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Business Segments
 6 Months Ended
Jun. 30, 2023
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. There have been no changes in the basis of our segmentation as compared with the presentation in our 2022 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.
During the second quarter of 2023, we implemented a change to our internal management reporting to report net funding charges associated with MSS trading activities within other operating income to better align with the trading revenue generated by such activities. Historically, these funding charges were reported within net interest income (expense). There was no impact to consolidated net interest income (expense) or other operating income as these net funding charges are reversed back into net interest income (expense) in the CC. As a result, we have aligned our segment reporting for MSS and CC to reflect this change for all periods presented. The impact of this change on reported segment net interest income (expense) and other operating income for the three and six months ended June 30, 2022 was not material.
There have been no other changes in the measurement of segment profit as compared with the presentation in our 2022 Form 10-K.
A summary of significant differences between U.S. GAAP and the Group Reporting Basis as they impact our results are summarized in Note 25, "Business Segments," in our 2022 Form 10-K. There have been no significant changes since December 31, 2022 in the differences between U.S. GAAP and the Group Reporting Basis impacting our results.
During the second quarter of 2023, we recorded a reversal of $149 million of impairment charges under the Group Reporting Basis related to capitalized software and leasehold improvements primarily associated with our Wealth and Personal Banking business segment which were previously written-off. During the second quarter of 2023, we determined that the cash generating unit was no longer impaired under the Group Reporting Basis and that its estimated fair value exceeded its carrying value, which resulted in the re-establishment of these assets at their recoverable amount net of amortization that would have been recorded had no impairment loss been recognized and excluding any assets that have since been sold.
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)
Three Months Ended June 30, 2023
Net interest income (expense)$194 $288 $123 $15 $(12)$(106)$502 $2 $(70)$434 
Other operating income52 79 92 50 25 106 404 (42)86 448 
Total operating income246 367 215 65 13 — 906 (40)16 882 
Expected credit losses / provision for credit losses(8)14 27 — — — 33 3 — 36 
254 353 188 65 13 — 873 (43)16 846 
Operating expenses51 159 141 71 14 36 472 159 16 647 
Profit (loss) before income tax$203 $194 $47 $(6)$(1)$(36)$401 $(202)$— $199 
Three Months Ended June 30, 2022
Net interest income (expense)$185 $220 $106 $8 $1 $(20)$500 $— $32 $532 
Other operating income32 73 130 92 26 24 377 (11)(23)343 
Total operating income217 293 236 100 27 4 877 (11)9 875 
Expected credit losses / provision for credit losses(6)54 (3)— 1 — 46 23 — 69 
223 239 239 100 26 4 831 (34)9 806 
Operating expenses197 143 115 80 21 115 671 13 9 693 
Profit (loss) before income tax$26 $96 $124 $20 $5 $(111)$160 $(47)$— $113 
 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)
Six Months Ended June 30, 2023
Net interest income (expense)$407 $573 $262 $28 $(12)$(213)$1,045 $3 $(131)$917 
Other operating income104 151 146 146 46 197 790 (49)160 901 
Total operating income (expense)511 724 408 174 34 (16)1,835 (46)29 1,818 
Expected credit losses / provision for credit losses2 30 30 — — — 62 (6)— 56 
509 694 378 174 34 (16)1,773 (40)29 1,762 
Operating expenses226 309 276 140 32 68 1,051 196 29 1,276 
Profit (loss) before income tax$283 $385 $102 $34 $2 $(84)$722 $(236)$— $486 
Balances at end of period:
Total assets$42,727 $53,983 $9,898 $38,003 $37,603 $3,115 $185,329 $(18,401)$— $166,928 
Total loans, net22,654 23,739 9,234 215 305 — 56,147 (144)1,337 57,340 
Goodwill— 358 — — — — 358 100 — 458 
Total deposits30,085 45,836 38,689 862 2,633 — 118,105 (2,575)6,106 121,636 
Six Months Ended June 30, 2022
Net interest income (expense)$354 $405 $184 $17 $(1)$(14)$945 $1 $63 $1,009 
Other operating income195 156 254 241 50 9 905 (31)(45)829 
Total operating income (expense)549 561 438 258 49 (5)1,850 (30)18 1,838 
Expected credit losses / provision for credit losses(2)27 (5)— 1 — 21 59 — 80 
551 534 443 258 48 (5)1,829 (89)18 1,758 
Operating expenses439 290 232 149 45 181 1,336 25 18 1,379 
Profit (loss) before income tax$112 $244 $211 $109 $3 $(186)$493 $(114)$— $379 
Balances at end of period:
Total assets$43,510 $52,351 $12,385 $40,413 $41,225 $2,314 $192,198 $(20,966)$— $171,232 
Total loans, net21,994 25,454 11,780 131 528 — 59,887 (890)2,267 61,264 
Goodwill— 358 — — — — 358 100 — 458 
Total deposits37,395 40,170 41,995 1,193 1,409 — 122,162 (3,434)8,535 127,263 
(1)Represents adjustments associated with differences between U.S. GAAP and the Group Reporting Basis.
(2)Represents differences in financial statement presentation between U.S. GAAP and the Group Reporting Basis.