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Business Segments
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
Business Segments Business Segments
We have distinct businesses, which are aligned with HSBC's global business strategy: Wealth and Personal Banking ("WPB"), Commercial Banking ("CMB"), and Global Banking and Markets ("GBM"). These businesses and a Corporate Center ("CC") serve as our reportable segments with the exception of GBM. Our GBM business is comprised of three distinct operating segments: Global Banking ("GB"), Markets and Securities Services ("MSS"), and Global Banking and Markets Other ("GBM Other"), which are separately reported as discussed further below.
During the fourth quarter of 2021, we implemented a change to our internal management reporting to align with changes to the governance structure and how we assess business performance of our GBM business, which is now being reported and managed as three separate operating segments: GB, MSS and GBM Other. As a result, we have aligned our segment reporting to reflect this change for all periods presented.
The following tables summarize the impact of this change on reported segment profit (loss) before tax, total assets and total deposits for the periods below:
Year Ended
December 31, 2020		Year Ended
December 31, 2019
As Previously ReportedAfter Reporting ChangesAs Previously ReportedAfter Reporting Changes
(in millions)
Segment profit (loss) before tax:
GBM$387 NSR$571 NSR
GBNSR$209 NSR$544 
MSSNSR194 NSR132 
GBM OtherNSR(16)NSR(105)
NSR Not Separately Reported
At December 31, 2020At December 31, 2019
As Previously ReportedAfter Reporting ChangesAs Previously ReportedAfter Reporting Changes
(in millions)
Segment total assets:
GBM$132,363 NSR$126,710 NSR
GBNSR$11,473 NSR$16,002 
MSSNSR67,293 NSR71,742 
GBM Other(1)
NSR53,597 NSR38,966 
Segment total deposits:
GBM$44,668 NSR$29,050 NSR
GBNSR$37,320 NSR$24,596 
MSSNSR3,417 NSR2,956 
GBM OtherNSR3,931 NSR1,498 
NSR Not Separately Reported
(1)Includes assets allocated from Markets Treasury.
As of January 1, 2021, we also implemented a change to our internal management reporting to prospectively report assets related to our active branches within our WPB segment, which were historically reported within our CC segment. As a result, lease impairment and other related costs associated with these branches is recorded within our WPB segment beginning in 2021. Prior periods were not impacted by this change.
There have been no additional changes in the basis of our segmentation as compared with the presentation in our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 Form 10-K").
Net interest income of each segment represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for a funding charge or credit that includes both interest rate and liquidity components. Segments are charged a cost to fund assets (e.g. customer loans) and receive a funding credit for funds provided (e.g. customer deposits) based on equivalent market rates that incorporate both repricing (interest rate risk) and tenor (liquidity) characteristics. The objective of these charges/credits is to transfer interest rate risk to one centralized unit in Markets Treasury. Markets
Treasury income statement and balance sheet results are allocated to each of the global businesses based upon tangible equity levels and levels of any surplus liabilities.
Certain other revenue and operating expense amounts are also apportioned among the business segments based upon the benefits derived from this activity or the relationship of this activity to other segment activity. These inter-segment transactions have not been eliminated, and we generally account for them as if they were with third parties.
Our segment results are presented in accordance with HSBC Group accounting and reporting policies, which apply IFRSs as issued by the IASB. As a result, our segment results are prepared and presented using financial information prepared on the Group Reporting Basis as operating results are monitored and reviewed, trends are evaluated and decisions about allocating resources, such as employees, are primarily made on this basis. We continue, however, to monitor capital adequacy and report to regulatory agencies on a U.S. GAAP basis.
There have been no changes in the measurement of segment profit as compared with the presentation in our 2020 Form 10-K.
A summary of significant differences between U.S. GAAP and the Group Reporting Basis as they impact our results is presented below:
Net Interest Income
Loan origination - The scope of loan origination costs deferred is more stringent under the Group Reporting Basis and generally results in lower costs being deferred than permitted under U.S. GAAP. In addition, deferred loan origination fees, costs and loan premiums are generally amortized to earnings based on the expected life of the loan under the Group Reporting Basis as part of the effective interest calculation, while under U.S. GAAP, they are generally amortized to earnings based on either a contractual or expected life basis. In the case of credit cards, while under the Group Reporting Basis deferred costs are amortized over the expected life of the credit card relationship, they are amortized over a shorter period of one year under U.S. GAAP.
Leases - Under the Group Reporting Basis, all leases are recognized as financing arrangements with interest expense on the lease liability recognized separately from depreciation of the ROU asset, which generally results in a front-loaded pattern of total lease expense. Under U.S. GAAP, expense on operating leases is generally recognized on a straight-line basis in operating expenses.
Deposit incentives - Under the Group Reporting Basis, costs associated with cash back incentives offered on customer deposits are deferred and amortized to interest expense over the incentive period, while under U.S. GAAP, such costs are recognized immediately in operating expenses.
Other Operating Income (Total Other Revenues)
Loans held for sale - For loans transferred to held for sale subsequent to origination, the Group Reporting Basis requires these loans to be reported separately on the balance sheet when certain criteria are met which are generally more stringent than those under U.S. GAAP, but does not change the recognition and measurement criteria. Accordingly, for the Group Reporting Basis, such loans continue to be accounted for and credit losses continue to be measured in accordance with IFRS 9, "Financial Instruments," with any gain or loss recorded at the time of sale. U.S. GAAP requires loans that meet the held for sale classification requirements be transferred to a held for sale category and subsequently measured at the lower of amortized cost or fair value. The existing allowance for credit losses at the time of transfer is recognized as a charge-off to the extent fair value is less than amortized cost and attributable to credit, with any remaining allowance for credit losses released to the provision for credit losses. Under U.S. GAAP, the component of the lower of amortized cost or fair value adjustment upon transfer to held for sale related to credit risk is recorded in provision for credit losses while the component related to interest rates and liquidity factors is recorded in other revenues. Changes in the lower of amortized cost or fair value after the initial transfer to held for sale are recorded in other revenues to the extent permissible.
For loans originated with the intent to sell, the Group Reporting Basis requires these loans to be classified as trading assets and recorded at their fair value, with gains and losses recorded in trading revenue. Under U.S. GAAP, such loans are classified as loans held for sale and, with the exception of certain loans accounted for under FVO accounting, are recorded at the lower of amortized cost or fair value, with changes in the lower of amortized cost or fair value adjustment recorded in other revenues to the extent permissible.
Renewable energy tax credit investments - Under the Group Reporting Basis, renewable energy tax credit investments are measured at fair value, with changes in fair value recognized in earnings. Under U.S. GAAP, certain of these investments are accounted for under the equity method, with the amortization of our investment balance presented in other revenues and the tax benefits obtained presented in income tax expense (benefit).
Low income housing tax credit investments - Under the Group Reporting Basis, the amortization of our investment balance and associated tax benefits are presented net in other operating income. Under U.S. GAAP, amortization of our investment balance and associated tax benefits are presented net in income tax expense (benefit).
Debt extinguishment - During 2019, extinguishment of long-term debt resulted in a gain under U.S. GAAP compared with a loss under the Group Reporting Basis. As we previously elected to apply fair value option accounting to this debt, under U.S. GAAP, the extinguishment resulted in the realization of a gain associated with our own credit spread that was previously recorded in AOCI which more than offset the premium paid to extinguish the debt. Under the Group Reporting Basis, the gain associated with our own credit spread remains in equity and does not get recognized in earnings.
Expected Credit Losses (Provision for Credit Losses)
Expected credit losses - In 2020, we adopted new accounting guidance under U.S. GAAP which requires entities to recognize an allowance for credit losses based on lifetime ECL. However, under the Group Reporting Basis only financial assets which are considered to have experienced a significant increase in credit risk ("stage 2") or for which there is objective evidence of impairment ("stage 3") require an allowance based on lifetime ECL. Under the Group Reporting Basis, financial assets at initial recognition and which have not experienced a significant increase in credit risk since initial recognition are considered to be in "stage 1" and only require an allowance based on expected credit losses resulting from default events that are possible within the next 12 months ("12-month ECL"). Under the Group Reporting Basis, a majority of our loans are considered to be in stage 1 and only a 12-month ECL is recorded. Primarily as a result of this difference, the allowance for credit losses is higher under U.S. GAAP than under the Group Reporting Basis in 2021 and 2020.
Prior to 2020, we maintained an allowance for credit losses under U.S. GAAP that reflected our estimate of probable incurred losses in the existing loan portfolio, while under the Group Reporting Basis, we used the ECL approach as discussed above. For commercial loans collectively evaluated for impairment, we utilized a loss emergence period greater than 12 months for calculating the allowance for credit losses under U.S. GAAP, while under the Group Reporting Basis, a loss emergence period is not applicable. Under the Group Reporting Basis, a majority of our commercial loans were considered to be in stage 1 and only a 12-month ECL was recorded. Primarily as a result of the different approaches, the allowance for credit losses for commercial loans was higher under U.S. GAAP than under the Group Reporting Basis in 2019.
In addition to the differences discussed above, under the Group Reporting Basis, the allowance for credit losses includes estimated ECL arising from expected future draws on unused credit card lines, while under U.S. GAAP, unused credit card lines are considered unconditionally cancellable and expected future draws are not reserved for. Also, the new accounting guidance adopted under U.S. GAAP in 2020 requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral-dependent assets), which results in an impact to earnings substantially consistent with the Group Reporting Basis. Prior to 2020, these expected recoveries were not recognized under U.S. GAAP.
Loans held for sale - As discussed more fully above under "Other Operating Income (Total Other Revenues)," under U.S. GAAP for loans that are transferred to held for sale, the existing allowance for credit losses at the time of transfer is recognized as a charge-off or released to the provision for credit losses. There is no similar requirement under the Group Reporting Basis.
Operating Expenses
Other long-lived assets impairment - A long-lived asset group is tested for impairment when events or changes in circumstances indicate that the carrying amount of a long-lived asset group might not be recoverable. Under U.S. GAAP, if the estimated undiscounted cash flows of the long-lived asset group exceed its carrying amount, an impairment is not recognized. However, if the estimated undiscounted cash flows are less than the carrying amount of the long-lived asset group, a second step is performed to determine fair value and an impairment loss is required if the carrying amount of the long-lived asset group exceeds fair value. Under the Group Reporting Basis, there is no separate undiscounted cash flow test and an impairment loss is recognized if the carrying amount of the cash generating unit exceeds the higher of its value in use or fair value less costs to sell. In 2020, we recorded an impairment charge under the Group Reporting Basis related to the write-off of all the capitalized software and a portion of the leasehold improvements associated with our WPB business segment. Under U.S. GAAP, the estimated undiscounted cash flows of the long-lived asset group exceeded its carrying amount and no impairment charge was required. Consequently, the carrying amounts of capitalized software and leasehold improvements are higher under U.S. GAAP than under the Group Reporting Basis and, as a result, corresponding amortization expense is higher under U.S. GAAP. In addition, during 2021, we determined we would exit certain branches as part of our Restructuring Plan and, as a result, we recorded an impairment charge of $18 million under U.S. GAAP to write-off the leasehold improvements associated with these branches. These leasehold improvements were previously written-off under the Group Reporting Basis.
Deposit incentives - As discussed more fully above under "Net Interest Income," incentive costs on customer deposits are deferred and amortized to interest expense under the Group Reporting Basis, while under U.S. GAAP, such costs are recognized immediately in operating expenses.
Loan origination - As discussed more fully above under "Net Interest Income," loan origination cost deferrals are more stringent under the Group Reporting Basis and generally result in lower costs being deferred than permitted under U.S. GAAP.
Pension and other postretirement benefit costs - Under U.S. GAAP, pension expense reflects the expected return on plan assets based on the fair value of plan assets. Additionally, under U.S. GAAP, pension expense includes the amortization of the amount by which actuarial losses exceeds the higher of 10 percent of the projected benefit obligation or fair value of plan assets (the corridor). Under the Group Reporting Basis, pension expense is determined using a finance cost component comprising the net interest on the net defined benefit liability, which does not reflect the benefit from the expectation of higher returns on plan assets. In 2021, 2020 and 2019, pension expense was lower under U.S. GAAP due primarily to the benefit of higher expected returns on plan assets.
Leases - As discussed more fully above under "Net Interest Income," all leases are recognized as financing arrangements under the Group Reporting Basis with interest expense on the lease liability recognized separately from depreciation of the ROU asset. Under U.S. GAAP, expense on operating leases is generally recognized on a straight-line basis in operating expenses.
Goodwill impairment - Under the Group Reporting Basis, goodwill was amortized until 2005, however goodwill was amortized under U.S. GAAP until 2002, which resulted in a lower carrying amount of goodwill and, therefore, lower impairment charges under the Group Reporting Basis in 2020 and 2019.
Litigation expense - Under U.S. GAAP, litigation accruals are recorded when it is probable a liability has been incurred and the amount is reasonably estimable. Under the Group Reporting Basis, a present obligation and a probable outflow of economic benefits must exist for an accrual to be recorded. This may create differences in the timing of accrual recognition between the Group Reporting Basis and U.S. GAAP. Additionally, under the Group Reporting Basis, legal costs to defend litigation are accrued at the time that a liability is recorded for the related litigation, while under U.S. GAAP, these costs are recognized as services are performed.
Assets
Derivatives - Under U.S. GAAP, derivative receivables and payables with the same counterparty may be reported on a net basis in the balance sheet when there is a legally enforceable netting agreement in place. In addition, under U.S. GAAP, fair value amounts recognized for the obligation to return cash collateral received or the right to reclaim cash collateral paid are offset against the fair value of derivative instruments. Under the Group Reporting Basis, these agreements do not necessarily meet the requirements for offset, and therefore such derivative receivables and payables are presented gross on the balance sheet.
Loans - As discussed more fully above under "Other Operating Income (Total Other Revenues)," on a Group Reporting Basis, loans designated as held for sale at the time of origination and accrued interest are classified as trading assets. In addition, the accounting requirements governing when loans previously held for investment are transferred to a held for sale category are more stringent under the Group Reporting Basis than under U.S. GAAP which results in loans generally being reported as held for sale later than under U.S. GAAP.
Precious metal loans - Under U.S. GAAP, precious metals leased or loaned to customers are reclassified from trading precious metals into loans and interest is accrued, while under the Group Reporting Basis, precious metals leased or loaned to customers continue to be part of the precious metal inventory recorded in other assets and are carried at fair value.
Loan allowance - As discussed more fully above under "Expected Credit Losses (Provision for Credit Losses)," beginning in 2020, under U.S. GAAP, the allowance for credit losses is recognized based on lifetime ECL. Prior to 2020, we used an incurred loss approach for estimating credit losses under U.S. GAAP which, for commercial loans collectively evaluated for impairment, included the utilization of a loss emergence period greater than 12 months. Under the Group Reporting Basis, the allowance for credit losses in all periods is recognized based on expected credit losses, however, financial assets which have not experienced a significant increase in credit risk since initial recognition only require an allowance based on a 12-month ECL.
Other long-lived assets - As discussed more fully above under "Operating Expenses," in 2020, we recorded an impairment charge under the Group Reporting Basis related to the write-off of all the capitalized software and a portion of the leasehold improvements associated with our WPB business segment. Consequently, the carrying amounts of capitalized software and leasehold improvements are higher under U.S. GAAP than under the Group Reporting Basis.
Goodwill - The Group Reporting Basis and U.S. GAAP require goodwill to be tested for impairment at least annually, or more frequently if circumstances indicate that goodwill may be impaired. Under the Group Reporting Basis, goodwill was amortized until 2005, however goodwill was amortized under U.S. GAAP until 2002, which resulted in a lower carrying amount of goodwill under the Group Reporting Basis. Methods, assumptions and reporting groups used to calculate impairment under the Group Reporting Basis may differ locally from that utilized by HSBC.
Securities transferred to held-to-maturity - During 2014, we transferred securities from available-for-sale to held-to-maturity. Under the Group Reporting Basis, the remaining unamortized net pretax unrealized losses related to the transferred securities
were adjusted against the carrying value of the securities held-to-maturity, while under U.S. GAAP, such unrealized losses are included in AOCI and are being amortized over the remaining contractual life of each security as an adjustment to yield.
The following table summarizes the results for each segment on a Group Reporting Basis, as well as provides a reconciliation of total results under the Group Reporting Basis to U.S. GAAP consolidated totals:
 Group Reporting Basis Consolidated Amounts   
GBM
WPBCMBGBMSSGBM OtherCCTotal
Group Reporting Basis
Adjust-
ments(1)
Group Reporting Basis
Reclassi-
fications(2)
U.S. GAAP
Consolidated
Totals
 (in millions)
Year Ended December 31, 2021
Net interest income (expense)$801 $771 $315 $47 $(24)$(6)$1,904 $19 $160 $2,083 
Other operating income303 297 409 318 100 3 1,430 (51)(142)1,237 
Total operating income (expense)1,104 1,068 724 365 76 (3)3,334 (32)18 3,320 
Expected credit losses / provision for credit losses(21)(26)(157)— (1)— (205)(365)— (570)
1,125 1,094 881 365 77 (3)3,539 333 18 3,890 
Operating expenses1,221 581 407 275 98 316 2,898 62 18 2,978 
Profit (loss) before income tax$(96)$513 $474 $90 $(21)$(319)$641 $271 $— $912 
Balances at end of period:
Total assets$62,904 $43,052 $10,486 $43,007 $44,151 $1,746 $205,346 $(16,114)$— $189,232 
Total loans, net22,285 21,971 9,930 178 881 — 55,245 (1,991)2,163 55,417 
Goodwill— 358 — — — — 358 100 — 458 
Total deposits40,232 45,082 41,343 1,298 981 — 128,936 (2,889)16,985 143,032 
Year Ended December 31, 2020
Net interest income (expense)$837 $821 $369 $91 $(62)$(30)$2,026 $9 $139 $2,174 
Other operating income368 234 351 454 165 129 1,701 (46)(120)1,535 
Total operating income1,205 1,055 720 545 103 99 3,727 (37)19 3,709 
Expected credit losses / provision for credit losses189 293 139 — 1 — 622 188 — 810 
1,016 762 581 545 102 99 3,105 (225)19 2,899 
Operating expenses2,203 587 372 351 118 403 4,034 (172)19 3,881 
Profit (loss) before income tax$(1,187)$175 $209 $194 $(16)$(304)$(929)$(53)$— $(982)
Balances at end of period:
Total assets$59,200 $36,354 $11,473 $67,293 $53,597 $1,760 $229,677 $(33,243)$— $196,434 
Total loans, net24,048 23,377 11,260 329 475 — 59,489 (2,307)3,891 61,073 
Goodwill— 358 — — — — 358 100 — 458 
Total deposits50,000 42,369 37,320 3,417 3,931 — 137,037 (4,253)12,366 145,150 
Year Ended December 31, 2019
Net interest income (expense)$1,018 $829 $513 $91 $(83)$(65)$2,303 $13 $(204)$2,112 
Other operating income330 239 415 358 127 68 1,537 102 215 1,854 
Total operating income1,348 1,068 928 449 44 3 3,840 115 11 3,966 
Expected credit losses / provision for credit losses115 55 1 — — — 171 32 (8)195 
1,233 1,013 927 449 44 3 3,669 83 19 3,771 
Operating expenses1,645 581 383 317 149 238 3,313 169 19 3,501 
Profit (loss) before income tax$(412)$432 $544 $132 $(105)$(235)$356 $(86)$— $270 
Balances at end of period:
Total assets$50,851 $34,241 $16,002 $71,742 $38,966 $2,421 $214,223 $(38,848)$— $175,375 
Total loans, net24,243 24,647 15,875 777 907 — 66,449 (2,965)4,432 67,916 
Goodwill693 358 — — — — 1,051 191 — 1,242 
Total deposits44,553 29,986 24,596 2,956 1,498 — 103,589 (4,747)20,851 119,693 
(1)Represents adjustments associated with differences between U.S. GAAP and the Group Reporting Basis. These adjustments, which are more fully described above, consist of the following:
Net
Interest
Income		Other
Revenues		Provision
for Credit
Losses		Operating
Expenses		Profit (Loss)
before Income
Tax Expense		Total
Assets
(in millions)
December 31, 2021
Deposit incentives$13 $— $— $9 $4 $(25)
Derivatives— — — — — (16,172)
Expected credit losses— — (272)— 272 (148)
Goodwill— — — — — 100 
Leases16 — — 22 (6)13 
Loan origination(11)— — (20)9 23 
Loans held for sale— (31)(93)— 62 (31)
Other long-lived assets impairment— — — 61 (61)152 
Pension and other postretirement benefit costs— — — (10)10 — 
Renewable energy tax credit investments— (21)— — (21)3 
Securities transferred to held-to-maturity— — — — — (24)
Other1 1 — — 2 (5)
Total adjustments$19 $(51)$(365)$62 $271 $(16,114)
December 31, 2020
Deposit incentives$14 $— $— $21 $(7)$(28)
Derivatives— — — — — (33,163)
Expected credit losses(4)— 200 — (204)(357)
Goodwill impairment— — — 91 (91)100 
Leases23 — — 14 9 33 
Loan origination(24)(2)— (20)(6)18 
Loans held for sale— (25)(12)— (13)— 
Other long-lived assets impairment— — — (264)264 201 
Pension and other postretirement benefit costs— — — (15)15 — 
Renewable energy tax credit investments— (11)— — (11)2 
Securities transferred to held-to-maturity— — — — — (38)
Other— (8)— 1 (9)(11)
Total adjustments$9 $(46)$188 $(172)$(53)$(33,243)
December 31, 2019
Debt extinguishment$— $123 $— $— $123 $— 
Deposit incentives15 — — 32 (17)(23)
Derivatives— — — — — (38,651)
Expected credit losses(3)(1)32 — (36)(357)
Goodwill impairment— — — 156 (156)191 
Leases25 — — 8 17 15 
Loan origination(27)— — (19)(8)38 
Loans held for sale2 (1)— — 1 (5)
Pension and other postretirement benefit costs— — — (12)12 — 
Renewable energy tax credit investments— (7)— — (7)3 
Securities transferred to held-to-maturity— — — — — (65)
Other1 (12)— 4 (15)6 
Total adjustments$13 $102 $32 $169 $(86)$(38,848)
(2)Represents differences in financial statement presentation between U.S. GAAP and the Group Reporting Basis.