

Balance sheet presentation
Profit and loss presentation
Hedged risk
$m

$m

$m

$m

$m

$m

Interest rate3
4,620

 
29

 
Loans and advances to banks

38

(2
)
Net income from financial instruments held for trading or managed on a fair value basis

 
33,874

 
(763
)
Debt securities in issue
191

At 31 Dec 2018
4,620

33,874

29

(763
)
 
229

(2
)
 
1
Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2
The accumulated amount of fair value adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for hedging gains and losses were liabilities of $80m for debt issued.
3
The hedged risk ‘interest rate’ includes foreign exchange risk.
HSBC hedged item by hedged risk

Hedged item
Ineffectiveness

Carrying amount
 
Accumulated fair value hedge adjustments included in carrying amount2
Change in fair value1

Recognised in profit and loss



Assets

Liabilities

Assets

Liabilities

Balance sheet presentation
Profit and loss presentation
Hedged risk
$m

$m

$m

$m

$m

$m

Interest rate3
93,469



231



Financial assets designated and otherwise mandatorily measured at fair value through other comprehensive income
(425
)
(37
)
Net income from financial instruments held for trading or managed on a fair value basis
1,455



(6
)


Loans and advances to customers
(4
)


14,171



(155
)
Debt securities in issue
124



4,780



45

Deposits by banks
(15
)
At 31 Dec 2018
94,924

18,951

225

(110
)

(320
)
(37
)


1
Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2
The accumulated amount of fair value adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for hedging gains and losses were assets of $93m for FVOCI and assets of $19m for debt issued.
3
The hedged risk ‘interest rate’ includes inflation risk.
HSBC Holdings hedging instrument by hedged risk
 
Hedging instrument
 
 
Carrying amount
 
 
 
Notional amount1,4


Assets

Liabilities

Balance sheet presentation
Change in fair value2

Hedged risk
$m

$m

$m

$m

Interest rate3
39,538

217

993

Derivatives
(231
)
At 31 Dec 2018
39,538

217

993

 
(231
)
Disclosure of information about amounts that affected statement of comprehensive income as result of hedge accounting
Reconciliation of equity and analysis of other comprehensive income by risk type

Interest rate

Foreign currency


$m

$m

Cash flow hedging reserve at 1 Jan 2018
(40
)
(187
)
Fair value gains/(losses)
(67
)
(200
)
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of:


Hedged items that have affected profit or loss
90

227

Income taxes
(11
)
(13
)
Others
2

(9
)
Cash flow hedging reserve at 31 Dec 2018
(26
)
(182
)