HSBC Holdings Plc

Headline performance & profitability momentum (good) - Q1’26 PBT ex-notables: $10.1bn - Revenue ex-notables: +$4% YoY to $19.1bn - Annualized RoTE ex-notables: 18.7% (up +0.3pp YoY), supported by the removal of Hang Seng Bank minorities - All 4 business lines grew revenues and delivered annualized RoTE >17% (ex-notables) → signals strategy is working.

Guidance updates: higher NII, higher credit risk (mixed but clear) - Banking NII guidance upgraded to ~$46bn (full-year) due to a better interest-rate outlook (management notes volatile curves and ongoing uncertainty). - ECL guidance updated to ~45 bps (full-year), reflecting macro uncertainty. - Q1 ECL: $1.3bn = 52 bps annualized - Includes $0.3bn charge tied to Middle East conflict (precautionary) - Includes $0.4bn fraud-related secondary securitization exposure with a U.K. financial sponsor

Credit risk “known/contained” vs. headline stress (surprising/important risk framing) - Management explicitly calls the Stage 3 fraud charge “idiosyncratic” and not representative of broader portfolio risk: - They reviewed the highest-risk areas and did not identify comparable fraud concerns - They updated risk appetite and due diligence processes - Hong Kong commercial real estate: small recoveries in Q1; remains broadly stable - Bookend downside stress scenario (extreme): includes ~35% stock market fall, oil price assumption, and global GDP slowdown; management says this is already reflected in the 45 bps ECL guidance weighting (and emphasizes management actions would mitigate).