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Derivatives (Tables)
 12 Months Ended
Dec. 31, 2019
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
8,207,629

31,899

84,083

455

84,538

84,498

740

85,238

Interest rate
17,895,349

177,006

183,668

1,208

184,876

175,095

2,031

177,126

Equities
1,077,347

—

9,053

—

9,053

11,237

—

11,237

Credit
345,644

—

4,744

—

4,744

5,597

—

5,597

Commodity and other
93,245

—

1,523

—

1,523

2,038

—

2,038

Gross total fair values
27,619,214

208,905

283,071

1,663

284,734

278,465

2,771

281,236

Offset (Note 30)








(41,739
)




(41,739
)
At 31 Dec 2019
27,619,214

208,905

283,071

1,663

242,995

278,465

2,771

239,497

 
 
 
 
 
 
 
 
 
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

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
24,980

—

161

—

161

766

—

766

Interest rate
48,937

36,769

435

1,406

1,841

1,072

183

1,255

At 31 Dec 2019
73,917

36,769

596

1,406

2,002

1,838

183

2,021

 
 
 
 
 
 
 
 
 
Foreign exchange
16,623

1,120

207

—

207

628

155

783

Interest rate
44,059

38,418

283

217

500

538

838

1,376

At 31 Dec 2018
60,682

39,538

490

217

707

1,166

993

2,159

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
36,769

1,406

183

Derivatives
1,704

At 31 Dec 2019
36,769

1,406

183

 
1,704


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 $36,769m, of which the weighted-average maturity date is March 2027 and the weighted-average swap rate is 1.53%. The majority of these hedges are internal to HSBC Group.
HSBC hedging instrument by hedged risk

Hedging instrument



Carrying amount




Notional amount1

Assets

Liabilities

Balance sheet presentation
Change in fair value2

Hedged risk
$m

$m

$m

$m

Interest rate3
122,753

1,056

2,208

Derivatives
(1,531
)
At 31 Dec 2019
122,753

1,056

2,208


(1,531
)
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
90,617



1,859



Financial assets designated and otherwise mandatorily measured at fair value through other comprehensive income
2,304

(7
)
Net income from financial instruments held for trading or managed on a fair value basis
153



4



Loans and advances to banks
5

1,897



12



Loans and advances to customers
24



15,206



797

Debt securities in issue
(1,011
)


3,009



39

Deposits by banks
202

At 31 Dec 2019
92,667

18,215

1,875

836


1,524

(7
)


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
21,385

455

254

Derivatives
341

341

—

Net income from financial instruments held for trading or managed on a fair value basis
Interest rate
54,253

152

46

Derivatives
195

193

2

At 31 Dec 2019
75,638

607

300


536

534

2


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 2019
 At 31 Dec 2018
 
 
Gross carrying/nominal amount

Allowance for
ECL1

Gross carrying/nominal amount

Allowance for ECL1

 
Footnotes
$m

$m

$m

$m

Loans and advances to customers at amortised cost
 
1,045,475

(8,732
)
990,321

(8,625
)
– personal
 
434,271

(3,134
)
394,337

(2,947
)
– corporate and commercial
 
540,499

(5,438
)
534,577

(5,552
)
– non-bank financial institutions
 
70,705

(160
)
61,407

(126
)
Loans and advances to banks at amortised cost
 
69,219

(16
)
72,180

(13
)
Other financial assets measured at amortised cost
 
615,179

(118
)
582,917

(55
)
– cash and balances at central banks
 
154,101

(2
)
162,845

(2
)
– items in the course of collection from other banks
 
4,956

—

5,787

—

– Hong Kong Government certificates of indebtedness
 
38,380

—

35,859

—

– reverse repurchase agreements – non-trading
 
240,862

—

242,804

—

– financial investments
 
85,788

(53
)
62,684

(18
)
– prepayments, accrued income and other assets
2
91,092

(63
)
72,938

(35
)
Total gross carrying amount on-balance sheet
 
1,729,873

(8,866
)
1,645,418

(8,693
)
Loans and other credit-related commitments
 
600,029

(329
)
592,008

(325
)
– personal
 
223,314

(15
)
207,351

(13
)
– corporate and commercial
 
278,524

(307
)
271,022

(305
)
– non-bank financial institutions
 
98,191

(7
)
113,635

(7
)
Financial guarantees
 
 
20,214

(48
)
23,518

(93
)
– personal
 
804

(1
)
927

(1
)
– corporate and commercial
 
14,804

(44
)
17,355

(85
)
– non-bank financial institutions
 
4,606

(3
)
5,236

(7
)
Total nominal amount off-balance sheet
3
620,243

(377
)
615,526

(418
)
 
 
2,350,116

(9,243
)
2,260,944

(9,111
)
 
 
 
 
 
 
 
 
Fair value

Memorandum allowance for ECL4

Fair value

Memorandum allowance for
ECL4

 
 
$m

$m

$m

$m

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

 
355,664

(166
)
343,110

(84
)
1
The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision.
2
Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’, as presented within the consolidated balance sheet on page 262, includes both financial and non-financial assets.
3
Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
4
Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in ‘Change in expected credit losses and other credit impairment charges’ in the income statement
Maximum exposure to credit risk
 
 
 
(Audited)
 
 
 
 
2019
2018
 
Maximum
exposure

Offset

Net

Maximum
exposure

Offset

Net

 
$m

$m

$m

$m

$m

$m

Loans and advances to customers held at amortised cost
1,036,743

(28,524
)
1,008,219

981,696

(29,534
)
952,162

– personal
431,137

(4,640
)
426,497

391,390

(3,679
)
387,711

– corporate and commercial
535,061

(21,745
)
513,316

529,025

(23,421
)
505,604

– non-bank financial institutions
70,545

(2,139
)
68,406

61,281

(2,434
)
58,847

Loans and advances to banks at amortised cost
69,203

—

69,203

72,167

—

72,167

Other financial assets held at amortised cost
616,648

(28,826
)
587,822

585,600

(21,788
)
563,812

– cash and balances at central banks
154,099

—

154,099

162,843

—

162,843

– items in the course of collection from other banks
4,956

—

4,956

5,787

—

5,787

– Hong Kong Government certificates of indebtedness
38,380

—

38,380

35,859

—

35,859

– reverse repurchase agreements – non-trading
240,862

(28,826
)
212,036

242,804

(21,788
)
221,016

– financial investments
85,735

—

85,735

62,666

—

62,666

– prepayments, accrued income and other assets
92,616

—

92,616

75,641

—

75,641

Derivatives
242,995

(232,908
)
10,087

207,825

(194,306
)
13,519

Total on-balance sheet exposure to credit risk
1,965,589

(290,258
)
1,675,331

1,847,288

(245,628
)
1,601,660

Total off-balance sheet
893,246

—

893,246

874,751

—

874,751

– financial and other guarantees
95,967

—

95,967

94,810

—

94,810

– loan and other credit-related commitments
797,279

—

797,279

779,941

—

779,941

At 31 Dec
2,858,835

(290,258
)
2,568,577

2,722,039

(245,628
)
2,476,411

Unamortised balance of derivatives valued using models with significant unobservable inputs


2019

2018


Footnotes
$m

$m

Unamortised balance at 1 Jan

86

106

Deferral on new transactions

145

161

Recognised in the income statement during the year:

(154
)
(158
)
– amortisation

(80
)
(96
)
– subsequent to unobservable inputs becoming observable

(3
)
(2
)
– maturity, termination or offsetting derivative

(71
)
(60
)
Exchange differences

1

(4
)
Other

(5
)
(19
)
Unamortised balance at 31 Dec
1
73

86

1
This amount is yet to be recognised in the consolidated income statement.
Disclosure of detailed information about hedged items
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
90,617



1,859



Financial assets designated and otherwise mandatorily measured at fair value through other comprehensive income
2,304

(7
)
Net income from financial instruments held for trading or managed on a fair value basis
153



4



Loans and advances to banks
5

1,897



12



Loans and advances to customers
24



15,206



797

Debt securities in issue
(1,011
)


3,009



39

Deposits by banks
202

At 31 Dec 2019
92,667

18,215

1,875

836


1,524

(7
)


HSBC hedged item by hedged risk (continued)
 
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 testing; 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 $482m for FVOCI and assets of $2m 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
36,769

1,406

183

Derivatives
1,704

At 31 Dec 2019
36,769

1,406

183

 
1,704


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
 
38,126

 
1,088

Debt securities in issue
(1,697
)
7

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

At 31 Dec 2019
—

38,126

—

1,088

 
(1,697
)
7

 
1
Used in effectiveness testing; 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 $71m for debt issued.
3
The hedged risk ‘interest rate’ includes foreign exchange risk.
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 2019
(26
)
(182
)
Fair value gains/(losses)
193

341

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
99

(371
)
Income taxes
(53
)
4

Others
(9
)
3

Cash flow hedging reserve at 31 Dec 2019
204

(205
)
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 has affected profit or loss
90

227

Income taxes
(11
)
(13
)
Others
2

(9
)
Cash flow hedging reserve at 31 Dec 2018
(26
)
(182
)
Disclosure of hedging instruments impacted by IBOR reform
Ibor reform are not significant and have not been presented below:
Hedging instrument impacted by Ibor reform
 
Hedging instrument
 
Impacted by Ibor reform
Not impacted by Ibor reform

Notional
amount1

 
€

£

$

Other

Total

 
$m

$m

$m

$m

$m

$m

$m

Fair value hedges
20,378

4,533

41,274

13,435

79,620

43,133

122,753

Cash flow hedges
5,724

6,594

15,750

15,979

44,047

10,206

54,253

At 31 Dec 2019
26,102

11,127

57,024

29,414

123,667

53,339

177,006

1
The notional contract amounts of interest rate 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.
Hedging instrument impacted by Ibor reform held by HSBC Holdings
 
Hedging instrument
 
Impacted by Ibor reform
Not impacted by Ibor reform

Notional amount

 
€

£

$

Other

Total

 
$m

$m

$m

$m

$m

$m

$m

Fair value hedges
3,928

5,222

24,500

3,119

36,769

—

36,769

Cash flow hedges
—

—

—

—

—

—

—

At 31 Dec 2019
3,928

5,222

24,500

3,119

36,769

—

36,769