Fair values of financial instruments not carried at fair value (Tables)

12 Months Ended

Dec. 31, 2019

Fair values of financial instruments not carried at fair value and bases of valuation - assets



Financial instruments carried at fair value and bases of valuation
	2019				2018
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets	186,653	62,639	4,979	254,271	178,100	53,271	6,759	238,130
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	26,505	9,373	7,749	43,627	23,125	12,494	5,492	41,111
Derivatives	1,728	239,131	2,136	242,995	1,868	203,534	2,423	207,825
Financial investments	271,467	84,087	2,023	357,577	263,885	78,882	2,000	344,767
Liabilities
Trading liabilities	66,925	16,192	53	83,170	66,300	18,073	58	84,431
Financial liabilities designated at fair value	9,549	149,901	5,016	164,466	6,815	136,362	5,328	148,505
Derivatives	1,331	235,864	2,302	239,497	2,845	201,234	1,756	205,835



Transfers between Level 1 and Level 2 fair values
	Assets				Liabilities
	Financial investments	Trading assets	Designated and otherwise mandatorily measured at fair value	Derivatives	Trading liabilities	Designated at fair value	Derivatives
	$m	$m	$m	$m	$m	$m	$m
At 31 Dec 2019
Transfers from Level 1 to Level 2	5,257	3,304	1,332	24	278	—	—
Transfers from Level 2 to Level 1	3,486	2,726	673	111	220	—	117
At 31 Dec 2018
Transfers from Level 1 to Level 2	367	435	2	1	79	—	—
Transfers from Level 2 to Level 1	17,861	4,959	85	128	1,821	—	138



Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3
	Assets					Liabilities
	Financial investments	Trading assets	Designated and otherwise mandatorily measured at fair value through profit or loss	Derivatives	Total	Trading liabilities	Designated at fair value	Derivatives	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Private equity including strategic investments	716	4	7,289	—	8,009	4	—	—	4
Asset-backed securities	874	934	28	—	1,836	—	—	—	—
Loans held for securitisation	—	1	39	—	40	—	—	—	—
Structured notes	—	3	—	—	3	47	5,016	—	5,063
Derivatives with monolines	—	—	—	66	66	—	—	—	—
Other derivatives	—	—	—	2,070	2,070	—	—	2,302	2,302
Other portfolios	433	4,037	393	—	4,863	2	—	—	2
At 31 Dec 2019	2,023	4,979	7,749	2,136	16,887	53	5,016	2,302	7,371

Private equity including strategic investments	427	20	5,106	—	5,553	12	—	—	12
Asset-backed securities	1,030	1,140	32	—	2,202	—	—	—	—
Loans held for securitisation	—	—	49	—	49	—	—	—	—
Structured notes	—	3	—	—	3	46	5,328	—	5,374
Derivatives with monolines	—	—	—	65	65	—	—	—	—
Other derivatives	—	—	—	2,358	2,358	—	—	1,755	1,755
Other portfolios	543	5,596	305	—	6,444	—	—	1	1
At 31 Dec 2018	2,000	6,759	5,492	2,423	16,674	58	5,328	1,756	7,142



Movement in Level 3 financial instruments
		Assets								Liabilities
		Financial invest-ments		Trading assets		Designated and otherwise mandatorily measured at fair value through profit or loss		Derivatives		Trading liabilities		Designated at fair value		Derivatives
	Footnotes	$m		$m		$m		$m		$m		$m		$m
At 1 Jan 2019		2,000		6,759		5,492		2,423		58		5,328		1,756
Total gains/(losses) recognised in profit or loss		6		(112	)	598		278		(4	)	195		930
– net income from financial instruments held for trading or managed on a fair value basis		—		(112	)	—		278		(4	)	—		930
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		598		—		—		195		—
– gains less losses from financial investments at fair value through other comprehensive income		10		—		—		—		—		—		—
– expected credit loss charges and other credit risk charges		(4	)	—		—		—		—		—		—
Total gains/(losses) recognised in other comprehensive income (‘OCI’)	1	269		76		(1	)	49		1		18		52
– financial investments: fair value gains/(losses)		261		—		—		—		—		—		—
– exchange differences		8		76		(1	)	49		1		18		52
Purchases		271		2,206		2,353		—		8		157		—
New issuances		—		154		—		—		6		1,601		—
Sales		(10	)	(895	)	(276	)	—		(9	)	(193	)	—
Settlements		(329	)	(2,107	)	(434	)	(100	)	(7	)	(1,048	)	(162	)
Transfers out		(471	)	(1,558	)	(23	)	(710	)	(9	)	(1,079	)	(473	)
Transfers in		287		456		40		196		9		37		199
At 31 Dec 2019		2,023		4,979		7,749		2,136		53		5,016		2,302
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2019		(4	)	(22	)	477		279		—		57		(407	)
– net income from financial instruments held for trading or managed on a fair value basis		—		(22	)	—		279		—		—		(407	)
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		477		—		—		57		—
– loan impairment recoveries and other credit risk provisions		(4	)	—		—		—		—		—		—



Movement in Level 3 financial instruments (continued)
		Assets								Liabilities
		Financial invest-ments		Trading assets		Designated and otherwise mandatorily measured at fair value through profit or loss		Derivatives		Trading liabilities		Designated at fair value		Derivatives
	Footnotes	$m		$m		$m		$m		$m		$m		$m
At 1 Jan 2018		1,767		5,080		3,958		2,444		93		4,107		1,949
Total gains/(losses) recognised in profit or loss		251		284		608		597		(4	)	(637	)	255
– net income from financial instruments held for trading or managed on a fair value basis		—		284		—		597		(4	)	—		255
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		608		—		—		(637	)	—
– gains less losses from financial investments at fair value through other comprehensive income		251		—		—		—		—		—		—
Total gains/(losses) recognised in other comprehensive income (‘OCI’)	1	17		(274	)	(107	)	(113	)	(3	)	(144	)	(82	)
– financial investments: fair value gains/(losses)		15		—		—		—		—		—		—
– cash flow hedges: fair value gains/(losses)		—		—		6		6		—		—		2
– exchange differences		2		(274	)	(113	)	(119	)	(3	)	(144	)	(84	)
Purchases		275		4,377		2,172		—		3		76		—
New issuances		—		975		—		—		6		2,442		—
Sales		(51	)	(1,589	)	(395	)	—		(11	)	—		—
Settlements		(141	)	(2,021	)	(541	)	(191	)	(2	)	(32	)	(18	)
Transfers out		(685	)	(1,402	)	(285	)	(337	)	(24	)	(1,112	)	(464	)
Transfers in		567		1,329		82		23		—		628		116
At 31 Dec 2018		2,000		6,759		5,492		2,423		58		5,328		1,756
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2018		—		(5	)	199		342		(5	)	274		(351	)
– net income from financial instruments held for trading or managed on a fair value basis		—		(5	)	—		342		(5	)	—		(351	)
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		199		—		—		274		—
– loan impairment recoveries and other credit risk provisions		—		—		—		—		—		—		—


1	Included in ‘financial investments: fair value gains/(losses)’ in the current year and ‘exchange differences’ in the consolidated statement of comprehensive income.



Basis of valuing HSBC Holdings’ financial assets and liabilities measured at fair value
		2019	2018
	Footnotes	$m	$m
Valuation technique using observable inputs: Level 2
Assets at 31 Dec
– derivatives		2,002	707
– financial investments		—	—
– designated and otherwise mandatorily measured at fair value through profit or loss	1	61,964	23,513
Liabilities at 31 Dec
– designated at fair value		30,303	25,049
– derivatives		2,021	2,159

In 2019, due to the restructuring of the Group’s Asia and UK operations to meet resolution and recovery requirements, changes in the terms of financial assets have resulted in the derecognition of principal amounts of $33.3bn, relating to financial assets measured at amortised cost. Under the revised terms, financial assets with principal amounts of $33.3bn (2018: nil) measured on fair value basis have been recognised.



Fair values of financial instruments not carried at fair value and bases of valuation
		Fair value
	Carrying amount	Quoted market price Level 1	Observable inputs Level 2	Significant unobservable inputs Level 3	Total
	$m	$m	$m	$m	$m
At 31 Dec 2019
Assets
Loans and advances to banks	69,203	—	68,508	739	69,247
Loans and advances to customers	1,036,743	—	10,365	1,027,178	1,037,543
Reverse repurchase agreements – non-trading	240,862	16	240,199	691	240,906
Financial investments – at amortised cost	85,735	26,202	62,572	287	89,061
Liabilities
Deposits by banks	59,022	—	58,951	—	58,951
Customer accounts	1,439,115	—	1,439,362	150	1,439,512
Repurchase agreements – non-trading	140,344	—	140,344	—	140,344
Debt securities in issue	104,555	—	104,936	—	104,936
Subordinated liabilities	24,600	—	28,861	385	29,246

At 31 Dec 2018
Assets
Loans and advances to banks	72,167	—	68,378	3,791	72,169
Loans and advances to customers	981,696	—	10,518	974,559	985,077
Reverse repurchase agreements – non-trading	242,804	81	241,407	1,369	242,857
Financial investments – at amortised cost	62,666	1,790	60,073	216	62,079
Liabilities
Deposits by banks	56,331	—	56,308	—	56,308
Customer accounts	1,362,643	—	1,362,794	151	1,362,945
Repurchase agreements – non-trading	165,884	—	165,884	—	165,884
Debt securities in issue	85,342	—	85,430	—	85,430
Subordinated liabilities	22,437	—	24,968	373	25,341



Fair values of HSBC Holdings’ financial instruments not carried at fair value on the balance sheet
		2019		2018
		Carrying amount	Fair value¹	Carrying amount	Fair value¹
	Footnotes	$m	$m	$m	$m
Assets at 31 Dec
Loans and advances to HSBC undertakings		10,218	10,504	56,144	56,801
Financial investments – at amortised cost	2	16,106	16,121
Liabilities at 31 Dec
Amounts owed to HSBC undertakings		464	464	949	949
Debt securities in issue		56,844	59,140	50,800	51,552
Subordinated liabilities		18,361	22,536	17,715	20,224


1	Fair values (other than Level 1 financial investments) were determined using valuation techniques with observable inputs (Level 2).


2	The 2019 period includes $16.1bn (2018: nil) of investments in highly liquid securities.

Fair values of financial instruments not carried at fair value and bases of valuation - liabilities



Financial instruments carried at fair value and bases of valuation
	2019				2018
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets	186,653	62,639	4,979	254,271	178,100	53,271	6,759	238,130
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	26,505	9,373	7,749	43,627	23,125	12,494	5,492	41,111
Derivatives	1,728	239,131	2,136	242,995	1,868	203,534	2,423	207,825
Financial investments	271,467	84,087	2,023	357,577	263,885	78,882	2,000	344,767
Liabilities
Trading liabilities	66,925	16,192	53	83,170	66,300	18,073	58	84,431
Financial liabilities designated at fair value	9,549	149,901	5,016	164,466	6,815	136,362	5,328	148,505
Derivatives	1,331	235,864	2,302	239,497	2,845	201,234	1,756	205,835



Transfers between Level 1 and Level 2 fair values
	Assets				Liabilities
	Financial investments	Trading assets	Designated and otherwise mandatorily measured at fair value	Derivatives	Trading liabilities	Designated at fair value	Derivatives
	$m	$m	$m	$m	$m	$m	$m
At 31 Dec 2019
Transfers from Level 1 to Level 2	5,257	3,304	1,332	24	278	—	—
Transfers from Level 2 to Level 1	3,486	2,726	673	111	220	—	117
At 31 Dec 2018
Transfers from Level 1 to Level 2	367	435	2	1	79	—	—
Transfers from Level 2 to Level 1	17,861	4,959	85	128	1,821	—	138



Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3
	Assets					Liabilities
	Financial investments	Trading assets	Designated and otherwise mandatorily measured at fair value through profit or loss	Derivatives	Total	Trading liabilities	Designated at fair value	Derivatives	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Private equity including strategic investments	716	4	7,289	—	8,009	4	—	—	4
Asset-backed securities	874	934	28	—	1,836	—	—	—	—
Loans held for securitisation	—	1	39	—	40	—	—	—	—
Structured notes	—	3	—	—	3	47	5,016	—	5,063
Derivatives with monolines	—	—	—	66	66	—	—	—	—
Other derivatives	—	—	—	2,070	2,070	—	—	2,302	2,302
Other portfolios	433	4,037	393	—	4,863	2	—	—	2
At 31 Dec 2019	2,023	4,979	7,749	2,136	16,887	53	5,016	2,302	7,371

Private equity including strategic investments	427	20	5,106	—	5,553	12	—	—	12
Asset-backed securities	1,030	1,140	32	—	2,202	—	—	—	—
Loans held for securitisation	—	—	49	—	49	—	—	—	—
Structured notes	—	3	—	—	3	46	5,328	—	5,374
Derivatives with monolines	—	—	—	65	65	—	—	—	—
Other derivatives	—	—	—	2,358	2,358	—	—	1,755	1,755
Other portfolios	543	5,596	305	—	6,444	—	—	1	1
At 31 Dec 2018	2,000	6,759	5,492	2,423	16,674	58	5,328	1,756	7,142



Movement in Level 3 financial instruments
		Assets								Liabilities
		Financial invest-ments		Trading assets		Designated and otherwise mandatorily measured at fair value through profit or loss		Derivatives		Trading liabilities		Designated at fair value		Derivatives
	Footnotes	$m		$m		$m		$m		$m		$m		$m
At 1 Jan 2019		2,000		6,759		5,492		2,423		58		5,328		1,756
Total gains/(losses) recognised in profit or loss		6		(112	)	598		278		(4	)	195		930
– net income from financial instruments held for trading or managed on a fair value basis		—		(112	)	—		278		(4	)	—		930
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		598		—		—		195		—
– gains less losses from financial investments at fair value through other comprehensive income		10		—		—		—		—		—		—
– expected credit loss charges and other credit risk charges		(4	)	—		—		—		—		—		—
Total gains/(losses) recognised in other comprehensive income (‘OCI’)	1	269		76		(1	)	49		1		18		52
– financial investments: fair value gains/(losses)		261		—		—		—		—		—		—
– exchange differences		8		76		(1	)	49		1		18		52
Purchases		271		2,206		2,353		—		8		157		—
New issuances		—		154		—		—		6		1,601		—
Sales		(10	)	(895	)	(276	)	—		(9	)	(193	)	—
Settlements		(329	)	(2,107	)	(434	)	(100	)	(7	)	(1,048	)	(162	)
Transfers out		(471	)	(1,558	)	(23	)	(710	)	(9	)	(1,079	)	(473	)
Transfers in		287		456		40		196		9		37		199
At 31 Dec 2019		2,023		4,979		7,749		2,136		53		5,016		2,302
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2019		(4	)	(22	)	477		279		—		57		(407	)
– net income from financial instruments held for trading or managed on a fair value basis		—		(22	)	—		279		—		—		(407	)
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		477		—		—		57		—
– loan impairment recoveries and other credit risk provisions		(4	)	—		—		—		—		—		—



Movement in Level 3 financial instruments (continued)
		Assets								Liabilities
		Financial invest-ments		Trading assets		Designated and otherwise mandatorily measured at fair value through profit or loss		Derivatives		Trading liabilities		Designated at fair value		Derivatives
	Footnotes	$m		$m		$m		$m		$m		$m		$m
At 1 Jan 2018		1,767		5,080		3,958		2,444		93		4,107		1,949
Total gains/(losses) recognised in profit or loss		251		284		608		597		(4	)	(637	)	255
– net income from financial instruments held for trading or managed on a fair value basis		—		284		—		597		(4	)	—		255
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		608		—		—		(637	)	—
– gains less losses from financial investments at fair value through other comprehensive income		251		—		—		—		—		—		—
Total gains/(losses) recognised in other comprehensive income (‘OCI’)	1	17		(274	)	(107	)	(113	)	(3	)	(144	)	(82	)
– financial investments: fair value gains/(losses)		15		—		—		—		—		—		—
– cash flow hedges: fair value gains/(losses)		—		—		6		6		—		—		2
– exchange differences		2		(274	)	(113	)	(119	)	(3	)	(144	)	(84	)
Purchases		275		4,377		2,172		—		3		76		—
New issuances		—		975		—		—		6		2,442		—
Sales		(51	)	(1,589	)	(395	)	—		(11	)	—		—
Settlements		(141	)	(2,021	)	(541	)	(191	)	(2	)	(32	)	(18	)
Transfers out		(685	)	(1,402	)	(285	)	(337	)	(24	)	(1,112	)	(464	)
Transfers in		567		1,329		82		23		—		628		116
At 31 Dec 2018		2,000		6,759		5,492		2,423		58		5,328		1,756
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2018		—		(5	)	199		342		(5	)	274		(351	)
– net income from financial instruments held for trading or managed on a fair value basis		—		(5	)	—		342		(5	)	—		(351	)
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss		—		—		199		—		—		274		—
– loan impairment recoveries and other credit risk provisions		—		—		—		—		—		—		—


1	Included in ‘financial investments: fair value gains/(losses)’ in the current year and ‘exchange differences’ in the consolidated statement of comprehensive income.



Basis of valuing HSBC Holdings’ financial assets and liabilities measured at fair value
		2019	2018
	Footnotes	$m	$m
Valuation technique using observable inputs: Level 2
Assets at 31 Dec
– derivatives		2,002	707
– financial investments		—	—
– designated and otherwise mandatorily measured at fair value through profit or loss	1	61,964	23,513
Liabilities at 31 Dec
– designated at fair value		30,303	25,049
– derivatives		2,021	2,159



Fair values of financial instruments not carried at fair value and bases of valuation
		Fair value
	Carrying amount	Quoted market price Level 1	Observable inputs Level 2	Significant unobservable inputs Level 3	Total
	$m	$m	$m	$m	$m
At 31 Dec 2019
Assets
Loans and advances to banks	69,203	—	68,508	739	69,247
Loans and advances to customers	1,036,743	—	10,365	1,027,178	1,037,543
Reverse repurchase agreements – non-trading	240,862	16	240,199	691	240,906
Financial investments – at amortised cost	85,735	26,202	62,572	287	89,061
Liabilities
Deposits by banks	59,022	—	58,951	—	58,951
Customer accounts	1,439,115	—	1,439,362	150	1,439,512
Repurchase agreements – non-trading	140,344	—	140,344	—	140,344
Debt securities in issue	104,555	—	104,936	—	104,936
Subordinated liabilities	24,600	—	28,861	385	29,246

At 31 Dec 2018
Assets
Loans and advances to banks	72,167	—	68,378	3,791	72,169
Loans and advances to customers	981,696	—	10,518	974,559	985,077
Reverse repurchase agreements – non-trading	242,804	81	241,407	1,369	242,857
Financial investments – at amortised cost	62,666	1,790	60,073	216	62,079
Liabilities
Deposits by banks	56,331	—	56,308	—	56,308
Customer accounts	1,362,643	—	1,362,794	151	1,362,945
Repurchase agreements – non-trading	165,884	—	165,884	—	165,884
Debt securities in issue	85,342	—	85,430	—	85,430
Subordinated liabilities	22,437	—	24,968	373	25,341



Fair values of HSBC Holdings’ financial instruments not carried at fair value on the balance sheet
		2019		2018
		Carrying amount	Fair value¹	Carrying amount	Fair value¹
	Footnotes	$m	$m	$m	$m
Assets at 31 Dec
Loans and advances to HSBC undertakings		10,218	10,504	56,144	56,801
Financial investments – at amortised cost	2	16,106	16,121
Liabilities at 31 Dec
Amounts owed to HSBC undertakings		464	464	949	949
Debt securities in issue		56,844	59,140	50,800	51,552
Subordinated liabilities		18,361	22,536	17,715	20,224


1	Fair values (other than Level 1 financial investments) were determined using valuation techniques with observable inputs (Level 2).


2	The 2019 period includes $16.1bn (2018: nil) of investments in highly liquid securities.