HSBC Holdings plc (HSBC) Q4 2025 Earnings Report, Transcript and Summary

Welcome to the HSBC Holdings plc Investor and Analyst Presentation for the 2025 annual results. We will begin in 2 minutes. [Operator Instructions] Please note that it will not be possible to ask a question if you are joining via the webcast link on the HSBC website. Ladies and gentlemen, welcome to HSBC Holdings plc's 2025 annual results webinar for investors and analysts. For your information, today's webinar is being recorded. At this time, I will hand the call over to Georges Elhedery, Group CEO.

Welcome, everyone. Thank you for joining us. As we celebrate the year of the horse, [Foreign Language]. Our 2025 full year performance was strong. It was a year in which we performed, transformed, invested for growth. I will discuss our strong strategic progress today. First, the strong momentum in our 2025 performance. Second, the execution of our 3 strategic priorities where we are progressing at pace and with discipline. And third, the new growth and return targets we are setting out today for 2026, '27 and '28. So first, the full year earnings. My comments will exclude notable items and the comparisons will be year-on-year on a constant currency basis. In 2025, there were $6.7 billion of notable items. You are already aware of these from prior quarters. They are set out on appendix Slide 36. So first, we delivered strong earnings. Group revenues grew 5%. Profit before tax rose 7%, reaching a record $36.6 billion. Return on tangible equity was 17.2%. And we delivered 3% cost growth on a target basis in 2025, in line with our cost target. Second, we delivered strong growth. Our deposit balances grew 5% with deposit growth in each of our 4 businesses. Our deposit base is a core strength. It contributes the lion's share of our banking NII. We also grew fee and outcome. In Transaction Banking, it grew by 4%. Elevated market activity demonstrating the power of our deep international network, which gives access to 86% of world trade flows, alongside our product and service expertise. In Wealth, it grew by 24%, reflecting our leadership position in the world's fastest-growing wealth markets and continued investment in our products and proposition. And we are investing for strategic long-term growth. We completed the $13.7 billion privatization of Hang Seng Bank. This brings together to 255 years of history and heritage, combining global reach and local depth. It reflects our confidence and conviction in Hong Kong's future growth. And third, we delivered strong returns to our shareholders. We announced a full year ordinary dividend per share of $0.75, up 14% on 2024. Let's turn straight to the progress we are making on strategy execution. In October 2024, I set out a clear agenda to unlock HSBC's full potential. To do so, we now run the bank on 4 core complementary businesses, 2 home market businesses, U.K. and Hong Kong, and 2 international network businesses, Corporate and Institutional Banking and International Wealth and Premier Banking. Each business is growing. Each is generating above mid-teens return on tangible equity and each is building on a strong foundation for future growth. We are focused on 3 clear priorities, and we are moving at pace with each one, be simple and agile; two, drive customer centricity and three, deliver focused sustainable growth. Now let's look at each priority in turn and our progress. First, simple and agile. The first step in unlocking HSBC's full potential is reengineering to reduce complexity and cost. Structure and strategy are now aligned. Accountability is sharpened and roles deduplicated. In 2025, we reduced net managing director positions by circa 15%. We are taking $1.5 billion of annualized simplification saves straight to the bottom line with immaterial revenue impact. We expect to have taken action to deliver these saves by the first half of 2026, 6 months ahead of plan. We are also making positive progress with the reallocation of circa $1.5 billion from nonstrategic or low-returning businesses. The medium-term intent being to reallocate these costs to areas of competitive strength and generate accretive returns. In 2025, we announced 11 business or market exits. Completed and announced exits account for $0.7 billion in annualized cost savings with around $1 billion of associated revenue $0.6 billion remains an active execution, including those under strategic review. Then following the privatization of Hang Seng Bank, we are increasing reallocation costs to $1.8 billion, reflecting an additional $0.3 billion of reported basis cost synergies across HSBC and Hang Seng Bank. We will direct this $0.3 billion to growth opportunities in Hong Kong. We are also streamlining and upgrading our operating model by simplifying the bank at scale and retiring nonstrategic applications. And we are reengineering whilst focusing on resilience and risk management. Next, priority number two, drive customer centricity. Our 4 businesses are built on customer trust. Our investments to improve customer proposition and experience are yielding results. Net Promoter Scores have improved or remained top ranked in our home markets. In Hong Kong, we added 1.1 million new to bank customers. Taking the total number of customers to more than 7 million. Our U.K. business lending -- our U.K. business banking lending grew 13% year-on-year, excluding COVID loan runoff. In CIB, corporate surveys have positioned us as a market leader in trade, in payments and in foreign exchange. In IWPB, we attracted net new invested assets of $80 billion. Next, priority #3, investing to deliver focused, sustainable growth. Our Hong Kong home market is a dynamic economy, a top 3 global financial center and a thriving trade gateway. It is the super connector between Mainland China and the world. And it is set to become the world's leading cross-border wealth hub by 2029. The privatization of Hang Seng Bank enables us to scale capabilities and drive growth across both banks for all customers. We have the ambition, and we have comprehensive plans to deliver $0.9 billion of benefits through reported synergies and unlock of opportunities by 2028. It is an investment for growth. And if we move beyond Hong Kong and look at HSBC's other core strength, we are in Asia, Middle East powerhouse. Asia and the Middle East are increasingly central to global trade and capital flows. Global trade is being rewarded. Asia's growth is increasingly powered by intra-Asia demand. Asia is buying Asia. The Middle East is scaling as a global capital trade and investment hub. Its integration with Asia is accelerating. The Asia-Middle East corridor is becoming a defining access of global growth. Wealth creation across Asia and the Middle East is also structurally strong. That is why we are investing to consolidate our powerhouse position and capture these growth opportunities. We are also investing to connect the world, scaling our capabilities, building new capabilities and supporting customers secure commercial advantage from real-time services. Our customers are making real-time 24/7 payments across 35 markets. They're also using frictionless tokenized deposits and payments in 4 markets, including the U.K. with more to follow. And we are pioneering the future of finance. Last month, the U.K. Treasury selected HSBC's distributed ledger technology as its preferred platform for its U.K. Digital Gilt pilot. Next, our people and technology. We see innovation and culture that's core to our competitiveness, and we are investing in both. We are scaling AI adoption first, to empower our colleagues second for end-to-end process engineering and third, to enhance customer experience. Our customer relationships are built on trust. AI strengthens how we act on that trust, personalizing service at scale. The strong culture turns a clear strategy into results, and we are investing to nurture a high-performance culture. All our senior leaders and the broader managing director cohort have attended our new group-wide leadership training. Finally, let's turn to our new targets for 2026, '27 and '28. 2025 has been a year in which we have performed, transformed and invested for growth. This gives us the confidence to set out new growth targets. We will target revenues growing year-on-year every year, rising to 5% in 2028, excluding notable items. We will target return on tangible equity of 17% or better in each year from 2026 to 2028, excluding notable items and a dividend payout ratio of 50% for each year, excluding material notable items. To conclude, we are creating a simple, agile, growing bank built to generate high returns. We are executing our strategy with discipline and precision. We are delivering growth, we are investing for growth and we are confident we can navigate uncertainty from a position of strength. That is why we are confident in setting these new targets and in our ability to continue delivering for our shareholders. Let me now hand over to Pam. Thank you.

Thank you, Georges. Thank you, everyone, for joining. We have had another strong quarter, which reflects the positive progress we are making towards creating a simple, more agile growing HSBC. We are investing for growth. Throughout this presentation, I will exclude notable items and focus on the fourth quarter numbers compared to the same period last year on a constant currency basis. Let's turn straight to the highlights. In the fourth quarter, revenues grew 6% and to $17.7 billion. This was driven by broad-based growth in banking NII and fee and other income. Profit before tax was $8.6 billion, up 17%. Our customer deposit balances stand at $1.8 trillion, an increase of $78 billion when we include held-for-sale balances. Full year return on tangible equity was 17.2%, achieving our mid-teens or better target. In 2025, we maintained tight cost discipline, managing target basis cost growth to 3%, in line with our cost growth target. Turning to capital and distributions. Our CET1 capital ratio was 14.9%, up 40 basis points in the quarter, reflecting our organic capitalization and expectation not to initiate any further buybacks for up to 3 quarters following October's announcement of our intention to privatize Hang Seng Bank. As Georges said, this strong performance allows us to announce ordinary dividends for the year of $0.75 per share, an increase of $0.04 on the prior year. Turning to our business segment performance. We grew full year revenue by 5% to $71 billion. Each of our 4 businesses grew revenues. Each grew deposits, deepening customer relationships. Each returned a mid-teens or better return on tangible equity, excluding notable items. We are pleased to be making such positive progress firm-wide. Moving next to our privatization of Hang Seng Bank. On 9th October, we announced our intention to privatize Hang Seng Bank. We are pleased to have completed on 26th January, sooner than our initial expectation of the first half of 2026. This slide explains the financial rationale. Let's walk through it, starting with a $13.7 billion purchase price. The removal of the $3.8 billion minority capital inefficiency takes you to the $9.9 billion of common equity Tier 1 consumption. The removal of the capital inefficiency is around 1/4 of the purchase price. The $9.9 billion CET1 consumption is equivalent to buying back 4% of group shares at the point of announcement. Next, we show the $0.8 billion minority interest in the P&L and the $0.5 billion of pretax synergies from the privatization. Together, the minority interest and the synergies contribute more than 4% to our profit, beating the buyback threshold. On top of this, we see potential, further revenue and cost upside of $0.4 billion enabled by the privatization. Then on the right of the slide, we see good growth in Hong Kong in the years ahead. Having 2 fully owned banks positions us well to capture this growth. As we said in October, we are acquiring a business with structurally high pre-impairment margins. And while we are not calling the credit cycle, we believe it is a cycle. Let's now turn to banking NII. Our full year banking NII was $44.1 billion. In the fourth quarter, banking NII of $11.7 billion grew $0.7 billion. $0.4 billion of this growth was in Hong Kong, including the recovery of HIBOR during the quarter. Banking NII in the fourth quarter included a positive benefit of around $100 million for items that we do not expect to repeat. We expect full year 2026 banking NII of at least $45 billion with the impact of expected lower rates more than offset by deposit growth and the tailwind from our structural hedge. Next, to wholesale transaction banking. This year has really validated the strength of our franchise in a range of economic market and tariff situations. We have deepened customer relationships, and our global network has helped our customers navigate volatility and uncertainty. In the quarter, security services grew fee and other income 6%, reflecting higher market valuations and new mandates. Payments grew 3%, driven by new mandates and payment volumes. In particular, international payments. Foreign exchange increased by 1%, reflecting strong client flows and higher levels of volatility. This was a good performance given the strong prior year comparison. Trade was down 5% in the quarter, but it was stable over the full year. I would note the first half was particularly strong, given advanced ordering as we supported clients to navigate a fast-changing landscape. We continue to see growth in volumes, and strong client engagement. Let's now turn to Wealth, including the new disclosures we are setting out today. We are very pleased with the 20% year-on-year fee and other income growth to $2.1 billion. And we are very encouraged that this was driven by all 4 income areas, which shows the sharpening of our strategy is working. Asset Management grew 14% and Private Banking grew 8%. Investment Distribution also performed well, up 14%, reflecting strength in our customer franchise in Hong Kong. Our Insurance CSM balance was $14.6 billion, up 21% versus the prior year. We continue to attract net new invested assets with $7 billion in the fourth quarter. Today, we are giving you new disclosures, which you will see through on this slide. These better show the strength of our relationship with our customers, including both their deposits and invested assets. We are focused on capturing the full wealth opportunity, and we will now report Wealth balances and net new money. I appreciate that the Wealth balance figure is similar to the invested assets. But I would highlight two changes to note. You will see these set out on Appendix Slides 31, 32 and 33. We have added $608 billion of Premier and Private Bank deposits to the invested assets. That is offset by taking out $580 billion of asset management, third-party distribution assets. This is a good business, but it does not reflect our wealth customers. Adjusting our disclosure in this way also means our Wealth business is more easily comparable to the broader peer group. These new disclosures will replace the existing ones from the first quarter of 2026. We saw net new money in the quarter of $26 billion, of which $19 billion was in Asia. And Wealth is not just a Hong Kong story. It runs across our Asia and Middle East franchise with double-digit invested asset growth in Singapore, Mainland China, India and the UAE. Next to credit. Our ECL charge this quarter was $0.9 billion. There was no material impact from Hong Kong commercial real estate in the quarter. On Slide 29, you will see we have updated the commercial real estate disclosures. Movements in the fourth quarter were in line with our expectations. of a full year 2026 ECL guidance is around 40 basis points. This is at the higher end of our typical range, reflecting the economic outlook and remaining pressures in parts of retail and office commercial real estate in Hong Kong. Let's now turn to costs. We delivered 3% target basis cost growth in the full year, hitting our cost goals while making the space to invest in the bank was a key theme of 2025. It will be again in 2026. We have taken actions to realize $1.2 billion of annualized simplification savings with immaterial revenue impact. This is ahead of our original time line of $1 billion by the year-end 2025. On a realized basis, we have taken $0.6 billion of the simplication saves into the full year 2025 P&L. Together with ongoing discipline, this allows us to guide for 1% cost growth on a target basis for 2026 while reinvesting in the business. Next, to customer deposits and loans. We had another strong quarter with deposit growth of $50 billion. We saw good growth in each of our 4 businesses. Loans increased by $5 billion. The U.K. was again the standout with another quarter of growth in mortgages and commercial lending. Our U.K. business is well positioned to support growth in the U.K. economy. We are particularly pleased with the momentum in our commercial loan book where we see significant potential, particularly in infrastructure, innovation, social housing and mid-market direct lending. Now turning to capital. Our CET1 ratio is up strongly to 14.9%, primarily reflecting good organic capital generation. Although after the balance sheet date, I draw your attention to the impact of the Hang Seng Bank privatization which is 110 basis points in addition to the 10 basis points already incurred in the fourth quarter. We have set this out in the appendix Slide 27. As a reminder, we said when announcing the offer on 9th October that we expected to suspend buybacks for up to the next 3 quarters. That is, of course, dependent on underlying capital generation. With strong profitability and current modest loan growth we remain highly capital generative. A decision on future share buybacks will be taken quarterly, subject to a non-buyback considerations. Let's next turn to the full year defaults. Excluding notable items, and at constant currency, revenues grew 5% to $71 billion. Profit before tax was $36.6 billion, up 7% year-on-year to a record high. Return on tangible equity was 17.2%, achieving our mid-teens or better target. Our strong performance allows us to announce ordinary dividends for the year of $0.75 per share or $12.9 billion. Let's briefly return to the new targets Georges set out earlier before I close on guidance. We made clear and positive progress in 2025. That is why we are now raising our ambition to target 17% return on tangible equity or better, excluding notable items in each year from 2026 to 2028. We will also target year-on-year revenue growth in each year over the period, rising to 5% in 2028 compared to 2027, excluding notable items. And as you would expect, we maintain our discipline of a 50% dividend payout ratio, excluding material notable items and related impacts. Finally, to guidance. This slide gives you our guidance mainly for 2026. We saw revenue momentum continue in January, including in Wealth. On the slide, you see banking NII of at least $45 billion. Our revenue ambitions for our Wealth business are contained within our revenue target. We have, therefore, removed grow fee and other income at a double-digit percentage CAGR from our guidance. We see an ECL charge of around 40 basis points, broadly stable on 2025. We expect to constrain cost growth to 1% on a target basis. This benefits from our organizational simplification and allows us to continue to invest in the business. There is no change to our CET1 target range of 14% to 14.5%. In 2026, we will deliver the $1.5 billion of savings from the reorganization. We are well on track with the $1.5 billion of reallocation costs which will be redirected towards priority growth areas. We are now adding the expected $0.3 billion of Hang Seng Bank cost synergies to the original $1.5 billion of reallocation costs, taking this to circa $1.8 billion. On Hang Seng Bank specifically, we see $0.5 billion of revenue and cost synergies to be achieved by year-end 2028 as well as an additional $0.4 billion of potential further upside enabled by the privatization. To achieve this $0.9 billion, we will incur a restructuring charge of $0.6 billion from the Hang Seng privatization which will be a material notable item. To close, as I said to you last year, I am fully focused on discipline, performance and delivery. Discipline means prioritizing with precision, maintaining strong cost control and ensuring investment rigor for growth. Performance means gearing our financial strategy towards achieving our new returns target. Delivery means ensuring we remain agile and resilient, enhance operating leverage and are always well positioned to support our customers. This is exactly how we will continue to run the bank. With that, we are happy to take your questions. Alastair?

Thank you, Georges. We'll take any questions from the room here in Hong Kong first. If I can ask you to introduce you to your company, and there's been the hard part, constrain yourself to two questions each, please. That goes for people on Zoom as well as people in the room. Anyone would like to ask a first question here? Yes, we'll take a question from Nick.

It's Nick Lord from Morgan Stanley. I'll put it in one question in two parts, if that's okay. I'm just interested in your revenue target by 2028 of achieving 5% revenue growth. And I just wonder if you could talk about some of the components of how you would get there. Presumably, Wealth is part of that. And so maybe you could talk about the Wealth trajectory and how sustainable that is. Presumably, at some stage, we're going to see sort of a kick in of sort of the development of markets in Asia, and that market's business can grow more. So I wonder if you could talk a little bit about how you want to grow that markets business in Asia.

Thank you, Nick, for the question. I'm going to share some high-level comments as we are looking at the growth opportunities, and Pam can take you through the various components. The first thing is we have delivered growth in 2025. And we have delivered growth, as we mentioned, across all our businesses and all our key metrics, including deposits, loans, including fee income and Transaction Banking and Wealth and this is reflected in our revenues growing at 5%, 2025. The second item to call out is if you look at our footprint. We're actually basically aligned to the strong structural growth opportunities. Hong Kong, we've called it out, and we are basically consolidating our leadership position to capture these growth opportunities with the privatization of Hang Seng among other. Asia and Middle East, structural growth opportunities in Wealth, but also Asia and Middle East hitting record volumes and shipments for trade, Asia is buying Asia and we are -- our footprint allows us to capture these growth opportunities. The U.K., we've seen the strongest loan growth in 2025, and we have indicators to believe that there is a possibility for this trend to carry on. This is the strongest loan growth we've seen in the U.K. for many years, but it's also the strongest store growth we've seen across all our businesses that we have seen in the U.K. And then the last thing I would put, we are investing for all these growth opportunities. We're putting now investment from within our cost base. We're putting investment from the additional costs we are taking in 2026. And we will be putting even further investments from the reallocation of the $1.8 billion as we free up these costs back into those core areas where we can grow. And this is what's giving us this confidence to give you the growth targets of revenue growing year-on-year every year rising to 5% in 2028. Pam?

Thanks, Georges. So firstly, in 2026, we expect broad-based growth in revenue across all our businesses, but just unbundling a little. In banking NII, as we have said, we expect a low single-digit growth fundamentally driven through deposits. Yes, there are pockets of growth in loans, but so far, we've just seen in the U.K. market. Overall, we expect that growth in Wealth and Transaction Banking and our fee-generating businesses will continue to be very positive. As we go beyond '26, we do expect balance sheet growth should again in Asia and other markets, not just in the U.K. Of course, we are seeing growth in the U.S. already, but we are not a big player in the U.S. market, domestic growth. And we are continuing to invest in our fee businesses and our investment plans are multiyear plans. So it's not just for growth for 1 year. It's a very strong building block for growth through the period we have called out and beyond. Particularly in markets like Hong Kong, in the U.K. and other key markets for us in Asia and the Middle East.

Thank you, Nick. Thank you. Any further questions in Hong Kong. We'll go straight to Zoom. The first question on the Zoom then, please, is with Joe Dickerson at Jefferies. Actually I've announced yourself, Joe.

Good set of results, guys. Just a quick question on the costs. If you look at the 2026 number that you've given the kind of 1% growth. I know you've got your recycling how do you think about when you peel that back and what's the metabolic rate of growth in costs, particularly coming from investments because you clearly have some global peers who have accelerated their investments around AI. So I was just curious how you think about that. And then secondly, a nitpicky question, but what rate of HIBOR have you assumed in the banking NII guide of greater than $45 billion?

Okay. Thank you very much, Joe, for your questions. On let me make some high-level considerations how we look at costs, and I'll ask Pam to comment then on cost and then on hypo rates. And I shared a bit earlier, but I want to emphasize, first, within our workspace, there's a proportion set aside for investments for change the bank, investments, digital capabilities, additional people, hires, relationship managers, wealth advisory, et cetera, of course, generative AI efficiencies. That's within our cost base. Second, the fact that we're adding costs adjusted for these savings, half of that additional cost will go towards payroll inflation, but the other half will go towards additional investments. And then third, the recycling of those $1.8 billion, which is commensurate to about 5%, 6% of our cost base will go back into those areas of investment for growth. So we believe we have ample capacity to invest and deliver the growth that we are setting ourselves, setting targets to deliver against. Then the next thing I would say about cost is that it's important, Joe, to -- we are committed to cost discipline, we are confident in our ability to deliver cost discipline. And as you've seen for our 2025 results, we have met our cost target. So I think that's an important guide also as you look at our cost guidance for 2026. Pam?

Thank you, Georges. So firstly, I would note that we are ahead on our simplification saves because the plan and the actions we have taken have come through sooner than what we had originally outlined. This gives us incremental saves of $700 million in full year '26. So that has been a consideration in the overall 1% cost growth envelope. And as Georges said, as we have divestments happening, we are continuously redeploying those -- reallocating those costs to our priority growth areas. What's really important for us is that our investment rigor is focused on our strategic priorities. That's what we've done in 2025. That's what we will do going forward. And these are committed plans, which are multiyear plans. They don't go back and forth every year. So that's all part of the overall cost envelope guidance we have given for this year. And again, we're only giving guidance for this year only, but we expect to maintain a cost rigor on a continuous basis. In terms of assumptions, we have used the end January forward rate curve for our banking NII guidance for all major currencies. So in terms of HIBOR just to note a couple of points. Our HIBOR volatility that we saw in Q2 and Q3 when HIBOR is at 1% has an impact of about $100 million on banking NII. The moment HIBOR sort of stabilizes as it did in Q4 and indeed this year, although it has fluctuated a little bit around the 2.5% mark, that is captured in our guidance. And we look at a few plausible downside scenarios as well before we give a full guidance.

Thank you. Our next question on the Zoom is from Ben Toms at RBC.

Firstly, on your RoTE guidance of greater than 17%. I'm just looking for some commentary about how sustainable you feel that guidance is beyond the announced planning horizon. So how much do you feel this guidance isn't all weather guidance post all the investments that you've been making into the business? And then secondly, on the Hang Seng synergies on Slide 13, can you mind just talking a little bit around why you've adopted 2 buckets that you've labeled synergies and upside. Is the upside bucket basically where there's a lower degree of certainty over the synergies? So what type of synergies fall into each bucket would be useful. And presumably, there's no incremental restructuring costs associated with the upside bucket on top of the $0.6 billion.

Thank you very much, Ben. On the Hang Seng guidance, what I will share is we do have the management ambition, and we do have comprehensive sets of plans to achieve the full $0.9 billion upside with the restructuring costs that we've called out. I'll let Pam give you the details. On the RoTE guidance, we are not guiding beyond our horizon, but you should always assume that we are ambitious. Pam?

Thank you, Georges. And just to say on our RoTE guidance, we continue to see a positive momentum in our businesses. And as we said earlier, we are investing for growth. But of course, the targets are only for 3 years. So in terms of the Hang Seng synergies, you're quite right, the $500 million is what I would call the reported synergies following accounting rules. The $400 million synergies are depending to some extent of markets and customer behavior. So there is some degree of uncertainty, and they don't strictly fall between what is considered to be accounting reported synergies. So that's the reason why they're too separate. Both these synergies, the plan to get that $900 million benefit is by the end of '28. And the restructuring cost of $600 million covers the benefits across both buckets. And now beyond that, we actually believe, as it says on the slide that at some stage, the credit cycle will be normalized. So there will be some benefit coming from there. There will be more growth in lending as well as overall Hong Kong growth, which we will continue to be very well positioned for because of the redeployment of the cost allocation that we have, there will be a fair chunk that obviously goes into Hong Kong, which is a core market on our strategy.

Yes, we have a question in the room next, Melissa. Sorry, you're allowed to introduce yourself fully.

I'm Melissa from Goldman Sachs. Just two questions. In terms of the strategy that you have, the rising to 5% revenue growth. Just wanted to see if you can give about CAGR growth instead. So we can understand the pathway there. In terms of that, I suppose, will it be coming largely from the nonbanking NII portion? Or will it be from the banking and NII? So that's my first question. On the second question, perhaps on the restructuring cost at HSP of $0.6 billion. Can you just give a little flavor about what is it that we are doing in terms of the restructuring that we need such a cost focusing on in terms of delivery and then how we will see the revenue synergies. And in terms of the revenue synergies can it be as quick as next year? Or will it be more heavy into 2028 as per your 3-year guidance rising to 5%?

Thank you very much, Melissa, and Pam can address both questions.

Thank you, Georges. So firstly, we've said that revenue growth is positive each year, but it's also progressive and reaching out to 5% by '27 to '28. In terms of the underlying building blocks we said to you that in 2026, where we have given the guidance on banking NII, it's a low single digit. So therefore, similar to the prior year, we will see more positive growth momentum on the fee-generating businesses. And beyond 2026, Banking NII, of course, we look and see where the guidance is, where it is, where the rates are and what's the timing of the rate cuts as we go into '26, but we are continuing to invest in our fee-generating businesses so we see that momentum in those businesses, including Wealth, which really underpins this revenue growth and wholesale transaction banking to continue. And I'm hoping that at some stage, we'll see a little bit more of growth on the balance sheet in terms of lending beyond U.K. that we have already seen. Now in terms of the restructuring costs. There are a couple of elements that drive it. One is there's some organizational alignment. So there will be some roles, which will evolve and teams that will be realigned, but a large chunk of this is really in terms of technology. So the investment in technology so that we can better harmonize our technology and better get results from the technology investment we have across both the Green and the Red brand. And this is really quite critical for us in order to achieve the overall ambition of the $900 million because it's the $900 million ambition just to reiterate, it's not just a cost story. It's a revenue and a cost story, and this is an investment for growth, and that's how we look at it. And we plan to spend restructuring costs of $600 million across the 3 years. And of course, this will be spread through these 3 years, we are not saying any more. In terms of revenue synergies, we strongly believe that by the privatization of Hang Seng Bank, our ability to be able to provide a broader product proposition into the Green band is highly enhanced. So we'll have better Wealth products for our retail customers. We have capital markets and broader wholesale transaction banking products for the wholesale customers, but more importantly, we will be able to have access for the same international network that we have for the Red brand also within the Green brand. And last but not least, we will have more balance sheet flexibility in terms of how we leverage our treasury capabilities, but also in terms of upstreaming and downstream capital, and this will all be done over the next 3 years.

Thank you. We'll go back to the Zoom. The next question will be from Aman Rakkar at Barclays.

I had two questions, please. So one is around capital. It looks like a decent chance that you'll be within your target CET1 range in Q1 based on historical and perhaps projected capital generation kind of estimates. Obviously, it raises the prospect as to whether you might be able to reintroduce buyback earlier than planned. I don't know if you're able to kind of comment on whether that's a realistic or plausible scenario. But I guess more specifically, just interested in the capital allocation thought process from here? Clearly, your stock is trading at a level now where the return on investment around buyback might be beaten by alternative uses of uses of capital. Obviously, you did it with Hang Seng, but should we be thinking about inorganic growth as well as the compelling organic growth within your footprint? And then I just wanted to ask around banking NII, please. Clearly, that kind of Q4 jumping off point is flattered by $100 million. I don't know if there's anything else that you direct us to kind of strip out of that number in terms of deposit catch-up or the impact of HIBOR. And I was particularly interested in what your deposit growth assumption is that sits behind the guidance you've given '26, please, because I think that could be a sensitivity around the ultimate outturn of banking NII in '26.

Thank you, Aman. Pam is best placed to answer both, but I want to share a few thoughts about our philosophy on capital. First, we remain capital-generative as you've seen from our targets, but also as we've experienced over the first 1.5 months in the year in 2026. So we're very pleased to see that our capital generation is strong. But our first priority is now restoring the CET1 ratio following the privatization of Hang Seng, which we estimated to take us 3 quarters. But of course, we do that assessment quarter-by-quarter. But I don't want to point out to the increased dividend we are paying this year, $0.75, $0.45 on the fourth quarter, which is on a full year basis, 14% higher than last year. So we are distributing through dividends. What I wanted to share about the discipline how we use capital, we've shared it in February 2025 Aman, we've set ourselves 4 key criteria. They are a high bar, and we strictly adhere to them in the way we look at inorganic opportunities. In so far, that these 4 criteria are met like in the case of Hang Seng privatization, then we will consider inorganic. But if one of these criteria is defeated, then our preference will be to utilize or return any excess capital back to our shareholders in the form of share buyback. Pam?

Thank you, Georges, and thank you, Aman, for your questions. So firstly, as Georges said, we continue to remain highly capital generative. We've had a good start to the year, as I called out earlier in my remarks. But as you know, we look at our share buyback decisions on a quarterly basis, and that will be a quarterly process. The starting point is clearly our target operating range, which we are working hard so that we can replenish capital that has been deployed in the Hang Seng Bank privatization. That's the first priority, as Georges said, and that CET1 operating range remains 14% to 14.5%. That's the one which underpins all the targets and guidance we have given today. Just to clarify, in terms of our priorities from there on, of course, the priorities are 50% is the dividend payout ratio, which we have again reaffirmed. We would like to see balance sheet growth, and we want to invest for growth. That's if we can have growth at the right return levels. Our distribution priorities hence have not changed, and share buyback remains for us a useful tool to deploy surplus capital irrespective of where the share price is. So I think that's an important consideration for us going forward. Next question. On banking NII, you're right, there was a $100 million non-repeat items. So if you take that out for modeling purposes, you come to $11.6 billion. There are no other one-offs. There was a higher HIBOR quarter-on-quarter, and HIBOR also stabilized. And that's why, as you remember, third quarter when we gave a more cautious outlook because we don't know where HIBOR would be. But having seen HIBOR stabilize, it gave us the upbeat on our banking NII results. We also saw low betas on saving accounts in Hong Kong. And very importantly, we saw strong deposit growth, and we do expect this strong deposit growth to continue to be a key driver in 2026 along with the tailwinds of the structural hedge similar to last year and redeployment at higher rates. The only thing to bear in mind is that for this year, clearly, in Q1, given that there will be 2 days less there will be a headwind of $300 million in Q1. We have assumed, obviously, the rate changes, both that we've seen to date as well as projected for the year. But a lot depends on, as you can imagine, the timing of those rate changes, particularly in the U.S. dollar and sterling.

So we'll take the next question back on Zoom, Amit Goel at Mediobanca.

So two for me. The first one, just coming back on the upgraded RoTE targets. the 17% plus. I just want to check in terms of how you're thinking about that on a kind of year-on-year-on-year basis for '27 and '28. I mean are you thinking that RoTE kind of continues to improve? Or are you thinking more 17% is kind of a very acceptable and a good level and so any additional upside you would look to reinvest? And within that, I kind of note that on the LTIP, you've kind of brought up the lower end of the kind of the boundary performance to, I think, to 16.5% from 14%, but the 18% of the top end hasn't changed. So I appreciate that's done by the compensation committee. But I'm just kind of curious how you're thinking about what appropriate or sustainable level of return is. And then secondly, again, just coming back, maybe more clarification on the Hang Seng Bank kind of benefit and restructuring charge. So I mean, I guess, I was curious, really, for a bit more detail on the $0.4 billion of additional benefit, I guess, from an accounting standpoint, can't be treated as a synergy what exactly that is? And within the restructuring charge, I think previously you said that there's actually going to be more of a less staff, natural -- there will be more natural attrition and redeployment. So there'd be very limited kind of day kind of costs. So I'm just curious what you're spending that money on?

Perfect. Thank you, Amit, very much for your two questions. Pam can address them, but just to talk about LTIP briefly. This is indeed the remuneration committee consideration. It reflects the performance that we will achieve in '26, '27, '28, which aligns to the guidance we're giving you. So there isn't more we can say at this stage. Apart from that, it is more ambitious and reflects our ambition to the business.

Thank you, Jordan. Thank you for your question. So firstly, yes, we have ambitions and our target is 17% plus each year. We are not giving a trajectory, whether it's the same or progressive but of course, we continue to grow our business and invest in it diligently, but the target is just 17% plus each year. In terms of our -- the Hang Seng, firstly to call out, these are both benefits we are getting from a cost perspective but also a revenue perspective. So classically, what you would see in terms of cost synergies and all the restructuring is actually severance costs, that is not the case here. Because there is so much focus on revenue as well, a lot of the restructuring will be in terms of investment from a technology perspective. The cost synergies themselves, of course, there will be some realignment and evolution of roles and individual areas. It's not something which is going to lead to severance or staff reductions. There could be some rule changes, clearly. There will be some scale in product manufacturing and there'll be some technology harmonization. Now when we think in terms of the 2 bits with the $500 million, the $400 million and why it so, clearly, from a cost synergies perspective, it's easier to call out. Revenue synergies, there are greater haircuts, but we do have very detailed comprehensive plans on how we are going to drive these revenue synergies. And those plans underpin the $400 million even though they were a haircut in the $500 million and just in total, to reiterate because there are lots of numbers going around. I appreciate that. Think of it as a $900 million benefit in those 2 buckets with different degrees of accounting rules and different probability of expectations and then an overall restructuring cost of $600 million to achieve that total.

And Amit, we are a net investor in people in Hong Kong. We are also investing in technology in Hong Kong to capture all these growth opportunities we have been talking about. Therefore, we do not expect, anticipate or plan any program of redundancies. We do, though, expect that some roles may need to evolve, and we are basically committing to training, reskilling to make sure that our own colleagues have these growth opportunities, career opportunities to be able to capture these roles in which we will be investing over the duration of our program of 3 years.

That's a meaningful number that we have already included in that $600 million restructuring costs for training and reskilling of our colleagues as their roles change and evolve.

Thank you. Will stay on the Zoom with Kian Abouhossein from JPMorgan. Kian?

First of all, Georges, congratulations. I have to say you really driving the bank to a better process and discipline. We haven't seen in HSBC before, if I may say so. To the questions, tech stack, can you go a little bit more into detail? You gave a number in 2022 that you're spending about 20% on IT as a percentage of expenses. Wondering if we should think about similar ballpark. Within that, can you go a little bit under the hood and discuss where are you on cloud transmission are you done? Where are we on platforms? Are you done? Or what platforms still have to be produced new or integrated data management? So I really want to understand a little bit what you're doing on the tech side. And then CRE, this is still an area where I'm a little bit uncomfortable. Stage 3, CRE China 18% coverage, 16% on Hong Kong -- 14% sorry, on Hong Kong, stage 3. Can you talk a little bit where you want to drive that to? And clearly, I heard Pam's remarks about provisions and CRE was mentioned.

Perfect. Thank you, Kian, for your two questions and for your feedback. I'm going to take your tech question. Pam will cover the Hong Kong CRE. And I think it's a very important question. Thank you for asking it. We're indeed driving both performance and transformation with discipline, with precision, and we are doing it at pace. And we're very glad to see that the results of both performing, growing and transforming is delivering at pace, as you've seen in our 2024 numbers. So in terms of tech, you could broadly assume that 20% is the cost that we are spending on technology. But the way we're talking technology now is, number one, we are thinking about all those legacy or nonstrategic applications, which are consumers of run-the-bank costs, consumers of maintenance costs, patching costs, license fees that we are going to very proactively demise at scale. And we're very pleased to be able to say that we've demised more than 1,100 applications this year -- well, in 2025, this is more than 1/3 of the about 3,000 applications that we have deemed nonstrategic and looking to demise. Just to give you a perspective, we run about 10,000 applications, 9,000 actually, of which 3,000 are flagged to demise over the horizon between now and 2028, and we're moving at pace for that. Now that demise will allow us to free up investment capacity to put it in new technology and new capabilities in tech space. Cloud transformation, I think we are quite mature on cloud. I think we've moved from a cloud-first strategy where we moved many of our applications to cloud to now a more mature and therefore, more sophisticated approach to cloud by looking at optimization of hosting of applications. And therefore, we would look at any new applications or our existing stack, where it is better at. If it is on cloud where the majority is, then it will be on cloud, and then we will look at portability capabilities and resilience capabilities. And if it is on-premise, then or in the private cloud, then we will look at that. So I think we have matured our cloud approach, and we're already in a place where we want to be, but of course, we'll continuously evolve it. If you ask me where is the biggest investment going into the new technology today, it is definitely going into generative AI. I want to just take a minute to explain how we're thinking about generative AI because that's quite important. We're looking at generative AI in 3 work streams. They're on the Slide 8 of the pack. The first work stream is we're making generative AI available to all our colleagues in time, 85% mostly now enabled to make sure that we are helping our colleagues upgrade themselves and become future-ready. The first thinking is how can we bring our whole colleague population with us in becoming future-ready, generative AI enabled. They will have generative AI tools that they can use. They will have coding assistance or vibe coding assistance for those among our engineers, 31,000 already enabled, and we are seeing immediate productivity gains. We're seeing 60% speeding up in our unit testing. We're seeing 5x faster patching of code, patching of vulnerabilities and code, thanks to all these capabilities. This is our first mission. All our colleagues to benefit, to be trained, to be upskilled, to become future-ready, better version of themselves, more productive, better outcome for our customers. The second work stream in generative AI is fundamental reengineering of our processes end-to-end. 50 of those processes are already under review. Some of them have already delivered and finished, such as onboarding and KYC, but all sorts of processes, including fraud detection and prevention, credit applications, capital allocations and what have you data -- visas and what have you to allow generative AI to help us redesign the process in a much simpler way and also allow gen AI to be integrated in the process to process data in a much more efficient way. The result of which is a more productive bank, more efficient bank and a safer bank with stronger controls, and more importantly, a very simple bank that will be able to ultimately deliver to our customers closer to near real time or real time at the highest possible standard that's available for us. And that is an ongoing journey. The third work stream we're taking in generative AI is how we enhance customer experience at the customer touch points. So this is our relationship managers, wealth advisers, contact center operators. As they engage with customers, generative AI tools already rolled out, as you can see on the slide, will allow them to personalize at scale, to tailor-make, to customize at scale at the highest possible standards for our customers close to real time in a way that can allow us to deliver our capabilities to customers in a much more seamless, faster, better way. Customer experience will be materially enhanced. Now today, we will have operators using this generative AI at the service of our customers, but you can envisage that in a few years' time, we could possibly put these generative AI tools straight for utilization by our customers. Those are the 3 work streams. What I want to say though is that we're doing this with safety and security at the forefront. We're doing this in a way that we can review, monitor and audit everything we're doing in the space as a critical standard, and we're doing this in a way to keep control, resilience and human accountability always there because we are a regulated industry and our customers' trust is the most important asset, and we will do everything to make sure customers trust is always protected and nurtured. Thank you for that question. I'll hand over to Pam on Hong Kong.

Thank you, Kian. So just looking overall in our guidance, around 40 basis points guidance for 2026 considers all our portfolios. And of course, Hong Kong commercial real estate as well as the very small residual amount of China commercial real estate, and we look at a range of plausible downside scenarios before we give you this guidance. So just unbundling a bit. The China commercial real estate portfolio has really come down. It's now less than $1.5 billion, and our ECLs this year for this was below $200 million. So in that context, the names that have left that portfolio that's left, we feel much better about it compared to where the other portfolio was when we first started with it. Now when you think in terms of Hong Kong commercial real estate, firstly, I'm going to give you a bit of an update on the 3 segments within this Hong Kong commercial real estate portfolio and then how we look at the names, particularly the credit impaired names. Now the first one, we've been calling it for a year, and now I'm very pleased to say that the residential component of Hong Kong commercial real estate is near normalized. And I say that because whether I look at in terms of price increases, HPI has been up 5% year-on-year in 2025. But more importantly, we've seen a 10% growth and also sales volume. Rentals have already stabilized both in terms of the rental demand as well as the rental pricing. Now when we look at retail and the office space, of course, there are pockets of distress in it. But just as a broader context, we saw retail sales also in Hong Kong in May turn into positive. And they are now up year-on-year at 6.6%. But of course, this alone is not going to solve the problems of the retail sector because peoples retail shopping patterns have changed. They don't necessarily need to go to shops on malls, et cetera. Having said that, as there is more consumption in Hong Kong, we are seeing this shift from shopping places being changed into more food and beverage and so on, but there will be pockets of stress in it, and that will be coming from mainly oversupply at this point of time. Now office is the sector we are watching very carefully, because recently, we have seen both in terms of rental demand and in transactions for the best properties with the best spec in central in the best areas, there are some green shoots. But the downside is, at this point of time, vacancy rates starts are still around 17%. So that's what we will be managing through and following up very, very carefully. Having said that, in Hong Kong, we are not a distressed seller. It's a market we are deeply embedded in. We really understand well. But we are very resilient in terms of how we do our valuations. So we go and look at valuations, including distressed valuations. And we look at with our collateral position, and we stay well collateralized. And we've been following through this very closely over the last couple of years. The one metric, which I personally follow, though my job has changed now, is what happens to credit impaired names. And the exposure that you need to focus on is credit impaired names, which have an LTV over 70%. Now this number has grown and it now stands at $1.9 billion. But the ECLs against it have also grown, and they have grown to around $900 million. And if you go back quarter-on-quarter, that differential between the ECL number and the exposure sits around $1 billion number. So that's where you think your risk is. And of course, you have to see if some of the substandard names don't fall down and so on. So overall, I would say, given what we are seeing and particularly to notice that in this quarter, we had a stage 3 against one name, but the macro environment in Hong Kong was positive. And as a consequence, through IFRS 9 calculation, those 2 almost offset each other. So in that broader picture, we feel very comfortable with the 40 basis point guidance.

We will take Rob Noble at Deutsche Numis next.

Just on net -- sorry, noninterest income in 2026, what are the negatives in noninterest income for next year? So if you were to grow the same level, which was, I think, the low teens in 2025, you would blow through 5% revenue growth in '26, let alone in 2028. So why aren't you -- why are we much more positive on revenues than you're kind of sat now? And then secondly, just on Hang Seng, what's the difference in the local capital requirements in Hong Kong and the U.K.? Does the transaction change anything in terms of minimum group regulatory requirements and how we manage capital through the group?

Okay. Rob, thank you very much. Let me address your first question, and Pam may add to it and address definitely the Hang Seng capital question. So the 90% or more of our noninterest income, and therefore, our fee or other income is driven by transaction banking and Wealth. So looking at the dynamic in these 2 will give you a good perspective of how our non-NII is evolving. Transaction banking, we've reported full year growth of 4% year-on-year. We are seeing continued momentum in this space. We are a leader in practically all the aspects of transaction banking that we prosecute with our clients. We've been voted by 30,000 of businesses as the leader in payments, both in products, services and technology. We've been 9 years consecutively a leader in trade. We've been voted by corporates using foreign exchange as the leader in servicing them with foreign exchange. We continue investing in this space. We continue expecting resilience in this space, in particular in trade. And I can talk more to trade if desired. As you look at Wealth, Wealth remain unequivocally one of the strongest growth opportunities, in particular, one, given our footprint, where we are focusing on Asia and the Middle East and the underlying growth in Asia and the Middle East of Wealth is very strong and our ability to capture more market share is very strong. We're already a leader in Wealth in Asia, if you look at Wealth balances. And that's an area where we can benefit from this underlying structural growth opportunity. And second, Wealth because we are also accelerating our investments in this space. You've seen we've launched 26 or 27 wealth centers in 2025, taking the total to 64. We're hiring relationship managers, wealth advisers. We're empowering ourselves with generative AI wealth capabilities. We're building technology. We're creating a comprehensive set of products, and we continue investing in this space. So we do believe they remain -- Wealth remains a very strong growth opportunity, albeit we have dropped the guidance on that. And the idea is to give you an overall revenue guidance, which is better encompassing the overall opportunities and probably more relevant for your forecasting. Pam?

Thank you, Georges. So firstly, the only comment I'll make on Wealth is, as Georges said, we are very comfortable in our broad-based product proposition. But the only thing we need to remember is that this year, with how the markets have performed, therefore, on some of the Wealth that is generated through transactional kind of activity, we just have to see how that progresses in next year. We're not going to make a call out on how volatile or otherwise markets are going to be in 2026. So if there's anything that's what would have been a good consideration because we have to look at plausible downsides clearly in giving our guidance as opposed to just a base case or an optimistic case. So that's all I would say on that. Now from a Hang Seng capital perspective, we have already got the $3.8 billion benefit, which comes from the disallowed minority capital, which we don't need to have an impact on our CET1 anywhere. So that's a positive straight on. But generally, in a broader picture, across all our subsidiaries, which are 100% owned, we do have more flexibility in terms of how we move our capital, whether it's upstreaming or downstreaming, obviously, subject to what we consider the mark-to-market outlook is, where our portfolio is and subject to sort of regulatory discussions. So all in all, it does give us a better ability to move capital around the group and be more efficient in the deployment of capital.

The next question we will take again from the Zoom is [ Chen Li ] at China Securities.

I have a question about preservation of Hang Seng Bank. Could you provide further information about the growth opportunities? I want to know that in which aspects of the Wealth Management business will have more -- stronger synergies with Hang Seng Bank? And what are other outlooks for the Wealth balances and the Wealth Management margins?

Okay. Chen, thank you very much. I'll hand over to Pam, but remember what we said at the announcement on the 9th of October of our intent to privatize Hang Seng is these are commitments we are holding. Hang Seng Bank will retain its own authorized institution and governance. It will retain its own brand in Hong Kong, of course, as a major community bank and the largest local bank. It will retain an independent customer proposition that will compete in the market for all customers. It will retain its branch network. And that proposition will remain intact with a distinctive cultural strength and customer proposition, customer experience strength that Hang Seng has been known for, for practically a century in Hong Kong. What we are driving through these privatizations is better efficiencies in cross-selling or better efficiencies in aligning back office or manufacturing capabilities that are not related to the customer proposition. Pam?

Thank you, Georges. So firstly, as Georges has said, that the positioning of Hang Seng Bank as an iconic community bank in Hong Kong stays. What we will endeavor to do is that post the privatization, we don't have that arm's length relationship restriction that prevents us to do more in terms of product proposition offerings and cross referral to our customers and also in terms of the investment dollars that we spend, we can't spend them if it's on the same product, on the same customer journeys seamlessly across both the Red brand and the Green brand. So that gives us a very good position that as these 2 stand-alone brands, our ability to lean into the growth in Hong Kong and the macro opportunities, including cross-border will be available to the broadest customer base while maintaining that community element of service for those customers. So that's how we are looking at it. And we will look at, obviously, Wealth products as well as pricing margins so that we can really make them more easily available for our customers.

Chen, we are the market. We are the market leader in Hong Kong, undisputed. We are consolidating and cementing this leadership. Hang Seng Bank privatization will allow us to consolidate that leadership even further in all sorts of a broad range of products and services. And we have a leadership position in capturing these growth opportunities that Pam was talking about in Hong Kong as a super connector between the Mainland and the world, as poised to become the leading cross-border wealth hub on the planet before the end of the decade. And it's really a privilege to be in the position we are in to be able to capture this with the full HSBC and Hang Seng propositions. Thank you, Chen.

So I will take the next question from Ed Firth at KBW.

I just had two questions. One, just talking about the HIBOR benefit in Q4 for your net interest income. I think one of your peers talked about it as a temporary benefit. And I guess I'm not close enough to the franchises and how you price, et cetera, domestically. But I guess, do you know -- is there anything peculiar about you or some of the peers about the way you repriced CASA accounts or something in Q4, which would mean that yours should be sustained, but somebody else's might be temporary. So I guess that's the first question. And then the second question is, I guess, it's slightly an extension of Rob's question. I'm not quite sure what is so specific about 2028 that means you can get 5% revenue growth there, but I assume you don't feel you can before then. And I know that at the moment, in '26, we've got some headwinds from interest rates, but you've also got a very strong tailwinds around things like Wealth Management, Pam highlighted that. And '27, I guess, should be a reasonably normal year. So I'm just wondering, is there something that I need to think about that you can see that is happening from '28 and beyond that will make your revenue growth better that we're not seeing today?

Okay. Thank you very much, Ed, for your two questions. Pam, do you want to address that?

Yes. So let me just unbundle the situation with regard to HIBOR. So in the fourth quarter, HIBOR stabilized. And we had called out in the prior quarters that in 20 -- and I'll come to Q1 in a second. That in Q2 and Q3, HIBOR was very volatile. And we were looking at the comparison for a HIBOR close to a 1% where it has an impact of about $100 million in terms of banking NII on a monthly basis and then stabilizing to something which is in the 2% mark. We look at HIBOR on a 1-month HIBOR basis. We feel very comfortable as long as HIBOR is around 2.25%, 2.5% and so on. I fully recognize that in -- and I don't know what other peers would say, like what tenor of HIBOR rate is most relevant for them. I'm just telling you from our perspective. Now in Q1, HIBOR has fallen, but we have to see the context. There's been a range of IPOs that normally happens. When there's that demand for HIBOR fluctuation, but it has fluctuated within a narrow range. So the impact isn't there. Also, last year, in Q4, there was a benefit of lower betas. So when HIBOR went up, the same impact wasn't there on the savings rates. Of course, we'll have to look at betas, how they evolve. And then we have a very strong deposit franchise. And I think that's a differentiator in terms of the CASA level that we have, in terms of our accounts. And therefore, we have a good positioning where that deposit base helps us on the banking NII more than most of our peers. Obviously, in terms of both banking NII this year and also our ambition, it's the rate headwinds. And as I said earlier, it's the timing of the rate headwinds. If they're delayed, of course, it becomes less of a headwind. If they are earlier, then there is more sensitivity to it. So I would say from a Wealth business, as I also alluded to earlier, yes, the growth is very strong whether its asset management, Wealth products, insurance, it's broad-based growth. But last year, there was a great advantage or a tailwind coming from markets, which gave us a lot of uplift on the transactional-based fee income. We can't assume that for this year. Of course, if markets stay well and that happens, then that's a positive tailwind. So that's how I would look at it.

Yes. And I would look at '28, not specifically as the year '28, but as what would we believe our long-term structural opportunity to grow. It's our guidance for '28, but we've delivered 5% revenue growth in '25. We've delivered 4% in '24. So it's just the footprint we are in and the capabilities for us to capture the growth is there.

And we like to be cautious to we have to consider downside scenarios as well. We don't always take the best case. That's all I would add.

Many thanks. We have probably time for a couple more questions. We'll take Alastair Warr at Autonomous next.

Two questions. Back to Hang Seng Bank, I'm afraid. You touched on potential upside from asset quality improving. I just wondered if that's something you're thinking about in terms of maybe more active steps? Or is this just about being patient with the property cycle? And then just on the Wealth side for a second question. It looks like there's a bit of a slowdown in the new account opening in the fourth quarter if you've got 1.1 million for the year and you were running at about 300,000 a quarter. Is that just seasonal or anything changing there that we should be aware of?

Thank you, Alastair. Pam, you can.

So just in terms of the asset quality, the comment I made was that if you look at Hang Seng's pre-impairment margins, they've been very strong. If you look at what Hang Seng's ECL charges have been prior to '22 versus in '24, '25 and even the run rate for the first half of the year and then what's consolidated for the full year, that's what I meant by the overall improvement, and that would be both for Hang Seng Bank as it would be for HSBC Red brand, and that's the only way to look at it. In terms of our own policies or processes and how we manage exposures, both for the Red brand and Green brand, they are highly aligned, how the rigor we follow through them, I don't expect any of that to give us either a tailwind or a headwind. So in terms of the new-to-bank customers, yes, it was 1.1 million, just to clarify for the Red brand. And the fourth quarter also had a good number. We believe that this new-to-bank customers is a huge growth opportunity for us. However, we are trying to be now a little bit more selective on the acquisition because we have now had a 3-year trend on how the acquisition has happened in between the lower end of the customer base and the more premier. We have added a fee for the new-to-bank customers who have a balance less than HKD 10,000. And because of that, we expect that there would be slightly slower acquisition in 2026. But the focus on our affluent customers is going to continue. The focus of the improvement in our overall income, whether it's through deposits, Wealth products, insurance is very healthy coming from these new-to-bank customers. So we don't see any change. We just don't want people to say that every month is going to be like 100,000 number because it's like almost like a ticker number because that's what the trend was. There will be fluctuations and changes month-to-month and quarter-to-quarter, but nothing material to call out as such.

We'll take Kendra Yan at CICC.

My question is kind of related to micro side. As the newly nominated U.S. Federal Reserve Chair has proposed interest rate cuts and balance sheet reduction. Could you please share your macro assumption behind the future 3 years guidance? And are there any risks that we need to pay attention to?

Yes. Thank you, Kendra. We can do that, Pam?

Yes. So just as I said earlier, Kendra, when we look at our guidance, we look at plausible downside scenarios. That include interest rate cuts, both quantum as well as duration. This time around, as we said, the starting point for the guidance for this year was the January year-end cuts, but we also stress test our portfolios on a regular basis for a range of scenarios. And we consider those and the impact on ECLs also on a weighted average basis when we look at our overall portfolios. We have looked at the -- some of the macro I would say, recent news, whether it's to do with private credit or otherwise because as I said earlier, we look at second and third order risks that may come from some sort of a macro event or issue, even though our own underwriting practices are very stringent and very rigorous in this respect. What I will say is that despite the evolving scenarios that you are facing on tariffs and trade, our business has been really quite resilient. And that has -- overall, it is up 2% year-on-year in 2025. In a complex market as this landscape evolves, our relationships and engagement with clients gets even stronger. We have taken market share in corridors through -- in Hong Kong, U.K., Asia overall as supply chains are moving and corridors are shifting. So I would say, overall, if I think in a macro sense, there are headwinds and tailwinds as well as for the world at large, but also for HSBC. We look at specific idiosyncratic factors that could impact us, any risk concentrations we may have in our home markets, and that's all part of our guidance. And that's why I said to you earlier or to the earlier question that when we give our guidance and our targets, we like to be rightfully conservative. But the most important thing is through this period, we have made an assumption that we will continue to invest for growth. We have the right strategy. We have the right priorities. We have the focus to retain and win market share and we will continue to do that with the basic underlying principle that Georges called out earlier, we are here to serve our customers, and it's the strength of our relationship with our customers that gives us the confidence for our guidance and targets.

Yes. Thank you, Georges. So we'll just take a final question today from Katherine Lei at JPMorgan.

Okay. My question is still on revenue side, right? I think the 5% revenue growth in 2028 and then the above 17% RoTE guidance, I think there's 2 key drivers. One will be on NII and then the other will be on Wealth. But my question is that on NII, what is -- like what gives HSBC the confidence that on the sustainability of the deposit growth? Because one trend we noted is that, say, for example, in China, with RMB appreciation and also China start to taxing its citizen globally, will that actually slow down, say, for example, Chinese nationals coming to Hong Kong to open new accounts and then the money flow movement? So can we be more a bit specific on what are the key drivers and then the key path on the deposit growth? This is number one. Number two, I think is still on -- number two is on Wealth and on that trend, right? So what do you think that will have an impact on our Wealth as well?

Okay. Thank you very much, Katherine. Let me address them in reverse order. I'll speak a little bit about Wealth, and I'll share some thoughts about deposits and Pam can give you additional granularity to address your question. Wealth remains structurally a very important growth opportunity for HSBC, as we said specifically that we are aligning our Wealth footprint, Asia and Middle East to where the Wealth is growing fastest in the world in Asia and the Middle East. Also our ability to capture wealth all the way from the premier customer base, which is the affluent middle class all the way to the high net worth means we have a better catchment of all these opportunities. We're also present in a number of onshore markets such as China onshore. We are the leading international wealth manager in China, Mainland China onshore, which is not dependent to flows outside China, for instance. We're investing in India. We, of course, have big wealth hubs in places such as Hong Kong, of course, Singapore, the UAE and a number of other markets. The challenges possibly to anticipate is there is a turnaround or a change in the overall outlook of investment because inevitably, wealth will depend on the underlying performance of the invested markets. And if there is -- today, there is a strong resilience in these markets, which is what we -- our customers are also looking at. But that is, of course, always a risk that we need to be watchful of. We're also investing to gain share. We're investing to diversify the product offering and to diversify the wrapper offering all the way from insurance to asset management to other forms of brokerage, et cetera. So that we are able to meet the varying wealth customers' needs in how they look at their investment requirements. Finally, we're also investing in generational wealth, specifically supporting transfer to the youth or the next generation or transfer between wealth centers in a way our footprint allows us to do that is competitively very strong compared to a number of our peers who are offering wealth from very, very few number of hubs, okay? That's the wealth. Now with regards to deposits, Pam will give you a better answer in the details you're asking for, but let me tell you one thing about deposit. It is the foundational product on which our customers' trust is expressed with HSBC, and this is how we look at it. Customers trust us with their deposits. That's the starting point of any possible service and proposition in transaction banking, payment, financing and otherwise. So we cherish this asset class. We have always cherished it, through thick and through thin, in good rates and bad rates, and we will always focus on what it takes to make sure our customers trust us, the financial strength, the level of service so that we earn their trust with their deposits. When you look at our deposit base, it has grown in every business. It has grown, and we are highly surplus liquidity in every currency, every major currency, in every major geography. So there is a deep rooted across our 4 businesses and across all the geographies where we operate. a deep-rooted trust, which we nurture to support customers giving us their deposits and using us as their deposit bank by preference or by excellence that can support, if you want, our outlook on our deposit growth. Pam?

Thank you, Georges. And Katherine, a really good question to close on. We have seen deposit growth, as you've seen in our new disclosures on Wealth across the spectrum of our customer base, premier, private bank, retail in every market, in every jurisdiction, even when there isn't a home market, and that really underpins the growth that we are seeing in our banking NII. We have taken very conservative trajectory on loan growth. I'm hopeful at some stage, loan growth will also pick up, which will then also support the banking NII if from an interest rate perspective, the timing of the interest rate becomes a headwind in one of those plausible downside scenarios. We have a structural hedge, which is continuing to be a tailwind given all the work we did a few years ago. We will also continue to build on the structural hedge, even though the largest increases we have done are -- have been behind us now. So if I look at all of these things in the round, and I look at the momentum of the business that we have seen in the first sort of 7 weeks of this year, that gives us confidence for our banking NII guidance for 2026. If you underpin that just based on the fourth quarter, obviously, it will give you a number of [ $46 billion ]. But we are not calling that out because we are very cognizant of the headwinds on interest rates. And you're right, the interest rates in the U.S. is down 50 basis points, U.K., 25 basis points just year-to-date with further 2 to 3 rate cuts to happen. So with that, I think in the round, we feel very confident that the banking NII, which is, again, the trust of our customers and what we are doing everything to preserve that trust and to build on those relationships, because I'll just end with one thing. We are fundamentally a relationship bank. We have a full-service suite of products we offer to our customers. So for our guidance, for our targets, we look at that full range. We are not a product proposition-based bank, in which case, some of the comments you made will obviously be a bigger headwind.

Perfect. Thank you, Pam, and thank you, Katherine, for your last question. Thank you, everyone, for joining us. We are pleased to report strong revenues, strong profit, strong returns and strong distribution to our shareholders. We are confident we can navigate the challenges ahead of us from a position of strength, and this has allowed us to put ambitious targets about our revenue growing every year for '26, '27, '28 rising to 5% in '28 as well as our return on tangible equity delivering 17% or better every year over that period with a 50% dividend payout ratio, all excluding notable item. Thank you very much for joining us this morning or this afternoon, and I hope you have a good day.

Thank you.

Thank you, ladies and gentlemen, for joining today's webinar. You may now disconnect.