HSBC Holdings, plc.

Good morning to everybody in London and good afternoon to everybody in Hong Kong. We have two objectives today. The first is to take you through our Q4 and full year results for 2020. And the second is to update you on progress against the change agenda we shared with you last February and the additional actions we are taking to deliver returns above the cost of capital. I'll start with a few reflections on the year just gone. Euan will then take you through our full year and fourth quarter results. Then myself, Peter Wong, Nuno Matas and John Hinshaw will share key details of our future plan. Euan will then return to cover the financial implications of that plan. Let me start with 2020. First and most importantly, our people provided amazing support to our customers and the communities we serve throughout the world. We provided more than $52 billion of wholesale lending support through government schemes and moratoria, more than $26 billion of additional relief for personal customers, and more than $1.9 trillion of loan, debt, and equity support for our wholesale customers. However, the numbers don't do justice to the efforts and energies that went into delivering them. My colleagues acted with great purpose on a global scale. They broke down silos, they innovated, and they delivered repeatedly in the toughest of circumstances. They were customer-centric in the truest sense of the term. And our customer scores in the UK, Hong Kong, the US, the Middle East, and Mexico bear this out. Second, the economic impact of COVID-19 hit our profitability, but we still delivered $12.1 billion of adjusted pre-tax profits and $8.8 billion of reported profit before tax. We also finished the year with a strong capital base of 15.9%. and increased our liquidity by around $170 billion. This proves two things. This is an incredibly strong and resilient business, particularly in Asia, which delivered $13 billion of adjusted profit before tax. But also, opportunity exists even in a difficult year. We increased mortgage lending in the UK and Hong Kong. We grew our share of trade in Asia despite the falling volumes. We grew our wealth balances in our target markets, and we made $1 billion of PBT in our India business, which will be hugely important in the years to come. Third, it was incredibly important to us to resume dividend payments, and we have declared a dividend of 15 cents per share. We are also resetting our dividend policy in the future to strike a balance between providing good income and supporting future growth. In future, we're aiming to deliver sustainable cash dividends while transitioning towards a payout ratio of 40 to 55% from 2022. We're no longer going to offer a script dividend and will consider share buybacks beyond the near term, where no immediate opportunity for capital redeployment exists. This is a measured policy that gives us the flexibility to invest and grow the business in future. Clearly, 2020 fundamentally challenged many businesses, so we also embarked on a major exercise to refresh our core purpose as an organization. We consulted widely on this over a number of months, speaking to thousands of colleagues and customers, looking deeply into our history, but also assessing the world of the future. And we kept coming back to the same themes. HSBC has always focused on helping customers pursue the opportunities around them, whether as individuals, families or businesses. Our renewed purpose, opening up a world of opportunity, both captures this aim and sets a challenge. Opportunity never stands still. It changes and evolves with the world around us. It is our job to keep adapting with it and to find and capture opportunities with the same spirit of entrepreneurialism and innovation that I feel represents HSBC at its very best. We also saw in 2020 the power of an organization that can respond positively and at pace to radical change on a global scale. Hence, you will see a new behavior within our value statements. We get it done. It's deliberately expressed in uncomplicated language. We can talk about what we want to achieve forever, but execution is everything. Last February, I promised we'd deliver our plans with pace and conviction, which is exactly what we've done. We've taken more than one billion of costs out of the business and expect to exceed our 4.5 billion cost-saving target ahead of schedule. And despite the pause in our redundancy program following the COVID-19 outbreak, we've reduced our FTE and contractor headcount by around 11,000. In achieving those headcounts and cost savings, we created a combined wholesale banking back office function serving both commercial banking and global banking. We merged wealth and personal banking. We reduced our senior management population by 17%. We appointed new people to just under 50% of the top 200 senior positions. We reduced our U.S. branch footprint by more than 30% and cut our U.S. adjusted cost base by 8%. We reduced FTEs in our European non-ring fence bank by 6%. and we achieved $52 billion of gross RWA savings in 2020, taking us more than halfway towards our three-year gross risk-weighted asset reduction target in just a single year. However, given the impact of low interest rates and COVID, we no longer expect to reach our targeted level of returns by 2022. That said, We recognised the fundamental shifts in our environment in 2020 and reacted to them quickly. The plans we are announcing today will build on this work and enable us to target a return on tangible equity at or above 10% over the medium term. And that's with the assumption that base interest rates remain at today's ultra-low levels. Ewan will now take you through our results.

Thanks Noel and good morning or afternoon all. A few quick words on the full year 2020 results. The combined impact of COVID-19 and ultra low interest rates significantly impacted our reported profit before tax, down 34% from the prior year to $8.8 billion. On the positive side, Asian business held up well with $13 billion of adjusted pre-tax profits. This included the second year running of $1 billion of pre-tax profits from our Indian franchise and further market share gains in our trade franchise in the region. We did a good job at controlling operating costs, down $1.1 billion or 3%, well ahead of what we'd promised previously. we'd achieved a year ago. We achieved exceptional growth in our deposit franchise, up $173 billion in the year, or some 12%. And we strengthened our core capital base with our core tier one ratio up 120 basis points to 15.9%. As we move into 2021, It's the interest rate environment that's most negatively impacting our returns outlook. And it's why we're shifting our revenue mix towards non-interest income, accelerating our capital allocation, people and investment towards Asia, and investing in a multi-year technology plan to significantly improve productivity. Turning to slide eight. On the fourth quarter, it was a solid set of results. with reported pre-tax profits of $1.4 billion. Adjusted revenues were down 14% on last year's fourth quarter, mainly driven by the progressive impact of ultra-low interest rates. Expected credit losses were 44 basis points, or $1.2 billion in the quarter. This compares to 26 basis points, or just under $700 million in the fourth quarter of last year. Total ECLs for the full year were $8.8 billion, at the lower end if I targeted $8 to $13 billion full year range. While operating costs were up Q4 on Q4 by 1% x the bank's levy, this was mainly driven by a decision to increase the variable pay pool accrual in the quarter, which was down 17% year on year. and tangible net asset value per share increased by 20 cents in the quarter to $7.75. As you model 2021, please note that the weakening of the US dollar towards the end of 2020 will materially impact both costs and revenues. If you adjusted our 2020 results to average January exchange rates, it would have added $1.6 billion to our revenues and $1.1 billion to our operating costs. Turning to slide nine and looking at fourth quarter adjusted revenues across the three global businesses, in wealth and personal banking, revenues were down 18% on a year ago, with retail banking revenues falling by just under $1 billion. This was due largely to the impact of falling interest rates on deposit margins Wealth management revenues were down $91 million due to a combination of lower insurance sales and the impact of lower interest rates on private banking deposits. Commercial banking revenues were 15% lower, due mainly to the impact of lower margins on global liquidity and cash management. In global banking and markets, revenues were down 7%, And that's despite another good quarter for global markets, which saw revenues up 13%, even as we kept value at risk broadly stable. On slide 10, net interest income was $6.6 billion. That's up 3% against the third quarter. The net interest margin was 122 basis points, up 2 basis points on the third quarter. reflecting improved liability margins, particularly in the US and Europe. As we look forward, while we expect a soft start for non-interest income, for net interest income, due to the lower short-term hyper rates and fewer days this quarter, we expect NIMS stabilisation and lending volume growth to progressively support net interest income over the remainder of the year. On the next slide, two core trends to discuss. Firstly, on fee income, we saw greater stability in the fourth quarter, notably in commercial banking and global banking and markets, with a small reduction in fees and wealth in personal banking, reflecting lower insurance sales and unsecured lending volumes. And secondly, on other non-interest income, It was down $800 million. This reflected a combination of lower interest earned on securities held in the trading book, a reduction in the value of new business written in insurance, and lower credit and funding valuation adjustments in global banking and markets. For 2021, we expect customer activity and fee income to recover as economic activity recovers. and we've seen a good start to the year in Hong Kong. But with the impact of new COVID-19 variants, this recovery may be slower than we foresaw a few months ago in areas such as consumer credit. We also expect global markets to have trading activity lower than we experienced last year. On the next slide, ECLs were $1.2 billion or 44 basis points of gross loans in the quarter, Relative to the third quarter, this mainly reflects higher Stage 3 charges and the fact that the third quarter benefited from additional releases. The Stage 1 and 2 P&L charge for 2020 was around $4.5 billion, including around $300 million incurred in the fourth quarter. We now have Stage 1 and Stage 2 provision balances of $7.9 billion That's up $3.9 billion in 2020. While we remain cautious on the outlook for credit in 2021, we expect the 2021 ECL charge to be lower than 2020, and we've no update at this point to the guidance we gave you at third quarter, effectively a range of approximately 40 to 60 basis points this year. By 2022, we expect ECLs to have materially reduced from the 81 basis point charge in 2020 towards or even below the lower end of our 30 to 40 basis point normalised range. Turning to slide 13, fourth quarter adjusted operating costs X, the bank levy, were $780 million higher than the third quarter. This was driven by targeted technology investment and marketing spend, together with a decision to increase the variable pay pool. For the year as a whole, operating costs were down $1.1 billion, or 3%. This included a number of offsetting items. The variable pay pool was down by more than $500 million. COVID-19 impacted cost items like travel and entertainment and marketing costs. were down by around $600 million, and our combined cost programs over 2019 and 2020 delivered in-year savings of $1.4 billion. Offsetting this were various items, including increased technology investment, up $377 million, or 7% on 2019. For 2021, we expect the bank levy to fall to around $300 million. That's some $500 million lower than 2020. For operating costs X, the bank levy, we're seeking to keep them broadly flat after adjusting for the impact of dollar weakness. With significant cost savings from our ongoing restructuring program offset by a combination of certain costs increasing from COVID-19 lows, together with planned higher investment and growth spend. On slide 14, in the first year of our three-year program, we achieved $52 billion of gross risk-weighted asset saves. We're more than halfway towards our $100 billion gross reduction target of low returning risk-weighted assets. This included a $10 billion reduction in the fourth quarter. We expect to make around a further $30 billion of gross RWA sales in 2021. On slide 15, our core tier one ratio at the end of the four quarter was 15.9%. That's up 30 basis points in the quarter. This was driven by a combination of RWA reductions on a constant currency basis, profit generation, FX translation differences, and 21 basis points of software intangible benefit. On the latter, we expect software intangibles to be reversed out of our Core Tier 1 over the next 12 to 18 months. Excluding FX movements, risk-weighted assets fell by $20 billion in the fourth quarter, primarily as a result of reduced lending balances. The planned 2020 interim dividend of 15 cents resulted in a reduction of 40 basis points to our quarter one ratio at the end of 2020. And with that, back to Noel.

Thanks, Ewan. So last February, we announced a series of actions to make HSBC fit for the future. And we remain committed to delivering them. But there were three fundamental shifts in 2020 that we must reflect in our plans for the future. First, the interest rate environment changed dramatically. We lost around $5.3 billion of net interest income, or more than two percentage points of ROTI. And we don't expect rates to rebound any time soon. We reacted to this in two ways. By accelerating our shift towards non-interest income, including earned fee income, and cutting our costs further and faster to compensate for lost revenue. Second, the shift to digital was accelerated by the impact of lockdown. As the pandemic took hold, our customers' digital engagement increased dramatically. We were already investing heavily in digital and technology, but we responded by rapidly accelerating the digitization of our business. Third, COVID-19 has made everyone aware of how fragile the global economy is to an external event. And as a consequence, environmental issues have taken on a renewed importance. Thankfully, we were already working on the next phase of our successful journey with respect to sustainability. And we announced an ambitious new climate plan in October of last year. The low carbon transition is the most transformative trend of our time. And it presents an unmissable commercial opportunity for a bank of our size, geography and profile. So these three trends and the decisive action we took to meet them form the basis for much of what you're going to hear over the next 30 minutes. We have a plan that we think can deliver at least 10% return on tangible equity over the medium term. It will transfer material amounts of capital from low return markets to higher return markets. That capital will be deployed into businesses in Asia where we already have a strong track record of growth and profitability. And we will also invest in technology to transform our costs. It's a plan capable of delivering returns above the cost of capital and supporting both sustainable dividends and future growth. It is built on the four pillars you see here on slide 19, and I'll take you through each one in turn. Slide 20 looks at the first pillar of our plan, driving growth by focusing on our strengths. we're going to stop trying to be everything to everyone. We want to do the things that capitalise on the advantages we have and to do them brilliantly. In wealth and personal banking, we will continue to invest in our scale markets in the UK and Hong Kong. But the new story here is Asia Wealth. Nuno will talk about this in more detail. but we're going to invest more than $3.5 billion in wealth in Asia in the next five years to achieve three things. We want to serve high net worth and ultra high net worth clients in Hong Kong, mainland China, Singapore and Southeast Asia globally. We want to build out our insurance and asset management capabilities across Asia. with organic and inorganic options firmly on the table. And we want to do more with clients who already bank with us, bringing wealth opportunities to our customers in commercial banking and global banking and markets. In commercial banking, we will continue to be unashamedly and uniquely global. We want to lead the world in cross-border trade, and in serving mid-market corporates globally. There are many things that are changing with respect to our strategy and our execution, but this one will remain unchanged. We'll invest around $2 billion to drive customer acquisition, to become a digital leader in our scale markets, and to support the three critical product platforms, global liquidity and cash management, global trade and receivables finance, and foreign exchange. Global banking and markets will retain the capacity to serve clients globally, but will invest in the markets that set us apart, whilst also moving the heart of the business to Asia, including leadership. We will use our global network to connect our global banking and market clients to opportunities in Asia, the UK and the Middle East, where we can add the greatest value. We'll spend around $800 million in GB&M in Asia to build better digital market platforms to support our wealth strategy, to build better market access and execution capabilities for our wholesale clients, and to expand our investment banking coverage across Asia. Peter will talk about this in a few minutes. Slide 21 shows where our US and European businesses fit in. Michael Roberts and the US team did a great job in 2020 repositioning the business, closing branches, driving down costs, and reducing capital. For the next stage, We will focus the vast majority of our resources into our international corporate and institutional franchise in the U.S. We'll continue to connect our U.S. wholesale clients into our international network, driving revenue growth in other regions. We'll also defend our strength in U.S. dollar clearing, trade and foreign exchange. and continue to reposition US markets and security services to provide access in a way that uses less capital. In US retail, our focus will be on building an international wealth platform that connects WPB clients across our global network to US wealth opportunities. And we continue to explore organic and inorganic options for our U.S. retail banking franchise. For Europe, the story is similar. Nuno and the team laid solid foundations in 2020, removing RWAs and reducing FTEs by 6%. Our strategy remains focused on connecting inbound and outbound international wholesale customers into our network and a wealth business focused on our global booking centers in mainland Europe. We'll keep investing in our transaction banking franchises to better connect issuers and investors in Europe to Asia and continue to reduce or exit subscale retail banking and SME portfolios. We are continuing with the strategic review of our retail banking operations in France and are in negotiations in relation to a potential sale, although no decision has yet been taken. If any sale is implemented, given the underlying performance of the French retail business, a loss on sale is expected. Slide 22 looks at the second pillar of our plan, and this is incredibly important. We see our digital agenda as presenting opportunities for both revenue growth and cost efficiency. In the last year, we spent around $5.5 billion on digital and technology, The impact of this is coming through our digital engagement and ratings, in our revenue, in our cost base, and in our ability to operate a global business in the middle of COVID. We wouldn't have achieved what we have already done without that historical investment. John will go into more detail about the future investment programme, but I want to take a minute or two to talk about how we'll pay for it. We think we need to grow investment by between seven and 10% on a compound annual basis between 2019 and 2022. To pay for that, we need to reduce the cost of running HSBC by four to 5% over the same period. We intend to save a billion dollars more on costs than we said last February on a constant currency basis. We'll make our cost programs work harder to deliver between $5 and $5.5 billion of savings. And we'll spend around $7 billion to achieve those savings, with at least half of that falling in 2021. We also intend to keep our headline costs broadly stable from 2022 onwards, enabling us to reinvest further savings into the business. Slide 23 is about energising HSBC for growth. So the culture, the composition and the future skills we need. This is about creating a dynamic, inclusive and entrepreneurial organisation. We've already infused the top of the firm with new people and new skills. More than three quarters of my senior leadership team have been in post for around a year or less. And of the layer below, just under half of the top 200 took up their current roles in 2020. We've also reduced senior management numbers by 17%, removing layers and increasing accountability. I'm passionate about creating an inclusive organization that unlocks opportunity for all and fosters the diversity of thought and experience that every business needs. The diversity of our top team is improving, but we want to go further, both in terms of gender and ethnicity. We also made good progress improving employee advocacy, but there are gaps among some employee groups that we must bridge. We also need to build skills and capabilities in areas that are different to what we've needed historically, particularly in digital, analytics and sustainability. We can bring some of those in from outside, as we have done over the last 12 months. But we also need to train from within, which we're doing through the newly expanded HSBC University, for which I was the executive sponsor before I became group CEO. Slide 24 looks at one of our biggest opportunities and one of our biggest drivers of change, the transition to net zero. We're already a global leader in sustainability, and we want to stay there as the market expands exponentially. In 2020, we were the biggest underwriter of green, social, sustainability and sustainability-linked bonds for the second year running. doubling the volume we underwrote in 2019. We've already set out some uniquely ambitious plans for a bank of our scale and footprint to reduce emissions in our operations and supply chain to net zero by 2030 and to align our portfolio of financed emissions to net zero by 2050 or sooner. In May, we intend to file a resolution to our AGM requesting investor approval for a clear, science-based route to a net zero aligned portfolio. It will commit the bank to ending financing of coal-fired power. It will align our financed emissions to net zero. And it will commit us to evidencing it through very specific milestones and reporting. Let me be clear that we intend and plan to work with all our clients in every sector to map and finance their low carbon transition. We are aligning every part of our business behind that aim, both to achieve our net zero ambition and to capture the commercial opportunity. So taking all of this in aggregate, what does tomorrow's HSBC look like? we're effectively undertaking three pivots to Asia, to wealth, and to fee income. We'll also continue to grow our global capability in wholesale banking and further leverage our unique capability to service mid-market corporates globally. These are our highest return, highest growth opportunities. We expect to move around 8 percentage points of group tangible equity to Asia over the medium to long term. And we're linking this to compensation for the first time. It will explicitly be part of mine and Ewan's scorecards. We also expect to move around 10 percentage points of tangible equity to wealth and personal banking over the same period. with a broadly equivalent reduction in global banking and markets. The focused investment in wealth, combined with our investment in technology, aims to deliver compound annual revenue growth in the mid single digits from 2022. That should accelerate the growth of fee income and insurance income from 29% to around 35% of group revenue over the medium to long term. This is an ambitious plan, but a deliverable plan, and we're going to move with pace and determination and belief in our ability to get it done. I'll now hand over to Peter to talk about our Asia opportunity, Nuno to talk about our pivot to wealth, and John to talk about the technology that underpins everything we want to achieve.